<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 13E-4
----------------
AMENDMENT NO. 1 TO
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
----------------
Building One Services Corporation
(Name of Issuer)
----------------
Building One Services Corporation
(Name of Person(s) Filing Statement)
----------------
COMMON STOCK
(Title of Class of Securities)
120114103
(CUSIP Number of Class of Securities)
----------------
Joseph M. Ivey
President and Chief Executive Officer
Building One Services Corporation
800 Connecticut Avenue, N.W., Suite 1111
Washington, DC 20006
(202) 261-6000
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of the Person(s) Filing the Statement)
Copies to:
F. Traynor Beck, Esquire Linda Griggs, Esquire
Executive Vice President, General Morgan, Lewis & Bockius
Counsel LLP
and Secretary, Building One Services
Corporation 1800 M Street, N.W.
800 Connecticut Avenue, N.W., Suite Washington, DC 20036
1111
Washington, DC 20006 (202) 467-7000
(202) 261-6000
----------------
February 19, 1999
(Date Tender Offer First Published, Sent or Given to Security Holders)
----------------
CALCULATION OF FILING FEE
Transaction Valuation* $573,750,000 Amount of Filing Fee $114,750
*Based upon the aggregate value of the securities proposed to be acquired.
[X]Check the box if any part of the fee is offset as provided by Rule 0-
11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement,
number, or the form or schedule and the date of its filing.
Amount previously paid: $116,187.63 Filing party: Building One Services
Corporation
Form or registration no.: Schedule Date filed: Feb. 19, 1999
13E-4
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INTRODUCTORY STATEMENT
This Amendment No. 1 modifies and supplements the Issuer Tender Offer
Statement on Schedule 13E-4 dated February 19, 1999 (the "Schedule 13E-4")
filed by Building One Services Corporation, a Delaware corporation (the
"Issuer"). The Issuer has decided to extend the expiration, withdrawal and
proration dates for its self-tender offer for shares (the "Shares") of its
common stock (the "Offer") and to modify the Offer. The Issuer is now offering
to purchase 25.5 million Shares at a price of $22.50 per Share net to the
seller in cash or, in the case of Shares underlying stock options having
exercise prices below $22.50 per Share ("Option Shares"), $22.50 per Share less
the exercise price per share on the terms and subject to the purchase of a
minimum of 21 million shares in the Offer, the receipt of financing and the
other conditions set forth in the Supplement to the Offer to Purchase (the
"Supplement to the Offer to Purchase") and the amended Letter of Transmittal
(the "Letter of Transmittal"). Copies of the Supplement to the Offer to
Purchase and the Letter of Transmittal are filed with the Securities and
Exchange Commission as Exhibits (a)(1) and (a)(2), respectively to this
Amendment No. 1 to the Schedule 13E-4.
The expiration and proration date for the Offer is now April 22, 1999.
ITEM 1. SECURITY AND ISSUER.
Section (b) is amended as follows:
(b) The securities that are the subject of the Offer are the Issuer's shares
of common stock, par value $.001 per share. As of March 23, 1999, there were
45,275,872 Shares issued and outstanding and options with exercise prices below
$22.50 per share for 3,640,081 Option Shares. The Issuer seeks to purchase up
to 25.5 million and Shares for $22.50 per Share net to the seller in cash or,
in the case of Option Shares, $22.50 per share less the exercise price per
share (and applicable withholding taxes). The Issuer's president and chief
executive officer and a director, Joseph M. Ivey, has advised the Issuer that
he will not tender any of the Shares he owns directly or through a trust or any
of his Option Shares, pursuant to the terms of the Offer. The Issuer's other
directors and executive officers have not advised the Issuer whether they will
tender Shares, including Option Shares, pursuant to the terms of the Offer.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in Section 8 of the Supplement to the Offer
to Purchase, "Background and Purpose of the Offer; Certain Effects of the
Offer," and Section 10 of the Supplement to the Offer to Purchase,"Source and
Amount of Funds," is incorporated herein by reference. The Issuer expects to
use its cash flow to repay the indebtedness to be incurred to finance the Offer
pursuant to the terms of such indebtedness.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
The Issuer does not intend to:
(a) acquire any additional securities of the Issuer or dispose of any of the
Shares or any other securities of the Issuer to any person (other than the
issuance of Shares and options for Shares to certain employees under the
Issuer's employee benefit plans, the issuance of Shares and options for Shares
in connection with the acquisition of businesses, the issuance of senior
subordinated notes due 2009 and the issuance of convertible subordinated notes
in the transaction with Boss Investment LLC, an affiliate of Apollo Management
L.P. ("Boss Investment"). The issuances of the senior subordinated notes and
the convertible subordinated notes are described in Section 8 of the Supplement
to the Offer to Purchase, "Background and Purpose of the Offer; Certain Effects
of the Offer.";
(b) engage in any extraordinary corporate transaction, such as a merger,
reorganization or liquidation other than the Offer described in the Supplement
to the Offer to Purchase;
(c) sell or transfer a material amount of assets of the Issuer or sell any of
its subsidiaries;
(d) change in any way the present Board of Directors or management of the
Issuer, except that Joseph M. Ivey became the Issuer's president and chief
executive officer on February 25, 1999 and, in connection with the Issuer's
sale of convertible subordinated notes, the Issuer has agreed to increase the
size of
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its Board to ten, appoint three designees of Boss Investment to the Board, and
change the composition of the Board so that it has ten directors.
(e) make any material change in the Issuer's present dividend rate or policy,
or indebtedness or capitalization other than as a result of the Offer;
(f) make any other material changes in the Issuer's corporate structure or
business;
(g) change the Issuer's charter, bylaws or instruments corresponding thereto
or take other actions that might impede the acquisition of control of the
Issuer by any person except for amendments to its restated certificate of
incorporation to permit the holders of the convertible subordinated notes to
vote together with the holders of the Shares on all matters submitted to the
holders of the common stock for a vote, to elect three members of the Board
(or, if the Board has more than ten members, no less than 30% of the
directors), to elect a majority of the directors if certain events of default
shall occur (to hold office only for so long as such events of default are
continuing) and to permit action by written consent only by all stockholders;
(h) cause the class of equity security of the Issuer to be delisted from the
Nasdaq National Market or from any national securities exchange or to cease to
be authorized to be quoted in an inter-dealer quotation system of a registered
national securities association;
(i) cause a class of equity security of the Issuer to become eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); or
(j) suspend the Issuer's obligations to file reports pursuant to Section
15(d) of the Exchange Act.
The Issuer has agreed to seek stockholder approval of the amendments to the
restated certificate of incorporation required by its agreement to sell
convertible subordinated notes to Boss Investment.
Item 4. Interest in Securities of the Issuer.
The information set forth in Section 9 of the Supplement to the Offer to
Purchase, "Interests of Directors and Executive Officers; Transactions and
Arrangements Concerning the Shares," is incorporated herein by reference.
Item 5. Contracts, Arrangements, Understandings or Relationships with Respect
to the Issuer's Securities.
The information set forth in "Information," Section 8 of the Supplement to
the Offer to Purchase, "Background and Purpose of the Offer; Certain Effects of
the Offer," Section 9 of the Supplement to the Offer to Purchase, "Interests of
Directors and Executive Officers; Transactions and Arrangements Concerning the
Shares," and Section 10 of the Supplement to the Offer to Purchase,"Source and
Amount of Funds," is incorporated herein by reference. Except as set forth in
the Supplement to the Offer to Purchase, neither the Issuer nor any person
controlling the Issuer nor, to the Issuer's knowledge, any of its directors or
executive officers, is a party to any contract, arrangement, understanding or
relationship with any other person relating, directly or indirectly, to the
Offer with respect to any securities of the Issuer (including, but not limited
to, any contract, arrangement, understanding or relationship concerning the
transfer or the voting of any such securities, joint ventures, loan or option
arrangements, puts or calls, guarantees of loans, guarantees against loss or
the giving or withholding of proxies, consents or authorizations).
Item 6. Persons Retained, Employed or to be Compensated.
The information set forth in Section 16 of the Supplement to the Offer to
Purchase, "Fees and Expenses," is incorporated herein by reference.
Item 7. Financial Information.
The information set forth in Section 11 of the Supplement to the Offer to
Purchase, "Certain Information About the Company," and Section 17 of the
Supplement to the Offer to Purchase, "Unaudited Pro Forma Financial
Statements," is incorporated herein by reference.
Item 8. Additional Information.
(a) Not applicable.
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(b) The information set forth in Section 13 of the Supplement to the Offer to
Purchase, "Certain Legal Matters," is incorporated herein by reference.
(c) The information set forth in Section 12 of the Supplement to the Offer to
Purchase, "Effect of the Offer on the Market for Shares; Registration
Under the Exchange Act," is incorporated herein by reference.
(d) Not applicable.
(e) The information set forth in Exhibits (a)(1) through (a)(11) is
incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1)Form of Supplement to the Offer to Purchase, dated April 6, 1999.
(a)(2)Form of Letter of Transmittal to Tender Shares of Common Stock, dated
April 6, 1999.
(a)(3)Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(4)Form of Notice of Guaranteed Delivery.
(a)(5)Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
(a)(6) Form of Letter to Clients for Use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(7) Form of Letter to Stockholders of the Issuer dated April 6, 1999, from
Joseph M. Ivey, President and Chief Executive Officer.
(a)(8) Form of press release dated March 23, 1999 (Exhibit 99.1 of the
Company's Current Report on Form 8-K dated March 23, 1999 is hereby
incorporated by reference).
(a)(9) (1) Form of Memorandum dated April 6, 1999 from Issuer to Holders of
Building One Services Corporation Options; (2) Instructions for Tender
of Options; and (3) Form of Option Tender Enrollment Form.
(a)(10) (1) Form of Memorandum dated April 6, 1999 from Issuer to Participants
in the Employee Stock Purchase Plan; and (2) Form of Tender
Instruction Form for Shares in the Building One Services Corporation
Employee Stock Purchase Plan; and (3) Form of Notice to Participants
in the Building One Services Corporation Employee Stock Purchase Plan
from American Stock Transfer & Trust Company dated April 6, 1999.
(a)(11) Form of Memorandum dated April 6, 1999 from the Issuer to Stockholders
who Received Shares in Connection with the Sale of a Business.
(b)(1) Bank Commitment Letter, dated March 22, 1999, from Bankers Trust
Company relating to the $350 million revolving credit facility.
(b)(2) Form of Indenture for 7 1/2% Convertible Junior Subordinated Debentures
Due 2012 (Exhibit 99.4 of the Company's Current Report on Form 8-K
dated March 23, 1999 is hereby incorporated by reference).
(b)(3) Securities Purchase Agreement, dated as of March 22, 1999, between Boss
Investment LLC and Building One Services Corporation (Exhibit 99.2 of
the Company's Current Report on Form 8-K dated March 23, 1999 is hereby
incorporated by reference).
(b)(4) Investors' Rights Agreement, dated March 22, 1999, between Building One
Services Corporation and Certain of its Investors (Exhibit 99.3 of the
Company's Current Report on Form 8-K dated March 23, 1999 is hereby
incorporated by reference).
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(b)(5) Commitment Letter, dated March 25, 1999, from Goldman Sachs Credit
Partners LP and Citicorp USA, Inc. relating to the $350 million
revolving credit facility.
(b)(6) Highly confident letter, dated March 22, 1999, from BT Alex. Brown
Incorporated relating to the sale of $200 million of senior
subordinated notes.
(d) No written opinion has been prepared by legal counsel at the request of
the Issuer pertaining to the tax consequences of the tender offer.
(f) One or more of the officers of the Issuer may orally solicit security
holders on behalf of the Issuer, but no written instruction, form or
other material has been furnished to such persons for their use,
directly or indirectly, in connection with the tender offer.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
BUILDING ONE SERVICES CORPORATION
By: /s/ Joseph M. Ivey
------------------------------------
Name: Joseph M. Ivey
Title: President and Chief Executive
Officer
Dated: April 6, 1999
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
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<S> <C>
(a)(1) Form of Supplement to Offer to Purchase, dated April 6, 1999.
(a)(2) Form of Letter of Transmittal to Tender Shares of Common Stock, dated April 6, 1999.
(a)(3) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.
(a)(4) Form of Notice of Guaranteed Delivery.
(a)(5) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(6) Form of Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(7) Form of Letter to Stockholders of the Issuer dated April 6, 1999, from Joseph M. Ivey,
President and Chief Executive Officer.
(a)(8) Form of press release dated March 23, 1999 (Exhibit 99.1 of the Company's Current Report on
Form 8-K dated March 23, 1999 is hereby incorporated by reference).
(a)(9) (1) Form of Memorandum dated April 6, 1999 from Issuer to Holders of Building One
Services Corporation Options; (2) Instructions for Tender of Options; and (3) Form of Option Tender
Enrollment Form.
(a)(10) (1) Form of Memorandum dated April 6, 1999 from Issuer to Participants in the Employee
Stock Purchase Plan; and (2) Form of Tender Instruction Form for Shares in the Building One
Services Corporation Employee Stock Purchase Plan; and (3) Form of Notice to Participants in the
Building One Services Corporation Employee Stock Purchase Plan from American Stock Transfer &
Trust Company dated April 6, 1999.
(a)(11) Form of Memorandum dated April 6, 1999 from the Issuer to Stockholders who Received
Shares in Connection with the Sale of a Business.
(b)(1) Bank Commitment Letter, dated March 22, 1999, from Bankers Trust Company, relating to the $350
million revolving credit facility.
(b)(2) Form of Indenture for 7 1/2% Convertible Junior Subordinated Debentures Due 2012 (Exhibit 99.4 of
the
Company's Current Report on Form 8-K dated March 23, 1999 is hereby incorporated by reference).
(b)(3) Securities Purchase Agreement, dated as of March 22, 1999, between Boss Investment LLC and
Building One Services Corporation (Exhibit 99.2 of the Company's Current Report on Form 8-K
dated March 23, 1999 is hereby incorporated by reference).
(b)(4) Investors' Rights Agreement, dated March 22, 1999, between Building One Services Corporation
and Certain of its Investors (Exhibit 99.3 of the Company's Current Report on Form 8-K dated
March 23, 1999 is hereby incorporated by reference).
(b)(5) Commitment Letter, dated March 25, 1999, from Goldman Sachs Credit Partners LP and
Citicorp USA, Inc. relating to the $350 million revolving credit facility.
(b)(6) Highly confident letter, dated March 22, 1999, from BT Alex. Brown Incorporated relating to the
sale of $200 million of senior subordinated notes.
</TABLE>
<PAGE>
Supplement to the Original Offer to Purchase Dated February 19, 1999
[LOGO APPEARS HERE]
OFFER TO PURCHASE FOR CASH UP TO
25,500,000 SHARES
OF COMMON STOCK
AT A PURCHASE
PRICE OF $22.50 PER SHARE
The offer, proration period and withdrawal rights expire at 11:59 p.m., New
York City time, on April 22, 1999, unless the offer is extended.
Building One Services Corporation, a Delaware corporation (the "Compa-
ny"), has modified its tender offer commenced on February 19, 1999. It now in-
vites its stockholders to tender shares of their common stock, par value $.001
per share ("Shares"), to the Company at a price of $22.50 per Share in cash,
upon the terms and subject to the conditions set forth in this Supplement to
the Offer to Purchase, the related Letter of Transmittal and certain other rel-
evant documents (which together constitute the "Offer"). As part of the Offer,
the Company is permitting tenders of (a) Shares in connection with the condi-
tional exercise of the stock options held by employees as of March 23, 1999
("Options") and having exercise prices below $22.50 per Share ("Option
Shares"), (b) Shares that were acquired as of December 31, 1998 through the
Company's 1997 Employee Stock Purchase Plan ("ESPP Shares"), (c) Shares that
were acquired as of March 23, 1999 in connection with the sale of a business to
the Company under agreements with the Company that restrict (or restricted pre-
viously) their transfer for periods of at least one year ("Restricted Shares"),
and (d) Shares that are pledged to the Company to secure potential future obli-
gations ("Pledged Shares"). Although the Company is not obligated to purchase
Restricted Shares, the Company will purchase up to, but not more than, 50% of
any one person's Restricted Shares in the Offer. The Company will pay $22.50
per Share, net to the seller in cash or, in the case of Option Shares,
$22.50 per Share less the exercise price per Share and applicable withholding
taxes, for 25,500,000 Shares validly tendered and not withdrawn, upon the terms
and subject to the conditions of the Offer, including the proration terms here-
of. The Company reserves the right, in its sole discretion and subject to cer-
tain restrictions, to purchase more than 25,500,000 Shares pursuant to the Of-
fer.
This Offer is conditioned on a minimum of 21,000,000 Shares being tendered,
the receipt of financing on terms consistent with our descriptions of the
proposed financings in this
Supplement to the Offer to Purchase and certain other conditions.
As of March 23, 1999, the Company had outstanding 45,275,872 Shares, Op-
tions with exercise prices below $22.50 per Share for 3,640,081 Option Shares
and warrants with exercise prices below $22.50 per Share to purchase 3,080,000
Shares (the "Warrants").
The Shares are quoted on the Nasdaq Stock Market ("Nasdaq") under the
symbol "BOSS." On February 5, 1999, the last full trading day on Nasdaq prior
to the announcement by the Company of its intention to make the original offer,
the closing sales price per Share was $20 1/8. On March 22, 1999, the last full
trading day on Nasdaq prior to the announcement by the Company of its intention
to modify the original offer, the closing sales price per Share was $18 13/16.
The Company urges stockholders to obtain current quotations of the market price
of the Shares. See Section 7.
<PAGE>
The Board of Directors of the Company has approved the Offer. However,
stockholders must make their own decisions whether to tender Shares and, if so,
how many Shares to tender. Neither the Company nor its Board of Directors makes
any recommendation as to whether to tender or refrain from tendering Shares.
This transaction has not been approved or disapproved by the Securities
and Exchange Commission, nor has the Commission passed upon the fairness or
merits of this transaction or upon the accuracy or adequacy of the information
contained in this document. Any representation to the contrary is unlawful.
The Date of this Supplement to the Offer to Purchase is April 6, 1999.
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IMPORTANT
General
The information agent for the Offer is MacKenzie Partners, Inc. ("MacKen-
zie Partners"), 156 Fifth Avenue, New York, NY 10010 (telephone number 800/322-
2885). Except as discussed below, any stockholders desiring to tender all or
any portion of their Shares should either:
(i)complete and sign the Letter of Transmittal or a facsimile thereof in
accordance with the instructions in the Letter of Transmittal, mail or
deliver it with any required signatureguarantee, or an agent's message
(in the case of book-entry transfer), and any other required documents
to Harris Trust Company of New York ("Harris Trust"), and either mail
ordeliver the stock certificates for such Shares to Harris Trust (with
all such other documents) or follow the procedure for book-entry deliv-
ery set forth in Section 3; or
(ii)request a broker, dealer, commercial bank, trust company or other nomi-
nee to effect the transaction for such stockholder.
A stockholder having Shares registered in the name of a broker, dealer, commer-
cial bank, trustcompany or other nominee must contact that broker, dealer, com-
mercial bank, trust company or other nominee if such stockholder desires to
tender such Shares.
Stockholders who desire to tender Shares and whose certificates for such
Shares are not immediately available or who cannot comply with the procedure
for book-entry transfer on a timely basis or whose other required documentation
cannot be delivered to Harris Trust, in any case, by the expiration of the
Offer should tender such Shares by following the procedures for guaranteed
delivery set forth in Section 3. To effect a valid tender of Shares,
stockholders must validly complete the Letter of Transmittal.
Questions and requests for assistance or for additional copies of this
Supplement to the Offer to Purchase, the Letter of Transmittal or the Notice of
Guaranteed Delivery may be directed to MacKenzie Partners.
Special Instructions for Holders of Certain Types of Shares
Holders of Options, ESPP Shares, Restricted Shares or Pledged Shares who
wish to participate in the Offer must follow the instructions and procedures
set forth in the separate documents described below. These separate documents
are also part of the terms of the Offer.
. Holders of Options, ESPP Shares, Restricted Shares or Pledged
Shares should read this Supplement to the Offer to Purchase and
the related Letter of Transmittal, as they contain the terms of
the Offer. The special instructions in the documents referred to
below supplement the information contained in this Supplement to
the Offer to Purchase and the related Letter of Transmittal.
Holders of Options or ESPP Shares should also see "Certain United
States Federal Income Tax Consequences--Tax Considerations for
Holders of Options or ESPP Shares" in Section 14 for information
about tax considerations and Section 5 for special payment
procedures that apply to such holders if they participate in the
Offer.
. Holders of Options who wish to tender Option Shares in the Offer
should review the information and must follow the instructions
contained in the materials printed on yellow paper.
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. Holders of ESPP Shares who wish to tender ESPP Shares in the Offer
should review the information and must follow the instructions
contained in the materials printed on green paper.
. Holders of Restricted Shares or Pledged Shares who wish to tender
Shares in the Offer should review the information and must follow
the instructions contained in the materials printed on purple
paper.
Additional copies of the special instructions may be obtained from Mac-
Kenzie Partners.
* * *
The Offer is not being made to (nor will any tender of Shares be ac-
cepted from or on behalf of) holders in any jurisdiction in which the making
of the Offer or the acceptance of any tender of Shares therein would not be in
compliance with the laws of such jurisdiction. However, the Company may, at
its discretion, take such action as it may deem necessary for the Company to
make the Offer in any such jurisdiction and extend the Offer to holders in
such jurisdiction.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
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<C> <S> <C>
Summary................................................................. 6
Introduction............................................................ 8
The Offer............................................................... 9
1. Number of Shares; Proration.................................. 9
2. Tenders by Owners of Fewer than 100 Shares................... 12
3. Procedure for Tendering Shares............................... 12
4. Withdrawal Rights............................................ 18
5. Purchase of Shares and Payment of Purchase Price............. 18
6. Certain Conditions of the Offer.............................. 21
7. Price Range of Shares........................................ 23
Background and Purpose of the Offer; Certain Effects of the
8. Offer........................................................ 23
9. Interests of Directors and Executive Officers; Transactions
and Arrangements Concerning the Shares....................... 25
10. Source and Amount of Funds................................... 26
11. Certain Information about the Company........................ 29
Effect of the Offer on the Market for Shares; Registration
12. under the Exchange Act....................................... 34
13. Certain Legal Matters........................................ 34
14. Certain United States Federal Income Tax Consequences........ 35
15. Extension of the Offer; Termination; Amendment............... 39
16. Fees and Expenses............................................ 40
17. Unaudited Pro Forma Financial Statements..................... 41
18. Miscellaneous................................................ 46
</TABLE>
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SUMMARY
This general summary is provided for the convenience of the Company's
stockholders and is qualified in its entirety by reference to the full text and
more specific details of this Supplement to the Offer to Purchase.
Number of Shares to be Purchased
Up to 25,500,000 Shares, including Op-
tion Shares, ESPP Shares, Restricted
Shares and Pledged Shares.
Purchase Price
$22.50 per Share, net to the seller in
cash, or, in the case of Option
Shares, $22.50 per Share less the ex-
ercise price per Share and the appli-
cable tax withholding amount.
Minimum Tender 21,000,000 Shares.
How to Tender Shares See Section 3. Call the Information
Agent, MacKenzie Partners, at 800/322-
2885 or consult your broker for assis-
tance.
Brokerage Commissions None.
Stock Transfer Tax None, if the Company pays the regis-
tered holder.
Expiration Date
April 22, 1999, at 11:59 p.m., New
York City time, unless extended by the
Company.
Payment Date As soon as practicable after the Expi-
ration Date.
Position of the Company Neither the Company nor its Board of
Directors makes any recommendation to
any stockholder as to whether to ten-
der or refrain from tendering Shares.
Withdrawal Rights Tendered Shares may be withdrawn at
any time until 11:59 p.m., New York
City time, on April 22, 1999 (unless
the Offer is extended by the Company)
and, unless the Company has accepted
the Shares for payment, at any time
after 12:00 midnight, New York City
time, on April 16, 1999. See Section
4.
Proration If all of the eligible Shares (exclud-
ing Shares underlying Warrants) and
1,800,000 of the Option Shares under-
lying Options with exercise prices of
less than $22.50 are validly tendered
by stockholders in the Offer, the pro-
ration percentage (that is, the per-
centage of validly tendered Shares
that would be purchased in the Offer)
would be approximately 54%. If more
than 25,500,000 shares are validly
tendered, the Company will buy:
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(i)
first, all Shares unconditionally
tendered by holders of fewer than 100
Shares (including Restricted Shares)
who check the "Odd Lots" box in the ap-
propriate documents;
(ii)
second, on a pro rata basis, all
other Shares unconditionally tendered
and all Shares conditionally tendered
for which the condition can be satis-
fied, except that the Company will not
buy more than 50% of any one person's
Restricted Shares as a result of the
pre-existing contractual restrictions
on such Shares;
(iii)
third, if the Company does not
buy certain tendered Restricted Shares
because of the 50% limitation set forth
above, all of such other Shares not
purchased pursuant to (ii) above except
Restricted Shares, on a pro rata basis;
(iv)
finally, if the number of Shares
acquired under (i), (ii) and (iii) is
less than 25,500,000, such additional
Shares to total 25,500,000, by lot from
stockholders who conditionally tendered
their Shares for which the condition
could not be met and in the respective
amounts that each such stockholder in-
dicated as the minimum number of Shares
to be purchased by the Company.
The Company will return all of the
Shares that it does not purchase (other
than Pledged Shares),including Shares
not purchased because of proration or
conditional tenders and will return all
Options not exercised because of
proration.
Questions Call MacKenzie Partners at 800/322-2885
or consult your broker.
The Company has not authorized any person to make any recommendation on
behalf of the Company as to whether stockholders should tender or refrain from
tendering Shares pursuant to the Offer. The Company has not authorized any per-
son to give any information or to make any representation in connection with
the Offer on behalf of the Company other than those contained in this Supple-
ment to the Offer to Purchase, the Letter of Transmittal or the other documents
sent to you in connection with the Offer. Do not rely on any such recommenda-
tion or any such information or representations, if given or made, as having
been authorized by the Company.
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To the holders of shares of common stock of Building One Services Corporation:
INTRODUCTION
The Company invites its stockholders to tender up to 25,500,000 Shares to
the Company at a price of $22.50 per Share net to the seller in cash, or, in
the case of Option Shares, $22.50 per Share, less the exercise price per Share
and applicable withholding taxes, upon the terms and subject to the conditions
set forth in this Offer. As part of the Offer, the Company invites tenders of
(a) Option Shares, (b) ESPP Shares, (c) Restricted Shares, and (d) Pledged
Shares. The Company will not purchase, however, more than 50% of any one
person's Restricted Shares.
The Company will pay $22.50 per Share, net to the seller in cash, or, in
the case of Option Shares, $22.50 per Share, less the exercise price per Share
and applicable withholding taxes, for all Shares validly tendered prior to the
Expiration Date (as defined in Section 1) and not withdrawn, upon the terms and
subject to the conditions of the Offer, including the proration terms described
below. The Company reserves the right, in its sole discretion, to purchase more
than 25,500,000 Shares.
The Offer is conditioned on a minimum of 21,000,000 Shares being ten-
dered, the receipt of financing on terms consistent with our descriptions of
the proposed financings included in this Supplement to the Offer to Purchase
and certain other conditions. See Section 6.
If, before the Expiration Date, more than 25,500,000 Shares (or such
greater number of Shares as the Company may elect to purchase) are validly
tendered and not withdrawn, the Company will, upon the terms and subject to the
conditions of the Offer, purchase Shares subject to the priorities and
proration terms described in this Supplement to the Offer to Purchase.
The $22.50 per Share purchase price will be paid net to the tendering
stockholder in cash for all Shares purchased, except that holders of Options
will be permitted to tender in connection with the conditional "cashless"
exercises of such Options and receive the difference between $22.50 and the
exercise price, less applicable withholding taxes, for each Option Share
purchased by the Company. Tendering stockholders will not be obligated to pay
brokerage commissions, solicitation fees or, subject to Instruction 6 of the
Letter of Transmittal, stock transfer taxes on the Company's purchase of Shares
pursuant to the Offer. However, any tendering stockholder who fails to
complete, sign and return to Harris Trust the Substitute Form W-9 that is
included with the Letter of Transmittal may be subject to required backup
federal income tax withholding of 31% of the gross proceeds payable to such
stockholder pursuant to the Offer. See Section 3.
The Board of Directors of the Company has approved the Offer. However,
stockholders must make their own decisions whether to tender Shares and, if so,
how many Shares to tender. Neither the Company nor its Board of Directors makes
any recommendation to any stockholder as to whether to tender or refrain from
tendering Shares.
On February 8, 1999, the Company announced its intention to offer to pur-
chase Shares. The original offer was commenced on February 19, 1999. On March
23, 1999, the Company announced its intention to modify the original offer to
increase the number of Shares it was offering to purchase to 25,500,000 from
24,365,891 and to reduce the purchase price to $22.50 per Share from $25.00 per
Share. The Company made this decision as a result of the decreases in the mar-
ket price of the Shares
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after the commencement of the original offer and the increasing cost of the
financing needed to fund the original offer. The Company also announced on
March 23, 1999 that it had agreed to sell $100 million of convertible subordi-
nated notes to Boss Investment LLC, an affiliate of Apollo Management, L.P.
("Boss Investment"), to fund a portion of the Offer.
The Company believes that its purchase of Shares through the Offer will
(i) provide value to its stockholders; (ii) reconfigure the Company's balance
sheet to provide a higher return on equity; and (iii) afford to those stock-
holders who desire liquidity an opportunity to sell their Shares (subject to
proration) at a premium to recent market prices and without the usual transac-
tion costs associated with open market sales. After the Offer is completed,
the Company expects to have sufficient cash flow and access to other sources
of capital to continue to implement its business plan, fund its operations and
make acquisitions.
Stockholders who are participants in the Company's 1997 Employee Stock
Purchase Plan (the "Purchase Plan") and own ESPP Shares may instruct American
Stock Transfer & Trust Company (the "ESPP Agent"), as administrator of the
Purchase Plan, to tender part or all of the Shares credited to their accounts
as of December 31, 1998 in the Purchase Plan by following the instructions set
forth in "Procedure for Tendering Shares--Tenders by Holders of Options, ESPP
Shares, Restricted Shares and Pledged Shares" in Section 3.
Based on the exercise prices of the Options eligible to participate in
the Offer, the Company estimates that 900,000 Option Shares may be purchased
in the Offer. Accordingly, based on this assumption and the assumption that no
Shares underlying the Warrants will be tendered, the Company believes that it
will purchase 24,600,000 Shares, or approximately 54% of its outstanding
Shares as of March 23, 1999. As of March 23, 1999, the Company had outstanding
45,275,872 Shares, Options with exercise prices below $22.50 per share for
3,640,081 Option Shares and Warrants to purchase 3,080,000 Shares. The
25,500,000 Shares that the Company is offering to purchase represent 49% of
the outstanding Shares, Option Shares and Shares underlying the Warrants as of
March 23, 1999.
The Shares are quoted on Nasdaq under the symbol "BOSS." On February 5,
1999, the last full trading day on Nasdaq prior to the announcement by the
Company of its intention to make the original offer, the closing sales price
per Share was $20 1/8. On March 22, 1999, the last full trading day on Nasdaq
prior to the announcement by the Company of its intention to modify the origi-
nal offer, the closing sales price per Share was $18 13/16. The Company urges
stockholders to obtain current quotations of the market price of the Shares.
THE OFFER
1. NUMBER OF SHARES; PRORATION
Upon the terms and subject to the conditions of the Offer, the Company
will accept for payment (and thereby purchase) 25,500,000 Shares or such
lesser number of Shares as are validly tendered before the Expiration Date
(and not withdrawn in accordance with Section 4) at a net cash price of $22.50
per Share. Holders of Options will be permitted to tender in connection with
conditional "cashless" exercises of such Options and will receive the differ-
ence between $22.50 and the exercise price, less applicable withholding taxes
for each Option Share purchased by the Company. The term "Expiration Date"
means 11:59 p.m., New York City time, on April 22, 1999, unless and until the
Company shall have extended the period of time during which the Offer is open,
in which
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event the term "Expiration Date" shall refer to the latest time and date at
which the Offer, as so extended by the Company, shall expire. Under the agree-
ment with Boss Investment, the Company shall, unless otherwise requested by
Boss Investment, and may, without the prior written consent of Boss Investment,
extend the Offer periodically through June 20, 1999, if at the Expiration Date
the conditions to the Offer are not satisfied or waived, until such time as all
such conditions are satisfied or waived. See Section 15 for a description of
the Company's right to extend the time during which the Offer is open and to
delay, terminate or amend the Offer.
The Company reserves the right, in its sole discretion, to purchase more
than 25,500,000 Shares pursuant to the Offer. See Section 15. In accordance
with applicable regulations of the
Securities and Exchange Commission (the "SEC"), the Company may purchase
pursuant to the Offer an additional amount of Shares not to exceed 2% of the
outstanding Shares without amending or extending the Offer. If (i) the Company
increases or decreases the price to be paid for Shares, the Company increases
the number of Shares being sought and such increase in the number of Shares
being sought exceeds 2% of the outstanding Shares, or the Company decreases the
number of Shares being sought; and (ii) the Offer is scheduled to expire at any
time earlier than the expiration of a period ending on the tenth business day
from, and including, the date that notice of such increase or decrease is first
published, sent or given in the manner specified in Section 15, the Offer will
be extended until the expiration of such period of ten business days. For
purposes of the Offer, a "business day" means any day other than a Saturday,
Sunday or federal holiday until 5:00 p.m., New York City time, on such day.
The Offer is conditioned on a minimum of 21,000,000 Shares being ten-
dered, the receipt of financing on terms consistent with our descriptions of
the proposed financings in this Supplement to the Offer to Purchase and certain
other conditions. See Section 6.
The Company will pay the $22.50 purchase price per Share or, in the case
of Option Shares, $22.50 per Share, less the exercise price per Share and the
applicable tax withholding amount, for all Shares validly tendered prior to the
Expiration Date and not withdrawn, upon the terms and subject to the conditions
of the Offer. The Company will return, at its own expense, as promptly as prac-
ticable after the Expiration Date all of the Shares (other than Pledged Shares)
that it does not purchase, including Shares not purchased because of proration
or conditional tenders, and all of the Options that are not exercised because
of proration.
If the number of Shares validly tendered and not withdrawn prior to the
Expiration Date is at least 21,000,000 Shares, but less than or equal to
25,500,000 Shares (or such greater number of Shares as the Company may elect to
purchase), the Company will, upon the terms and subject to the conditions of
the Offer, purchase at the $22.50 purchase price per Share all of the Shares so
tendered.
Priority. Upon the terms and subject to the conditions of the Offer, in
the event that prior to the Expiration Date more than 25,500,000 Shares (or
such greater number of Shares as the Company may elect to purchase pursuant to
the Offer) are validly tendered and not withdrawn, the Company will purchase
such validly tendered Shares in the following order of priority:
(i)
first, all of the Shares validly and unconditionally tendered prior to
the Expiration Date by any Odd Lot Owner (as defined in Section 2) who:
(a) tenders all of the Shares beneficially owned by such Odd Lot Owner
(partial tenders will not qualify for this preference); and
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(b) completes the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed
Delivery; and
(ii)second, on a pro rata basis, all of the other Shares validly and uncon-
ditionally tendered, and all of the Shares validly and conditionally
tendered, for which the condition can be satisfied, except that, as a
result of pre-existing contractual arrangements between the Company and
the holders of Restricted Shares, the Company will not buy more than 50%
of any one person's Restricted Shares; and
(iii) third, if the Company does not buy certain tendered Restricted Shares
because of the 50% limitation set forth above, all of such other Shares
not purchased pursuant to (ii) above except Restricted Shares, on a pro
rata basis; and
(iv)finally, if the number of Shares acquired under (i), (ii) and (iii) is
less than 25,500,000, such additional Shares to total 25,500,000, by lot
from stockholders who conditionally tender their Shares for which the
condition could not be met and in the respective amounts that each such
stockholder indicated as the minimum number of Shares to be purchased by
the Company.
Proration. In the event that proration of tendered Shares is required,
the Company will determine the proration factor as promptly as practicable
after the Expiration Date. Proration for each stockholder tendering Shares
(other than Odd Lot Owners and stockholders whose conditional tender terms
cannot be met) shall be based on the ratio of the number of Shares tendered by
such stockholder to the total number of Shares tendered by all of the
stockholders other than Odd Lot Owners and stockholders whose conditional
tender terms cannot be met. The same proration factor applies to stockholders
tendering Restricted Shares, except that the Company will not purchase more
than 50% of any one person's Restricted Shares. To the extent that the Company
does not buy tendered Restricted Shares because of this 50% limitation, the
Company will determine a new proration factor equal to the ratio of the number
of tendered Restricted Shares not purchased to the total number of Shares
tendered by all of the stockholders other than Odd Lot Owners and holders of
tendered Restricted Shares who, based on initial proration, have reached the
50% limitation. These ratios will be applied to stockholders tendering Shares
(other than Odd Lot Owners and, where applicable, holders of Restricted Shares)
to determine the number of Shares that will be purchased from each such
stockholder pursuant to the Offer.
Option Shares, Restricted Shares and the ESPP Shares that are validly
tendered will be subject to the following additional administrative rules:
. The Company will purchase Option Shares in the order in which the
Option Shares had already vested or would have vested under the
Option's original vesting schedule. The Compensation Committee has
accelerated the vesting of all of the Options to permit tenders of
Option Shares in connection with conditional exercises of Options
in the Offer.
. The Company will purchase Restricted Shares in the order in which
their restrictions lapse.
. For holders of ESPP Shares, the Company will first purchase the
ESPP Shares that have been held the longest.
The Company expects to be able to announce the final results of such pro-
ration no later than approximately seven business days after the Expiration
Date.
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As described in Section 14, the number of Shares that the Company will
purchase from a stockholder may affect the United States federal income tax
consequences to that stockholder and therefore, may be relevant to a stockhold-
er's decision whether to tender Shares. The Letter of Transmittal affords each
tendering stockholder the opportunity to designate a minimum number of Shares
that the stockholder wants to tender, if any are purchased.
This Supplement to the Offer to Purchase and the related Letter of Trans-
mittal will be mailed to record holders of Shares as of April 6, 1999 and will
be furnished to brokers, banks and similar persons whose names, or the names of
whose nominees, appear on the Company's stockholder list or, if applicable, who
are listed as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of Shares.
2.TENDERS BY OWNERS OF FEWER THAN 100 SHARES
The Company, upon the terms and subject to the conditions of the Offer,
will accept for purchase, without proration, all of the Shares validly tendered
and not withdrawn on, or prior to, the Expiration Date by, or on behalf of,
stockholders who owned beneficially as of the close of business on March 23,
1999 and continued to own beneficially as of the date of their tender an aggre-
gate of fewer than 100 Shares and so certified in the appropriate place on the
Letter of Transmittal and, if applicable, on the Notice of Guaranteed Delivery
("Odd Lot Owners"). To avoid proration, however, an Odd Lot Owner must validly
tender all of the Shares that such Odd Lot Owner beneficially owns; partial
tenders will not qualify for this preference. This preference is not available
to partial tenders or to owners of 100 or more Shares in the aggregate, even if
such owners have separate stock certificates for fewer than 100 of such Shares.
Any Odd Lot Owner wishing to tender all of the Shares beneficially owned by
such stockholder pursuant to this Offer must complete the box captioned "Odd
Lots" in the Letter of Transmittal and, if applicable, on the Notice of Guaran-
teed Delivery. See Section 3. Stockholders owning an aggregate of less than 100
Shares whose Shares are purchased pursuant to the Offer will avoid both the
payment of brokerage commissions and any applicable odd lot discounts payable
on a sale of their Shares in transactions on Nasdaq.
The Company also reserves the right, but will not be obligated, to pur-
chase all of the Shares duly tendered by any stockholder who tendered all of
the Shares beneficially owned and who, as a result of proration, would then
beneficially own an aggregate of fewer than 100 Shares. If the Company exer-
cises this right, it will increase the number of Shares that it is offering to
purchase in the Offer by the number of Shares purchased through the exercise of
such right.
3.PROCEDURE FOR TENDERING SHARES
Proper Tender of Shares. For Shares other than Option Shares and ESPP
Shares to be validly tendered pursuant to the Offer:
(i)
the certificates for such Shares, other than Pledged Shares (or
confirmation of receipt of such Shares pursuant to the procedures for
book-entry transfer set forth below), together with a properly completed
and duly executed Letter of Transmittal (or manually signed facsimile
thereof) with any required signature guarantees, or an agent's message
(in the case of any book-entry transfer), and any other documents
required by the Letter of Transmittal, must be received prior to 11:59
p.m., New York City time, on the Expiration Date by Harris Trust at its
address set forth on the back cover of this Supplement to the Offer to
Purchase; or
(ii)
the tendering stockholder must comply with the guaranteed delivery
procedure set forth below.
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Holders of Options or ESPP Shares should not complete the Letter of
Transmittal but should follow the instructions for tendering Shares discussed
in the instructions referred to below. See "--Tenders by Holders of Options,
ESPP Shares, Restricted Shares and Pledged Shares." In addition, Odd Lot Owners
who tender all of their Shares must complete the section entitled "Odd Lots" on
the Letter of Transmittal and, if applicable, on the Notice of Guaranteed De-
livery, in order to qualify for the preferential treatment available to Odd Lot
Owners as set forth in Section 2.
It is a violation of Section 14(e) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and Rule 14e-4 promulgated thereunder,
for a person to tender Shares for such person's own account unless the person
so tendering:
(i) owns such Shares; or
(ii)owns other securities convertible into or exchangeable for Shares or
owns an option, warrant or right to purchase Shares and intends to
acquire such Shares for tender by conversion, exchange or exercise of
such option, warrant or right.
Section 14(e) and Rule 14e-4 contain a similar restriction applicable to a ten-
der or guarantee of a tender on behalf of another person.
The acceptance of Shares by the Company for payment will constitute a
binding agreement between the tendering stockholder and the Company upon the
terms and subject to the conditions of the Offer, including the tendering
stockholder's representation that such stockholder owns the Shares being ten-
dered within the meaning of Rule 14e-4, and the tender of such Shares complies
with Rule 14e-4.
Tenders by Holders of Options, ESPP Shares, Restricted Shares or Pledged
Shares. Holders of Options and ESPP Shares should not complete the Letter of
Transmittal. They should complete the forms discussed in the documents referred
to below. In addition, holders of Options, ESPP Shares, Restricted Shares or
Pledged Shares who wish to participate in the Offer must follow the
instructions and procedures set forth in the separate documents described
below. These separate documents are also part of the terms of the Offer.
. Holders of Options, ESPP Shares, Restricted Shares or Pledged
Shares should read this Supplement to the Offer to Purchase and
the related Letter of Transmittal, as they contain the terms of
the Offer. The special instructions in the documents referred to
below supplement the information contained in this Supplement to
the Offer to Purchase and the related Letter of Transmittal.
Holders of Options or ESPP Shares should also see "Certain United
States Federal Income Tax Consequences--Tax Considerations for
Holders of Options or ESPP Shares" in Section 14 for information
about tax considerations and Section 5 for special payment
procedures that apply to such holders if they participate in the
Offer.
. Holders of Options who wish to tender Option Shares in the Offer
should review the information and must follow the instructions
contained in the materials printed on yellow paper.
. Holders of ESPP Shares who wish to tender ESPP Shares in the Offer
should review the information and must follow the instructions
contained in the materials printed on green paper.
. Holders of Restricted Shares and Pledged Shares who wish to tender
Shares in the Offer should review the information and must follow
the instructions contained in the materials printed on purple
paper.
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In addition, see Section 5 below, "Purchases of Shares and Payment of Purchase
Price--Special Procedures for Holders of Options, ESPP Shares, Restricted
Shares or Pledged Shares."
Conditional Tender of Shares. Under certain circumstances and subject to
the exceptions set forth in Section 1, the Company may reduce on a pro rata ba-
sis the number of Shares purchased pursuant to the Offer. As discussed in Sec-
tion 14, the number of Shares to be purchased from a particular stockholder
might affect the tax treatment of such purchase to such stockholder and such
stockholder's decision whether to tender. Accordingly, a stockholder may tender
Shares subject to the condition that a specified minimum number of such hold-
er's Shares must be purchased if any such Shares so tendered are purchased, and
any stockholder desiring to make such a conditional tender must so indicate in
the box captioned "Conditional Tender" in the Letter of Transmittal or, if ap-
plicable, the Notice of Guaranteed Delivery. Holders of ESPP Shares who wish to
make conditional tenders should so indicate in the section captioned "Condi-
tional Tender" in the "Tender Instruction Form for Shares in Building One Serv-
ices Corporation's 1997 Employee Stock Purchase Plan."
Any tendering stockholders wishing to make a conditional tender must cal-
culate and appropriately indicate such minimum number of Shares and each stock-
holder is urged to consult with his own tax advisor. If the effect of accepting
tenders on a pro rata basis would be to reduce the number of Shares to be pur-
chased from any stockholder below the minimum number so specified, such tender
will automatically be regarded as withdrawn (except as provided in the next
paragraph) and all Shares tendered by such stockholder pursuant to such Letter
of Transmittal or Notice of Guaranteed Delivery will be returned as soon as
practicable thereafter.
If conditional tenders would otherwise be so regarded as withdrawn and
would cause the total number of Shares to be purchased to fall below the number
of Shares sought by the Company, then, to the extent feasible, the Company may
select enough of such conditional tenders that would otherwise have been so
withdrawn to permit the Company to purchase the number of Shares sought by the
Company. In selecting among such conditional tenders, the Company will select
by lot and will limit its purchase in each case to the designated minimum num-
ber of Shares to be purchased.
Signature Guarantees and Method of Delivery. No signature guarantee is
required on the Letter of Transmittal (i) if the Letter of Transmittal is
signed by the registered holder of the Shares (which term, for purposes of this
Section, includes any participant in The Depository Trust Company (the "Book-
Entry Transfer Facility") whose name appears on a security position listing as
the holder of the Shares) tendered therewith and payment and delivery are to be
made directly to such registered holder; or (ii) if Shares are tendered for the
account of a member firm of a registered national securities exchange, a member
of the National Association of Securities Dealers, Inc. or a commercial bank or
trust company (not a savings bank or savings and loan association) having an
office, branch or agency in the United States (each such entity being hereinaf-
ter referred to as an "Eligible Institution"). In all other cases, all signa-
tures on the Letter of Transmittal must be guaranteed by an Eligible Institu-
tion. See Instruction 1 of the Letter of Transmittal. If a certificate repre-
senting Shares is registered in the name of a person other than the signer of a
Letter of Transmittal, or if payment is to be made, or Shares not purchased or
tendered are to be issued, to a person other than the registered holder, the
certificate must be endorsed or accompanied by an appropriate stock power, in
either case signed exactly as the name of the registered holder appears on the
certificate, with the signature on the certificate or stock power guaranteed by
an Eligible Institution. In this regard, see Section 5 for information with re-
spect to applicable stock transfer taxes. In all cases, payment for Shares ten-
dered and accepted for payment pursuant to the Offer will be made only after
timely receipt by Harris Trust of certificates for such Shares (or a timely
confirmation of a book-entry transfer of such Shares into Harris Trust's
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account at the Book-Entry Transfer Facility as described above), a properly
completed and duly executed Letter of Transmittal (or manually signed facsimile
thereof) or an agent's message (in the case of any book-entry transfer) and any
other documents required by the Letter of Transmittal.
The method of delivery of all documents, including Share certificates,
the Letter of Transmittal and any other required documents, is at the election
and risk of the tendering stockholder. If delivery is by mail, registered mail
with return receipt requested, properly insured, is recommended.
Book-Entry Delivery. Harris Trust has established an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer.
Any financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of the Shares by causing such
facility to transfer such Shares into Harris Trust's account in accordance with
such facility's procedure for such transfer. Even though delivery of Shares may
be effected through book-entry transfer into Harris Trust's account at the
Book-Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile thereof), with any required signature
guarantees or an agent's message (in the case of any book-entry transfer) and
other required documents must, in any case, be transmitted to and received by
Harris Trust at one of its addresses set forth on the back cover of this Sup-
plement to the Offer to Purchase prior to the Expiration Date, or the guaran-
teed delivery procedure set forth below must be followed. Delivery of the Let-
ter of Transmittal and any other required documents to the Book-Entry Transfer
Facility does not constitute delivery to Harris Trust.
Guaranteed Delivery. If a stockholder desires to tender Shares, other
than Pledged Shares, pursuant to the Offer and such stockholder's Share certif-
icates cannot be delivered to Harris Trust prior to the Expiration Date (or the
procedures for book-entry transfer cannot be completed on a timely basis) or
time will not permit all required documents to reach Harris Trust before the
Expiration Date, such Shares may nevertheless be tendered provided that all of
the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii)
Harris Trust receives (by hand, mail, overnight courier, telegram or
facsimile transmission), on, or prior to, the Expiration Date, a
properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form the Company has provided with this Supplement
to the Offer to Purchase, including (where required) a signature
guarantee by an Eligible Institution in the form set forth in such
Notice of Guaranteed Delivery; and
(iii)
the certificates for all tendered Shares in proper form for transfer (or
confirmation of book-entry transfer of such Shares into Harris Trust's
account at the Book-Entry Transfer Facility), together with a properly
completed and duly executed Letter of Transmittal (or manually signed
facsimile thereof) and any required signature guarantees or an agent's
message (in the case of any book-entry transfer) or other documents
required by the Letter of Transmittal, are received by Harris Trust
within three Nasdaq trading days after the date Harris Trust receives
such Notice of Guaranteed Delivery.
Return of Shares. If any tendered Shares are not purchased, or if less
than all of the Shares evidenced by a stockholder's certificates are tendered,
certificates for Shares that are not purchased (other than Pledged Shares) will
be returned as promptly as practicable after the expiration or termination of
the Offer or, in the case of Shares tendered by book-entry transfer at the
Book-Entry Transfer Facility, such Shares will be credited to the appropriate
account maintained by the tendering stock-
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<PAGE>
holder at the Book-Entry Transfer Facility, in each case without expense to
such stockholder. Restricted Shares that are returned will bear appropriate
legends restricting transfer, as applicable.
Backup Federal Income Tax Withholding. Under the United States federal
income tax backup withholding rules, unless an exemption applies under the ap-
plicable law and regulations, 31% of the gross proceeds payable to a stock-
holder or other payee pursuant to the Offer must be withheld and remitted to
the United States Treasury, unless the stockholder or other payee provides such
person's taxpayer identification number (employer identification number or so-
cial security number) to Harris Trust and certifies under penalties of perjury
that such number is correct. Therefore, each tendering stockholder should com-
plete and sign the Substitute Form W-9 included as part of the Letter of Trans-
mittal so as to provide the information and certification necessary to avoid
backup withholding, unless such stockholder otherwise establishes to the satis-
faction of Harris Trust that the stockholder is not subject to backup withhold-
ing. Certain stockholders, including, among others, all corporations and cer-
tain foreign stockholders (in addition to foreign corporations), are not sub-
ject to these backup withholding and reporting requirements. In order for a
foreign stockholder to qualify as an exempt recipient, that stockholder must
submit an IRS Form W-8 or a Substitute Form W-9, signed under penalties of per-
jury, attesting to that stockholder's exempt status. Such statements can be ob-
tained from Harris Trust. See Instruction 12 of the Letter of Transmittal.
To prevent backup federal income tax withholding equal to 31% of the
gross payments made to stockholders for Shares purchased pursuant to the Offer,
each stockholder who does not otherwise establish an exemption from such with-
holding must provide Harris Trust with the stockholder's correct taxpayer iden-
tification number and provide certain other information by completing the Sub-
stitute Form W-9 included with the Letter of Transmittal.
For a discussion of certain United States federal income tax consequences
to tendering stockholders, see Section 14.
Withholding For Foreign Stockholders. Even if a foreign stockholder has
provided the required certification to avoid backup withholding, Harris Trust
will withhold United States federal income taxes equal to 30% of the gross pay-
ments payable to a foreign stockholder or his or her agent unless Harris Trust
determines that a reduced rate of withholding is available pursuant to a tax
treaty or that an exemption from withholding is applicable because such gross
proceeds are effectively connected with the conduct of a trade or business
within the United States. For this purpose, a foreign stockholder is any stock-
holder that is not (i) a citizen or resident of the United States; (ii) a cor-
poration, partnership, or other entity created or organized in or under the
laws of the United States, any State or any political subdivision thereof;
(iii) an estate, the income of which is subject to United States federal income
taxation regardless of the source of such income; or (iv) a trust, if a court
within the United States is able to exercise primary supervision of the admin-
istration of the trust and one or more United States persons have the authority
to control all of the substantial decisions of the trust. In order to obtain a
reduced rate of withholding pursuant to a tax treaty, a foreign stockholder
must deliver to Harris Trust before the payment a properly completed and exe-
cuted IRS Form 1001. In order to obtain an exemption from withholding on the
grounds that the gross proceeds paid pursuant to the Offer are effectively con-
nected with the conduct of a trade or business within the United States, a for-
eign stockholder must deliver to Harris Trust a properly completed and executed
IRS Form 4224. Harris Trust will determine a stockholder's status as a foreign
stockholder and eligibility for a reduced rate of, or exemption from, withhold-
ing by reference to any outstanding certificates or statements concerning eli-
gibility for a reduced rate of, or exemption from, withholding (e.g., IRS Form
1001 or IRS Form 4224) unless facts and circumstances indicate that such reli-
ance is
16
<PAGE>
not warranted. A foreign stockholder may be eligible to obtain a refund of all
or a portion of any tax withheld if such stockholder meets the "complete re-
demption," "substantially disproportionate" or "not essentially equivalent to
a dividend" test described in Section 14 or is otherwise able to establish
that no tax or a reduced amount of tax is due. Backup withholding generally
will not apply to amounts subject to the 30% or a treaty-reduced rate of with-
holding. Foreign stockholders are urged to consult their own tax advisors re-
garding the application of United States federal income tax withholding, in-
cluding eligibility for a withholding tax reduction or exemption, and the re-
fund procedure. See Instruction 12 of the Letter of Transmittal.
Tendering Stockholder's Representation and Warranty; Company's Accept-
ance Constitutes an Agreement. It is a violation of Rule 14e-4, promulgated
under the Exchange Act, for a person acting alone or in concert with others,
directly or indirectly, to tender Shares for such person's own account unless
at the time of tender and at the Expiration Date such person has a "net long
position" equal to or greater than the amount tendered in (i) the Shares and
will deliver or cause to be delivered such Shares for the purpose of tender to
the Company within the period specified in the Offer or (ii) other securities
immediately convertible into, exercisable for or exchangeable into Shares
("Equivalent Securities") and, upon the acceptance of such tender, will ac-
quire such Shares by conversion, exchange or exercise of such Equivalent Secu-
rities to the extent required by the terms of the Offer and will deliver or
cause to be delivered such Shares so acquired for the purpose of tender to the
Company within the period specified in the Offer. Rule 14e-4 also provides a
similar restriction applicable to the tender or guarantee of a tender on be-
half of another person. A tender of Shares made pursuant to any method of de-
livery set forth herein will constitute the tendering stockholder's represen-
tation and warranty to the Company that (i) such stockholder has a "net long
position" in Shares or Equivalent Securities being tendered within the meaning
of Rule 14e-4; and (ii) such tender of Shares complies with Rule 14e-4. The
Company's acceptance for payment of Shares tendered pursuant to the Offer will
constitute a binding agreement between the tendering stockholder and the Com-
pany upon the terms and subject to the conditions of the Offer.
Determinations of Validity; Rejection of Shares; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the number of Shares
to be accepted, the price to be paid therefor and the validity, form, eligi-
bility (including time of receipt) and acceptance for payment of any tender of
Shares will be determined by the Company, in its sole discretion, which deter-
mination shall be final and binding on all parties. The Company reserves the
absolute right to reject any or all of the tenders it determines not to be in
proper form or the acceptance of or payment for which may, in the opinion of
the Company's counsel, be unlawful. The Company also reserves the absolute
right to waive any of the conditions of the Offer and any defect or irregular-
ity in the tender of any particular Shares or any particular stockholder. No
tender of Shares will be deemed to be properly made until all defects or ir-
regularities have been cured or waived. None of the Company, Harris Trust, AST
StockPlan, Inc., MacKenzie Partners or any other person is or will be obli-
gated to give notice of any defects or irregularities in tenders, and none of
them will incur any liability for failure to give any such notice.
Certificates for Shares, together with a properly completed Letter of
Transmittal and any other documents required by the Letter of Transmittal,
must be delivered to Harris Trust and not to the Company. Any such documents
delivered to the Company will not be forwarded to Harris Trust and therefore
will not be deemed to be validly tendered.
17
<PAGE>
4. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 4, tenders of Shares pursu-
ant to the Offer are irrevocable. Shares other than Option Shares and ESPP
Shares tendered pursuant to the Offer may be withdrawn at any time before the
Expiration Date and, unless the Company has accepted the Shares (including Op-
tion Shares and ESPP Shares) for payment as provided in this Supplement to the
Offer to Purchase, may also be withdrawn after 12:00 midnight, New York City
time, on April 16, 1999. Option Shares and ESPP Shares may be withdrawn at any
time before 5:00 p.m. April 20, 1999.
For a withdrawal to be effective, Harris Trust must receive (at its ad-
dress set forth on the back cover of this Supplement to the Offer to Purchase)
a notice of withdrawal in written, telegraphic or facsimile transmission form
on a timely basis. Such notice of withdrawal must specify the name of the per-
son who tendered the Shares to be withdrawn, the number of Shares tendered, the
number of Shares to be withdrawn and the name of the registered holder, if dif-
ferent from that of the person who tendered such Shares. If the certificates
have been delivered or otherwise identified to Harris Trust, then, prior to the
release of such certificates, the tendering stockholder must also submit the
serial numbers shown on the particular certificates evidencing the Shares and
the signature on the notice of withdrawal must be guaranteed by an Eligible In-
stitution (except in the case of Shares tendered by an Eligible Institution).
If Shares have been tendered pursuant to the procedure for book-entry transfer
set forth in Section 3, the notice of withdrawal must specify the name and the
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Shares and otherwise comply with the procedures of such facility.
Holders of Options and ESPP Shares must comply with the withdrawal procedures
set forth in the separate documents for such holders.
All questions as to the form and validity, including time of receipt and
of notices of withdrawal will be determined by the Company, in its sole discre-
tion, which determination shall be final and binding on all parties. None of
the Company, Harris Trust, AST StockPlan, Inc., MacKenzie Partners or any other
person is or will be obligated to give any notice of any defects or irregulari-
ties in any notice of withdrawal, and none of them will incur any liability for
failure to give any such notice. Withdrawals may not be rescinded, and any
Shares properly withdrawn will thereafter be deemed not tendered for purposes
of the Offer. However, withdrawn Shares may be retendered before the Expiration
Date by again following any of the procedures described in Section 3.
If the Company extends the Offer or is delayed in its purchase of Shares
for any reason, then, without prejudice to the Company's rights under the Of-
fer, Harris Trust may, subject to applicable law, retain on behalf of the Com-
pany all tendered Shares, and such Shares may not be withdrawn except to the
extent tendering stockholders are entitled to withdrawal rights as described in
this Section 4.
5. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE
Upon the terms and subject to the conditions of the Offer, the Company
will purchase and pay the $22.50 per Share purchase price for all of the Shares
accepted for payment pursuant to the Offer or, in the case of Option Shares,
$22.50 per Share less the exercise price per Share and the applicable tax with-
holding amount as soon as practicable after the Expiration Date. In all cases,
payment for Shares tendered and accepted for payment pursuant to the Offer will
be made promptly (subject to possible delay in the event of proration) but only
after timely receipt by Harris Trust of certificates for Shares (or of a timely
confirmation of a book-entry transfer of such Shares into Harris Trust's ac-
count at the Book-Entry Transfer Facility), a properly completed and duly exe-
cuted Letter of Transmittal (or manually signed facsimile thereof) or any other
required documents.
18
<PAGE>
Payment for Shares purchased pursuant to the Offer will be made by de-
positing the aggregate purchase price therefor with Harris Trust, which will
act as agent for tendering stockholders for the purpose of receiving payment
from the Company and transmitting payment to the tendering stockholders. In
the event of proration, the Company will determine the proration factor and
pay for those tendered Shares accepted for payment as soon as practicable af-
ter the Expiration Date. However, the Company does not expect to be able to
announce the final results of any such proration until approximately seven
business days after the Expiration Date. Under no circumstances will the Com-
pany pay interest on the purchase price including, without limitation, by rea-
son of any delay in making payment. Certificates for all of the Shares not
purchased other than Pledged Shares, including all of the Shares not purchased
due to proration, will be returned (or, in the case of Shares tendered by
book-entry transfer, such Shares will be credited to the account maintained
with the Book-Entry Transfer Facility by the participant who so delivered such
Shares) as promptly as practicable following the Expiration Date or termina-
tion of the Offer without expense to the tendering stockholder. In addition,
if certain events occur, the Company may not be obligated to purchase Shares
pursuant to the Offer. See Section 6.
The Company will pay any stock transfer taxes payable on the transfer to
it of Shares purchased pursuant to the Offer; provided, however, that if pay-
ment of the purchase price is to be made to, or (in the circumstances permit-
ted by the Offer) if unpurchased Shares are to be registered in the name of,
any person other than the registered holder, or if tendered certificates are
registered in the name of any person other than the person signing the Letter
of Transmittal, the amount of all of the stock transfer taxes, if any (whether
imposed on the registered holder or such other person), payable on account of
the transfer to such person will be deducted from the purchase price unless
evidence satisfactory to the Company of the payment of such taxes or exemption
therefrom is submitted. See Instruction 6 of the Letter of Transmittal.
Special Procedures for Holders of Options, ESPP Shares, Restricted Shares or
Pledged Shares
Options. Holders of Options to purchase Shares granted as of March 23,
1999 under the Company's Option plans or assumed in acquisitions may tender
Option Shares in connection with the conditional exercise of Options having
exercise prices below $22.50 per Share as part of the Offer. Such Option hold-
ers will instruct AST StockPlan, Inc., as their agent, to tender part or all
of the Option Shares resulting from the conditional exercise.
This exercise of Options will be "conditional" because the Option holder
is deemed to exercise the Option only if, and to the extent that, the Company
actually purchases the Option Shares in the Offer. If the Company purchases
less than all of a holder's Option Shares, the Options relating to the remain-
ing Option Shares will not be considered to have been exercised and will re-
main outstanding. The Options relating to up to 50% of the amount of an Option
holder's Option Shares prior to the Company's purchase of Option Shares will
remain exercisable and the Options relating to the Option holder's remaining
Option Shares will be subject to the original vesting schedule applicable to
the portions of the holder's Options that would have vested last.
As an accommodation to Option holders planning to tender Option Shares
in the Offer, the Company will permit a "cashless" exercise of such Options.
In this event, the Option holder will not be required to pay cash for the ex-
ercise price and the consideration received by the holder whose Option Shares
are purchased in the Offer will be the difference between $22.50 per Share and
the exercise price per Share relating to the Option Shares so purchased (less
the applicable tax withholding amount). Option holders who have not exercised
their Options for cash and received Shares may
19
<PAGE>
not use the Letter of Transmittal to direct the tender of the Option Shares.
Instead, such holders must follow the procedures for tender described in the
separate materials on yellow paper included with this Supplement to the Offer
to Purchase.
ESPP Shares. Participants in the Purchase Plan who wish to have the agent
for such plan tender ESPP Shares attributable to their accounts should notify
the ESPP Agent of such election as provided in the notice sent to such partici-
pants and explained in the materials on green paper included with this Supple-
ment to the Offer to Purchase. As explained in greater detail in those materi-
als, employees who own ESPP Shares who wish to participate in the Offer must
instruct the ESPP Agent as to the number of their ESPP Shares they would like
to tender in the Offer, and must authorize the ESPP Agent to tender the ESPP
Shares on their behalf. Solely for the purpose of allowing participants in the
Purchase Plan to participate in the Offer, the one-year restriction on sales of
ESPP Shares acquired through the Purchase Plan as of the end of the December
1998 purchase period has been temporarily waived. Shares credited under the
Purchase Plan after December 31, 1998 are not eligible for the Offer. Any ESPP
Shares that have not satisfied the one-year sale restriction and are not pur-
chased in the Offer will be returned to the employee's Purchase Plan account.
Such ESPP Shares will not be eligible for sale until the one-year period has
been satisfied. Holders of ESPP Shares may not use the Letter of Transmittal to
direct the tender of ESPP Shares. Instead, holders of ESPP Shares must follow
the procedures for tender described in the separate materials on green paper
included herewith.
Restricted Shares. Holders of Restricted Shares may tender part or all of
their Restricted Shares. As a result of pre-existing agreements between the
Company and the holders of Restricted Shares, the Company will not purchase,
however, more than 50% of any one person's Restricted Shares. In addition, the
Company will purchase Restricted Shares in the order in which their restric-
tions lapse. To the extent that the Company purchases less than 50% of a hold-
er's Restricted Shares, either because the holder did not tender the Restricted
Shares or because of proration, such Restricted Shares will remain free of any
contractual restrictions on transfer (but subject to any applicable securities
laws limitations). The remaining 50% of a holder's Restricted Shares will re-
main subject to the contractual restrictions on transfer agreed to in the
agreement relating to the holder's acquisition of the Restricted Shares. Hold-
ers of Restricted Shares must complete the Letter of Transmittal to tender Re-
stricted Shares, including any Pledged Shares. The procedures for tender of Re-
stricted Shares are described in the separate materials on purple paper in-
cluded with this Supplement to the Offer to Purchase.
Pledged Shares. Holders of Pledged Shares who desire to tender their
Pledged Shares in the Offer must direct Harris Trust to tender the Pledged
Shares on their behalf as described in the materials on purple paper included
with this Offer to Purchase. By signing the Letter of Transmittal, a holder of
Pledged Shares will authorize Harris Trust to return any Pledged Shares that
are not purchased in the Offer to the Company and to forward the proceeds from
the sale of any Pledged Shares to an account maintained for the Company's bene-
fit by American Stock Transfer & Trust Company. The Company will purchase
Pledged Shares based upon the proration factor applicable in the Offer. The
proceeds from the Pledged Shares received upon tender will be subject to the
same terms and conditions as the Pledged Shares. Holders of Pledged Shares must
complete the Letter of Transmittal to tender Pledged Shares. The procedures for
tender of Pledged Shares are described in the separate materials on purple pa-
per included with this Offer to Purchase.
20
<PAGE>
6. CERTAIN CONDITIONS OF THE OFFER
The Offer is conditioned upon the tender of a minimum of 21,000,000
Shares. In addition, notwithstanding any other provision of the Offer, the Com-
pany shall not be required to accept for payment, or purchase or pay for any
Shares tendered, and may terminate or amend the Offer or may postpone the ac-
ceptance for payment of, or the purchase of and the payment for Shares ten-
dered, subject to Rule 13e-4(f) promulgated under the Exchange Act, if at any
time on or after April 6, 1999 and prior to the Expiration Date any of the fol-
lowing events shall have been determined by the Company to have occurred that,
in the Company's reasonable judgment in any such case and regardless of the
circumstances giving rise thereto (including any action or omission to act by
the Company), makes it inadvisable to proceed with the Offer or with such ac-
ceptance for payment:
(a) there shall not be available to the Company funds sufficient to pay for
the Shares and the costs and expenses of the Offer on terms and
conditions consistent with our descriptions of the proposed financings in
this Supplement to the Offer to Purchase; or
(b) there shall have been threatened, instituted or pending before any court,
agency, authority or other tribunal any action, suit or proceeding by any
government or governmental, regulatory or administrative agency or
authority or by any other person, domestic or foreign, or any judgment,
order or injunction entered, enforced or deemed applicable by any such
court, authority, agency or tribunal, which (i) challenges or seeks to
make illegal, or to delay or otherwise directly or indirectly to
restrain, prohibit or otherwise affect the making of the Offer or, the
acquisition of Shares pursuant to the Offer or is otherwise related in
any manner to, or otherwise affects, the Offer; or (ii) could materially
affect the business, condition (financial or other), income, operations
or prospects of the Company and its subsidiaries, taken as a whole, or
otherwise materially impair in any way the contemplated future conduct of
the business of the Company and its subsidiaries, taken as a whole, or
materially impair the Offer's contemplated benefits to the Company; or
(c) there shall have been any action threatened or taken, or any approval
withheld, or any statute, rule or regulation invoked, proposed, sought,
promulgated, enacted, entered, amended, enforced or deemed to be
applicable to the Offer or the Company or any of its subsidiaries, by any
government or governmental, regulatory or administrative authority or
agency or tribunal, domestic or foreign, which would or might directly or
indirectly result in any of the consequences referred to in clause (i) or
(ii) of paragraph (b) above; or
(d) there shall have occurred (i) the declaration of any banking moratorium
or any suspension of payments in respect of banks in the United States
(whether or not mandatory); (ii) any general suspension of trading in, or
limitation on prices for, securities on any United States national
securities exchange or in the over-the-counter market; (iii) the
commencement or escalation of a war, armed hostilities or any other
national or international crisis directly or indirectly involving the
United States; (iv) any limitation (whether or not mandatory) by any
governmental, regulatory or administrative agency or authority on, or any
event which, in the sole judgment of the Company, might materially
affect, the extension of credit by banks or other lending institutions in
the United States; (v) any significant decrease in the market price of
the Shares or in the market prices of equity securities generally in the
United States or any change in the general political, market, economic or
financial conditions or in the commercial paper markets in the United
States or abroad that could have in the sole judgment of the Company a
material adverse effect on the business, condition (financial or
otherwise), income, operations or prospects of the Company and
21
<PAGE>
its subsidiaries, taken as a whole, or on the trading in the Shares or on
the proposed financing for the Offer; (vi) in the case of any of the
foregoing existing at the time of the announcement of the Offer, a
material acceleration or worsening thereof; or (vii) any decline in either
the Dow Jones Industrial Average or the S&P 500 Composite Index by an
amount in excess of 10% measured from the close of business on February
19, 1999; or
(e) any change shall occur or be threatened in the business, condition
(financial or other), income, operations or prospects of the Company and
its subsidiaries, taken as a whole, which is or may be material to the
Company and its subsidiaries taken as a whole; or
(f) a tender or exchange offer with respect to some or all of the Shares
(other than the Offer), or a merger or acquisition proposal for the
Company, shall have been proposed, announced or made by another person or
shall have been publicly disclosed, or the Company shall have learned that
(i) any person or "group" (within the meaning of Section 13(d)(3) of the
Exchange Act) shall have acquired or proposed to acquire beneficial
ownership of more than 5% of the outstanding Shares, or any new group
shall have been formed that beneficially owns more than 5% of the
outstanding Shares; or
(g) any person or group shall have filed a Notification and Report Form under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 reflecting an
intent to acquire the Company or any of its Shares.
Notwithstanding anything else herein to the contrary, pursuant to the
terms of the Company's agreement with Boss Investment, (a) no condition to the
Offer may be waived in whole or in part, and the Offer may not be terminated
without the prior written consent of Boss Investment and (b) the Company shall,
unless otherwise requested by Boss Investment, and may, without the prior writ-
ten consent of Boss Investment, extend the Offer periodically through June 20,
1999, if at the then scheduled or any extended expiration of the Offer, any of
the conditions of the Offer shall not be satisfied or waived, until such time
as all such conditions are satisfied or waived. Additionally, notwithstanding
anything else herein to the contrary, the Company has agreed with Boss Invest-
ment that unless the Company's agreement with Boss Investment shall have been
terminated prior to June 20, 1999, the Company will not exercise any of its
rights under this Section 6 not to accept for payment, terminate, or amend the
Offer or postpone the acceptance for payment or the purchase of Shares ten-
dered, without the written consent of Boss Investment, including any such exer-
cise after June 20, 1999; provided, however, that the Company may, without the
consent of Boss Investment, exercise such rights under this Section 6 if the
conditions to the Company's obligations to complete the transactions with Boss
Investment (other than the satisfaction of conditions to this Offer set forth
herein) shall not then have been satisfied (subject to the right of Boss In-
vestment to require the Company to extend the Offer through June 20, 1999).
Subject to the preceding paragraph, the foregoing conditions are for the
Company's sole benefit and may be asserted by the Company regardless of the
circumstances giving rise to any such condition (including any action or inac-
tion by the Company) or may be waived by the Company in whole or in part. The
Company's failure at any time to exercise any of the foregoing rights shall not
be deemed a waiver of any such right, and each such right shall be deemed an
ongoing right that may be asserted at any time and from time to time. Any de-
termination by the Company concerning the events described above and any re-
lated judgment or decision by the Company regarding the inadvisability of pro-
ceeding with the purchase of or payment for any Shares tendered will be final
and binding on all parties.
22
<PAGE>
7. PRICE RANGE OF SHARES
The Shares are quoted on Nasdaq. The high and low sales prices per Share
on Nasdaq as compiled from published financial sources for the periods indi-
cated are listed below. The Shares have been traded under the symbol "BOSS"
since September 1998.
<TABLE>
<CAPTION>
High Low
--------- -------
<S> <C> <C>
Fiscal Year 1997
Fourth Quarter............................................ $ 21 1/2 $20
Fiscal Year 1998
First Quarter............................................. $ 25 7/8 $18 3/8
Second Quarter............................................ $25 15/16 $19 3/4
Third Quarter............................................. $ 24 1/2 $11 1/2
Fourth Quarter............................................ $ 22 1/2 $ 7 7/8
Fiscal Year 1999
First Quarter............................................. $ 21 $15 1/2
Second Quarter through April 5, 1999...................... $ 17 1/8 $ 17
</TABLE>
On February 5, 1999, the last full trading day on Nasdaq prior to the an-
nouncement by the Company of its intention to make the original offer, the
closing sales price per Share was $20 1/8. On March 22, 1999, the last full
trading day on Nasdaq prior to the announcement by the Company of its intention
to modify the original offer, the closing sales price per Share was $18 13/16.
The Company urges stockholders to obtain current quotations of the market price
of the Shares.
8. BACKGROUND AND PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER
From time to time, the Company receives indications of interest or pro-
posals for a transaction with the Company. On December 23, 1998, the Company
entered into an Agreement and Plan of Merger with Boss Investment. Pursuant to
that Agreement and Plan of Merger, the Company was to merge with an affiliate
of Boss Investment, with the Company as the surviving corporation. The adoption
of the Agreement and Plan of Merger by the Company's stockholders would have
resulted in reducing the number of outstanding Shares from approximately
45,300,000 to 10,578,000. As a part of the merger, stockholders would have re-
ceived $25.00 in cash for each Share of common stock they beneficially owned
unless the stockholder elected to retain such Shares and unless stockholders
elected to retain less than 10,578,000 Shares in the aggregate, and the Company
would have acquired 50% of the outstanding Options for $25.00 in cash less the
exercise price per Share.
On February 8, 1999, the Company and Boss Investment announced that they
had agreed to mutually terminate the Agreement and Plan of Merger. The Agree-
ment and Plan of Merger had been conditioned on a number of items, including
Boss Investment's comfort with arrangements with management of the Company re-
garding their Shares after the merger. The Company and Boss Investment were un-
able to agree to satisfactory terms with respect to such arrangements and other
matters.
On February 8, 1999, the Company announced its intention to make an offer
to purchase 50% of its outstanding Shares at $25.00 per Share net to the seller
in cash and 50% of its Option Shares at a price of $25.00 per Share less the
exercise price per Share and applicable withholding taxes. The original offer
was commenced on February 19, 1999.
On March 23, 1999, the Company announced that it had extended and in-
tended to modify its original offer. In addition, it announced that Boss In-
vestment had agreed to invest $100 million in the Company to finance a portion
of the tender offer in exchange for 7.5% convertible subordinated notes.
23
<PAGE>
The completion of the transaction with Boss Investment is subject to a number
of conditions, including the following: no prohibition or restriction of the
transaction by law or injunction; the expiration or early termination of the
waiting period under the Hart-Scott-Rodino Act of 1976, as amended (the "HSR
Act") and the receipt of all other required consents; the receipt of the other
financings for the Offer; no pending or threatened delisting proceeding by
Nasdaq; our acquisition of 21,000,000 Shares at a price of $22.50 per Share
through the Offer; our appointment or nomination of persons acceptable to Boss
Investment to the Board of Directors; and other customary closing conditions,
including those related to the accuracy of representations and warranties, the
performance of covenants and the delivery of legal opinions and other docu-
ments.
The Company has assumed, for purposes of estimating the cost of the Of-
fer, that it will purchase approximately 24,600,000 of its Shares outstanding
and approximately 900,000 Option Shares and that holders of outstanding War-
rants will not exercise the Warrants and tender the Shares underlying the War-
rants. Based upon those assumptions, the Company estimates that the cost of
purchasing the Shares, including fees and expenses will be $585.5 million. The
Company expects to finance the purchase of Shares through the use of its cash
on hand, the sale of the $100 million of convertible subordinated notes to Boss
Investment, the sale of $200 million of senior subordinated notes and
borrowings under a revolving credit facility. The Company has received commit-
ment letters for a $350 million revolving credit facility from Bankers Trust
Company, Citicorp USA, Inc. and Goldman Sachs Credit Partners LP and a highly
confident letter with respect to the sale of $200 million of senior subordi-
nated notes from BT Alex. Brown.
A successful completion of the Offer will result in, among other things,
three consequences: a significant increase in the Company's debt on its balance
sheet, a decrease in its public float and the issuance of subordinated convert-
ible notes that vote together with Shares and have certain other protective
provisions.
The Offer provides stockholders who are considering a sale of all or a
portion of their Shares the opportunity to sell their Shares to the Company
(subject to proration) without payment of brokerage commissions. Any Odd Lot
Owners whose Shares are purchased pursuant to the Offer will avoid both the
payment of brokerage commissions and any applicable odd lot discounts payable
on sales of odd lots. To the extent the purchase of Shares in the Offer results
in a reduction in the number of record or beneficial holders of Shares, the
costs to the Company for services to stockholders will be reduced. Stockholders
who determine not to accept the Offer will increase their proportionate inter-
est in the Company's equity, and thus in the Company's future earnings and as-
sets, subject to the Company's right to issue additional Shares and other eq-
uity securities in the future.
The Board of Directors of the Company has approved the Offer. However,
stockholders must make their own decisions whether to tender Shares and, if so,
how many Shares to tender. Neither the Company nor its Board of Directors makes
any recommendation to any stockholder as to whether to tender or refrain from
tendering Shares. Neither the Company nor its Board of Directors has authorized
any person to make any such recommendation.
Shares the Company acquires pursuant to the Offer will be retired.
24
<PAGE>
9. INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS; TRANSACTIONS AND
ARRANGEMENTS CONCERNING THE SHARES
As of March 23, 1999, there were 45,275,872 Shares outstanding, 3,640,081
Shares issuable upon exercise of outstanding Options with exercise prices below
$22.50 per Share and Warrants with exercise prices below $22.50 per Share to
purchase 3,080,000 Shares. As of March 23, 1999, the Company's directors and
executive officers as a group (12 persons) beneficially owned 7,956,897 Shares
(including 3,528,500 Shares issuable to such persons upon exercise of Options
or Warrants exercisable within sixty days of such date ("Exercisable Securi-
ties") without regard to conditional exercises permitted to be made in the Of-
fer) which constituted approximately 16.3% of the outstanding Shares (including
Shares issuable if all of the Exercisable Securities held by directors and ex-
ecutive officers were exercised) at such time.
As of March 23, 1999, the Company had granted or assumed Options with ex-
ercise prices below $22.50 per Share to employees for the purchase of a total
of 3,640,081 Shares of common stock. The Compensation Committee has accelerated
the exercise date for Options so that optionees may tender Option Shares having
exercise prices below $22.50 per Share in connection with the conditional exer-
cise of outstanding Options in exchange for cash in the amount of $22.50 per
Share, less the exercise price of the Option and the applicable tax withholding
amount. To the extent that the Company purchases Option Shares, the Company
will recognize compensation expense in an amount equal to the difference be-
tween the $22.50 per Share and the exercise price per Option Share purchased.
It is up to each individual employee to determine whether and to what extent he
or she will (1) exercise Options and tender Option Shares; or (2) continue to
hold such Options for exercise at any time in the future. If, after taking into
account proration, the Company purchases less than all of a holder's Option
Shares, the Options relating to up to 50% of the holder's Option Shares prior
to the Company's purchase of Option Shares will remain exercisable and the Op-
tions relating to the remaining Option Shares will not be considered to have
been exercised and will remain outstanding subject to the original vesting
schedule applicable to the portions of the holder's Options that would have
vested last.
Among the employees having Options are Joseph M. Ivey (president and
chief executive officer), Timothy C. Clayton (executive vice president, chief
financial officer and treasurer), F. Traynor Beck (executive vice president,
general counsel and secretary), David Ledecky (executive vice president, chief
administrative officer and a member of the Board of Directors) and Michael Sul-
livan (chairman of the Building One Service Solutions Group). Mr. Ivey received
an Option to purchase 250,000 Shares at an exercise price of $16.75 per Share
as part of an employment agreement effective February 25, 1999. Messrs. Clay-
ton, Beck and Ledecky each received Options to purchase 500,000 shares of com-
mon stock at an exercise price of $20.00 per share as part of employment agree-
ments dated November 25, 1997. Mr. Sullivan received (a) an Option to purchase
200,000 Shares at an exercise price of $14.1875 per Share as part of an employ-
ment agreement effective November 6, 1998 and (b) an Option to purchase 24,000
Shares at an exercise price of $22.25 in connection with a sale of a business
to the Company on May 11, 1998. These Options vest ratably on the first, sec-
ond, third and fourth anniversary of the date of the grant except to the extent
exercised in connection with the Offer. Similar to the rest of the holders of
Options having exercise prices below $22.50 per Share, these persons will be
permitted to conditionally exercise all of their Options and tender their Op-
tion Shares in the Offer subject to proration and the other terms of the Offer.
These Options expire on the tenth anniversary of the date of grant.
As of March 23, 1999, the Company had issued 13,174,267 Shares subject to
contractual restrictions on transfer in connection with its purchase of busi-
nesses, including 1,256,284 Shares owned by Messrs. Heule, Ivey, Love and Sul-
livan, who are executive officers and directors of the Company. The Company is
permitting the former owners of those acquired businesses to tender
25
<PAGE>
100% of the Restricted Shares they received in exchange for their businesses.
The Company will not purchase, however, more than 50% of any one person's Re-
stricted Shares. To the extent that the Company does not purchase up to 50% of
any one person's Restricted Shares, such Shares will remain free of any con-
tractual restrictions on transfer (but subject to any applicable securities law
limitations).
Joseph M. Ivey, the Company's president and chief executive officer and a
director, has advised the Company that he does not intend to tender any of the
Shares he owns directly or through a trust or any of his Option Shares. The
Company's other directors and executive officers have not advised the Company
whether they will tender Shares, including Option Shares and Shares underlying
Warrants, pursuant to the terms of the Offer.
In connection with the Offer, Messrs. Ivey, Love and Sullivan and certain
other key employees of the Company have agreed to extend their lock-up agree-
ments applicable to the shares of stock that they will own after the Offer for
an additional twelve months from the date of their original expiration.
W. Russell Ramsey, a director, is President and stockholder of Friedman,
Billings, Ramsey Group, Inc. ("FBR"). FBR, through wholly owned subsidiaries,
acted as a financial advisor to the Company in connection with the Company's
consideration of strategic alternatives, for which it received a fee of
$500,000. FBR will receive an additional fee of up to $3 million upon consumma-
tion of the Offer.
Except as discussed below, based upon the Company's records and upon in-
formation provided to the Company by its directors, executive officers, associ-
ates and subsidiaries, neither the Company nor any of its associates or subsid-
iaries or persons controlling the Company nor, to the best of the Company's
knowledge, any of the directors or executive officers of the Company or any of
its subsidiaries, nor any associates or subsidiary of any of the foregoing, has
effected any transactions in the Shares during the 40 business days prior to
February 19, 1999 and since that date. The Company issued 922,019 Shares in
connection with five acquisitions completed in March 1999, 24,166 Shares to
participants in the Purchase Plan on January 1, 1999 and 18,594 Shares upon the
exercise of Options granted to persons other than directors and executive offi-
cers since December 7, 1998.
Except as set forth in this Supplement to the Offer to Purchase, includ-
ing the descriptions of the Company's agreement with Boss Investment and Boss
Investment's rights after the completion of the Offer, neither the Company nor
any person controlling the Company nor, to the Company's knowledge, any of its
directors or executive officers, is a party to any contract, arrangement, un-
derstanding or relationship with any other person relating, directly or indi-
rectly, to the Offer with respect to any securities of the Company (including,
but not limited to, any contract, arrangement, understanding or relationship
concerning the transfer or the voting of any such securities, joint ventures,
loan or option arrangements, puts or calls, guarantees of loans, guarantees
against loss or the giving or withholding of proxies, consents or authoriza-
tions).
10. SOURCE AND AMOUNT OF FUNDS
Assuming that the Company purchases 25,500,000 Shares pursuant to the Of-
fer at a purchase price of $22.50 per Share, net to the seller in cash, or, in
the case of Option Shares, $22.50 per Share less the exercise price per Share
and applicable withholding taxes, the Company expects the maximum aggregate
cost, including all fees and expenses applicable to the Offer, to be approxi-
mately $585.5 million. The Company estimates that the funds necessary to pay
such amounts will come from available cash, the issuance of $200 million in se-
nior subordinated notes, the sale of $100 million of convertible subordinated
notes to Boss Investment and a portion of a $350 million revolv -
26
<PAGE>
ing credit facility. It is estimated that the Company will incur approximately
$25 million in financing, legal and accounting charges. The Company has re-
ceived commitment letters from Bankers Trust Company, Goldman, Sachs & Co. and
Citicorp USA, Inc. for the $350 million revolving credit facility and a highly
confident letter from BT Alex. Brown Incorporated for the offering of $200 mil-
lion in senior subordinated notes.
The Company has assumed, for purposes of the unaudited pro forma
financial data, that the interest rate on the senior subordinated notes will be
in a range of 10.5% to 10.625% to be paid semi-annually. The senior
subordinated notes will mature in ten years, will be unsecured subordinated
obligations and will be guaranteed by our domestic subsidiaries. Interest on
the senior subordinated notes will be paid semi-annually and principal will be
paid at maturity. The senior subordinated notes and the guarantees will rank
junior to the senior debt.
The Company will be able to redeem the senior subordinated notes, in
whole or in part, at any time on or after the fifth anniversary of their
issuance, at specified redemption prices, plus accrued interest. At any time
(which may be more than once) before the third anniversary of the issue date of
the senior subordinated notes, the Company will be able to redeem up to 35% of
the outstanding senior subordinated notes with money raised in one or more
equity offerings under certain circumstances. Upon a change of control of the
Company, the holders of the senior subordinated notes will have the right to
sell the notes to the Company at 101% of the face amount plus accrued interest.
Additionally, the Company expects that the indenture governing the senior
subordinated notes will also contain certain covenants that will restrict,
among other things, its ability to incur indebtedness, pay dividends, incur
liens, sell or otherwise dispose of a substantial portion of its assets or
merge or consolidate with another entity.
The convertible subordinated notes will mature on the thirteenth anniver-
sary of the date of issuance and will provide for interest payments at a rate
of 7.5% to be paid in additional convertible subordinated notes or cash, at the
Company's election, for the first five years after their issuance, and in cash
thereafter. The holders of a majority of the outstanding principal amount of
the convertible subordinated notes, however, will have the right to require the
payment of interest in cash after the third and through the fifth anniversary
of the issuance of the convertible subordinated notes. In addition, the provi-
sions of the revolving credit facility and the indenture for the senior subor-
dinated notes may limit the Company's ability to pay cash interest payments.
The convertible subordinated notes will be convertible into Shares at an
initial conversion price of $22.50 per Share plus all accrued and unpaid inter-
est. Assuming conversion of the principal amount of the convertible subordi-
nated notes, assuming all interest is paid in cash, and assuming the Company
purchases 24.6 million Shares in the Offer, Boss Investment will have the right
to acquire upon conversion 4,444,444 Shares, or approximately 17% of the out-
standing voting power after the Offer. If the convertible subordinated notes
are converted prior to the fifth anniversary of their issuance, the amount con-
verted into Shares will include additional interest that would have accrued or
been paid from the date of conversion through the fifth anniversary of the is-
suance of the convertible subordinated notes. However, unless the conversion is
in connection with a change of control, the additional interest will not exceed
a total of 30 months of interest. The Company will adjust the
27
<PAGE>
conversion price under certain circumstances, including the issuance of Shares
at a price below the conversion price of the convertible subordinated notes or
below the then fair market value of a Share or the repurchase of our Shares at
prices above the then fair market value.
The indenture for the convertible subordinated notes will limit the
Company's ability to incur additional indebtedness, pay dividends, repurchase
securities or repay certain other indebtedness. The Company has agreed to seek
stockholder approval of amendments to its restated certificate of incorporation
that would authorize the holders of the convertible subordinated notes to vote
together with the holders of Shares on all of the matters submitted to its
stockholders for a vote and to elect three of its directors (or, if the Board
has more than ten directors, no less than 30% of the directors). The holders of
the convertible subordinated notes will be entitled to cast the number of votes
that they would be entitled to cast if they had converted the convertible sub-
ordinated notes into Shares. If this amendment is not enacted by the later of
July 25, 1999 and the 60th day after issuance of the convertible subordinated
notes (the "deadline"), the interest rate on the convertible subordinated notes
will increase to 12.5%, but will revert back to 7.5% after the amendment is en-
acted. In addition, if the amendment is not enacted by 90 days after the dead-
line, the conversion price will be permanently reduced by $1.00. It will be
permanently reduced by another $1.00 every 90 days afterward (up to a maximum
$4.00 reduction), unless the amendment has been enacted before the scheduled
reduction. At closing, the Board will have ten directors including three mem-
bers who are designees of Boss Investment. Additionally, if certain events of
default occur which the Company does not correct, Boss Investment will be enti-
tled to elect a majority of the Board of Directors to hold office only for so
long as such events of default are continuing.
Pursuant to the Company's agreement with Boss Investment, as long as Boss
Investment holds at least 50% of the outstanding convertible subordinated
notes, the Company, without the consent of Boss Investment, will be precluded
from, among other things:
. merging with another company unless in connection with a permitted ac-
quisition, as defined;
. liquidating, recapitalizing or reorganizing or otherwise materially al-
tering its business;
. acquiring or disposing of any business or assets in one or more trans-
actions with an aggregate value in excess of $100 million;
. declaring or paying a dividend;
. repurchasing any capital stock or indebtedness junior to the convert-
ible subordinated notes;
. agreeing to restrict its ability to honor the rights of the holders of
the convertible subordinated notes;
. entering into any agreement with an affiliate that is not in the ordi-
nary course of business and on terms no less favorable to the Company
than those in an arm's-length transaction;
. increasing the size of the Board above ten directors, unless Boss In-
vestment's designees continue to represent at least 30% of the Board;
or
. hiring, firing or amending the employment terms of its chief executive
officer or chief operating officer.
28
<PAGE>
In addition, Boss Investment will have the right to acquire equity
securities or securities convertible or exercisable for equity securities of
the Company in an amount equal to 50% of the amount to be sold in a private
placement. Boss Investment and any other holders of the convertible
subordinated notes will have the right to require the Company to register the
Shares that they acquire upon conversion of the convertible subordinated notes
for resale under the Securities Act of 1933, as amended. Upon the issuance of
the subordinated convertible notes, the Company will be obligated to pay Boss
Investment a financing fee in the amount of $2,500,000, based upon the
principal amount of the convertible subordinated notes, and reimburse Boss
Investment for its related expenses.
The revolving credit facility will bear interest at the sum of the (i)
applicable margin and (ii) at the option of the Company, either the "base rate"
or the "eurodollar rate" (as defined in the agreement for the revolving credit
facility), which we have assumed to be in a range of 7.5% to 7.625% for pur-
poses of the unaudited pro forma financial data set forth in Sections 11 and 17
of this Supplement to the Offer to Purchase. The Company will also pay certain
commitment fees. The revolving credit facility will mature five years after the
initial borrowing and will provide for certain mandatory repayments of the out-
standing indebtedness.
The revolving credit facility will likely include a number of significant
covenants that impose restrictions on the Company and its subsidiaries. These
covenants will include, among others, limitations on the Company's ability to
incur additional indebtedness and pay the interest on Boss Investment's con-
vertible subordinated notes in cash, and restrictions on mergers, acquisitions
and the disposition of assets, sale and leaseback transactions and capital
lease payments, dividends and other distributions and voluntary prepayment of
indebtedness. In addition, the Company will be required to comply with finan-
cial covenants with respect to minimum interest coverage and maximum leverage
ratios. The revolving credit facility will be guaranteed by the Company's do-
mestic subsidiaries and secured by a first priority lien on substantially all
of the Company's assets and the assets of the Company's subsidiaries. The com-
mitments for the revolving credit facility will terminate on June 30, 1999, un-
less definitive credit documents have been executed.
11. CERTAIN INFORMATION ABOUT THE COMPANY
Building One Services Corporation is a leader in the facilities services
industry. The Company, and the companies it has acquired since its formation,
had pro forma revenues of approximately $1.5 billion in 1998. The Company's
goal is to become a national single-source provider of facilities services. Fa-
cilities services companies provide many products and services for the routine
operation and maintenance of a building. Since its initial public offering in
December 1997, the Company has grown significantly by purchasing privately-held
electrical, mechanical and janitorial services businesses. Since its formation,
the Company has acquired 36 companies with 127 operating locations that provide
facilities services in 48 states. It currently offers mechanical and electrical
installation, maintenance and specialty services and janitorial and maintenance
management services.
Financial Data. The table below sets forth historical and pro forma sum-
mary consolidated financial information of the Company and its subsidiaries.
The Statement of Operations Data for the years ended December 31, 1997 and 1998
(except pro forma amounts) have been derived from the Company's audited finan-
cial statements, which are included in the Annual Report on Form 10-K for the
fiscal year ended December 31, 1998 filed with the SEC on March 30, 1999. The
financial data have been restated from prior presentations as a result of the
Company's decision to purchase Shares.
29
<PAGE>
The unaudited pro forma financial data gives effect to (i) the transac-
tions contemplated by the Offer, including the offering of $200 million of se-
nior subordinated notes, the sale of $100 million of convertible subordinated
notes to Boss Investment and estimated borrowings under a $350 million revolv-
ing credit facility necessary to finance the purchase of 25,500,000 Shares
(24,600,000 Shares at a price of $22.50 per Share and 900,000 Shares at a price
of $22.50 per Share less the exercise price for the purchase of Option Shares);
and (ii) the 26 business combinations completed during the year ended Decem-
ber 31, 1998 and the five acquisitions completed by the Company after Decem-
ber 31, 1998, as if they had been consummated on January 1, 1998. The selected
unaudited pro forma financial data should be read in conjunction with, and is
qualified in its entirety by reference to, the unaudited pro forma financial
statements set forth below. See "Section 17. Unaudited Pro Forma Financial
Statements." The selected unaudited pro forma financial data are not necessar-
ily indicative of the operating results or the financial position that would
have been achieved had the events described above been consummated and should
not be construed as representative of future operating results or financial po-
sition.
30
<PAGE>
The summary historical financial information should be read in conjunc-
tion with, and is qualified in its entirety by reference to, the audited fi-
nancial statements and the related notes thereto from which it has been de-
rived which are included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998 filed with the SEC on March 30, 1999. The
pro forma financial information should be read in conjunction with the histor-
ical consolidated financial information and does not purport to be indicative
of the results that would actually have been obtained had the purchase of
Shares pursuant to the Offer been completed at the dates indicated or that may
be obtained in the future.
Summary Financial Data
(Dollars in thousands, except share and per share data)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------
1997 1998
---------- ------------------------
Actual Pro Forma
----------- -----------
<S> <C> <C> <C>
Statement of Operations Data:
Revenues................................ $ 70,101 $ 809,601 $ 1,467,336
Cost of revenues........................ 58,857 636,225 1,174,347
---------- ----------- -----------
Gross profit............................ 11,244 173,376 292,989
Selling, general and administrative..... 11,776 99,771 168,865
Goodwill amortization................... -- 7,653 13,425
Non-recurring acquisition costs......... -- 768 --
---------- ----------- -----------
Operating income (loss)................. (532) 65,184 110,699
Other (income) expense
Interest income....................... (2,056) (19,373) --
Interest expense...................... 208 1,054 42,491
Other, net............................ (221) (80) (3,635)
---------- ----------- -----------
Income before income taxes.............. 1,537 83,583 71,843
Provision for income taxes.............. 94 36,120 33,717
---------- ----------- -----------
Net income.............................. $ 1,443 $ 47,463 $ 38,126
========== =========== ===========
Net income per share -- Basic........... $ 0.25 $ 1.19 $ 1.77
========== =========== ===========
Net income per share -- Diluted......... $ 0.25 $ 1.16 $ 1.63
========== =========== ===========
Weighted average shares outstanding --
Basic................................. 5,683,464 39,908,364 21,597,071
========== =========== ===========
Weighted average shares outstanding --
Diluted............................... 5,865,550 40,928,452 26,314,739
========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
As of
December 31, 1998
--------------------
As of
December 31, 1997 Actual Pro Forma
----------------- ---------- ---------
<S> <C> <C> <C>
Balance Sheet Data:
Working capital....................... $528,235 $ 307,390 $117,719
Total assets.......................... 539,159 1,043,922 938,434
Long term debt, net of current
maturities........................... 1,679 3,287 429,639
Stockholders' equity.................. 529,480 837,537 289,760
Book value per share (1).............. $16.84 $18.51 $13.42
</TABLE>
- -------------------------------------------------------------------------------
(1) Book value per Share was calculated by dividing total stockholders' equity
by the number of Shares outstanding. The pro forma book value per Share
amounts for both periods were adjusted for the Offer at an approximate
cost of $585,500, including transaction fees and expenses.
31
<PAGE>
The following table sets forth the ratio of earnings to fixed charges,
on an actual and pro forma basis, for the Company for the periods indicated:
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------
1997 1998
------ ----------------
Actual Actual Pro Forma
------ ------ ---------
<S> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges(1)............ 5.79x 24.3x 2.5x
</TABLE>
- -------------------------------------------------------------------------------
(1) For purposes of computing the ratio of earnings to fixed charges: (i)
"earnings" consists of income from continuing operations before income
taxes and fixed charges; and (ii) "fixed charges" consists of interest,
amortization of debt issuance costs, and the estimated interest component
of rental expense.
Important Factors. The completion of the Offer will affect the Company and its
stockholders in a number of ways. These are discussed below. In addition to
the factors discussed below, readers are encouraged to refer to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1998 filed
on March 30, 1999 for a further discussion of the Company's business and the
risks and opportunities attendant thereto, including risks relating to its ex-
pected increased debt and its impact on its operations and acquisition pro-
gram; the ownership and rights of the Company's securities outstanding after
the Offer; the dependence on key personnel of the Company and hourly wage and
technical employees; risks related to the Company's consolidation strategy and
ability to complete and integrate acquisitions; possible significant amortiza-
tion charges; exposure to downturns in commercial and industrial construction;
and substantial competition in the facilities services industry.
This Supplement to the Offer to Purchase contains some forward-looking
statements. You can identify these statements by the fact that they do not re-
late strictly to historical or current facts. They use words like "believe,"
"may," "will," "expect," "intend," "plan," "anticipate," "estimate," or "con-
tinue" and other words and terms of similar meaning. Any or all of the for-
ward-looking statements in this Supplement to the Offer to Purchase or in any
other public statements the Company makes may turn out to be wrong. They can
be affected by inaccurate assumptions the Company might make or by known or
unknown risks and uncertainties. Many factors will be important in determining
the Company's future results. Consequently, no forward-looking statement can
be guaranteed. Actual results could differ significantly.
Increased Debt. The Company will need to borrow approximately $385.5
million to finance the Offer. After giving pro forma effect to the completion
of the Offer, acquisitions completed after December 31, 1998, the borrowings
to finance the Offer and fees and expenses relating to such borrowings, as of
December 31, 1998, the Company would have had approximately $434.2 million of
debt (excluding unused commitments of approximately $225.2 million under the
revolving credit facility). The revolving credit facility will enable the Com-
pany to fund the cash portion of future acquisitions, contingent payments that
are required by certain acquisition agreements, capital requirements and fu-
ture operations. The Company estimates that the acquisition agreements provide
for the potential payment of approximately $147.6 million in cash and Shares.
The completion of the Offer and the additional borrowings may have important
consequences. For example, it could:
. make it more difficult for the Company to satisfy its obligations
with respect to outstanding indebtedness;
. increase the Company's vulnerability to general adverse economic and
industry conditions;
32
<PAGE>
. limit the Company's ability to fund future working capital, capital
expenditures, research and development costs and other general corpo-
rate requirements;
. require the Company to dedicate a substantial portion of its cash
flow from operations to payment of its indebtedness, which will ad-
versely affect the Company's ability to meet its debt service re-
quirements and force the Company to modify its operations if its ex-
penses increase;
. place the Company at a disadvantage when compared to those of its
competitors that have less debt; and
. limit the Company's flexibility in planning for, or reacting to,
changes in its business or industry.
Debt Covenants. The indenture relating to the senior subordinated notes,
the terms relating to the convertible subordinated notes and the revolving
credit facility will contain a number of significant covenants. These covenants
will limit the Company's ability to, among other things:
. borrow additional money;
. make capital expenditures and other investments;
. pay dividends;
. merge, consolidate, or dispose of its assets;
. enter into transactions with its affiliates; and
. grant liens on its assets.
In connection with the issuance of the $100 million convertible subordi-
nated notes, so long as Boss Investment holds at least 50% of the outstanding
convertible subordinated notes, the Company may not, among other things, agree
to, or permit its subsidiaries to agree to, a provision in another agreement
that would limit the Company's ability to honor the rights of holders of the
convertible subordinated notes. The indenture for the convertible subordinated
notes that the Company will issue to Boss Investment will provide certain vot-
ing rights to the holders of the convertible subordinated notes, subject to the
adoption of amendments to the Company's restated certificate of incorporation.
If such amendments are not adopted within the time period specified in the in-
denture, the interest rate on the convertible subordinated notes will increase
to 12.5% for so long as the amendments to the restated certificate of incorpo-
ration have not been adopted and the conversion price will be reduced, as de-
scribed above.
The revolving credit facility also will require the Company and its sub-
sidiaries to meet certain financial tests. The failure to comply with these
covenants would cause a default under the revolving credit facility. A default,
if not waived, could result in acceleration of indebtedness under the revolving
credit facility, in which case the debt would become immediately due and pay-
able. If this occurs, the Company may not be able to pay its debt or borrow
sufficient funds to refinance it. Even if new financing is available, it may
not be on terms that are acceptable to the Company. Complying with these cove-
nants may cause the Company to take actions that it otherwise would not take or
not take actions that it otherwise would take.
In connection with the revolving credit facility, the Company will grant
the lenders a first priority lien on substantially all of its assets and those
of its subsidiaries to secure its obligations and those of its subsidiaries un-
der the revolving credit facility. In the event of a default under the revolv
-
33
<PAGE>
ing credit facility, the lenders under the revolving credit facility could
foreclose upon the assets pledged to secure the revolving credit facility.
Additional Information. The Company is subject to the informational fil-
ing requirements of the Exchange Act and, in accordance therewith, is obligated
to file reports and other information with the SEC relating to its business,
financial condition and other matters. Information, as of particular dates,
concerning the Company's directors and officers, their compensation, options
granted to them, the principal holders of the Company's stock and any material
interest of such persons in transactions with the Company is required to be
disclosed in proxy statements distributed to the Company's stockholders and
filed with the SEC. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the SEC
at 450 Fifth Street, N.W., Room 2120, Washington DC 20549; at its regional of-
fices located at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-
2511; and 7 World Trade Center, New York, New York 10048. Copies of such mate-
rial may also be obtained by mail, upon payment of the SEC's customary charges,
from the Public Reference Section of the SEC at Judiciary Plaza, 450 Fifth
Street, N.W., Washington DC 20549. The SEC also maintains a Website on the
Internet at http://www.sec.gov that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the SEC.
12. EFFECT OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE
EXCHANGE ACT
The Company's purchase of Shares pursuant to the Offer will reduce the
number of Shares that might otherwise trade publicly and is likely to reduce
the number of stockholders. Nonetheless, the Company believes that a sufficient
number of Shares will be outstanding and publicly traded following the Offer to
ensure a continued trading market in the Shares. Based on the published guide-
lines of the National Association of Securities Dealers, the Company does not
believe that its purchase of Shares pursuant to the Offer will cause its re-
maining Shares to no longer be quoted on Nasdaq.
The Shares are currently "margin securities" under the rules of the Fed-
eral Reserve. This has the effect, among other things, of allowing brokers to
extend credit on the collateral of the Shares. The Company believes that, fol-
lowing the purchase of Shares pursuant to the Offer, the Shares will continue
to be "margin securities" for purposes of the Federal Reserve's margin regula-
tions.
The Shares are registered under the Exchange Act, which requires, among
other things, that the Company furnish certain information to its stockholders
and to the SEC and comply with the SEC's proxy rules in connection with meet-
ings of the Company's stockholders. The Company believes that its purchase of
Shares pursuant to the Offer will not result in the Shares becoming subject to
deregistration under the Exchange Act. As of March 25, 1999, the Shares were
held of record by 755 persons.
13. CERTAIN LEGAL MATTERS
The Company is not aware of any license or regulatory permit that appears
to be material to its business that might be adversely affected by its acquisi-
tion of Shares as contemplated in the Offer or of any approval or other action
by any government or governmental, administrative or regulatory authority or
agency, domestic or foreign, that would be required for the Company's acquisi-
tion or ownership of Shares as contemplated by the Offer. The Company's sale
and Boss Investment's purchase of $100 million of convertible subordinated
notes, however, is subject to the Hart-Scott-
34
<PAGE>
Rodino Antitrust Improvement Acts of 1976, as amended (the "HSR Act"), which
provides that certain acquisition transactions may not be consummated unless
certain information has been furnished to the Antitrust Division of the United
States Department of Justice and the United States Federal Trade Commission
and certain waiting period requirements have been satisfied. The Company and
Boss Investment made the required filings on March 31, 1999. The waiting pe-
riod under the HSR Act with respect to the sale to Boss Investment will expire
at 11:59 p.m. on the thirtieth day after the date of the filings unless early
termination of the waiting period is granted. The Company believes that the
acquisition of the convertible subordinated notes will not violate the HSR Act
or any other antitrust laws. Should any other such approval or other action be
required, the Company currently contemplates that it will seek such approval
or other action. The Company cannot predict whether it may be required to de-
lay the acceptance for payment of, or payment for, Shares tendered pursuant to
the Offer pending the outcome of any such matter. There can be no assurance
that any such approval or other action, if needed, would be obtained or would
be obtained without substantial conditions or that the failure to obtain any
such approval or other action might not result in adverse consequences to the
Company's business. The Company's obligations under the Offer to accept for
payment and pay for Shares are subject to certain conditions. See Section 6.
14. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
In General. The following summary describes certain United States fed-
eral income tax consequences relevant to the Offer. The discussion contained
in this summary is based upon the Internal Revenue Code of 1986, as amended to
the date hereof (the "Code"), existing and proposed United States Treasury
regulations promulgated thereunder, rulings, administrative pronouncements and
judicial decisions, changes to which could materially affect the tax conse-
quences described herein and could be made on a retroactive basis. As dis-
cussed below, depending upon a stockholder's particular circumstances, the
Company's purchase of such stockholder's Shares pursuant to the Offer may be
treated either as a sale or a dividend for United States federal income tax
purposes. Accordingly, such a purchase generally will be referred to in this
section of the Supplement to the Offer to Purchase as an "exchange" of Shares
for cash.
Scope. This summary does not apply to Shares acquired as compensation
(or Options that are exchanged for cash). The summary discusses only Shares
held as capital assets, within the meaning of Section 1221 of the Code, and
does not address all of the tax consequences that may be relevant to particu-
lar stockholders in light of their personal circumstances, or to certain types
of stockholders (such as certain financial institutions, dealers in securities
or commodities, insurance companies, tax-exempt organizations or persons who
hold Shares as a position in a "straddle" or as a part of a "hedging" or "con-
version" transaction for United States federal income tax purposes). In par-
ticular, the discussion of the consequences of an exchange of Shares for cash
pursuant to the Offer applies only to a United States Holder. For purposes of
this summary, a United States Holder is a holder of Shares that is (i) a citi-
zen or resident of the United States; (ii) a corporation, partnership or other
entity created or organized in or under the laws of the United States, any
State or any political subdivision thereof; (iii) an estate, the income of
which is subject to United States federal income taxation regardless of its
source; or (iv) a trust, if a court within the United States is able to exer-
cise primary supervision of the administration of the trust and one or more
United States persons have the authority to control all substantial decisions
of the trust. This discussion does not address the tax consequences to foreign
stockholders who will be subject to United States federal income tax on a net
basis on the proceeds of their exchange of Shares pursuant to the Offer be-
cause such income is effectively connected with the conduct of a trade or
business within the United States. Such stock-
35
<PAGE>
holders are generally taxed in a manner similar to United States Holders (for
purposes of this section, "Stockholder"); however, certain special rules apply.
Foreign stockholders who are not subject to United States federal income tax on
a net basis should see Section 3 for a discussion of the applicable United
States withholding rules and the potential for obtaining a refund of all or a
portion of the tax withheld.
The summary discussion set forth herein is included for general informa-
tion only. The tax consequences of a sale of Shares pursuant to the Offer may
vary depending upon, among other things, the particular situation and circum-
stances of the tendering Stockholder. No information is provided herein as to
the state, local or foreign tax consequences of the transaction contemplated by
the Offer. Stockholders are urged to consult their own tax advisors to deter-
mine the specific federal, state, local, foreign and other tax consequences of
sales made by them pursuant to the Offer, including the effect of the stock
ownership attribution rules mentioned herein.
Characterization of the Sale. An exchange of Shares by a Stockholder pur-
suant to the Offer will be a taxable transaction for United States federal in-
come tax purposes. The United States federal income tax consequences of such
exchange to a Stockholder may vary depending upon the Stockholder's particular
facts and circumstances. Under Section 302 of the Code, an exchange of Shares
by a Stockholder with the Company pursuant to the Offer will be treated as a
"sale or exchange" of such Shares for United States federal income tax purposes
(rather than as a deemed distribution by the Company with respect to Shares
continued to be held (or deemed to be held) by the tendering Stockholder) if
the receipt of cash upon such exchange (i) is "substantially disproportionate"
with respect to the Stockholder; (ii) results in a "complete redemption" of the
Stockholder's interest in the Company; or (iii) is "not essentially equivalent
to a dividend" with respect to the Stockholder. These tests (the "Section 302
tests") are explained more fully below.
If any of the Section 302 tests is satisfied, and the sale of the ten-
dered Shares is therefore treated as a "sale or exchange" of such Shares for
United States federal income tax purposes, the tendering Stockholder will rec-
ognize capital gain or loss equal to the difference between the amount of cash
received by the Stockholder pursuant to the Offer and the Stockholder's ad-
justed tax basis in the Shares sold pursuant to the Offer. Such capital gain or
loss will generally be long-term capital gain or loss if the tendering Stock-
holder held the tendered Shares for more than 12 months. Under current law, any
such gain or loss recognized by individuals, trusts or estates will be subject
to a maximum 20% tax rate.
If none of the Section 302 tests is satisfied, then, to the extent of the
Company's current and accumulated earnings and profits, the tendering Stock-
holder will be treated as having received a dividend taxable as ordinary income
in an amount equal to the entire amount of cash received by the Stockholder
pursuant to the Offer (without reduction for the adjusted tax basis of the
Shares sold pursuant to the Offer), no loss will be recognized, and (subject to
reduction as described below for corporate Stockholders eligible for the divi-
dends-received deduction) the tendering Stockholder's adjusted tax basis in the
Shares exchanged pursuant to the Offer will be added to such Stockholder's ad-
justed tax basis in its remaining Shares, if any. No assurance can be given
that any of the Section 302 tests will be satisfied as to any particular Stock-
holder, and thus no assurance can be given that any particular Stockholder will
not be treated as having received a dividend taxable as ordinary income. If the
exchange of Shares by a Stockholder is not treated as a sale or exchange for
federal income tax purposes, any cash received for Shares pursuant to the Offer
in excess of the current and accumulated earnings and profits of the Company
will be treated, first, as a nontaxable return of
36
<PAGE>
capital to the extent of the Stockholder's adjusted tax basis in its Shares,
and thereafter, as taxable capital gain, to the extent the cash received ex-
ceeds such basis.
Constructive Ownership of Stock. In determining whether any of the Sec-
tion 302 tests is satisfied, a Stockholder must take into account not only the
Shares which are actually owned by the Stockholder, but also Shares which are
constructively owned by the Stockholder by reason of the attribution rules con-
tained in Section 318 of the Code. Under Section 318 of the Code, a Stockholder
may be treated as owning (i) Shares that are actually owned, and in some cases
constructively owned, by certain related individuals or entities in which the
Stockholder owns an interest, or, in the case of Stockholders that are enti-
ties, by certain individuals or entities that own an interest in the Stockhold-
er; and (ii) Shares which the Stockholder has the right to acquire by exercise
of an Option or a conversion right contained in another instrument held by the
Stockholder. Each Stockholder should be aware that, because proration may occur
in the Offer, even if all of the Shares actually and constructively owned by a
Stockholder are tendered pursuant to the Offer, fewer than all of such Shares
may be purchased by the Company. Thus, proration may affect whether a sale by a
Stockholder pursuant to the Offer will meet any of the Section 302 tests.
Section 302 Tests. One of the following tests must be satisfied in order
for the exchange of Shares pursuant to the Offer to be treated as a sale or ex-
change for federal income tax purposes.
a. Substantially Disproportionate Test. The receipt of cash by a Stockholder
will be "substantially disproportionate" if the percentage of the
outstanding Shares actually and constructively owned by the Stockholder
immediately following the exchange of Shares pursuant to the Offer
(treating as not being outstanding all of the Shares purchased pursuant
to the Offer) is less than 80% of the percentage of the outstanding
Shares actually and constructively owned by such Stockholder immediately
before the exchange of Shares pursuant to the Offer (treating as
outstanding all of the Shares purchased pursuant to the Offer).
Stockholders should consult their own tax advisors with respect to the
application of the "substantially disproportionate" test to their
particular situation and circumstances.
b. Complete Redemption Test. The receipt of cash by a Stockholder will be a
"complete redemption" of the Stockholder's interest in the Company if
either (i) all of the Shares actually and constructively owned by the
Stockholder are exchanged pursuant to the Offer; or (ii) all of the
Shares actually owned by the Stockholder are exchanged pursuant to the
Offer and, with respect to the Shares constructively owned by the
Stockholder which are not exchanged pursuant to the Offer, the
Stockholder is eligible to waive (and effectively waives) constructive
ownership of all of such Shares under procedures described in Section
302(c) of the Code. Stockholders considering making such a waiver should
do so in consultation with their own tax advisors.
c. Not Essentially Equivalent to a Dividend Test. Even if the receipt of
cash by a Stockholder fails to satisfy the "substantially
disproportionate" test and the "complete redemption" test, a Stockholder
may nevertheless satisfy the "not essentially equivalent to a dividend"
test if the Stockholder's exchange of Shares pursuant to the Offer
results in a "meaningful reduction" in the Stockholder's proportionate
interest in the Company. Whether the receipt of cash by a Stockholder who
exchanges Shares pursuant to the offer will be "not essentially
equivalent to a dividend" will depend upon the Stockholder's particular
facts and circumstances. The IRS has indicated in published Revenue
Rulings that even a small reduction in the proportionate interest of a
small minority Stockholder in a publicly-held
37
<PAGE>
corporation who exercises no control over corporate affairs may
constitute such a "meaningful reduction." The IRS held, for example, in
Rev. Rul. 76-385, 1976-2 C.B. 92, that a reduction in the percentage
ownership interest of a Stockholder in a publicly-held corporation who
held a minimal interest and who exercised no control over the affairs of
the corporation from .0001118% to .0001081% (a reduction of only 3.3% in
the Stockholder's prior percentage ownership interest) would constitute a
"meaningful reduction." Stockholders expecting to rely on the "not
essentially equivalent to a dividend" test should consult their own tax
advisors as to its application to their particular situation and
circumstances.
The Company cannot predict whether or to what extent the Offer will be
over-subscribed. If the Offer is over-subscribed, proration of the tenders pur-
suant to the Offer will cause the Company to accept fewer Shares than are ten-
dered. Therefore, a Stockholder can be given no assurance that a sufficient
number of such Stockholder's Shares will be exchanged pursuant to the Offer to
ensure that such exchange will be treated as a sale, rather than as a dividend,
for United States federal income tax purposes pursuant to the rules discussed
above unless the Stockholder makes a conditional tender as described in Section
3 and the number of Shares to be exchanged pursuant to the conditional tender
would satisfy one of the Section 302 tests.
If a Stockholder sells Shares to persons other than the Company at or
about the time such holder also exchanges Shares pursuant to the Offer, and the
various sales effected by the Stockholder are part of an overall plan to reduce
or terminate such Stockholder's proportionate interest in the Company, then the
sales to persons other than the Company may, for United States federal income
tax purposes, be integrated with the Stockholder's exchange of Shares pursuant
to the Offer and, if integrated, should be taken into account in determining
whether the Stockholder satisfies any of the Section 302 tests described above.
Corporate Shareholder Dividend Treatment. If an exchange of Shares pursu-
ant to the Offer by a corporate Stockholder is treated as a dividend, the cor-
porate Stockholder may be entitled to claim a deduction in an amount equal to
70% of the gross dividend under Section 243 of the Code, subject to applicable
limitations. Corporate Stockholders should consider the effect of Section
246(c) of the Code, which disallows the 70% dividends-received deduction with
respect to any dividend on any share of stock that is held for 45 days or less
during the 90-day period beginning on the date which is 45 days before the date
on which such share becomes ex-dividend with respect to such dividend. For this
purpose, the length of time a taxpayer is deemed to have held stock may be re-
duced by periods during which the taxpayer's risk of loss with respect to the
stock is diminished by reason of the existence of certain options or other
hedging transactions. Moreover, under Section 246A of the Code, if a corporate
Stockholder has incurred indebtedness directly attributable to an investment in
Shares, the 70% dividends-received deduction may be reduced by a percentage
generally computed based on the amount of such indebtedness and the Stockhold-
er's total adjusted tax basis in the Shares.
In addition, any amount received by a corporate Stockholder pursuant to
the Offer that is treated as a dividend may constitute an "extraordinary divi-
dend" under Section 1059 of the Code. In such case, a corporate Stockholder
would be required under Section 1059(a) of the Code to reduce its adjusted tax
basis (but not below zero) in its Shares by the non-taxed portion of the ex-
traordinary dividend (i.e., the portion of the dividend for which a deduction
is allowed), and, if such portion exceeds the Stockholder's adjusted tax basis
in its Shares, to treat the excess as gain from the sale of such Shares in the
year in which the dividend is received. These basis reduction and gain recogni-
tion
38
<PAGE>
rules would be applied by taking account only of the Stockholder's adjusted tax
basis in the Shares that were sold, without regard to other Shares that the
Stockholder may continue to own. Corporate Stockholders should consult their
own tax advisors as to the application of Section 1059 of the Code to the Of-
fer, and to any dividends which may be treated as paid with respect to Shares
sold pursuant to the offer.
Foreign Stockholders. See Section 3 with respect to the withholding of
taxes for foreign stockholders.
Backup Withholding. See Section 3 with respect to the application of
United States federal income tax backup withholding.
Tax Considerations for Holders of Option Shares or ESPP Shares
Option Shares. An Option holder who receives cash in the Offer in ex-
change for Option Shares will be treated as receiving compensation income per
Share sold equal to the excess of $22.50 over the exercise price per Share of
the relevant Option. Such income will be taxed to the Option holder at ordinary
income rates and will be subject to withholding for income and employment tax-
es.
ESPP Shares. The first offering period under the ESPP commenced July 1,
1998, and therefore no ESPP Shares have been held for a period that exceeds one
year from the commencement of the offering. Accordingly, of the total gain re-
alized on any exchange of ESPP Shares (i.e., the difference between $22.50 mul-
tiplied by the number of ESPP Shares exchanged and the aggregate purchase price
paid for such shares), the portion that equals the difference between the mar-
ket value of the shares on the date the shares were acquired and the price paid
for the shares will be treated as compensation income (taxed at ordinary income
tax rates). Any remaining portion (i.e., the difference between $22.50 multi-
plied by the number of ESPP Shares exchanged and the market value of the shares
on the date the shares were acquired) will be taxed as described under the
heading "Characterization of the Sale" if any of the Section 302 tests are sat-
isfied and as described under the heading "Characterization of the Sale" if
none of the Section 302 tests are satisfied.
15. EXTENSION OF THE OFFER; TERMINATION; AMENDMENT
Subject to the last paragraph of this Section 15, the Company expressly
reserves the right, in its sole discretion, at any time and from time to time,
and regardless of whether or not any of the events set forth in Section 6 shall
have occurred or shall be deemed by the Company to have occurred, to extend the
period of time during which the Offer is open and thereby delay acceptance for
payment of, and payment for, any Shares by giving oral or written notice of
such extension to Harris Trust and making a public announcement thereof.
Subject to the last paragraph of this Section 15, the Company also ex-
pressly reserves the right, in its sole discretion, to terminate the Offer and
not accept for payment or pay for any Shares not theretofore accepted for pay-
ment or paid for or, subject to applicable law, to postpone payment for Shares
upon the occurrence of any of the conditions specified in Section 6 hereof by
giving oral or written notice of such termination or postponement to Harris
Trust and making a public announcement thereof. The Company's reservation of
the right to delay payment for Shares which it has accepted for payment is lim-
ited by Rule 13e-4(f)(5) promulgated under the Exchange Act, which requires
that the Company must pay the consideration offered or return the Shares ten-
dered promptly after termination or withdrawal of a tender offer.
39
<PAGE>
Subject to compliance with applicable law, the Company further reserves
the right, in its sole discretion, and regardless of whether any of the events
set forth in Section 6 shall have occurred or shall be deemed by the Company to
have occurred, to amend the Offer in any respect (including, without limita-
tion, by decreasing or increasing the consideration offered in the Offer to
holders of Shares or by decreasing or increasing the number of Shares being
sought in the Offer). Amendments to the Offer may be made at any time and from
time to time effected by public announcement thereof, such announcement, in the
case of an extension, to be issued no later than 12:00 noon, New York City
time, on the next business day after the last previously scheduled or announced
Expiration Date. Any public announcement made pursuant to the Offer will be
disseminated promptly to stockholders in a manner reasonably designated to in-
form stockholders of such change. Without limiting the manner in which the Com-
pany may choose to make any public announcement, except as provided by applica-
ble law (including Rule 13e-4(e)(2) promulgated under the Exchange Act), the
Company shall have no obligation to publish, advertise or otherwise communicate
any such public announcement other than by making a release to the Dow Jones
News Service.
If the Company makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, the Company will extend the Offer to the extent required by Rule 13e-4
promulgated under the Exchange Act, which requires that the minimum period dur-
ing which the Offer must remain open following material changes in the terms of
the Offer or information concerning the Offer (other than a change in price or
a change in percentage of securities sought) will depend upon the facts and
circumstances, including the relative materiality of such terms or information.
Pursuant to Rule 13e-4(f)(1)(ii), if (i) the Company increases or decreases the
price to be paid for Shares, the Company increases the number of Shares being
sought and such increase in the number of Shares being sought exceeds 2% of the
outstanding Shares, or the Company decreases the number of Shares being sought;
and (ii) the Offer is scheduled to expire at any time earlier than the expira-
tion of a period ending on the tenth business day from, and including, the date
that notice of such increase or decrease is first published, sent or given, the
Offer will be extended until the expiration of such period of ten business
days.
Notwithstanding anything else herein to the contrary, pursuant to the
terms of the Company's agreement with Boss Investment, (a) no condition to the
Offer may be waived in whole or in part, and the Offer may not be terminated
without the prior written consent of Boss Investment and (b) the Company shall,
unless otherwise requested by Boss Investment, and may, without the prior
written consent of Boss Investment, extend the Offer periodically through June
20, 1999, if at the then scheduled or any extended expiration of the Offer, any
of the conditions of the offer shall not be satisfied or waived, until such
time as all such conditions are satisfied or waived.
16. FEES AND EXPENSES
MacKenzie Partners, Inc., Harris Trust Company of New York, AST
StockPlan, Inc. and American Stock Transfer and Trust Company are providing
services in connection with the Offer, and the Company will pay reasonable and
customary compensation for their services in such capacities. The Company will
also reimburse MacKenzie Partners and Harris Trust for out-of-pocket expenses
and has agreed to indemnify MacKenzie Partners and Harris Trust against certain
liabilities in connection with the Offer, including certain liabilities under
the federal securities laws. MacKenzie Partners may contact stockholders by
mail, telephone, telex, telegraph and personal interviews, and may request bro-
kers, dealers and other nominee stockholders to forward materials relating to
the
40
<PAGE>
Offer to beneficial owners. Neither MacKenzie Partners nor Harris Trust has
been retained to make solicitations or recommendations in connection with the
Offer.
The Company will not pay fees or commissions to any broker, dealer, com-
mercial bank, trust company or other person for soliciting any Shares pursuant
to the Offer. The Company will, however, on request, reimburse such persons
for customary handling and mailing expenses incurred in forwarding materials
in respect of the Offer to the beneficial owners for which they act as nomi-
nees. No such broker, dealer, commercial bank or trust company has been autho-
rized to act as the Company's agent for purposes of the Offer. The Company
will pay (or cause to be paid) any stock transfer taxes on its purchase of
Shares, except as otherwise provided in Instruction 6 of the Letter of Trans-
mittal.
17. UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The financial statements of the Company included in the following unau-
dited pro forma financial statements represent the consolidated financial
statements of the Company, which are included in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1998. The unaudited pro
forma financial data gives effect to:
. the purchase in the Offer of 25,500,000 Shares, consisting of, for
purposes of the pro forma financial data, approximately 24,600,000
Shares at a price of $22.50 per Share and approximately
900,000 Shares at a price of $22.50 per Share less the exercise price
for the purchase of Option Shares underlying Options;
. the businesses the Company acquired in 1998 (the "1998 Acquisitions")
and 1999 (the "1999 Acquisitions"), in each case as if they had been
acquired on January 1, 1998; and
. the financing of the Offer and the 1999 Acquisitions from the
proceeds of the sale of the senior subordinated notes and the
convertible subordinated notes, estimated borrowings under the
revolving credit facility and available cash.
The pro forma financial statements do not reflect any earn-out payments pay-
able with respect to completed and pending acquisitions. The Company estimates
that the acquisition agreements provide for the potential payment of approxi-
mately $147.6 million in cash and Shares.
The following unaudited pro forma balance sheet gives effect to the
Offer, including the financing of the Offer, and the 1999 Acquisitions as if
they had been consummated as of December 31, 1998.
The unaudited pro forma statements of operations give effect to (i) the
Offer, including the financing of the Offer, and (ii) the 26 acquisitions com-
pleted during the year ended December 31, 1998 which were accounted for under
the purchase method of accounting (the "1998 Purchases") and the 1999 Acquisi-
tions as if they had been consummated on January 1, 1998, and (iii) certain
other pro forma adjustments to the historical financial statements.
The pro forma adjustments are based on estimates, available information
and certain assumptions and may be revised as additional information becomes
available. The pro forma financial data does not purport to represent what the
Company's consolidated financial position and results of operations would ac-
tually have been if such transactions in fact had occurred on the assumed
dates and are not necessarily representative of the Company's financial posi-
tion or results of operations for any future period. The unaudited pro forma
financial statements should be read in conjunction with the audited financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1998.
41
<PAGE>
Unaudited Pro Forma Balance Sheet
December 31, 1998
(Dollars in thousands)
<TABLE>
<CAPTION>
1999 Acquisitions
Building One ---------------------
Services Pro Forma Tender Pro Forma
Corporation Historical Adjustment Offer Combined
------------ ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS (A) (B)
Current assets:
Cash and cash
equivalents........... $ 213,096 $ 2,966 $(42,230) $(563,502)(i) $ 13,096
402,766 (ii)
Accounts receivable,
net................... 246,623 24,798 271,421
Cost and estimated
earnings in excess of
billings on
uncompleted
contracts............. 25,441 4,160 29,601
Prepaid expenses and
other current
assets................ 17,108 625 17,733
---------- ------- -------- --------- --------
Total current
assets.............. 502,268 32,549 (42,230) (160,736) 331,851
Property and equipment,
net.................... 38,967 4,812 43,779
Intangible assets, net.. 496,381 37,201 533,582
Other assets............ 6,306 916 22,000 29,222
---------- ------- -------- --------- --------
Total assets......... $1,043,922 $38,277 $ (5,029) $(138,736) $938,434
========== ======= ======== ========= ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt........ $ 2,167 $ 2,383 $ $ $ 4,550
Accounts payable....... 75,029 10,412 85,441
Billings in excess of
costs and estimated
earnings on
uncompleted
contracts............. 58,773 3,087 61,860
Income taxes payable... 6,125 (2,801) 3,324
Accrued compensation... 27,737 3,098 30,835
Accrued liabilities.... 25,047 3,075 28,122
---------- ------- -------- --------- --------
Total current
liabilities......... 194,878 22,055 (2,801) 214,132
Long-term debt.......... 3,287 1,586 424,766 429,639
Other liabilities....... 8,220 125 (3,442) 4,903
---------- ------- -------- --------- --------
Total liabilities.... 206,385 23,766 (3,442) 421,965 648,674
Stockholders' equity:
Common stock........... 45 120 (119) (25) 21
Additional paid-in
capital............... 832,514 60 12,863 (600,430) 245,007
Treasury stock......... (41,832) (78) 78 41,832
Retained earnings...... 47,255 14,409 (14,409) (2,078) 45,177
Accumulated other
comprehensive
(loss)................ (445) (445)
---------- ------- -------- --------- --------
Total stockholders'
equity ............. 837,537 14,511 (1,587) (560,701) 289,760
---------- ------- -------- --------- --------
Total liabilities and
stockholders'
equity.............. $1,043,922 $38,277 $ (5,029) $(138,736) $938,434
========== ======= ======== ========= ========
</TABLE>
42
<PAGE>
Unaudited Pro Forma Statement of Operations
For the Year Ended December 31, 1998
(Dollars in thousands, except share and per share data)
<TABLE>
<CAPTION>
Building
One
Services 1998 1999 Pro Forma Pro Forma
Corporation Purchases Acquisitions Adjustments Combined
----------- --------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C>
Revenues................ $ 809,601 $502,663 $155,072 $ $1,467,336
Cost of revenues........ 636,225 411,042 127,080 1,174,347
---------- -------- -------- -------- ----------
Gross profit........... 173,376 91,621 27,992 292,989
Selling, general and
administrative
expenses............... 99,771 71,905 20,546 (23,357)(A) 168,865
Goodwill amortization... 7,653 237 5,535 (B) 13,425
Non-recurring pooling
costs.................. 768 (768)(C)
---------- -------- -------- -------- ----------
Operating income....... 65,184 19,479 7,446 18,590 110,699
Other (income) expense:
Interest expense....... 1,054 1,835 441 39,161 (D) 42,491
Interest income........ (19,373) (1,852) (78) 21,303 (E)
Other, net............. (80) (1,455) (150) (1,950)(F) (3,635)
---------- -------- -------- -------- ----------
Income before provision
for income taxes....... 83,583 20,951 7,233 (39,924) 71,843
Provision for income
taxes.................. 36,120 6,550 793 (9,746)(G) 33,717
---------- -------- -------- -------- ----------
Net income.............. $ 47,463 $ 14,401 $ 6,440 $(30,178) $ 38,126
========== ======== ======== ======== ==========
Net income per share--
Basic.................. $ 1.19 $ 1.77
========== ==========
Net income per share--
Diluted................ $ 1.16 $ 1.63
========== ==========
Weighted average shares
outstanding--Basic..... 39,908,364 21,597,071
========== ==========
Weighted average shares
outstanding--Diluted... 40,928,452 26,314,739
========== ==========
</TABLE>
43
<PAGE>
Notes to Unaudited Pro Forma Financial Statements
(Dollars in thousands, except share and per share data)
Note 1--Unaudited Pro Forma Balance Sheet Adjustments
(A) Adjustment to reflect the purchase of the 1999 Acquisitions for
consideration of approximately $42,230 in cash (excluding related
professional fees) and 922,019 Shares resulting in excess purchase price
over the fair value of net assets acquired of $37,201. Such allocations
are preliminary in nature, pending the outcome of a detailed analysis
being performed by the Company of the assets and liabilities acquired. For
purposes of computing the estimated purchase price for business
combinations accounted for under the purchase method of accounting, the
value of the Shares was determined in consideration of restrictions, if
applicable, on the transferability of the Shares issued.
(B) (i) Adjustment to reflect the use of cash to purchase the 25,500,000
Shares, consisting of 24,600,000 Shares at a price of $22.50 per Share and
900,000 Shares at a price of $22.50 per Share less the exercise price for
outstanding Options estimated to be exercised, including applicable
transaction fees of $3,000.
(ii) Adjustment to reflect the sale of $200,000 of senior subordinated notes
at an assumed interest rate of 10.5% and $100,000 of 7.5% convertible
subordinated notes and $124,766 of borrowings under the revolving credit
facility at an assumed rate of 7.5%. Additionally, the adjustment reflects
approximately $22,000 of debt issue costs which will be capitalized and
amortized over the life of the debt.
As a result of the Company allowing for the exchange of an estimated 900,000
Options in the tender offer, compensation expense is recorded to the extent
that the Option holder exercises the Option for the net cash payments made
upon exercise. The Company estimates that the compensation expense related
to the Option Shares purchased in the tender offer will approximate $3,464,
assuming the 900,000 Option Shares are purchased. For purposes of the pro
forma balance sheet, the Company has reflected the after-tax compensation
expense of $2,078 ($3,464 before the benefit from income taxes) as a
reduction to retained earnings. Additionally, income taxes payable has been
decreased by approximately $2,801 to reflect the expected income tax benefit
and additional paid-in-capital has been increased by $4,879. The Company has
not included these items as compensation expense in the unaudited pro forma
statement of operations because they are of a non-recurring nature and are
directly related to the tender offer.
44
<PAGE>
Notes To Unaudited Pro Forma Financial Statements--(Continued)
(Dollars in thousands, except share and per share data)
Note 2--Unaudited Pro Forma Statements of Operations Adjustments
(A) Adjustment to reflect the modifications in salaries, bonuses and benefits
to owners of the 1998 Purchases, and the 1999 Acquisitions to which they
have agreed prospectively.
(B) Adjustment to reflect the increase in amortization expense relating to
goodwill recorded in purchase accounting related to the 1998 Purchases and
the 1999 Acquisitions for the periods prior to the date of acquisition.
The goodwill is being amortized over an estimated life of 40 years.
(C) Adjustment to reflect the reduction in one-time non-recurring acquisition
costs related to pooling-of-interests business combinations. These costs
consist of legal, accounting and broker fees.
(D) Adjustment to reflect the increase in interest expense as follows:
<TABLE>
<S> <C>
Interest expense on the senior subordinated notes at an assumed
rate of 10.5%.................................................... $21,000
Interest expense on the convertible subordinated notes at 7.5%.... 7,500
Interest expense on the borrowings of $124,766 under the new
credit facility at an assumed rate of 7.5%....................... 9,357
Commitment fees on the unused portion of the new credit facility
of 0.5%.......................................................... 1,126
Interest expense on other secured debt at an average rate of
7.5%............................................................. 708
-------
Subtotal........................................................ 39,691
Elimination of historical interest expense........................ (3,330)
Amortization of debt financing costs.............................. 2,800
-------
$39,161
=======
</TABLE>
Depending on market conditions at the time the senior subordinated notes
are offered and the revolving credit facility is obtained, the interest
rates may vary from those indicated herein. A 1/8 of 1% change in the in-
terest rate on the senior subordinated notes and the revolving credit fa-
cility would change interest expense and net income as follows:
<TABLE>
<CAPTION>
Senior Subordinated Revolving Credit
Notes Facility
------------------- ----------------
<S> <C> <C>
Interest expense..................... $250 $156
Net income........................... $150 $ 94
</TABLE>
(E) Adjustment to eliminate interest income relating to the cash consideration
used in the acquisition of the 1998 Purchases, the 1999 Acquisitions and
cash used in the tender offer.
(F) Adjustment to reflect the elimination of minority interest associated with
the acquisition of the remaining 50% interest of a currently 50% owned
business by the Company.
(G) Adjustment to reflect the incremental provision for federal and state in-
come taxes assuming a combined federal and state statutory rate of approx-
imately 40% and the non-deductibility of certain goodwill amortization.
45
<PAGE>
Notes To Unaudited Pro Forma Financial Statements--(Continued)
(Dollars in thousands, except share and per share data)
Note 3--Shares Used To Compute Earnings Per Share
Basic pro forma earnings per Share is calculated based upon 21,597,071
weighted average Shares outstanding for the year December 31, 1998. This amount
represents the Shares outstanding subsequent to the purchase in the tender of-
fer of 24,600,000 Shares as well as the repurchase of an estimated 900,000 Op-
tion Shares from the exercise of certain Options.
Diluted earnings per Share is calculated based upon the weighted average
Shares outstanding of 21,604,084, the incremental Shares assuming the convert-
ible subordinated notes convert into Shares and the dilution attributable to
Options and warrants outstanding subsequent to the tender offer.
The weighted average Shares outstanding used to calculate pro forma earn-
ings per Share for the year ended December 31, 1998 are as follows:
<TABLE>
<CAPTION>
Year ended
December 31, 1998
-----------------
<S> <C>
Basic earnings per Share:
Net income.................................................. $ 38,126
Pro forma weighted average Shares outstanding -- Basic...... 21,597,071
-----------
Net income per Share -- Basic............................... $ 1.77
===========
Diluted earnings per Share:
Net income ................................................. $ 38,126
Plus: Interest expense on 7.5% convertible subordinated
notes and related amortization expense on debt issue costs
net of applicable income taxes............................. 4,788
-----------
Net income on an as if converted basis...................... 42,914
-----------
Pro forma weighted average Shares outstanding -- Basic...... 21,597,071
Dilution attributable to options and warrants............... 273,224
Convertible subordinated notes, on an as if converted
basis...................................................... 4,444,444
-----------
Pro forma weighted average Shares outstanding -- Diluted.... 26,314,739
-----------
Net income per Share -- Diluted.............................. $ 1.63
===========
</TABLE>
18. MISCELLANEOUS
The Company is not aware of any jurisdiction where the making of the Of-
fer is not in compliance with applicable law. However, the Company may, at its
discretion, take such action as it may deem necessary for the Company to make
the Offer in any jurisdiction and extend the Offer to holders in such jurisdic-
tion.
Pursuant to Rule 13e-4 promulgated under the Exchange Act, the Company
has filed with the SEC Amendment No. 1 to its Issuer Tender Offer Statement on
Schedule 13E-4 (the "Amended Schedule 13E-4") which contains additional infor-
mation with respect to the Offer. The Amended Schedule 13E-4, including the ex-
hibits and any additional amendments thereto, may be examined, and copies may
be obtained, at the same places and in the same manner as is set forth in Sec-
tion 11 with respect to information concerning the Company.
46
<PAGE>
No person has been authorized to give any information or make any repre-
sentation on behalf of the Company in connection with the Offer other than
those contained in this Supplement to the Offer to Purchase or in the related
Letter of Transmittal. If given or made, such information or representation
must not be relied upon as having been authorized by the Company.
Building One Services Corporation
April 6, 1999
47
<PAGE>
A holder of Shares, other than Option Shares and ESPP Shares, or such
stockholder's broker, dealer, commercial bank, trust company or other nominee,
should properly complete and send or deliver the Letter of Transmittal (or a
manually signed facsimile thereof) and certificates for the Shares, other than
Pledged Shares, and any other required documents to Harris Trust at one of its
addresses set forth below:
The Depositary for the Offer is:
Harris Trust Company of New York
By Mail: Wall Street Station
Post Office Box 1023
New York, NY 10268-1023
By Hand/Overnight Courier: Receive Window
Wall Street Plaza
88 Pine Street, 19th Floor
New York, NY 10005
By Facsimile Transmission: 212/701-7636
Confirm Receipt of Notice of Guaranteed Delivery by Telephone (collect):
212/701-7624
A holder of Option Shares or ESPP Shares should follow the applicable
procedures for tendering such Shares in the separate documents relating
to the tendering of Shares.
Any questions or requests for assistance or for additional copies of this
Supplement to the Offer to Purchase, the Letter of Transmittal, the Notice of
Guaranteed Delivery or any of the other documents referred to herein may be di-
rected to MacKenzie Partners, at the telephone number and address below. Stock-
holders may also contact their broker, dealer, commercial bank or trust company
for assistance concerning the Offer. To confirm delivery of Shares, stockhold-
ers are directed to contact Harris Trust.
The Information Agent for the Offer is:
[LOGO OF MACKENZIE PARTNERS, INC. APPEARS HERE]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
CALL TOLL FREE (800) 322-2885
<PAGE>
LETTER OF TRANSMITTAL
TO ACCOMPANY SHARES OF COMMON STOCK
OF
BUILDING ONE SERVICES CORPORATION
TENDERED PURSUANT TO THE SUPPLEMENT TO THE OFFER TO PURCHASE
DATED APRIL 6, 1999
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 11:59 P.M., NEW YORK CITY TIME, ON
APRIL 22, 1999,
UNLESS THE OFFER IS EXTENDED
Depositary: HARRIS TRUST COMPANY OF NEW YORK
By Mail: By Hand/Overnight Courier:
- --------------------------------------------------------------------------------
Wall Street Station Receive Window
Post Office Box 1023 Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19th Floor
New York, NY 10005
By Facsimile Transmission:
(for Eligible Institutions Only)
(212) 701-7636
For Information (call collect):
(212) 701-7624
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
The instructions accompanying this Letter of Transmittal should be read
carefully before this Letter of Transmittal is completed.
This Letter of Transmittal is to be used (a) if you desire to effect the
tender transaction yourself; (b) if you intend to request your broker, dealer,
commercial bank, trust company or other nominee to effect the transaction for
you and the Shares (as defined below) are not registered in the name of such
broker, dealer, commercial bank, trust company or other nominee; and (c) by a
broker, dealer, commercial bank, trust company or other nominee effecting the
transaction as a registered owner or on behalf of a registered owner. To accept
the Offer in accordance with its terms, a properly completed and duly executed
Letter of Transmittal (or photocopy thereof bearing original signature(s) and
any required signature guarantees), any certificates representing Shares
tendered (other than Pledged Shares, as defined below), and any other documents
required by this Letter of Transmittal should be mailed or delivered to the
Depositary at the appropriate address set forth herein and must be received by
the Depositary prior to 11:59 p.m., New York City time, on April 22, 1999, or
such later time and date to which the Offer is extended, unless the tendering
party has satisfied the conditions for guaranteed delivery described in Section
3 of the Supplement to the Offer to Purchase or the Shares are pledged to
Building One Services Corporation (the "Pledged Shares"). Stockholders are not
required to pay a service charge to Building One Services Corporation or the
Depositary in connection with their tender of Shares, but may be charged a fee
by a broker, dealer or other institution for processing the tender requested.
Delivery of documents to a book-entry transfer facility does not constitute
delivery to the Depositary.
1
<PAGE>
DESCRIPTION OF SHARES TENDERED
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, EXACTLY AS NAME(S) APPEAR(S) ON TENDERED CERTIFICATE(S))
DESCRIPTION OF SHARES TENDERED
(See Instructions 3 and 4)
- --------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Certificate(s) Enclosed
Holder(s) (attach signed list if necessary)
(please fill in exactly as name(s)
appear(s) on certificate(s))
- --------------------------------------------------------------------------------
No. of
Certificate No. of Shares
No.* Shares Tendered**
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
Total No. of Pledged Shares Tendered
(See Instruction 13)
----------------------------------------
Total No. of Shares Tendered
- --------------------------------------------------------------------------------
* Need not be completed by stockholders who tender Shares by book-entry
transfer.
** Unless otherwise indicated, it will be assumed that all Shares
represented by any certificates delivered to the Depositary are being
tendered. See Instruction 4.
THE BOXES BELOW ARE TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY
CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE
TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE DEPOSITORY TRUST
COMPANY ("DTC") AND COMPLETE THE FOLLOWING:
Name of Tendering Institution __________________________________________________
DTC Participant Number__________________________________________________________
Transaction Code Number ________________________________________________________
CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s) ________________________________________________
Window Ticket Number (if any) __________________________________________________
Date of Execution of Notice of Guaranteed Delivery ____________________________
Name of Eligible Institution Which Guaranteed Delivery _________________________
DTC Participant Number (if delivered by book-entry transfer) ___________________
NOTE: SIGNATURE(S) MUST BE PROVIDED BELOW
2
<PAGE>
Ladies and Gentlemen:
The person(s) signing this Letter of Transmittal (the "Signer") hereby
tender(s) to Building One Services Corporation, a Delaware corporation (the
"Company"), the above-described shares of common stock, par value $0.001 per
share (the "Shares"), of the Company, at a price (the "Purchase Price") equal
to $22.50 per Share net in cash, upon the terms and subject to the conditions
set forth in the Supplement to the Offer to Purchase, dated April 6, 1999,
receipt of which is hereby acknowledged, and in this Letter of Transmittal
(which Supplement to the Offer to Purchase and Letter of Transmittal together
constitute the "Offer").
Subject to, and effective upon, acceptance for payment of, or payment for,
Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms or conditions of any such extension or amendment), the Signer hereby
sells, assigns and transfers to, or upon the order of, the Company all right,
title and interest in and to all of the Shares that are being tendered hereby
that are purchased pursuant to the Offer and hereby irrevocably constitutes and
appoints Harris Trust Company of New York (the "Depositary") as attorney-in-
fact of the Signer with respect to such Shares, with full power of substitution
(such power of attorney being deemed to be an irrevocable power coupled with an
interest), to (a) present certificate(s) for such Shares, if any, for
cancellation and transfer on the Company's books; and (b) receive all benefits
and otherwise exercise all rights of beneficial ownership of such Shares,
subject to the next paragraph, all in accordance with the terms and subject to
the conditions set forth in the Offer.
The Signer hereby represents and warrants that (a) the Signer, if a broker,
dealer, commercial bank, trust company or other nominee, has obtained the
tendering stockholder's instructions to tender pursuant to the terms and
conditions of this Offer in accordance with the letter from the Company to
brokers, dealers, commercial banks, trust companies and other nominees; (b)
when and to the extent the Company accepts the Shares for purchase, the Company
will acquire good, marketable and unencumbered title thereto, free and clear of
all security interests, liens, restrictions, charges, encumbrances, conditional
sales agreements or other obligations relating to their sale or transfer, and
not subject to any adverse claim; (c) on request, the Signer will execute and
deliver any additional documents that the Depositary or the Company deems
necessary or desirable to complete the assignment, transfer and purchase of the
Shares tendered hereby; and (d) the Signer has read and agrees to all of the
terms and conditions of the Offer.
The name(s) and address(es) of the registered owner(s) should be printed as
on the registration of the Shares. If the Shares tendered hereby are in
certificated form, the certificate(s) representing such Shares (other than
Pledged Shares) must be delivered together with this Letter of Transmittal.
The Signer recognizes that, under certain circumstances set forth in the
Supplement to the Offer to Purchase, the Company may terminate or amend the
Offer or may not be required to purchase any of the Shares tendered hereby. In
any such event, the Signer understands that certificate(s) for the Shares not
purchased (other than Pledged Shares), if any, will be returned to the Signer
at its registered address unless otherwise indicated under the Special Delivery
Instructions below. The Signer recognizes that the Company has no obligation,
pursuant to the Special Payment Instructions, to transfer any Shares from the
name of the registered owner thereof if the Company purchases none of such
Shares. The Signer understands that acceptance of Shares by the Company for
payment will constitute a binding agreement between the Signer and the Company
upon the terms and subject to the conditions of the Offer.
The check for the Purchase Price of the tendered Shares purchased (other than
Pledged Shares) will be issued to the order of the Signer and mailed to the
address indicated, unless otherwise indicated in the box titled Special Payment
Instructions or the box titled Special Delivery Instructions. The Company will
not pay interest on the Purchase Price under any circumstances.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the Signer and all obligations of the Signer hereunder
shall be binding upon the heirs, personal representatives, successors and
assigns of the Signer. Except as stated in the Supplement to the Offer to
Purchase, this tender is irrevocable.
3
<PAGE>
Unless otherwise indicated herein under "Special Payment Instructions" and
except with respect to Pledged Shares, the Signer acknowledges that the Company
will issue the check for the Purchase Price and/or return any certificate for
Shares not accepted for payment in the name(s) of the registered holder(s)
appearing under "Description of Shares Tendered." Similarly, unless otherwise
indicated under "Special Delivery Instructions" and except with respect to
Pledged Shares, the Signer acknowledges that the Company will mail the check
for the Purchase Price for any Shares purchased and/or return any certificates
for Shares not accepted for payment (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing under
"Description of Shares Tendered." In the event that both the Special Payment
Instructions and/or the Special Delivery Instructions are completed, the Signer
expects that the Company will issue the check for the Purchase Price and/or
return any certificates for Shares (other than Pledged Shares) not accepted for
payment in the name of, and/or deliver such check and/or return any such
certificates for Shares to, the person(s) so indicated. The Signer recognizes
that the Company has no obligation pursuant to the Special Payment Instructions
to transfer any Shares from the name of the registered holder thereof if the
Company does not accept for payment any of the Shares tendered hereby.
4
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 5, 6, 7 AND 11)
To be completed ONLY if certificates for Shares that are not purchased
and/or any check are to be issued in the name of and sent to someone other
than the Signer. This form is not available for holders of Pledged Shares.
Mail [_] check [_] certificates to:
Name(s) _____________________________________________________________________
(Please Print)
Address _____________________________________________________________________
(Include Zip Code)
_____________________________________________________________________________
(Tax Identification or Social Security No.)
SIGNATURE
(If Special Payment Instructions are Given)
(See Instruction 7)
_____________________________________________________________________________
Signature(s) of Payee(s)
Dated , 1999
By signing and completing the form above, under the penalties of perjury,
I/we certify that the above tax identification or social security number(s)
is/are correct.
Note: Failure to complete and sign may result in backup withholding of 31%
of the payments due to you. See Instruction 12.
5
<PAGE>
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4 AND 7)
To be completed ONLY if certificates for Shares that are not purchased
and/or check, issued in the name of the Signer, are to be sent to someone
other than the Signer or to the Signer at an address other than that shown
above. This form is not available for holders of Pledged Shares.
Mail [_] check [_] certificates to:
Name(s) _____________________________________________________________________
(Please Print)
Address _____________________________________________________________________
-----------------------------------------------------------------------------
(Include Zip Code)
ODD LOTS (See Instruction 8)
CONDITIONAL TENDER
To be completed ONLY if Shares
are being tendered by or on behalf Unless this box has been
of persons owning beneficially an completed and a minimum specified,
aggregate of fewer than 100 the tender will be deemed
Shares. unconditional (see Section 3 of
the Supplement to the Offer to
Purchase).
The undersigned either (check
one):
Minimum number of Shares that
must be purchased, if any are
[_]was as of the close of business purchased:
on March 23, 1999 and is as of
the date hereof the beneficial
owner of an aggregate of fewer
than 100 Shares, all of which
are tendered; or
Shares (fill in)
[_]is a broker, dealer, commercial
bank, trust company or other
nominee that (i) is tendering,
for the beneficial owners
thereof, Shares with respect to
which it is the record owner;
and (ii) believes, based upon
representations made to it by
each such beneficial owner,
that such beneficial owner
owned as of the close of
business on March 23, 1999 and
owns as of the date hereof an
aggregate of fewer than 100
Shares and is tendering all of
such Shares.
6
<PAGE>
IMPORTANT:
SIGN HERE AND COMPLETE SUBSTITUTE FORM W-9 (BELOW) OR FORM W-8 (ENCLOSED) AS
APPLICABLE (SEE INSTRUCTIONS 1, 5, 6 AND 12)
The Offer is hereby accepted in
accordance with its terms.
------------------------------------------
------------------------------------------
(Signature(s) of Stockholder(s))
Dated: , 1999
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
the Share certificates or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, agents, officers of
corporations or others acting in a fiduciary or representative capacity,
please provide the following information. See Instruction 5.)
Name(s):
----------------------------------
(Please Type or Print)
Capacity (Full Title):
--------------------
(See Instruction 5)
Address:
----------------------------------
------------------------------------------
------------------------------------------
Area Codes and Telephone Number:
Home: Business:
Taxpayer Identification or Social Security No. (if
applicable):
(Complete Substitute Form W-9 below or Form W-8 (enclosed), as applicable)
(See Instruction 12)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature: ____________________
Name: ____________________________________
(Please Type or Print)
Title: ___________________________________
Name of Firm: ____________________________
Address: _________________________________
___________________________________________
(Including Zip Code)
Area Code and Tel. No.: __________________
7
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. Guarantee of Signatures. No signature guarantee is required on this Letter
of Transmittal (a) if this Letter of Transmittal is signed by the registered
holder(s) of Shares tendered herewith (including, for purposes of this
document, any participant in the book-entry transfer facility of The Depository
Trust Company ("DTC") whose name appears on DTC's security position listing as
the owner of Shares), unless such holder(s) has completed either the box
entitled "Special Payment Instructions" or the box entitled "Special Delivery
Instructions" above; or (b) if such Shares are tendered for the account of a
firm (an "Eligible Institution") which is a bank, broker, dealer, credit union,
savings association or other entity which is a member in good standing of a
Stock Transfer Association approved medallion program (such as STAMP, SEMP or
MSP). In all other cases, all signatures on this Letter of Transmittal must be
guaranteed by an Eligible Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Certificates. This Letter of
Transmittal is to be used (a) if Shares are to be forwarded herewith; (b) if
tenders are to be made by book-entry transfer to the account maintained by the
Depositary pursuant to the procedure set forth in Section 3 of the Supplement
to the Offer to Purchase; or (c) if Pledged Shares are being tendered.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THIS LETTER OF TRANSMITTAL, AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND SOLE RISK OF THE TENDERING STOCKHOLDER.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Delivery will be deemed made only when actually received by the Depositary.
If delivery is by mail, registered mail with return receipt requested, properly
insured, is recommended. Stockholders have the responsibility to cause their
Shares (in proper certificated or uncertificated form), this Letter of
Transmittal (or a photocopy hereof bearing original signature(s) and any
required signature guarantees), and any other documents required by this Letter
of Transmittal to be timely delivered in accordance with the Offer. With
respect to Pledged Shares, however, the Company will forward the certificates
representing such Pledged Shares to the Depositary.
All tendering stockholders, brokers, dealers, commercial banks, trust
companies and other nominees, by execution of this Letter of Transmittal (or
photocopy hereof), waive any right to receive any notice of the acceptance of
their tender.
3. Inadequate Space. If the space provided in any of the above boxes is
inadequate, the necessary information should be listed on a separate schedule
signed by all of the required signatories and attached hereto.
4. Partial Tenders (not applicable to stockholders who tender by book-entry
transfer). If fewer than all of the Shares represented by any certificate
delivered to the Depositary are to be tendered, fill in the number of Shares
that are to be tendered in the box entitled "Description of Shares Tendered."
In such case, a new certificate for the remainder of the Shares represented by
the old certificate will be sent to the person(s) signing this Letter of
Transmittal (unless otherwise provided in the box titled "Special Payment
Instructions" or "Special Delivery Instructions") as promptly as practicable
following the expiration or termination of the Offer. The certificates for
Pledged Shares will not be delivered by tendering stockholders; therefore, only
the number of Pledged Shares being tendered should be indicated. All Shares
(other than Pledged Shares) represented by certificates delivered to the
Depositary will be deemed to have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal, Authorizations and Endorsements.
(a) If this Letter of Transmittal is signed by the registered holder(s)
of the Shares tendered hereby, the signature(s) must correspond with the
name(s) as written on the face of the certificate(s) without alteration,
enlargement or any change whatsoever.
(b) If any of the Shares tendered hereby are owned of record by two or
more joint owners, all of such owners must sign this Letter of Transmittal.
8
<PAGE>
(c) If any of the tendered Shares are registered in different names on
several certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations
of certificates.
(d) If this Letter of Transmittal or stock powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing, and proper evidence
satisfactory to the Company of their authority so to act must be submitted.
(e) If this Letter of Transmittal is signed by the registered holder(s)
of the Shares transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to or
certificates for Shares not purchased are to be issued in the name of a
person other than the registered holder(s). Signatures on such certificates
or stock powers must be guaranteed by an Eligible Institution.
(f) If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificate(s) listed, the certificate(s) must
be endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name(s) of the registered holder(s) appears on the
certificate(s) for such Shares. Signatures on such certificates or stock
powers must be guaranteed by an Eligible Institution.
6. Transfer Taxes. The Company will pay any transfer taxes payable on the
transfer to it of Shares purchased pursuant to the Offer. If, however, (a)
payment of the Purchase Price is to be made to, or (in the circumstances
permitted by the Offer) unpurchased Shares are to be registered in the name(s)
of, any person(s) other than the registered owner(s); or (b) if any tendered
certificate(s) are registered, or the Shares tendered are otherwise held, in
the name(s) of any person(s) other than the registered owner, the amount of any
transfer taxes (whether imposed on the registered owner(s) or such other
person(s)) payable on account of the transfer to such person(s) will be
deducted from the Purchase Price unless satisfactory evidence of the payment of
such taxes, or exemption therefrom, is submitted.
7. Special Payment and Delivery Instructions. If certificate(s) for
unpurchased Shares (other than Pledged Shares) and/or check(s) are to be issued
in the name of a person other than the registered owner(s) or if such
certificate(s) and/or check(s) are to be sent to someone other than the
registered owner(s) or to the registered owner(s) at a different address, the
captioned boxes "Special Payment Instructions" and/or "Special Delivery
Instructions" on this Letter of Transmittal must be completed.
8. Odd Lots. As described in the Offer to Purchase, if fewer than all of the
Shares validly tendered and not withdrawn prior to the Expiration Date are to
be purchased, the Shares purchased first will consist of all of the Shares
tendered by a stockholder who owned beneficially as of the close of business on
March 23, 1999 and as of the date of the tender an aggregate of fewer than 100
Shares and who validly and unconditionally tendered all of such Shares. Partial
or conditional tenders of Shares will not qualify for this preference. This
preference will not be available unless the box captioned "Odd Lots" in this
Letter of Transmittal and the Notice of Guaranteed Delivery, if any, is
completed.
9. Irregularities. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance of tenders will be determined by the
Company, in its sole discretion, which determination shall be final and
binding. The Company reserves the absolute right to reject any or all tenders
determined not to be in appropriate form or to refuse to accept for payment,
purchase or pay for any Shares if, in the opinion of the Company's counsel,
accepting, purchasing or paying for such Shares would be unlawful. The Company
also reserves the absolute right to waive any of the conditions of the Offer or
any defect in any tender, whether generally or with respect to any particular
Share(s) or stockholder(s). The Company's interpretations of the terms and
conditions of the Offer (including these instructions) shall be final and
binding.
NONE OF THE COMPANY, THE DEPOSITARY, THE INFORMATION AGENT OR ANY OTHER
PERSON IS OR WILL BE OBLIGATED TO GIVE ANY NOTICE OF DEFECTS IN TENDERS, AND
NONE OF THEM SHALL INCUR ANY LIABILITY FOR FAILURE TO GIVE ANY SUCH NOTICE.
9
<PAGE>
10. Questions and Requests for Assistance and Additional Copies. Questions
and requests for assistance may be directed to MacKenzie Partners, Inc., the
Information Agent, by telephoning 800/322-2885 toll-free. Requests for
additional copies of the Supplement to the Offer to Purchase and this Letter of
Transmittal may also be directed to the Information Agent. Stockholders who do
not own Shares directly may also obtain such information and copies from their
broker, dealer, commercial bank, trust company or other nominee. Stockholders
who do not own Shares directly are required to tender their Shares through
their broker, dealer, commercial bank, trust company or other nominee and
should NOT submit this Letter of Transmittal to the Depositary.
11. Restriction on Short Sales. Section 14(e) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and Rule 14e-4 promulgated thereunder
make it unlawful for any person, acting alone or in concert with others, to
tender Shares in a partial tender offer for such person's own account unless at
the time of tender, and at the time the Shares are accepted for payment, the
person tendering has a net long position equal to or greater than the amount
tendered in (i) Shares, and will deliver or cause to be delivered such Shares
for the purpose of tender to the person making the Offer within the period
specified in the Offer; or (ii) an equivalent security and, upon acceptance of
his or her tender, will acquire Shares by conversion, exchange, or exercise of
such equivalent security to the extent required by the terms of the Offer, and
will deliver or cause to be delivered the Shares so acquired for the purpose of
tender to the Company prior to or on the Expiration Date. Section 14(e) and
Rule 14e-4 provide a similar restriction applicable to the tender or guarantee
of a tender on behalf of another person.
The acceptance of Shares by the Company for payment will constitute a binding
agreement between the tendering stockholder and the Company, upon the terms and
subject to the conditions of the Offer, including such stockholder's
representation that (i) such stockholder has a net long position in the Shares
being tendered within the meaning of Rule 14e-4 promulgated under the Exchange
Act; and (ii) the tender of such Shares complies with Rule 14e-4.
12. Backup Withholding Tax. Subject to the availability of an exemption, each
tendering stockholder is required to provide the Depositary with a correct
Taxpayer Identification Number ("TIN") on the Substitute Form W-9, which is
provided under "Important Tax Information" below, and to certify under
penalties of perjury that such number is correct and that such stockholder is
not subject to backup withholding. If a tendering stockholder has been notified
by the Internal Revenue Service that such stockholder is subject to backup
withholding, such stockholder must not check the box in Part 2 of the
Substitute Form W-9, set forth below, unless such stockholder has since been
notified by the Internal Revenue Service that such stockholder is no longer
subject to backup withholding. Failure to provide the information on the
Substitute Form W-9 may subject the tendering stockholder to 31% federal income
tax withholding with respect to any payments received pursuant to the Offer. If
the tendering stockholder has not been issued a TIN and has applied for one or
intends to apply for one in the near future, such stockholder should write
"Applied For" in the space provided for the TIN in Part 1 of the Substitute
Form W-9, check the box in Part 3 of the Substitute Form W-9 and sign and date
the Substitute Form W-9. Such a stockholder must also complete the Certificate
of Awaiting Taxpayer Identification Number, which is provided below.
Notwithstanding that "Applied For" is written in Part 1 and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments of the purchase price to such stockholder until a
TIN is provided to the Depositary. However, such withheld amount will be
refunded to such stockholder if a certified TIN is provided to the Depositary
within 60 days.
Each tendering non-U.S. stockholder should complete a Form W-8, and provide
it to the Depositary. Contact the Information Agent for a copy of the Form W-8.
13. Pledged Shares. As described in the Supplement to the Offer to Purchase,
the Company is permitting stockholders who have Pledged Shares to tender such
Shares in the Offer. The Company has delivered the certificates representing
Pledged Shares to the Depositary. By signing this Letter of Transmittal,
10
<PAGE>
the undersigned hereby agrees that the proceeds from the sale of any of the
undersigned's Pledged Shares that are validly tendered and accepted for
purchase by the Company will be retained in an account maintained by American
Stock Transfer & Trust Company. The undersigned hereby acknowledges and agrees
that the Company will have the authority to direct disbursements from the
account, subject to the terms and conditions under which the Pledged Shares are
pledged to the Company.
IMPORTANT: THIS LETTER OF TRANSMITTAL, OR FACSIMILE HEREOF BEARING ORIGINAL
SIGNATURE(S), PROPERLY COMPLETED AND DULY EXECUTED, TOGETHER WITH ANY REQUIRED
SIGNATURE GUARANTEES, SHARES (IN PROPER CERTIFICATED OR UNCERTIFICATED FORM),
AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY, OR A
PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE EXPIRATION DATE.
The acceptance of Shares by the Company for payment will constitute a binding
agreement between the tendering stockholder and the Company, upon the terms and
subject to the conditions of the Offer, including such stockholder's
representation that the Shares being tendered represent and will represent all
Shares actually owned by such stockholder as of the date of purchase of Shares
pursuant to the Offer, and all Shares constructively owned by such stockholder
as of such date under Section 318 of the Internal Revenue Code of 1986, as
amended, have been or will be tendered pursuant to the Offer.
IMPORTANT TAX INFORMATION
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY. IT MAY NOT BE APPLICABLE TO NON-U.S. STOCKHOLDERS. ALL
STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISERS AS TO THE SPECIFIC TAX
CONSEQUENCES TO THEM OF THE OFFER.
SUBSTITUTE FORM W-9 OR FORM W-8
Under the United States federal income tax laws, the Depositary may be
required to withhold 31% of the amount of any payment made to certain holders
pursuant to the Offer. In order to avoid such backup withholding, each
tendering United States stockholder must provide the Depositary with such
stockholder's correct TIN by completing the Substitute Form W-9 set forth
below. In general, if a stockholder is an individual, the TIN is the Social
Security number of such individual. If the Depositary is not provided with the
correct TIN, the stockholder may be subject to a penalty imposed by the
Internal Revenue Service. Certain stockholders (including, among others, all
corporations) are not subject to these backup withholding and reporting
requirements, but should nonetheless complete a Substitute Form W-9 to avoid
possible erroneous backup withholding. For further information regarding backup
withholding and instructions for completing the Substitute Form W-9 (including
how to obtain a TIN if you do not have one and how to complete the Substitute
Form W-9 if Shares are held in more than one name), consult the enclosed
Guidelines for Certification of Taxpayer Identification Number.
In order for a non-United States stockholder to avoid 30% backup withholding,
such stockholder must submit a statement to the Depositary signed under
penalties of perjury attesting as to its non-United States status. Form W-8 and
instructions for such statement may be obtained by contacting the Information
Agent.
11
<PAGE>
CONSEQUENCES OF FAILURE TO FILE SUBSTITUTE FORM W-9 OR FORM W-8
Failure to complete Substitute Form W-9 or Form W-8 will not, by itself,
cause the Shares to be deemed invalidly tendered but may require the Depositary
to withhold 31% (or 30% for non-United States stockholders) of the amount of
any payments made pursuant to the Offer. Backup withholding is not an
additional federal income tax. Rather, the federal income tax liability of a
person subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, the stockholder
may claim a refund from the Internal Revenue Service.
Part 1: PLEASE PROVIDE YOUR
TIN IN THE BOX AT RIGHT AND ---------------------
CERTIFY BY SIGNING AND Social Security
DATING BELOW. Number
SUBSTITUTE
Form W-9
OR __________________
Department of the Employer ID Number
Treasury
Internal Revenue -----------------------------------------------------
Service
Part 2:--Check the box if you are NOT subject to
backup withholding under the provisions of section
3406(a)(1)(C) of the Internal Revenue Code because
(1) you have not been notified that you are
subject to backup withholding as a result of
failure to report all interest or dividends or (2)
the Internal Revenue Service has notified you that
you are no longer subject to backup
withholding. [_]
Payer's Request for
Taxpayer Identification
Number (TIN)
-----------------------------------------------------
CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I
CERTIFY THAT THE INFORMATION PROVIDED ON THIS FORM
IS TRUE, CORRECT, AND COMPLETE.
SIGNATURE _________________________________________
DATE ______________________________________________
-----------------------------------------------------
Part 3: Awaiting TIN [_]
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE
REVIEW THE "GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER" FOR
ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING (OR WILL SOON
APPLY FOR) A TAXPAYER IDENTIFICATION NUMBER.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand
that if I do not provide a Taxpayer Identification Number to the payer, 31% of
all reportable payments due to me pursuant to the Offer will be withheld until
I provide a Taxpayer Identification Number to the payer and that, if I do not
provide my Taxpayer Identification Number within 60 days, such retained amounts
shall be remitted to the Internal Revenue Service as backup withholding.
Signature: _____________________________
Date:___________________________________
12
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the
Payer.--Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
- --------------------------------------- ---------------------------------------
<TABLE>
<CAPTION>
Give the
For this type of account: SOCIAL SECURITY
number of--
- --------------------------------------------------
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, the first
individual on the
account(1)
3. Husband and wife (joint The actual owner
account) of the account
or, if joint
funds, either
person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only contributor,
the minor(1)
6. Account in the name of The ward, minor,
guardian or committee for a or incompetent
designated ward, minor, or person(3)
incompetent person
7. a. A revocable savings The grantor-
trust account (in which trustee(1)
grantor is also
trustee)
b. Any "trust" account that The actual
is not a legal or valid owner(1)
trust under State law
8. Sole proprietorship The owner(4)
account
</TABLE>
<TABLE>
<CAPTION>
Give the EMPLOYER
For this type of account: IDENTIFICATION
number of --
--------
<S> <C>
9. A valid trust, estate, or The legal entity
pension (do not furnish
the identifying
number of the
personal
representative or
trustee unless
the legal entity
itself is not
designated in the
account title)
(5)
10. Corporate account The corporation
11. Religious, charitable or The organization
educational organization
account
12. Partnership account held The partnership
in the name of the business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public entity
Department of Agriculture
in the name of a public
entity (such as a State or
local government, school
district, or prison) that
receives agricultural
program payments
</TABLE>
- --------------------------------------- ---------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's Social Security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner. If the owner does not have an employer
identification number, furnish the owner's social security number.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
Note: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2
Obtaining a Number
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
resident individuals), Form SS-4, Application for Employer Identification
Number (for businesses and all other entities), or Form W-7 for International
Taxpayer Identification Number (for alien individuals required to file U.S.
tax returns), at an office of the Social Security Administration or the
Internal Revenue Service.
To complete Substitute Form W-9, if you do not have a taxpayer identification
number, write "Applied For" in the space for the taxpayer identification
number in Part 1, sign and date the Form, and give it to the requester.
Generally, you will then have 60 days to obtain a taxpayer identification
number and furnish it to the requester. If the requester does not receive your
taxpayer identification number within 60 days, backup withholding, if
applicable, will begin and will continue until you furnish your taxpayer
identification number to the requester.
Payees Exempt from Backup Withholding
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual re-
tirement plan, or a custodial account under section 403(b)(7).
. The United States or any agency or instrumentality thereof.
. A state, the District of Columbia, a possession of the United States, or
any political subdivision or instrumentality thereof.
. A foreign government or a political subdivision, agency or instrumentality
thereof.
. An international organization or any agency or instrumentality thereof.
. A registered dealer in securities or commodities registered in the United
States or a possession of the United States.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
. An entity registered at all times during the tax year under the Investment
Company Act of 1940.
. A foreign central bank of issue.
. Unless otherwise noted herein, all references below to section numbers or
to regulations are references to the Internal Revenue Code and the regula-
tions promulgated thereunder.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. NOTE: You may
be subject to backup withholding if (i) this interest is $600 or more, and
(ii) the interest is paid in the course of the payer's trade or business
and (iii) you have not provided your correct taxpayer identification num-
ber to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to non-resident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Exempt payees described above should file a Substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM,
AND RETURN IT TO THE PAYER.
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup with-
holding. For details, see the regulations under sections 6041, 6041A(a), 6045,
and 6050A.
Privacy Act Notices. Section 6109 requires most recipients of dividends, in-
terest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for identi-
fication purposes and to help verify the accuracy of your tax return. Payers
must be given the numbers whether or not recipients are required to file tax
returns. Payers must generally withhold 31% of taxable interest, dividends,
and certain other payments to a payee who does not furnish a taxpayer identi-
fication number to a payer. Certain penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you
fail to furnish your taxpayer identification number to a payer, you are sub-
ject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) Failure to Report Certain Dividend and Interest Payments.--If you fail to
include any portion of an includible payment for interest, dividends, or pat-
ronage dividends in gross income and such failure is due to negligence, a pen-
alty of 20% is imposed on any portion of an underpayment attributable to the
failure.
(3) Civil Penalty for False Statements With Respect to Withholding.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) Criminal Penalty for Falsifying Information.--If you falsify certifica-
tions or affirmations, you are subject to criminal penalties including fines
and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
NOTICE OF GUARANTEED DELIVERY
REGARDING THE OFFER BY
BUILDING ONE SERVICES CORPORATION
TO PURCHASE FOR CASH 25,500,000 SHARES
AT $22.50 PER SHARE
This Notice of Guaranteed Delivery, or one substantially in the form hereof,
must be used to tender shares pursuant to the Offer if (i) certificates for
shares of common stock ("Shares") of Building One Services Corporation, a
Delaware corporation (the "Company"), other than Pledged Shares, are not
immediately available; (ii) time will not permit all required documents to
reach Harris Trust Company of New York, as Depositary (the "Depositary"), prior
to the Expiration Date (as defined in the Supplement to the Offer to Purchase,
dated April 6, 1999 (the "Supplement to the Offer to Purchase")); or (iii) the
procedure for delivery by book-entry transfer cannot be completed on a timely
basis. This Notice of Guaranteed Delivery may be delivered by hand or
transmitted by telegram, facsimile transmission or mail to the Depositary. See
Section 3 of the Supplement to the Offer to Purchase. Tenders using this form
may be made only by or through a member firm of a registered national
securities exchange, or a commercial bank or trust company having an office,
branch or agency in the United States.
Depositary: HARRIS TRUST COMPANY OF NEW YORK
By Mail: By Hand/Overnight Courier:
- --------------------------------------------------------------------------------
Wall Street Station Receive Window
Post Office Box 1023 Wall Street Plaza
New York, NY 10268-1023 88 Pine Street, 19th Floor
New York, NY 10005
By Facsimile Transmission:
(for Eligible Institutions Only)
(212) 701-7636
For Information (call collect):
(212) 701-7624
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE DOES
NOT CONSTITUTE VALID DELIVERY.
1
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and subject to
the conditions set forth in its Supplement to the Offer to Purchase, dated
April 6, 1999, and the related Letter of Transmittal, receipt of which are
hereby acknowledged, the number of Shares specified below pursuant to the
guaranteed delivery procedures set forth in Section 3 of the Supplement to the
Offer to Purchase.
Number of Shares Tendered: __________ Name(s) of Record Holder(s):
Certificate Nos. (if available):
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
Address:
----------------------------
-------------------------------------
-------------------------------------
If Shares will be tendered by book-
entry transfer to The Depository
Trust Company, please check box:
[_]
DTC Participant Number: _____________
Area Code and Telephone Number: _____
ODD LOTS CONDITIONAL TENDER
To be completed ONLY if Shares
are being tendered by or on behalf Unless this box has been
of persons owning beneficially an completed and a minimum specified,
aggregate of fewer than 100 the tender will be deemed
Shares. unconditional (see Section 3 of
the Supplement to the Offer to
Purchase).
The undersigned either (check
one): Minimum number of Shares that
must be purchased, if any are
purchased:
[_]was as of the close of business
on March 23, 1999 and is as of
the date hereof the beneficial
owner of an aggregate of fewer
than 100 Shares, all of which
are tendered; or
Shares (fill in)
[_]is a broker, dealer, commercial
bank, trust company or other
nominee that (i) is tendering,
for the beneficial owners
thereof, Shares with respect to
which it is the record owner;
and (ii) believes, based upon
representations made to it by
each such beneficial owner,
that such beneficial owner
owned as of the close of
business on March 23, 1999 and
owns as of the date hereof an
aggregate of fewer than 100
Shares and is tendering all of
such Shares.
Dated: ________________________, 1999 -------------------------------------
Signature
2
<PAGE>
GUARANTEE
The undersigned, a member firm of a registered national securities exchange,
or a commercial bank or trust company having an office, branch or agency in the
United States, hereby: (a) represents that the above named person(s) "own(s)"
the Shares tendered hereby within the meaning of Rule 14e-4 under the
Securities Exchange Act of 1934, as amended; (b) represents that the tender of
such Shares complies with Rule 14e-4; and (c) guarantees to deliver to Harris
Trust Company of New York, the Depositary, certificates representing the Shares
tendered hereby, in proper form for transfer (or to tender Shares pursuant to
the procedure for book-entry transfer into the Depositary's account at The
Depository Trust Company if so specified on the foregoing page), together with
a properly completed and duly executed Letter of Transmittal with any required
signature guarantees, and any other required documents, within three Nasdaq
Stock Market trading days after the date of receipt hereof by the Depositary.
Name of Firm: _______________________
(Please Print)
Authorized Signature: _______________
Name: _______________________________
Title: ______________________________
Address: ____________________________
(Include Zip Code)
-------------------------------------
(Area Code and Telephone Number)
Dated: ___________________________, 1999
3
<PAGE>
OFFER BY
BUILDING ONE SERVICES CORPORATION
TO PURCHASE FOR CASH 25,500,000 SHARES
AT $22.50 PER SHARE
TO:BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES AND OTHER NOMINEES:
Pursuant to your request, we are enclosing herewith the material listed below
relating to the offer by Building One Services Corporation (the "Company") to
purchase 25,500,000 shares of its issued and outstanding common stock
("Shares"), at a price equal to $22.50 per Share, subject to the terms and
conditions set forth in the Supplement to the Offer to Purchase, dated April 6,
1999, and the related Letter of Transmittal (which together constitute the
"Offer").
THE OFFER EXPIRES AT 11:59 P.M., NEW YORK CITY TIME, ON APRIL 22, 1999,
UNLESS EXTENDED (THE "EXPIRATION DATE").
The following documents are enclosed:
(1) SUPPLEMENT TO THE OFFER TO PURCHASE, DATED APRIL 6, 1999;
(2) LETTER OF TRANSMITTAL TO BE USED TO TENDER SHARES;
(3) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER;
(4) NOTICE OF GUARANTEED DELIVERY;
(5) LETTER TO CLIENTS, WHICH MAY BE SENT UPON ANY REQUEST FOR INFORMATION
BY YOUR CLIENTS FOR WHOSE ACCOUNT YOU HOLD SHARES REGISTERED IN YOUR
NAME (OR IN THE NAME OF YOUR NOMINEE) WITH SPACE PROVIDED FOR OBTAINING
SUCH CLIENTS' INSTRUCTIONS WITH REGARD TO THE OFFER;
(6) RETURN ENVELOPE ADDRESSED TO HARRIS TRUST COMPANY OF NEW YORK, THE
DEPOSITARY; AND
(7) LETTER TO STOCKHOLDERS FROM JOSEPH M. IVEY, PRESIDENT AND CHIEF
EXECUTIVE OFFICER OF BUILDING ONE SERVICES CORPORATION.
PLEASE NOTE THE EXPIRATION DATE IS 11:59 P.M., NEW YORK CITY TIME, ON APRIL
22, 1999, UNLESS EXTENDED.
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY.
No fees or commissions will be payable to brokers, dealers or other persons
for soliciting tenders of Shares pursuant to the Offer. The Company will,
however, upon request, reimburse brokers, dealers, commercial banks and trust
companies for reasonable and necessary costs and expenses incurred by them in
forwarding materials to their customers. The Company will pay all transfer
taxes on its purchase of Shares, subject to Instruction 6 of the Letter of
Transmittal. Backup tax withholding at a 31% rate may be required unless an
exemption is proved or unless the required taxpayer identification information
is or has previously been provided. Certain withholdings may also apply with
respect to payments to non-U.S. stockholders. See Instruction 12 of the Letter
of Transmittal.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) stockholders residing in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. However, the Company may, at its discretion, take such
action at it may deem necessary for the Company to make the Offer in any such
jurisdiction and extend the Offer to holders in such jurisdiction.
1
<PAGE>
Additional copies of the enclosed material may be obtained from MacKenzie
Partners, Inc., the Information Agent, by calling 800/322-2885 toll-free. Any
question you have with respect to the Offer should be directed to the
Information Agent at the number indicated in the previous sentence.
Very truly yours,
BUILDING ONE SERVICES CORPORATION
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS THE AGENT OF THE COMPANY, THE DEPOSITARY OR THE
INFORMATION AGENT OR AUTHORIZE YOU OR ANY OTHER PERSON (A) TO MAKE ANY
STATEMENTS WITH RESPECT TO THE OFFER, OTHER THAN THE STATEMENTS SPECIFICALLY
SET FORTH IN THE SUPPLEMENT TO THE OFFER TO PURCHASE AND THE LETTER OF
TRANSMITTAL, OR (B) TO DISTRIBUTE ANY MATERIAL WITH RESPECT TO THE OFFER
OTHER THAN AS SPECIFICALLY AUTHORIZED HEREIN.
2
<PAGE>
OFFER BY
BUILDING ONE SERVICES CORPORATION
TO PURCHASE FOR CASH 25,500,000 SHARES
AT $22.50 PER SHARE
To Our Clients:
Pursuant to your request, enclosed for your consideration are the Supplement
to the Offer to Purchase, dated April 6, 1999 (the "Supplement to the Offer to
Purchase"), of Building One Services Corporation (the "Company") and the
related Letter of Transmittal, pursuant to which the Company is offering to
purchase 25,500,000 shares of its issued and outstanding common stock
("Shares"), for cash of $22.50 per Share, subject to the terms and conditions
set forth in the Supplement to the Offer to Purchase and the related Letter of
Transmittal (which together constitute the "Offer").
THE OFFER EXPIRES AT 11:59 P.M., NEW YORK CITY TIME, ON APRIL 22, 1999,
UNLESS EXTENDED (THE "EXPIRATION DATE").
The Supplement to the Offer to Purchase and the Letter of Transmittal are
being forwarded to you as the beneficial owner of Shares held by us for your
account but not registered in your name. We are sending you the Letter of
Transmittal for your information only; you cannot use it to tender Shares we
hold for your account. A tender of such Shares can be made only by us as the
holder of record and only pursuant to your instructions.
Your attention is called to the following:
(1) The purchase price is $22.50 per Share, subject to the terms and
conditions set forth in the Supplement to the Offer to Purchase and the
related Letter of Transmittal.
(2) The Offer is for 25,500,000 of the issued and outstanding Shares of
the Company (including Shares underlying stock options with exercise prices
below $22.50 per share), and is conditioned on a minimum of 21,000,000
outstanding Shares being tendered, the receipt of financing and certain
conditions set forth in the Supplement to the Offer to Purchase. Under the
conditions described in the Supplement to the Offer to Purchase, the
Company may terminate or amend the Offer or may postpone the acceptance for
payment of, payment for or purchase of any Shares.
(3) Assuming that more than 25,500,000 Shares are duly tendered prior to
the expiration of the Offer (as extended), the Company will purchase Shares
from tendering stockholders in accordance with the terms and conditions
specified in the Supplement to the Offer to Purchase pro rata in accordance
with the number of Shares tendered by each stockholder during the period
the Offer remains open, unless the Company determines not to purchase any
Shares.
(4) Tendering stockholders will not be obligated to pay brokerage
commissions or, subject to Instruction 6 of the Letter of Transmittal,
transfer taxes on the purchase of Shares by the Company pursuant to the
Offer; however, a broker, dealer or other person may charge a fee for
processing the transactions on behalf of stockholders. Stockholders are not
required to pay a service charge to the Company or the Depositary in
connection with their tender of Shares.
(5) If you owned as of March 23, 1999 and currently own beneficially an
aggregate of fewer than 100 Shares and you instruct us to tender all of
such Shares prior to the expiration of the Offer and check the box
captioned "Odd Lots" in the instruction form, all of such Shares will be
accepted for purchase before proration, if any, of the purchase of other
Shares validly tendered.
1
<PAGE>
If you wish to have us tender your Shares, please so instruct us by
completing, executing and returning to us the instruction form on the
following page.
YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO
SUBMIT A TENDER ON YOUR BEHALF ON OR BEFORE THE EXPIRATION OF THE OFFER. THE
EXPIRATION DATE IS 11:59 P.M., NEW YORK CITY TIME, ON APRIL 22, 1999, UNLESS
EXTENDED.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) owners of Shares in any jurisdiction in which the Offer or its
acceptance would violate the laws of such jurisdiction. However, the Company
may, at its discretion, take such action as it may deem necessary for the
Company to make the Offer in any jurisdiction and extend the Offer to holders
in such jurisdiction.
2
<PAGE>
INSTRUCTIONS REGARDING THE OFFER BY
BUILDING ONE SERVICES CORPORATION
TO PURCHASE FOR CASH 25,500,000 SHARES
AT $22.50 PER SHARE
THIS FORM IS NOT TO BE USED TO TENDER SHARES DIRECTLY TO THE DEPOSITARY. IT
SHOULD BE SENT TO YOUR BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER
NOMINEE ONLY IF SUCH FIRM IS THE HOLDER OF RECORD OF YOUR SHARES AND WILL BE
EFFECTING THE TENDER ON YOUR BEHALF. THE DEPOSITARY MUST RECEIVE YOUR SHARES ON
OR PRIOR TO APRIL 22, 1999.
DO NOT COMPLETE THIS FORM IF YOU HAVE DECIDED NOT TO TENDER YOUR SHARES.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Supplement to the Offer to Purchase, dated April 6, 1999, and the related
Letter of Transmittal (which together constitute the "Offer") in connection
with the Offer by Building One Services Corporation (the "Company") to purchase
25,500,000 shares of its issued and outstanding common stock, par value $0.001
per share ("Shares"), at $22.50 per Share expiring on April 22, 1999 (or, if
the Offer is extended, on the new Expiration Date), on the terms and subject to
the conditions of the Offer.
The undersigned hereby instructs you to tender to the Company the number of
Shares indicated below or, if no number is indicated, all Shares held by you
for the account of the undersigned, upon the terms and subject to the
conditions of the Offer.
The undersigned hereby represents and warrants that: (i) the undersigned has
a net long position in the Shares being tendered within the meaning of Rule
14e-4 promulgated under the Securities Exchange Act of 1934, as amended; and
(ii) the tender of such Shares complies with Rule 14e-4.
CONDITIONAL TENDER
By completing this box, the undersigned conditions the tender authorized
hereby on the following minimum number of Shares being purchased if any are
purchased:
Shares
Unless this box is completed, the tender authorized hereby will be made
conditionally.
ODD LOTS
[_]By checking this box, the undersigned represents that the undersigned
owned as of the close of business on March 23, 1999 and owns as of the
date hereof beneficially an aggregate of fewer than 100 Shares and is
tendering all of such Shares.
Number of Shares to be Tendered:*
Shares
- --------
* Unless otherwise indicated, it will be assumed that all of the Shares held
by us for your account are to be tendered.
1
<PAGE>
Account Number: ______________________________________
Tax Identification of Social Security ______________________________________
Number:
Name(s) of Beneficial Owner(s): ______________________________________
(Please Print)
______________________________________
(Please Print)
______________________________________
(Please Print)
Address: ______________________________________
Area Code and Telephone Number ______________________________________
______________________________________
(Signature of beneficial owner)
______________________________________
(Signature of additional beneficial
owner, if any)
Date: , 1999
2
<PAGE>
[LOGO APPEARS HERE]
April 6, 1999
Dear Stockholder:
Enclosed is a copy of Building One Services Corporation's Supplement to the
Offer to Purchase, dated April 6, 1999 (the "Supplement to the Offer to
Purchase"), in which Building One Services Corporation (the "Company") is
offering to purchase 25,500,000 shares of its issued and outstanding common
stock, including shares underlying certain options ("Shares"), at a price of
$22.50 per Share, subject to the terms and conditions set forth in the
Supplement to the Offer to Purchase and the related Letter of Transmittal
(which together constitute the "Offer").
The Supplement to the Offer to Purchase modifies and restates in its entirety
the original Offer to Purchase dated February 19, 1999. The Company decided to
modify its original offer as a result of the decreases in the market price of
its Shares after the commencement of its original offer and the increasing cost
of the financing needed to fund the offer. The Company also announced on March
23, 1999 that it had agreed to sell $100 million of convertible subordinated
notes to Boss Investment LLC, an affiliate of Apollo Management L.P.
THE OFFER EXPIRES AT 11:59 P.M., NEW YORK CITY TIME, ON APRIL 22, 1999,
UNLESS EXTENDED (THE "EXPIRATION DATE").
If, after reviewing the information set forth in the Supplement to the Offer
to Purchase and Letter of Transmittal, you wish to tender Shares for purchase
by the Company, please contact your broker, dealer or other nominee to effect
the tender for you or, if you have the certificates for your Shares and they
are in your name, you may follow the instructions contained in the Supplement
to the Offer to Purchase and Letter of Transmittal. Tendering stockholders will
not be obligated to pay brokerage commissions or, subject to Instruction 6 of
the Letter of Transmittal, transfer taxes on the purchase of Shares by the
Company pursuant to the Offer; however, a broker, dealer or other person may
charge a fee for processing the transactions on behalf of stockholders.
Stockholders are not required to pay a service charge to the Company or the
Depositary in connection with their tender of Shares.
Neither the Company nor its Board of Directors is making any recommendation
to any holder of Shares as to whether to tender Shares. Each stockholder is
urged to consult his or her broker, investment adviser or tax adviser before
deciding whether to tender any Shares.
Should you have any other questions on the enclosed material, please do not
hesitate to contact your broker, dealer or other nominee, or call MacKenzie
Partners, Inc., the Information Agent, at 800/322-2885.
Yours truly,
BUIILDING ONE SERVICES CORPORATION
Joseph M. Ivey
President and Chief Executive Officer
<PAGE>
[LOGO APPEARS HERE]
April 6, 1999
MEMORANDUM TO HOLDERS OF BUILDING ONE STOCK OPTIONS
TO: Holders of Building One Stock Options as of March 23, 1999
FROM: Building One Services Corporation
RE: Tender of Option Shares in the Company's Tender Offer
We have prepared the following questions and answers for your convenience.
Please review this information together with the Supplement to the Offer to
Purchase and other documents printed on yellow paper. If, after reviewing the
information provided, you have additional questions, please call AST StockPlan,
Inc. at 888/980-6456.
1.WHAT IS THE OFFER?
We are offering to purchase 25,500,000 shares of our common stock ("Shares")
at $22.50 per Share. This offer will be open until it expires at 11:59 p.m.,
New York City time, on April 22, 1999, unless extended by us. However, in order
for AST StockPlan, Inc. to submit your tender to Harris Trust, you must deliver
the Option Tender Enrollment Form to AST StockPlan, Inc. by no later than April
20, 1999.
In connection with this offer, we have accelerated the vesting of the options
you held as of March 23, 1999 and that have exercise prices below $22.50 per
Share so that you may, at your election, simultaneously exercise some or all of
your options that have exercise prices below $22.50 per Share and sell the
Shares you acquire upon such exercise ("Option Shares") in the offer. We will
purchase your Option Shares in the order in which your options become
exercisable. To the extent that we do not purchase all of your Option Shares,
the options relating to the remaining Option Shares will not be considered to
have been exercised and will remain outstanding. The options relating to up to
50% of the amount of your Option Shares prior to our purchase of Option Shares
will remain exercisable and the options relating to the rest of your Option
Shares will be subject to the original vesting schedule applicable to the
portion of your options that would have vested last. The options that may be
exercised are those that you held as of March 23, 1999 and that we assumed in
acquisitions or granted under either of the following plans (the "Option
Plans"):
. Building One Services Corporation 1998 Long-Term Incentive Plan; or
. Building One Services Corporation 1997 Long-Term Incentive Plan.
You must instruct AST StockPlan, Inc., to tender part or all of the Option
Shares resulting from a conditional exercise of such options. This exercise of
your options is "conditional" because you can exercise the option only if, and
to the extent, that the Company actually purchases the Option Shares in the
offer.
The offer, which is subject to a number of other conditions, is fully
described in the Supplement to the Offer to Purchase dated April 6, 1999, and
related Letter of Transmittal provided to you. Please read these documents
carefully, together with the following materials printed also on yellow paper:
. Option Tender Enrollment Form; and
. the Instructions for Tender of Options.
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Please remember that neither our company nor our Board of Directors is making
any recommendation as to whether stockholders or option holders should
participate in the offer. You must make your own decision.
You must carefully follow the instructions below and in the enclosed
Instructions for Tender of Options and Option Tender Enrollment Form if you
want to participate in our offer. Failure to follow such instructions may make
you ineligible to tender your Option Shares in our offer.
2. MUST I ACTUALLY EXERCISE MY OPTIONS IN ORDER TO PARTICIPATE IN THE OFFER?
No. As a holder of unexercised options we are allowing you to "conditionally"
exercise all or part of your options and tender the Option Shares you would be
entitled to receive upon such exercise. This exercise of options is
"conditional" because you are deemed to exercise the option only if, and to the
extent that, we actually purchase the Option Shares in the offer.
3. DO I HAVE TO PAY THE EXERCISE PRICE WITH CASH?
No. In order to facilitate your participation in the offer, we are allowing
you to conditionally exercise your options without paying the exercise price in
cash. This is called a "cashless exercise." This means that your options will
be exercised and the Option Shares will be tendered, and the amount of cash you
receive for each Option Share purchased will equal the difference between
$22.50 per Share and the option exercise price per Share, less withholding
taxes. You do not need to send any money with your Option Tender Enrollment
Form.
4. IF MY OPTIONS ARE NOT VESTED MAY I STILL TENDER OPTION SHARES UNDERLYING
THEM?
Yes. The Compensation Committee of the Board of Directors has accelerated the
vesting of your options granted pursuant to the Option Plans that have exercise
prices below $22.50 per Share to permit tenders in the offer. However, see
Question 5 below with respect to the vesting of your options after the offer.
5. WILL ALL OF THE OPTION SHARES THAT I TENDER BE PURCHASED IN THE OFFER?
Probably not. In the offer, the Company is offering to purchase a total of
25,500,000 Shares at a per Share price of $22.50. If more than 25,500,000
Shares are tendered, we will reduce on a pro rata basis the number of shares we
purchase from each person who tenders shares. This means that we will not
purchase all of the Option Shares you tender under these circumstances. We
currently do not know how many shares will be tendered in the offer. We will
select the Option Shares we purchase based upon which Option Shares you could
have purchased first under the original vesting schedule of your options.
6. WHAT WILL HAPPEN TO MY OPTIONS IF THE OPTION SHARES ARE NOT PURCHASED?
We will credit to your account any options for Option Shares that we do not
purchase.
7. HOW WILL I KNOW IF MY OPTION SHARES HAVE BEEN PURCHASED AND WHEN WILL I BE
PAID?
After the offer expires, all tenders submitted in the offer will be
tabulated. This may take up to seven business days. Soon thereafter, you will
be advised of the number, if any, of your Option Shares that were purchased in
the offer. You will receive a check for the purchase price of all of your
Option Shares purchased in the offer (less the applicable exercise price or
prices and applicable withholding taxes) promptly thereafter.
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<PAGE>
8. WILL I BE TAXED ON THE MONEY I RECEIVE?
Yes. You will be treated as receiving compensation income for each Option
Share sold equal to the excess of $22.50 over the exercise price for each
Option Share. Such income will be taxed to you at ordinary income rates, not
capital gains rates, and will be subject to withholding for income and
employment taxes.
9. WHAT WILL HAPPEN TO ANY OPTIONS I STILL HOLD AFTER THE OFFER?
To the extent that we do not purchase some of your Option Shares, such
options will remain outstanding. The options relating to up to 50% of the
amount of your Option Shares prior to our purchase of Option Shares will remain
exercisable and the options relating to the rest of your Option Shares will be
subject to the original vesting schedule applicable to the portions of your
options that would have vested last. For example, if you own 100 options that
will become exercisable in 25% increments over a four-year period after their
grant on January 1, 1999, you may conditionally tender all 100 options. If we
buy 40 Option Shares, the options for 10 Option Shares will remain exercisable,
the options for 25 Option Shares will become exercisable on January 1, 2002,
and the options for the remaining 25 Option Shares will become exercisable on
January 1, 2003.
10. HOW DO I TENDER MY OPTION SHARES IN THE OFFER?
The only way that you can tender Option Shares in the offer is by completing
the Option Tender Enrollment Form on yellow paper, signing the form, and
returning it to AST StockPlan, Inc. at the address indicated on the form. THE
OPTION TENDER ENROLLMENT FORM MUST BE RECEIVED BY AST STOCKPLAN, INC. BEFORE
5:00 P.M., NEW YORK CITY TIME, ON APRIL 20, 1999.
On this form, you will direct AST StockPlan, Inc. to conditionally exercise
your options and tender your Option Shares in the offer. This is a
"conditional" exercise, which means that if some or all of the Option Shares
are not purchased in the offer because of the proration process described below
and in the Supplement to the Offer to Purchase (or for any other reason), the
options will be credited to your account as unexercised options.
If you would prefer to actually exercise your vested options and tender the
Shares you receive in the Offer, you can do so. If you do exercise vested
options, you should follow the same procedures applicable to all of our other
stockholders. If you decide to exercise your options in order to receive Shares
to tender in the Offer, you will need to exercise such options in sufficient
time to obtain Shares to tender before the Expiration Date for the Company's
offer, 11:59 p.m., New York City time, on April 22, 1999.
Please return your Option Tender Enrollment Form PROMPTLY, recognizing the
slow delivery time inherent in the United States mail today. If you use the
United States mail, we recommend using registered mail, return receipt
requested. You may mail your Option Tender Enrollment Form to AST StockPlan,
Inc. in the preaddressed envelope that has been provided for your reply or send
it by an alternate, faster means (such as hand delivery or overnight courier).
Please remember that in all events the materials must be received by AST
StockPlan, Inc. before 5:00 p.m., New York City time, on April 20, 1999.
DO NOT DELIVER YOUR INSTRUCTIONS TO YOUR HUMAN RESOURCES DEPARTMENT OR TO
YOUR BENEFITS ADMINISTRATOR OR TO THE COMPANY.
11. WHAT IF I HOLD SHARES OF BUILDING ONE SERVICES CORPORATION COMMON STOCK IN
ADDITION TO MY STOCK OPTIONS?
If you have actual Shares in your possession (or at a brokerage firm), you
may tender those Shares as well. In this case, you may receive two or more sets
of offer materials. You should be careful to follow the separate directions
that apply to Shares and Option Shares. In the event that we must reduce on a
pro rata basis the number of Shares and Option Shares that we purchase from
each stockholder, the total number of Shares, including Option Shares, that you
tender will be reduced independently.
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<PAGE>
12. CAN I CHANGE MY MIND AND WITHDRAW OPTION SHARES THAT I DIRECTED TO BE
TENDERED?
Yes, but only if you perform the following steps:
. You must send a signed notice of withdrawal to AST StockPlan, Inc.
. The notice of withdrawal must be in writing. You may fax your notice of
withdrawal to 212/659-2319.
. The notice of withdrawal must state your name and social security number
and the amount of Option Shares that you wish to withdraw from the
offer.
. The notice of withdrawal must be received by AST StockPlan, Inc. before
5:00 p.m., New York City time, on April 20, 1999.
The withdrawal procedures are described in the Instructions for Tender of
Options. You must follow these instructions carefully.
You are entitled to retender Option Shares after withdrawal, provided that
all resubmitted materials are completed properly and delivered on time in
accordance with the instructions applicable to the original submission.
13.WHAT DO I DO IF I HAVE ANY QUESTIONS ABOUT THE TENDER OFFER?
If you have questions about the offer or need help in properly responding to
the offer, you may call AST StockPlan, Inc. at 888/980-6456.
******
This memorandum is intended to help you understand the offer and how options
will be handled in the offer. The Supplement to the Offer to Purchase and
Letter of Transmittal contain the legal terms of the offer, and are
controlling. We urge you to carefully read these documents, which explain our
offer in detail.
4
<PAGE>
[LOGO APPEARS HERE]
INSTRUCTIONS FOR TENDER OF OPTIONS
(NOTE: Before completing the Option Tender Enrollment Form, you should read the
attached memorandum from Building One Services Corporation, as well as the
Supplement to the Offer to Purchase and related Letter of Transmittal. Holders
of options for shares ("Option Shares") granted under one of the option plans
or assumed in an acquisition who desire to tender Option Shares to the Company
must complete the Option Tender Enrollment Form.)
THE OPTION TENDER ENROLLMENT FORM MUST BE RECEIVED BY AST STOCKPLAN, INC.
BEFORE 5:00 P.M. NEW YORK CITY TIME, ON APRIL 20, 1999. YOU MUST SIGN AND
COMPLETE THIS FORM FOR YOUR DIRECTION TO BE VALID.
Send the Option Tender Enrollment Form to: AST StockPlan, Inc.
By Mail, Overnight Delivery or Hand:
250 Broadway, 14th Floor
New York, NY 10007
Telephone: 888/980-6456
Facsimile: 212/659-2319
Note: Delivery of the form to an address other than as set forth above will not
constitute a valid delivery.
1
<PAGE>
By signing the Option Tender Enrollment Form, you acknowledge receipt of the
materials relating to the Supplement to the Offer to Purchase dated April 6,
1999 (the "Supplement to the Offer to Purchase") and the related Letter of
Transmittal with respect to an offer by Building One Services Corporation, a
Delaware corporation (the "Company"), for 25,500,000 shares of common stock
(the "Shares"), at a price of $22.50 per Share. The number of Shares the
Company is offering to purchase includes Shares that may be tendered upon the
exercise of options under the Company's stock option plans and options assumed
by the Company in acquisitions with exercise prices below $22.50 per Share
("Option Shares").
The Compensation Committee of the Board of Directors has accelerated the
vesting of your options with exercise prices below $22.50 per share to permit
tenders in the offer. The offer is not being made for Option Shares if the
exercise price of the option is $22.50 per Share or greater.
1. You should complete the Option Tender Enrollment Form to instruct AST
StockPlan, Inc. to tender, at the $22.50 per Share purchase price set forth in
the Supplement to the Offer to Purchase, the Option Shares that you are
entitled to receive upon exercise, pursuant to the terms and conditions set
forth in the Supplement to the Offer to Purchase furnished to you. By signing
the Option Tender Enrollment Form, you agree that if any Option Shares you
validly tendered are accepted, you will receive a cash payment equal to (a) the
number of Option Shares that are accepted for purchase, multiplied by (b) the
difference between the applicable option exercise price(s) and the $22.50
purchase price, less (c) any taxes required to be withheld, and you further
agree to be bound by the terms and conditions set forth herein and in the
Supplement to the Offer to Purchase and Letter of Transmittal.
2. By signing the Option Tender Enrollment Form, you acknowledge that the
Company is allowing you to conditionally exercise your options for the purpose
of allowing you to tender Option Shares in the Company's offer. Further, by
signing the Option Tender Enrollment Form, you acknowledge that if, after
taking into account proration, the Company purchases less than all of your
Option Shares, the options relating to the remaining Option Shares will not be
considered to have been exercised and will remain outstanding and that your
options relating to up to 50% of the amount of your Option Shares prior to our
purchase of Option Shares will remain exercisable and the options relating to
the rest of your Option Shares will be subject to the original vesting schedule
applicable to the portion of your options that would have vested last.
3. Option Shares tendered pursuant to the Supplement to the Offer to Purchase
may be withdrawn at any time prior to 5:00 p.m., New York City time, on April
20, 1999. After that, Option Shares may be withdrawn if they have not been
accepted for payment by the Company as provided in the Supplement to the Offer
to Purchase. An option holder must submit a written, telegraphic or facsimile
transmission notice of withdrawal so that it is received by AST StockPlan, Inc.
at the address indicated above. Any such notice of withdrawal must specify the
name and social security number of the option holder who tendered the Option
Shares to be withdrawn and the number of Option Shares to be withdrawn. All
questions as to the form and validity (including time of receipt) of notices of
withdrawal will be determined by the Company, in its sole discretion, which
determination shall be final and binding. Any Option Shares properly withdrawn
will thereafter be deemed not tendered for purposes of the Supplement to the
Offer to Purchase. However, withdrawn Option Shares may be retendered by the
Expiration Date by again following the procedures for properly tendering Option
Shares.
The Option Tender Enrollment Form must be received by AST StockPlan, Inc.
before 5:00 p.m., New York City time, on April 20, 1999. You must sign and
complete this form for your direction to be valid.
2
<PAGE>
General Terms and Conditions of the Offer Applicable to Option Share Tenders:
NOTE: By signing the Option Tender Enrollment Form, you also agree to the
following terms and conditions which shall not be construed to limit in any way
the terms and conditions set forth in the Supplement to the Offer to Purchase.
1. You will, upon request, execute and deliver any additional documents
deemed by AST StockPlan Inc., the Depositary or the Company to be necessary or
desirable to complete the sale, assignment and transfer of the Option Shares
tendered hereby and have read, understand and agree with all of the terms of
the Supplement to the Offer to Purchase.
2. You understand that tenders of Option Shares pursuant to the procedures
described in the Supplement to the Offer to Purchase and in the Instructions
for Tender of Options will constitute an agreement between you and the Company
upon the terms and subject to the conditions of the Supplement to the Offer to
Purchase.
3. All authority herein conferred or agreed to be conferred shall survive
your death or incapacity and your obligation hereunder shall be binding upon
your heirs, personal representatives, successors and assigns. Except as stated
in the Supplement to the Offer to Purchase, this tender is irrevocable.
4. The Company will pay any stock transfer taxes with respect to the sale and
transfer of any Option Shares to it or its order pursuant to the Supplement to
the Offer to Purchase. You understand that (a) the purchase price will be paid
to you (you cannot elect to have the purchase price paid to another person);
and (b) you will be responsible for paying federal and state income taxes
arising from the sale of the Option Shares in the Offer (a portion of which
will be withheld as described in Instruction 5 below).
5. Under the U.S. federal income tax laws, the Company will be required to
withhold income and employment taxes from the amount of any payments made to
option holders pursuant to the Supplement to the Offer to Purchase.
6. All questions as to the number of Option Shares accepted, the form of
documents and the validity, eligibility (including time of receipt) and
acceptance for payment of any tender of Option Shares will be determined by the
Company in its sole discretion, which determinations shall be final and binding
on all parties. The Company reserves the absolute right to reject any or all
tenders of Option Shares it determines not to be in proper form or the
acceptance of which or payment for which may, in the opinion of the Company's
counsel, be unlawful. The Company also reserves the absolute right to waive any
of the conditions of the Offer and any defect or irregularity in the tender of
any particular Option Shares, subject to certain limitations set forth in the
Supplement to the Offer to Purchase. The Company's interpretation of the terms
of the Supplement to the Offer to Purchase (including these Instructions for
Tender of Options) will be final and binding on all parties. No tender of
Option Shares will be deemed to be properly made until all defects and
irregularities have been cured or waived. Unless waived, any defects or
irregularities in connection with tenders must be cured within such time as the
Company shall determine. None of the Company, AST StockPlan, Inc., Harris Trust
Company of New York, MacKenzie Partners, Inc. or any other person is or will be
obligated to give notice of any defects or irregularities in tenders and none
of them will incur any liability for failure to give any such notice.
7. If the Option Tender Enrollment Form is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary capacity, such person should so indicate when
signing, and proper evidence satisfactory to the Company of the authority of
such person so to act must be submitted to AST StockPlan, Inc.
8. Questions and requests for assistance or additional copies of the
Supplement to the Offer to Purchase and these Instructions for the Tender of
Options should be directed to AST StockPlan, Inc. at 888/980-6456.
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<PAGE>
[LETTERHEAD OF BUILDING ONE SERVICES CORPORATION APPEARS HERE]
Option Tender Election Form
April 6, 1999
[FNAME] [MNAME] [LNAME]
[ADDRESS1] [ADDRESS2]
[CITY], [STATE] [ZIP]
Grant Date: [GRANTDATE]
Grant Type: [GRANTTYPE]
Grant Price: [GRANT PRICE]
Shares Outstanding: [SHARES]
REVISED TENDER OFFER PRICE OF $22.50 PER SHARE; TENDER OFFER EXPIRATION
EXTENDED TO APRIL 20, 1999, 5:00 PM.
1. I hereby conditionally exercise options, for the amount of Shares set forth
herein ("Option Shares"), granted to me by a company acquired by the Company
or granted to me under one of the following plans:
Building One Services Corporation's 1998 Long-Term Incentive Plan; or
Building One Services Corporation's 1997 Long-Term Incentive Plan.
My exercise of options hereunder is subject to the condition that any options
for Option Shares tendered but not purchased by the Company because of
proration shall be deemed not to have been exercised and to be subject to the
original vesting provisions, with certain exceptions. None of the options
underlying any of the Option Shares tendered has an exercise price of $22.50 or
greater.
2. I hereby elect as follows with respect to my options: (Choose only one)
[_]I wish to conditionally exercise and tender Option Shares underlying ALL
of my options that have an exercise price of less than $22.50 per Share.
[_]I wish to conditionally exercise and tender Option Shares
underlying my options that have an exercise price of less than $ per
Share.
I understand that options will be exercised as accepted in the tender in the
order in which my options vest. If none of the boxes is checked and the form is
otherwise properly completed, signed and returned to AST StockPlan, Inc, all of
the Option Shares underlying your options that have an exercise price of less
than $22.50 per Share will be tendered.
SIGN HERE
................................................................................
Signature(s) of Option Holder Dated Daytime Telephone Number
Name(s) Please Print Capacity (Full Title)
Address (if different from that shown on the cover page)
(Must be signed by option holder(s) exactly as name(s) appear(s) on option
account(s) or by authorized agent(s) of option holder(s). If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, agent, officer of
a corporation or other person acting in a fiduciary or representative capacity,
please set forth full title. See Instruction 7 of the instructions for tender
of options.)
4
<PAGE>
[LOGO APPEARS HERE]
April 6 1999
MEMORANDUM TO PARTICIPANTS IN EMPLOYEE STOCK PURCHASE PLAN
TO: Participants in Building One Services Corporation's 1997 Employee Stock
Purchase Plan (the "ESPP")
FROM: Building One Services Corporation
RE: Tender of Shares in the Building One Services Corporation Offer
We have prepared the following questions and answers for your convenience.
Please review this information together with the Supplement to the Offer to
Purchase and other documents printed on green paper. If, after reviewing the
information provided, you have additional questions, please call American Stock
Transfer & Trust Company at 800/278-4353.
1. WHAT IS THE OFFER?
We are offering to purchase 25,500,000 shares of our common stock ("Shares")
at $22.50 per Share. This offer will be open until it expires at 11:59 p.m.,
New York City time, on April 22, 1999, unless we extend the offer. However, in
order for American Stock Transfer & Trust Company, the agent for the ESPP (the
"ESPP Agent") to submit your tender to Harris Trust, you must deliver the
"Tender Instruction Form for Shares in the Building One Services Corporation
1997 Employee Stock Purchase Plan" to the ESPP Agent no later than April 20,
1999.
We are permitting you to tender in this offer any Shares that you acquired
through the ESPP. This memorandum explains how you, as a participant in the
ESPP, can participate in the offer with respect to Shares held in your ESPP
account if you so choose.
The offer, which is subject to a number of conditions, is fully described in
the Supplement to the Offer to Purchase dated April 6, 1999 and the related
Letter of Transmittal provided to you. Please read these documents carefully,
together with the following materials also printed on green paper:
. a "Notice to Participants in the Building One Services Corporation's
1997 Employee Stock Purchase Plan" from the ESPP Agent; and
. the "Tender Instruction Form for Shares in the Building One Services
Corporation 1997 Employee Stock Purchase Plan."
Please remember that neither our company nor our Board of Directors is making
any recommendation as to whether you should participate in the offer. You must
make your own decision.
You must carefully follow the instructions below and in the Tender
Instruction Form for Shares in Building One Services Corporation's 1997
Employee Stock Purchase Plan if you want to tender the Shares held in your ESPP
account. Failure to follow such instructions properly may make you ineligible
to tender such Shares in the offer.
1
<PAGE>
2. MAY I STILL TENDER MY SHARES IN THE ESPP EVEN THOUGH THEY ARE SUBJECT TO THE
RESTRICTION ON SALE BECAUSE I ACQUIRED THEM LESS THAN ONE YEAR AGO?
Yes. As you know, the ESPP requires participants to hold all of the Shares
purchased through the ESPP for at least one year before they can be sold. We
have decided, for purposes of the offer only, to waive the one-year sale
restriction temporarily for ESPP Shares purchased through the ESPP as of the
end of the purchase period that ended on December 31, 1998. You may tender all
of your ESPP Shares that you have purchased through the ESPP through that
purchase period. Shares purchased through the ESPP after the purchase period
that ended on December 31, 1998, however, will remain subject to the one-year
restriction, and cannot be tendered.
Any of your ESPP Shares that are not purchased in the offer because of the
proration process described below (or for any other reason) will be returned to
your ESPP account. These Shares will not be eligible for sale until the one-
year restriction period has been satisfied. Waiver of the one-year sale
restriction applies only for the purpose of allowing you to participate in the
offer. You may not otherwise sell ESPP Shares that you have not held for one
year.
3. WILL ALL OF MY ESPP SHARES THAT I TENDER BE PURCHASED IN THE OFFER?
Probably not. In the offer, we are offering to purchase a total of 25,500,000
Shares at $22.50 per Share. If more than 25,500,000 Shares are tendered, we
will reduce on a pro rata basis the number of Shares we purchase from each
person who tenders Shares. This means that we will not purchase all of the ESPP
Shares you tender under these circumstances. If we reduce the number of ESPP
Shares we purchase from you, we will purchase those ESPP Shares with the
earliest purchase date first (that is, Shares that you have held in your ESPP
account the longest). We currently do not know how many Shares will be tendered
in the offer.
4. WHAT WILL HAPPEN TO MY SHARES IN THE ESPP IF THEY ARE NOT PURCHASED?
If we do not purchase any of your ESPP Shares because of proration or
otherwise, the ESPP Shares not purchased will be returned to the ESPP Agent to
return to your ESPP account. These ESPP Shares will then have the same terms as
they did before the offer (including the restriction on sale).
5. HOW WILL I KNOW IF MY SHARES IN THE ESPP HAVE BEEN PURCHASED AND WHEN WILL I
BE PAID?
After the offer expires, all tenders submitted in the offer will be
tabulated. This may take up to seven business days. Soon thereafter, you will
be advised of the number, if any, of your ESPP Shares that were purchased in
the offer. You will receive a check for the purchase price (less applicable
withholding taxes) promptly thereafter.
6. WILL I BE TAXED ON THE MONEY I RECEIVE?
Yes. You should review the Supplement to the Offer to Purchase for detailed
tax information and, if necessary, consult a tax advisor.
7. HOW DO I TENDER MY ESPP SHARES IN THE OFFER?
The only way that you can tender ESPP Shares in the offer is by completing
the Tender Instruction Form for Shares in the Building One Services Corporation
1997 Employee Stock Purchase Plan on green paper, signing the form, and
returning it to American Stock Transfer & Trust Company, the ESPP Agent, at the
address indicated on the form. The ESPP Agent will complete a Letter of
Transmittal for these ESPP Shares to be tendered in the offer. The Tender
Instruction Form for Shares in Building One Services Corporation's 1997
Employee Stock Purchase Plan must be received by the ESPP Agent before 5:00
p.m., New York City time, on April 20, 1999 in order to allow the ESPP Agent
sufficient time to tender on your behalf.
On this form, you may direct the ESPP Agent to tender either a specific
number, or all, of your ESPP Shares, if you desire us to purchase them in the
offer.
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<PAGE>
Pursuant to this authority, the ESPP Agent will complete a Letter of
Transmittal with respect to the ESPP Shares you direct the ESPP Agent to tender
on your behalf. Because the terms and conditions of the Letter of Transmittal
will govern the tender of your ESPP Shares, you should read the Letter of
Transmittal carefully. However, the Letter of Transmittal should not be
completed and returned to the ESPP Agent or Harris Trust Company of New York
for tendering ESPP Shares.
Please return your instructions PROMPTLY, recognizing the slow delivery time
inherent in the United States mail today. If you use the United States mail, we
recommend using registered mail, return receipt requested. You may hand deliver
or mail your Tender Instruction Form for Shares in Building One Services
Corporation 1997 Employee Stock Purchase Plan to the ESPP Agent in the
preaddressed envelope that has been provided for your reply or send it by an
alternate, faster means (such as overnight courier). Please remember that in
all events the materials must be received by the ESPP Agent before 5:00 p.m.
New York City time, on April 20, 1999.
Do not deliver your instructions to your Human Resources Department or to
your Benefits Administrator or to the company.
8. WHAT IF I HOLD OTHER SHARES OF BUILDING ONE SERVICES CORPORATION COMMON
STOCK IN ADDITION TO MY ESPP SHARES?
If you have Shares other than ESPP Shares in your possession (or at a
brokerage firm), you may tender the other Shares as well. In this case, you may
receive two or more sets of offer materials. You should be careful to follow
the separate directions that apply to Shares and ESPP Shares. In the event we
must reduce the number of Shares that we purchase from each stockholder, we
will purchase the same percentage of the Shares and the ESPP Shares that you
tender.
9. CAN I CHANGE MY MIND AND WITHDRAW ESPP SHARES THAT I DIRECTED TO BE
TENDERED?
Yes, but only if you perform the following steps:
. You must send a signed notice of withdrawal to the ESPP Agent.
. The notice of withdrawal must be in writing. You may fax your notice of
withdrawal to the ESPP Agent at 718/234-5001.
. The notice of withdrawal must state your name, social security number
and the amount of ESPP Shares that you wish to withdraw from the offer.
. The notice of withdrawal must be received by the ESPP Agent before 5:00
p.m., New York City time, on April 20, 1999.
The withdrawal procedures are described in greater detail in the Tender
Instruction Form for Shares in the Building One Services Corporation 1997
Employee Stock Purchase Plan. You must follow these instructions carefully.
You are entitled to resubmit tender materials after withdrawal, provided that
the resubmitted materials are completed properly and delivered on time in
accordance with the instructions applicable to the original submission.
10. WHAT DO I DO IF I HAVE ANY QUESTIONS ABOUT THE TENDER OFFER?
If you have questions about the operation of the offer or need help in
properly responding to the offer, you may call the ESPP Agent at 800/278-4353.
******
This memorandum is intended to help you understand the offer and how ESPP
Shares will be handled in the offer. The Supplement to the Offer to Purchase
and Letter of Transmittal contain the legal terms of the offer and are
controlling. We urge you to carefully read these documents, which explain our
offer in detail.
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<PAGE>
FOR HOLDERS OF EMPLOYEE STOCK PURCHASE PLAN SHARES
TENDER INSTRUCTION FORM
FOR SHARES IN THE
BUILDING ONE SERVICES CORPORATION 1997
EMPLOYEE STOCK PURCHASE PLAN
(NOTE: Before completing this Tender Instruction Form, you should read the
Supplement to the Offer to Purchase and the related Letter of Transmittal, the
attached memorandum from Building One Services Corporation, and the letter from
American Stock Transfer & Trust Company (the "ESPP Agent"), the agent for the
Building One Services Corporation 1997 Employee Stock Purchase Plan ("ESPP").
THIS FORM SHOULD BE USED ONLY BY EMPLOYEES WHO HAVE SHARES IN THE ESPP WHO
DESIRE TO TENDER SOME OR ALL OF SUCH SHARES TO THE COMPANY.)
THIS TENDER INSTRUCTION FORM MUST BE RECEIVED BY AMERICAN STOCK TRANSFER &
TRUST COMPANY BEFORE 5:00 P.M., NEW YORK CITY TIME, ON APRIL 20, 1999. YOU
MUST SIGN AND COMPLETE THIS FORM FOR YOUR DIRECTION TO BE VALID.
To: American Stock Transfer & Trust Company
Agent for the Building One Services Corporation Employee Stock Purchase Plan
By Mail, Overnight Delivery or Hand:
40 Wall Street, 46th Floor
New York, NY 10005
Attention: Reorganization Department
Telephone: 718/921-8200
Facsimile: 718/234-5001
NOTE: Delivery of this instrument to an address other than as set forth above
will not constitute a valid delivery.
Name(s) and Address(es) of ESPP Participant (Please fill in, if blank, exactly
as name(s) appear(s) on ESPP Account Statement, including ESPP Account Number)
- --------------------------------------------------------------------------------
<PAGE>
I am a participant in the ESPP who has Shares in such plan ("ESPP Shares")
and, as such, I have received a copy of the Supplement to the Offer to Purchase
dated April 6, 1999 (the "Supplement to the Offer to Purchase") and the related
Letter of Transmittal relating to the offer by Building One Services
Corporation (the "Company") to purchase 25,500,000 shares of its common stock
("Shares"), at a price of $22.50 per Share (the "Purchase Price").
I hereby acknowledge my desire to tender to the Company at the Purchase Price
certain Shares as described herein upon the terms and subject to the conditions
set forth in the Supplement to the Offer to Purchase, Letter of Transmittal and
this Tender Instruction Form.
This notice instructs you to tender, at the Purchase Price, the following
number of Shares I own in the ESPP:
[_] (insert number) ESPP Shares
[_] All of my ESPP Shares eligible for tender
Instructions: Check one of the boxes. If the first box is checked, insert the
number of your ESPP Shares that you desire to be tendered on your behalf. If
neither box is checked and the form is otherwise properly completed, signed and
returned to American Stock Transfer & Trust Company (the "ESPP Agent"), all of
your ESPP Shares eligible for tender will be tendered.
ESPP Shares tendered pursuant to the offer may be withdrawn at any time prior
to 5:00 p.m., New York City time, on April 20, 1999. After that, ESPP Shares
tendered pursuant to the offer may be withdrawn if they have not been accepted
for purchase by the Company as provided in the Supplement to the Offer to
Purchase. An owner of ESPP Shares must submit a written, telegraphic or
facsimile transmission notice of withdrawal so that it is received by the ESPP
Agent at the address indicated above. Any such notice of withdrawal must
specify the name and social security number of the owner who tendered the ESPP
Shares to be withdrawn and the number of ESPP Shares to be withdrawn. All
questions as to the form and validity (including time of receipt) of notices of
withdrawal will be determined by the Company, in its sole discretion, which
determination shall be final and binding. None of the Company, American Stock
Transfer & Trust Company, Harris Trust Company of New York, MacKenzie Partners,
Inc. or any other person shall be obligated to give any notice of any defects
or irregularities in any notice of withdrawal and none of them shall incur any
liability for failure to give any such notice. Any ESPP Shares properly
withdrawn will thereafter be deemed not tendered for purposes of the offer.
However, withdrawn ESPP Shares may be retendered by 5:00 p.m., New York City
time, on April 20, 1999 by again following the procedures for properly
tendering ESPP Shares.
Neither the Company nor its Board of Directors makes any recommendation as to
whether to tender or refrain from tendering any ESPP Shares.
This Tender Instruction Form must be received by the ESPP Agent before 5:00
p.m., New York City time, on April 20, 1999 in order to allow the ESPP Agent
sufficient time to tender on your behalf. You must sign and complete this form
for your direction to be valid.
Any tendering stockholder or other payee (other than a non-United States
stockholder) who fails to complete fully and sign the Substitute Form W-9
included below in the Letter of Transmittal may be subject to United States
federal income tax backup withholding equal to 31% of the gross proceeds paid
to such stockholder or other payee pursuant to the offer. The Depositary,
Harris Trust Company of New York, will withhold 30% of the gross proceeds paid
to non-United States stockholders unless it determines that a reduced rate of
withholding is available pursuant to a tax treaty or that an exemption from
withholding is available. As a result, non-United States stockholders will not
be subject to United States federal income tax backup withholding. See
Instruction 12 to the Letter of Transmittal.
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<PAGE>
Sign Here
(Please Complete Substitute Form W-9 Attached to the Letter of Transmittal)
.............................................................................
.............................................................................
Signature(s) of Owner(s)
Name(s) .....................................................................
(Please Print)
.............................................................................
Capacity (full title) .......................................................
Address (if different from that shown on the cover page) ....................
.............................................................................
.............................................................................
(Zip Code)
Daytime Telephone Number: ...................................................
Dated: ......................................................................
Must be signed by participant(s) exactly as name(s) appear(s) on the ESPP
account of the participant(s). If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, agent, officer of a corporation
or other person acting in a fiduciary or representative capacity, please set
forth full title and provide proper evidence to ESPP Agent satisfactory to
the Company of authority to sign.)
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<PAGE>
NOTICE TO PARTICIPANTS
IN THE BUILDING ONE SERVICES CORPORATION 1997
EMPLOYEE STOCK PURCHASE PLAN
OF THE
OFFER TO PURCHASE FOR CASH
BY
BUILDING ONE SERVICES CORPORATION OF
25,500,000 SHARES OF ITS COMMON STOCK
AT
$22.50 PER SHARE
April 6, 1999
To Participants in the Building One Services Corporation 1997 Employee Stock
Purchase Plan (the "ESPP"):
Pursuant to the Supplement to the Offer to Purchase dated April 6, 1999, and
the related Letter of Transmittal, Building One Services Corporation (the
"Company") is offering to purchase 25,500,000 shares of its common stock
("Shares") at $22.50 per Share.
American Stock Transfer & Trust Company (the "ESPP Agent") is the holder of
record of Shares held for your account in the ESPP. A tender of your Shares in
the ESPP ("ESPP Shares") can only be made by us, as your agent, pursuant to
your instructions.
IF YOU WISH TO PARTICIPATE IN THIS OFFER BY TENDERING ESPP SHARES, YOU MUST
NOTIFY THE ESPP AGENT BY COMPLETING THE "TENDER INSTRUCTION FORM FOR SHARES IN
THE BUILDING ONE SERVICES CORPORATION 1997 EMPLOYEE STOCK PURCHASE PLAN" ON
GREEN PAPER, SIGNING THE FORM, AND RETURNING IT TO US AT THE ADDRESS INDICATED
ON THE FORM BEFORE 5:00 P.M., NEW YORK CITY TIME, ON APRIL 20, 1999 IN ORDER TO
ALLOW US SUFFICIENT TIME TO TENDER ON YOUR BEHALF. If you wish to tender all or
any amount of your ESPP Shares, please instruct us by the deadline. If you do
not respond to this notice, none of your ESPP Shares will be tendered.
Solely for the purpose of allowing participants in the ESPP to participate in
the Offer, the one-year restriction on sales of ESPP Shares acquired through
the end of the purchase period that ended on December 31, 1998 has been
temporarily waived. Shares purchased through the ESPP after such date are not
eligible for the offer. Any ESPP Shares that are not purchased in the offer
will not be eligible for sale until the one-year period has been satisfied.
If the number of ESPP Shares purchased by the Company from each participant
in the ESPP who tenders ESPP Shares in the offer must be reduced on a pro rata
basis, as described in Section 1 of the Supplement to the Offer to Purchase,
the Company will accept first the ESPP Shares that have been held in your ESPP
account the longest.
Cash received from any ESPP Shares tendered and accepted for payment by the
Company will be distributed to participants by check (less applicable federal
withholding taxes). Any ESPP Shares tendered but not accepted by the Company
will remain in your account.
If you are unsure how many Shares you have in your ESPP account that are
eligible to be tendered in the offer, you may contact our Customer Service Unit
at 800/278-4353 before 5:00 p.m., New York City time, on April 20, 1999. Our
operators are available to take your call Monday through Friday between the
hours of 9:00 a.m. and 5:00 p.m., New York City time.
<PAGE>
We note the following:
1. The tender price is $22.50 per Share, net to you in cash (less
applicable federal withholding taxes).
2. The withdrawal deadline for ESPP Shares is on April 20, 1999, at 5:00
p.m., New York City time, unless the Company extends the Offer.
3. The Offer is conditioned upon a minimum of 21,000,000 Shares being
tendered, the receipt of financing on acceptable terms and certain other
conditions. You should refer to Section 6 of the Supplement to the Offer
to Purchase.
4. Any stock transfer taxes applicable to the sale of ESPP Shares to the
Company pursuant to the Offer will be paid by the Company, except as
described in the Letter of Transmittal.
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares in any jurisdiction in which the making of the
offer or acceptance thereof would not be in compliance with the laws of such
jurisdiction.
YOUR INSTRUCTIONS TO US ON THE ENCLOSED TENDER INSTRUCTION FORM FOR SHARES IN
THE BUILDING ONE SERVICES CORPORATION 1997 EMPLOYEE STOCK PURCHASE PLAN MUST BE
FORWARDED TO US PROMPTLY IN ORDER TO PERMIT US TO SUBMIT A TENDER ON YOUR
BEHALF IN ACCORDANCE WITH THE PROVISIONS OF THE SUPPLEMENT TO THE OFFER TO
PURCHASE AND LETTER OF TRANSMITTAL.
Very truly yours,
American Stock Transfer & Trust Company
Agent, Building One Services
Corporation 1997
Employee Stock Purchase Plan
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<PAGE>
[LOGO APPEARS HERE]
April 6, 1999
MEMORANDUM TO STOCKHOLDERS WHO RECEIVED SHARES
IN CONNECTION WITH THE SALE OF A BUSINESS
TO: Stockholders who Received Their Shares of Building One Services
Corporation Common Stock in Connection with the Sale of a Business
FROM: Building One Services Corporation
RE: Tender of Shares in the Company's Tender Offer
We have prepared the following questions and answers for your convenience.
Please review the information together with the Supplement to the Offer to
Purchase and other documents printed on purple paper. If, after reviewing the
information provided, you have additional questions, please call MacKenzie
Partners, Inc. ("MacKenzie Partners") at 800/322-2885.
1.WHAT IS THE OFFER?
We are offering to purchase 25,500,000 shares of our common stock ("Shares")
at $22.50 per Share. This offer will be open until it expires at 11:59 p.m.,
New York City time, on April 22, 1999, unless we extend the offer.
We are permitting you to tender in this offer any Shares that you received
from us in connection with the sale of a business to us, including shares that
you cannot now transfer or could not transfer previously because of contractual
restrictions on transfer that you agreed to in connection with the sale of a
business to us ("Restricted Shares"). We are also permitting you to tender
Shares that you pledged to us in connection with the sale of a business to us
("Pledged Shares"). We will not purchase, however, more than 50% of any one
person's Restricted Shares. This memorandum describes how you can tender your
Restricted Shares and your Pledged Shares in this offer. It also describes how
any tender proceeds on Pledged Shares that are purchased in the offer and how
Pledged Shares that are not purchased in the offer will be handled immediately
after the offer.
The offer, which is subject to a number of conditions, is fully described in
the Supplement to the Offer to Purchase dated April 6, 1999 and the related
Letter of Transmittal provided to you. Please read these documents carefully,
together with this memorandum.
Please remember that neither our company nor our Board of Directors is making
any recommendation as to whether you should participate in the offer. You must
make your own decision.
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<PAGE>
A.QUESTIONS APPLICABLE TO RESTRICTED SHARES
1.Will All of the Restricted Shares That I Tender Be Purchased in the Offer?
No. We will not purchase more than 50% of any one person's Restricted Shares.
In addition, we are offering to purchase from our stockholders a total of
25,500,000 Shares at $22.50 per Share. If more than 25,500,000 Shares are
tendered, we will reduce on a pro rata basis the number of Shares we purchase
from each person who tenders Shares. This means that we may not purchase 50% of
the Restricted Shares you tender if you tender less than 100% of your
Restricted Shares. We currently do not know how many Shares will be tendered in
the offer.
2. What Will Happen to My Restricted Shares if They Are Not Purchased?
If, after taking into account proration, we purchase less than 50% of your
Restricted Shares (including any Pledged Shares), such Restricted Shares will
remain transferable without restriction. The 50% of your Restricted Shares that
we do not purchase will remain subject to the contractual restrictions on
transfer applicable to the 50% of your Restricted Shares that would have lapsed
last. We will return to you the certificates representing the Restricted Shares
(excluding any Pledged Shares) that we do not purchase in the offer, which will
include applicable legends.
3. How Will I Know If My Restricted Shares Have Been Purchased And When Will I
Be Paid?
After the offer expires, all of the tenders submitted in the offer will be
tabulated. This may take up to seven business days. Soon thereafter, you will
be advised of the number, if any, of your Restricted Shares that we purchased
in the offer. You will receive a check for the purchase price promptly
thereafter.
4. Will I Be Taxed on the Proceeds from the Sale of Restricted Shares?
Yes. You should review the Supplement to the Offer to Purchase and Letter of
Transmittal for a more detailed discussion of tax considerations and, if
necessary, consult a tax advisor.
5. How Do I Tender My Restricted Shares In The Offer?
Although we will not purchase more than 50% of your Restricted Shares, we
will permit you to tender 100% of your Restricted Shares to account for the
effects of proration. If you tender fewer than 100% of your Restricted Shares,
you must tender your Restricted Shares whose restrictions have already lapsed
(if any), followed next by other Restricted Shares in the order in which the
restrictions lapse. Accordingly, if you tender fewer than 100% of your
Restricted Shares, please review carefully the legends on the back of your
stock certificates to determine which certificates to send along with the
Letter of Transmittal.
The only way that you can tender Restricted Shares (including any Pledged
Shares) in the Offer is by completing the Letter of Transmittal and returning
it to Harris Trust at the address indicated on the form. The Letter of
Transmittal MUST be received by Harris Trust before 11:59 p.m., New York City
time, on April 22, 1999 and MUST be accompanied by the appropriate stock
certificates representing your Restricted Shares, other than Pledged Shares.
The Company will deliver to Harris Trust the certificates representing Pledged
Shares.
Because the terms and conditions of the Letter of Transmittal will govern the
tender of your Restricted Shares, you should read the Letter of Transmittal
carefully.
Please return your Letter of Transmittal PROMPTLY, recognizing the slow
delivery time inherent in the United States mail today. If you use the United
States mail, we recommend using registered mail, return receipt requested. You
may mail your Letter of Transmittal to Harris Trust in the pre-addressed
envelope that has been
provided for your reply or send it by an alternate, faster means (such as
overnight courier). Hand deliveries must be made to Harris Trust. Please
remember that in all events the materials must be received by Harris Trust
before 11:59 p.m. , New York City time, on April 22, 1999.
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<PAGE>
B.QUESTIONS APPLICABLE TO PLEDGED SHARES
1.Will All of the Pledged Shares That I Tender Be Purchased in the Offer?
We are offering to purchase from our stockholders a total of 25,500,000
Shares at $22.50 per Share. If more than 25,500,000 Shares are tendered, we
will reduce on a pro rata basis the number of Shares we purchase from each
person who tenders Shares. This means that we will not purchase all of the
Pledged Shares that you tender under these circumstances. Pledged Shares that
are not purchased will be returned to us and will remain subject to the pledge.
We currently do not know how many Shares will be tendered in the offer. In
addition, we will not purchase more than 50% of any one person's Restricted
Shares.
2. What Will Happen to My Pledged Shares If They Are Not Purchased?
If we do not purchase Pledged Shares because of proration or otherwise, they
will be returned to us. We will continue to have control of the Pledged Shares
pursuant to the terms and conditions under which they were pledged to us, as
provided in the acquisition agreement you signed in connection with the sale of
a business to us. The Pledged Shares will continue to be retained by us as
collateral security, subject to the same terms and conditions as the Pledged
Shares are now.
3. How Will I Know If My Pledged Shares Have Been Purchased and When Will I Be
Paid?
After the offer expires, all tenders submitted in the offer will be
tabulated. This may take up to seven business days. Soon thereafter, you will
be advised of the number, if any, of your Pledged Shares that were purchased in
the offer. The proceeds of the purchase price will be retained in an account at
American Stock Transfer & Trust Company. You will not be sent this money or any
Pledged Shares not purchased in the offer until we release them in accordance
with the terms and conditions under which the Pledged Shares are pledged to us.
4. Will I Be Taxed on the Proceeds from the Sale of Pledged Shares Even Though
I Will Not Receive the Money Right Away?
Yes. You should consult a tax advisor with respect to the determination of
the applicable tax.
5. How Do I Tender My Pledged Shares in the Offer?
You may only tender Pledged Shares if you have already tendered any
Restricted Shares whose restrictions lapse prior to those applicable to the
Pledged Shares.
The only way that you can tender Pledged Shares in the Offer is by completing
the Letter of Transmittal, signing the form and returning it to Harris Trust at
the address indicated on the form. You only need to complete one Letter of
Transmittal if you want to tender your Restricted Shares, your Pledged Shares,
or any other Shares other than Shares underlying stock options or Shares held
in the Employee Stock Purchase Plan. The Letter of Transmittal MUST be received
by Harris Trust before 11:59 p.m., New York City time, on April 22, 1999. The
stock certificates representing Pledged Shares will be delivered to Harris
Trust by the Company.
By signing the Letter of Transmittal you will authorize Harris Trust, which
is holding the Pledged Shares in connection with the Company's offer, to tender
a specific number, or all, of your Pledged Shares in the Offer and will also
authorize us to enter into an arrangement with American Stock Transfer & Trust
Company which will govern the terms under which the proceeds of any Pledged
Shares you tender that are purchased by us in the offer will be held.
Disbursements will be made from this account only upon our instructions. You
will not receive the proceeds from the sale of Pledged Shares until we release
them in accordance with the terms and conditions under which the Pledged Shares
are pledged to us, as provided in the acquisition agreement you signed at the
time your business was sold to us.
3
<PAGE>
Please return your instructions PROMPTLY, recognizing the slow delivery time
inherent in the United States mail today. If you use the United States mail, we
recommend using registered mail, return receipt requested. Please remember that
in all events the materials must be received by Harris Trust before 11:59 p.m.,
New York City time, on April 22, 1999.
C. General Questions
1. What If I Hold Shares of Building One Services Corporation Common Stock in
Addition to Restricted or Pledged Shares?
If you have Shares other than Restricted Shares or Pledged Shares in your
possession (or at a brokerage firm), you may tender the other Shares as well.
In this case, you may receive two or more sets of offer materials. You should
be careful to follow the separate directions that apply to Shares versus
Restricted and Pledged Shares. In the event that we must reduce on a pro rata
basis the number of Shares and Restricted and Pledged Shares that we purchase
from each stockholder, the total number of Restricted and Pledged Shares you
tender will be reduced independently from the number of other Shares that you
tender.
2. Can I Change My Mind and Withdraw Pledged Shares That I Directed to Be
Tendered?
Yes, but only if you perform the following steps:
. You must send a signed notice of withdrawal to Harris Trust, Attn:
Tenders and Exchanges.
. The notice of withdrawal must be in writing. You may fax your notice of
withdrawal to 212/701-7636.
. The notice of withdrawal must state your name, social security number
and the amount of Restricted Shares or Pledged Shares that you wish to
withdraw from the Offer.
. The notice of withdrawal must be received by Harris Trust before we
accept shares for purchase.
3.WHAT DO I DO IF I HAVE ANY QUESTIONS ABOUT THE TENDER OFFER?
If you have questions about the operation of the offer or need help in
properly responding to the offer, you may call MacKenzie Partners, Inc. at
800/322-2885.
******
This memorandum is intended to help you understand the offer and how
Restricted Shares and Pledged Shares will be handled in the offer. The
Supplement to the Offer to Purchase and Letter of Transmittal contain the legal
terms of the offer, and are controlling. We urge you to carefully read these
documents, which explain our offer in detail.
4
<PAGE>
Exhibit (b)(1)
BANKERS TRUST COMPANY
One Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
March 22, 1999
Building One Services Corporation
800 Connecticut Avenue, NW
Suite 1111
Washington, DC 20006
Attention: Tim Clayton and Joe Ivey
re Bank Commitment Letter
----------------------
Ladies and Gentlemen:
You have advised Bankers Trust Company ("BTCo") that Building One
Services Corporation (the "Borrower") intends to repurchase, pursuant to a cash
tender offer (the "Tender Offer") of $22.50 per share, approximately 25.7
million shares of the Borrower's outstanding common stock (representing
approximately fifty-seven percent (57%) of the total issued and outstanding
shares of such common stock) from existing shareholders of the Borrower
(including shares outstanding after giving effect to the exercise of stock
options with a strike price of less than $22.50 per share outstanding at the
time of such repurchase) for an aggregate purchase price of $578.6 million
(based on the number of shares of the common stock of the Borrower and options
subject to exercise outstanding on the date hereof after giving effect to the
acceleration of such options in connection with the Tender Offer) (collectively,
the "Common Stock Repurchase").
We understand that the sources of funds needed to effect the Tender
Offer and the Common Stock Repurchase, to pay all fees and expenses incurred in
connection therewith, and to provide for the ongoing working capital needs and
general corporate requirements of the Borrower and its subsidiaries shall be
provided solely through (i) cash on hand at the Borrower on the date of the
consummation of the Common Stock Repurchase equal to at least $200.0 million
less such amount of cash utilized to make the Post-Signing Payments referred to
- ----
below (which cash on hand shall be available to make payments owing in
connection with the Common Stock Repurchase), (ii) $200.0 million from the
issuance by the Borrower of senior subordinated notes (the "Senior Subordinated
Notes"), (iii) $100.0 million from the issuance by the Borrower of 7 1/2% pay-
in-kind convertible subordinated notes due 2012 (the "Convertible Subordinated
Notes") to Boss Investment LLC ("Boss"), a Delaware limited liability company
formed by affiliates of Apollo Management, L.P. (collectively, "Apollo"), on
terms acceptable to BTCo (which Convertible Subordinated Notes, when issued,
shall represent, on an as-converted basis, approximately 18.0% of the voting
capital stock of the Borrower), and (iv) the incurrence by the
<PAGE>
Borrower of indebtedness pursuant to the Revolving Credit Facility described
below (the financing transactions described in preceding clauses (ii) through
(iv) above are herein collectively referred to as the "Financing Transactions",
with the Tender Offer, the Common Stock Repurchase and the Financing
Transactions being herein collectively called the "Transaction"). We further
understand that the total consideration payable in connection with the
Transaction (including fees and expenses not to exceed $30.0 million) shall not
exceed $608.6 million (based on the number of outstanding shares of the common
stock of the Borrower and options subject to exercise in connection with the
Common Stock Repurchase, in each case on the date hereof).
BTCo understands that the senior bank financing will be in the form of
a revolving credit facility (the "Revolving Credit Facility") in the amount of
$350.0 million, to be made available to the Borrower on and after the date of
the consummation of the Common Stock Repurchase (the "Initial Borrowing Date"),
provided that proceeds of the Revolving Credit Facility in an amount not to
- --------
exceed the sum of (x) $95.5 million plus (y) the aggregate amount of (i) all
----
cash earnout payments made after the date hereof and prior to the Initial
Borrowing Date in connection with acquisitions consummated by the Borrower and
its subsidiaries prior to the date hereof, (ii) all cash consideration paid
after the date hereof and prior to the Initial Borrowing Date in connection with
acquisitions consummated by the Borrower and its subsidiaries after the date
hereof and prior to the Initial Borrowing Date, (iii) additional cash payments
required to be made pursuant to the Common Stock Repurchase to holders of common
stock issued after the date hereof in connection with acquisitions consummated
by the Borrower and its subsidiaries prior to the date hereof and/or after the
date hereof and prior to the Initial Borrowing Date and (iv) cash consideration
paid pursuant to the Common Stock Repurchase to holders of common stock of the
Borrower issued after the date hereof pursuant to the exercise of warrants and
options (with the payments referred to in this clause (y) being herein
collectively called the "Post-Signing Payments" and with the Post-Signing
Payments not to exceed $85.0 million in the aggregate and otherwise to be
(including the transactions giving rise to such Post-Signing Payments) on terms
reasonably satisfactory to BTCo) may be utilized on the Initial Borrowing Date
to make payments owing in connection with the Transaction. A summary of terms
and conditions of the Senior Bank Financing is attached as Exhibit A to this
letter (the "Summary of Terms").
BTCo is pleased to advise you of its commitment, subject to the terms
and conditions contained herein and in the attached Summary of Terms, to provide
100% of the Revolving Credit Facility. In connection with the Senior Bank
Financing, BTCo shall act as the sole administrative agent (in such capacity,
the "Administrative Agent"), and BTCo or an affiliate designated by BTCo shall
act as sole lead arranger (in such capacity, the "Arranger"), for the Revolving
Credit Facility; provided that, in connection with the syndication of the
--------
Revolving Credit Facility, the Borrower and Apollo shall jointly have the right
to designate two agent titles for Lenders (as defined below) other than BTCo.
BTCo shall manage all aspects of the syndication of the Revolving Credit
Facility. Notwithstanding any designation by Apollo and the Borrower of agent
titles to any Lenders other than BTCo as contemplated above, the parties hereto
acknowledge and agree that in no event shall BTCo's share of the financing fee
referred to in paragraph 1 of the Fee Letter referred to below be less than 50%
of such financing fee.
-2-
<PAGE>
BTCo reserves the right, prior to or after execution of the definitive
credit documentation for the Revolving Credit Facility, to syndicate all or a
part of the Revolving Credit Facility to one or more financial institutions
(together with BTCo, the "Lenders") approved by the Borrower (which approval
shall not be unreasonably withheld or delayed) that will become parties to such
definitive credit documentation pursuant to a syndication to be managed by BTCo.
You agree actively to assist BTCo in achieving a syndication that is
satisfactory to BTCo and to you. Such syndication will be accomplished by a
variety of means, including direct contact during the syndication between your
senior management and advisors of the Borrower and Boss (including, without
limitation, Apollo) and the proposed Lenders. To assist BTCo in its syndication
efforts, you hereby agree both before and after the Initial Borrowing Date (i)
to provide and cause your advisors to provide BTCo and the other Lenders upon
request with all reasonable information deemed necessary by us to complete
syndication, including but not limited to, information and evaluations prepared
by you and Boss and your and its advisors (including, without limitation,
Apollo) and (ii) to assist BTCo upon request in the preparation of an
Information Memorandum to be used in connection with the syndication of the
Revolving Credit Facility, including making available officers of the Borrower
and its subsidiaries from time to time to attend and make presentations
regarding the business and prospects of the Borrower and its subsidiaries, as
appropriate, at a meeting or meetings of Lenders or prospective Lenders.
BTCo's commitment hereunder is subject to (a) there not occurring or
becoming known to BTCo any material adverse condition or material adverse change
in or affecting the business, property, assets, nature of assets, liabilities,
condition (financial or otherwise) or prospects of the Borrower or the Borrower
and its subsidiaries taken as a whole, (b) the absence of any material adverse
change after the date hereof in the market for syndicated facilities similar in
nature to the Revolving Credit Facility and the absence of any material
disruption of or a material adverse change in financial, banking or capital
markets generally, in each case as determined by BTCo in its reasonable
discretion and (c) the other conditions set forth or referred to in the Summary
of Terms.
It is understood and agreed that, if BTCo deems such actions advisable
in order to ensure successful syndication of the Revolving Credit Facility, BTCo
shall be entitled to (i) first, allocate up to $100.0 million of its commitment
-----
with respect to the Revolving Credit Facility to a term loan facility and
increase the pricing with respect to loans under such term loan facility in an
amount not to exceed 0.50% of the pricing applicable to loans under the
Revolving Credit Facility as provided in the Summary of Terms and Annex I
thereto (provided that the weighted average life-to-maturity of the resulting
--------
term facility shall be no less than six years) and (ii) second, if the actions
------
specified in immediately preceding clause (i) are not sufficient to ensure
successful syndication of its commitments hereunder as determined by BTCo in its
sole discretion, increase the pricing with respect to loans under the Revolving
Credit Facility in an amount not to exceed 0.50% of the pricing applicable to
loans under the Revolving Credit Facility as provided in the Summary of Terms
and Annex I thereto, it being understood that (x) any actions taken pursuant to
this clause (ii) are in addition to the actions permitted to be taken under
clause (i) and (y) in no event shall the right to increase pricing under the
Revolving Credit Facility under this clause (ii) be construed to permit an
increase in the pricing applicable to any term loan facility formed pursuant to
clause (i).
-3-
<PAGE>
To induce BTCo to issue this letter, you hereby agree that all
reasonable fees and expenses (including the reasonable fees and expenses of
counsel and consultants) of BTCo and its affiliates arising in connection with
the preparation, execution and delivery of this letter and the definitive
financing agreements and in connection with the transactions described herein
shall be for your account whether or not the Common Stock Repurchase is
consummated or the Revolving Credit Facility is made available. You further
agree, whether or not the Common Stock Repurchase is consummated, the Revolving
Credit Facility is made available or definitive credit documents are executed,
to indemnify and hold harmless BTCo, its affiliates and each director, officer,
employee, agent and representative thereof (each, an "indemnified person") from
and against any and all actions, suits, proceedings (including any
investigations or inquiries), claims, losses, damages, liabilities or expenses
of any kind or nature whatsoever which may be incurred by or asserted against or
involve BTCo, any of its affiliates or any indemnified person as a result of or
arising out of or in any way related to or resulting from the Transaction (or
any element thereof), this letter or the extension of credit pursuant to the
Revolving Credit Facility contemplated by this letter, or in any way arising
from any use or intended use of this letter or the proceeds of any of extensions
of credit under the Revolving Credit Facility contemplated by this letter and,
upon demand, to pay and reimburse BTCo, each such affiliate and each indemnified
person for any reasonable legal or other out-of-pocket expenses incurred in
connection with investigating, defending or preparing to defend any such action,
suit, proceeding (including any inquiry or investigation) or claim (whether or
not BTCo, such affiliate or any such indemnified person is a party to any
action, suit or proceeding out of which any such expenses arise and whether or
not any such action, suit or proceeding is between you and BTCo or an
indemnified person or between BTCo or an indemnified person and a third party or
otherwise); provided, however, that you shall not have to indemnify BTCo, any of
-------- -------
its affiliates or any indemnified person against any loss, claim, damage,
expense or liability which resulted primarily from the gross negligence or
willful misconduct of BTCo, such affiliate or such indemnified person. This
letter is issued for your benefit only and no other person or entity may rely
thereon. Neither BTCo, any of its affiliates nor any other Lender shall be
responsible or liable to you or any other person for any consequential damages
which may be alleged as a result of this letter or any failure to provide the
Revolving Credit Facility.
BTCo reserves the right to employ the services of its affiliates
(including, without limitation, BT Alex. Brown Incorporated ("BTAB")) in
providing the services contemplated by this letter and to allocate, in whole or
in part, to such affiliates certain fees payable to BTCo in such manner as BTCo
and such affiliates may agree in their sole discretion. You acknowledge that
BTCo may share with any of its affiliates (including BTAB), and such affiliates
may share with BTCo, any information relating to the Borrower, Boss and their
respective affiliates and subsidiaries (including, without limitation, any non-
public customer information regarding the creditworthiness of such entities) or
the Transaction, subject to BTCo's customary treatment of customer confidential
information. You also acknowledge that BTCo and/or any of its affiliates may be
providing other services and/or other financing to you in connection with the
Transaction and that this letter relates only to the Revolving Credit Facility,
with all such other services and financing to be agreed upon pursuant to other
documentation.
You are not authorized to show or circulate this letter or any portion
thereof to any other person or entity (other than Apollo and your and its legal
and financial advisors in connection with your evaluation hereof) until such
time as you have accepted this letter as
-4-
<PAGE>
provided in the penultimate paragraph hereof. In any event, neither you nor your
affiliates is authorized to disclose the terms of the related fee letter (the
"Fee Letter") (other than to Apollo and your and its legal and financial
advisors) without our prior written consent, unless (and then only to the
extent) your counsel advises you it is required by law in which case you shall
first give BTCo prior notice thereof. If this letter is not accepted by you as
provided in the penultimate paragraph hereof, you are to immediately return this
letter (and any copies hereof) to the undersigned.
Except as otherwise expressly set forth herein, the provisions of the
three preceding paragraphs shall survive any termination of this letter.
BTCo shall have the right to review and approve all public
announcements and filings relating to the Transaction which refer to BTCo or the
other Lenders before they are made (such approval not to be unreasonably
withheld or delayed).
The willingness of BTCo to provide its commitment as set forth above
will terminate on June 30, 1999, unless definitive documentation evidencing the
Revolving Credit Facility, satisfactory in form and substance to BTCo, shall
have been entered into prior to such date and the Initial Borrowing Date shall
have occurred.
If you are in agreement with the foregoing, please sign and return to
BTCo the enclosed copy of this letter, together with an executed copy of the Fee
Letter. This offer shall terminate at 5:00 P.M., New York time, on March 25,
1999 unless a signed copy of this letter, together with a signed copy of the Fee
Letter, has been delivered to BTCo (including by way of facsimile transmission)
by such time.
-5-
<PAGE>
This letter may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which counterparts
shall be an original, but all of which, when taken together, shall constitute
one agreement. THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES
GOVERNING CONFLICTS OF LAWS, AND ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY
CLAIM, ACTION, SUIT OR PROCEEDING ARISING OUT OF OR CONTEMPLATED BY THIS LETTER
IS HEREBY WAIVED. YOU HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE
FEDERAL AND NEW YORK STATE COURTS LOCATED IN THE CITY OF NEW YORK IN CONNECTION
WITH ANY DISPUTE RELATED TO THIS LETTER OR ANY MATTERS CONTEMPLATED HEREBY.
This letter and the Fee Letter represent the entire understanding of the parties
with respect to the matters addressed herein and may only be amended or modified
by the parties hereto in writing and with the prior written consent of Boss.
This letter and the related Fee Letter are intended to replace in full the
Commitment Letter and Fee Letter, each dated as of February 11, 1999, between
Bankers Trust Company and the Borrower, and the parties hereto hereby
acknowledge that their respective commitments and obligations thereunder are
terminated.
Very truly yours,
BANKERS TRUST COMPANY
By:_____________________
Name:
Title:
Agreed to and Accepted this
________ day of March, 1999
BUILDING ONE SERVICES CORPORATION
By:___________________
Name:
Title:
-6-
<PAGE>
EXHIBIT A
---------
SUMMARY OF CERTAIN TERMS
AND CONDITIONS OF THE
SENIOR BANK FINANCING/1/
-------------------------
Borrower: Building One Services Corporation.
Administrative Agent and BTCo (or an affiliate designated by BTCo).
Arranger:
Lenders: A syndicate of lenders (the "Lenders") formed by
the Arranger and approved by the Borrower (which
approval shall not be unreasonably withheld or
delayed).
Revolving Credit Facility: Revolving credit facility of $350.0 million (the
"Revolving Credit Facility"), with a letter of
credit sub-limit to be determined. In addition,
the definitive credit agreement governing the
Revolving Credit Facility (the "Credit
Agreement") shall provide that the Borrower
shall have the right to request the Lenders (or
financial institutions to become Lenders) to
provide up to $100.0 million of additional
financing (the "Uncommitted Supplemental
Financing" and, together with the Revolving
Credit Facility, the "Senior Bank Financing")
under the Credit Agreement in the form of (i) an
increase in the revolver commitments under the
Revolving Credit Facility or (ii) a term loan
facility (the "Uncommitted Term Loan Facility"),
in either case, so long as (i) no default or
event of default then exists under the Credit
Agreement or would exist after giving effect to
such Uncommitted Supplemental Financing, (ii)
the Borrower shall be in pro forma compliance
with the financial covenants contained in the
Credit Agreement, (iii) the Senior Debt-to-
EBITDA Ratio (to be defined) is less than
2.50:1.0 at the time of the effectiveness of
such Uncommitted Supplemental Financing (after
giving effect on a pro forma basis to
--- -----
- -------------------------
/1/ All capitalized terms used herein but not defined herein shall have the
meanings provided in the Commitment Letter to which this summary is
attached (the "Commitment Letter").
<PAGE>
Exhibit A
Page 2
any indebtedness incurred (or to be incurred)
under the Senior Bank Financing at the time of
the effectiveness of such Uncommitted
Supplemental Financing (or reasonably
contemporeneously therewith)) and (iv) no Lender
shall be required to provide additional
commitments in connection with the Uncommitted
Supplemental Financing without such Lender's
consent (which consent may be withheld or given
in such Lender's sole discretion). Except as
otherwise expressly set forth herein, all terms
of any Uncommitted Term Loan Facility
(including, without limitation, maturity,
amortization, use of proceeds, availability,
applicable interest rate, application of
prepayments to scheduled amortizations and the
application of proceeds in connection with
mandatory repayments and commitment reductions
between the Revolving Credit Facility and the
Uncommitted Term Loan Facility) shall be on a
basis to be agreed upon, it being understood and
agreed in any event that (i) the interest rate
for loans under any Uncommitted Term Loan
Facility ("Term Loans") shall be determined at
the time such Term Loans are extended and (ii)
all Term Loans will be guaranteed and secured
equally and ratably with the Revolving Loans
which are part of the Senior Bank Financing.
Maturity: The Revolving Credit Facility will terminate,
and all loans made pursuant to the Revolving
Credit Facility (the "Revolving Loans") shall be
required to be repaid (and all letters of credit
thereunder terminated), on the date (the
"Maturity Date") occurring five years after the
Initial Borrowing Date, provided that to the
--------
extent mandatory reductions to commitments under
the Revolving Credit Facility are required under
the heading "Mandatory Repayments/Commitment
Reductions" below, mandatory repayments of
Revolving Loans will be required to the extent
in excess of such commitments as so reduced.
Use of Proceeds: All proceeds of Revolving Loans shall be
utilized solely for the Borrower's and its
subsidiaries' working capital, requirements, for
Permitted Acquisitions (as defined below) and
for other general corporate purposes; provided
--------
that proceeds of Revolving Loans in an amount
not to exceed the sum of (x) $95.5
<PAGE>
Exhibit A
Page 3
million plus (y) the aggregate amount of all
Post-Signing Payments, may be utilized on the
Initial Borrowing Date to finance the Common
Stock Repurchase and to pay fees and expenses
owing in connection with the Transaction.
Availability: Revolving Loans may be borrowed, repaid and
reborrowed on and after the Initial Borrowing
Date and prior to the maturity of the Revolving
Credit Facility, in accordance with the
documentation governing the Senior Bank
Financing.
Guaranties: Each direct and indirect wholly-owned domestic
subsidiary of the Borrower shall be required to
provide an unconditional guaranty of all amounts
owing under the Senior Bank Financing
(collectively, the "Guaranties", with each
entity required to provide a Guaranty being
herein called a "Guarantor").
The Guaranties shall contain terms and
conditions reasonably satisfactory to BTCo.
Security: The obligations of the Borrower and the
Guarantors under the Senior Bank Financing or
the Guaranties, as the case may be, shall be
secured by (x) a first priority perfected pledge
of all capital stock and notes owned by the
Borrower and the Guarantors, provided that no
--------
more than 65% of the voting stock of foreign
subsidiaries of the Borrower shall be required
to be pledged unless such pledge may be effected
without giving rise to a "deemed dividend" tax
liability under applicable law or any other
material adverse tax consequence and (y) a first
priority perfected security interest in all
other tangible and intangible assets (including,
without limitation, receivables, contracts,
contract rights, securities, intellectual
property, inventory, equipment and real estate)
of the Borrower and each Guarantor, subject to
customary exceptions for transactions of this
type.
All documentation evidencing the security
required pursuant to the immediately preceding
paragraph shall be in form and substance
reasonably satisfactory to BTCo, and shall
effectively create first priority security
interests in the property purported to be
<PAGE>
Exhibit A
Page 4
covered thereby.
Interest Rates: At the option of the Borrower, Revolving Loans
may be maintained from time to time as (x) Base
Rate Loans, which shall bear interest at the
Applicable Margin in excess of the Base Rate in
effect from time to time or (y) Eurodollar
Loans, which shall bear interest at the
Applicable Margin in excess of the Eurodollar
Rate (adjusted for maximum reserves) as
determined by the Administrative Agent for the
respective interest period, provided that until
--------
the earlier to occur of (x) the 90th day
following the Initial Borrowing Date (or, if
later, the last day of the third interest period
described below) and (y) that date upon which
the Arranger has determined (and notifies the
Borrower) that the primary syndication of the
Revolving Credit Facility (and the resultant
addition of institutions as Lenders) has been
completed, Revolving Loans maintained as
Eurodollar Loans may only be incurred with three
successive one-month interest periods (and all
Eurodollar Loans at any time outstanding during
a period described above in this proviso shall
at all times have the same interest period),
with the first such interest period beginning
within five business days of the Initial
Borrowing Date, the second such interest period
beginning on the last day of the first interest
period, and the third interest period beginning
on the last day of the second interest period.
"Base Rate" shall mean the higher of (x) 1/2 of
1% in excess of the Federal Funds Rate and (y)
the rate that the Administrative Agent announces
from time to time as its prime lending rate, as
in effect from time to time.
"Applicable Margin" shall initially mean the
percentage per annum equal to in the case of
Revolving Loans maintained as (x) Eurodollar
Loans, 2.50% and (y) Base Rate Loans, 1.50%,
provided that (i) the Applicable Margin in
--------
respect of Revolving Loans will be subject to
quarterly adjustments to percentages as set
forth on Annex I hereto, with the first test
date for any such downward adjustment to the
Applicable Margin to be the date of delivery (or
required delivery) of the financial statements
for the
<PAGE>
Exhibit A
Page 5
first fiscal quarter ending nearest to
the six month anniversary of the Initial
Borrowing Date (based on the financial
performance for the four quarter period most
recently ended) and (ii) the highest pricing
levels set forth on Annex I hereto shall be
applicable at all times when a default or event
of default exists under the Credit Agreement.
Interest periods of 1, 2, 3 and 6 months, or to
the extent available to each Lender, 9 or 12
months, shall be available in the case of
Eurodollar Loans.
The Credit Agreement shall include customary
protective provisions for such matters as
defaulting banks, capital adequacy, increased
costs, actual reserves, funding losses,
illegality and withholding taxes.
Interest in respect of Base Rate Loans shall be
payable quarterly in arrears on the last
business day of each fiscal quarter. Interest in
respect of Eurodollar Loans shall be payable in
arrears at the end of the applicable interest
period and every three months in the case of
interest periods in excess of three months.
Interest will also be payable at the time of
repayment of any Loans and at maturity. All
calculations of interest on Loans and commitment
fees shall be based on a 360-day year and actual
days elapsed.
Default Interest: Overdue principal, interest and other amounts
shall bear interest at a rate per annum equal to
the greater of (i) the rate which is 2% in
excess of the rate otherwise applicable to Base
Rate Loans from time to time and (ii) the rate
which is 2% in excess of the rate then borne by
such borrowings. Such interest shall be payable
on demand.
<PAGE>
Exhibit A
Page 6
Voluntary Prepayments/ Voluntary prepayments and commitment reductions
Commitment Reductions: may be made at any time without premium or
penalty, subject to minimum notice and minimum
prepayment or reduction requirements, as the
case may be; provided that voluntary prepayments
of Eurodollar Loans made on a date other than
the last day of an interest period applicable
thereto shall be subject to the payment of
customary breakage costs, if any.
Mandatory Repayments/ Mandatory repayments of Term Loans (if any) and
Commitment Reductions: permanent reductions to the commitments under
the Revolving Credit Facility (and mandatory
repayments of outstanding Revolving Loans to the
extent in excess of such commitments as so
reduced) to be required from (a) 100% (or 75%,
if the Leverage Ratio (as defined below) is less
than 3.50:1.0) of the net cash proceeds from
asset sales by the Borrower and its subsidiaries
(other than certain ordinary course of business
sales and dispositions and certain other asset
dispositions in an aggregate amount to be
determined), provided that the Borrower and its
subsidiaries may, in the absence of a default or
an event of default under the Credit Agreement,
reinvest proceeds of certain asset sales during
a period (to be agreed upon) following the date
of the respective asset sale, (b) 100% (or 75%,
if the Leverage Ratio is less than 3.50:1.0) of
the net cash proceeds from issuances of debt
(other than the Senior Subordinated Notes, the
Convertible Subordinated Notes and Permitted
Debt (as defined below)) and preferred stock
(other than Qualified Preferred Stock) by the
Borrower and its subsidiaries, with customary
exceptions to be agreed upon and (c) 100% of
certain insurance proceeds, provided that the
Borrower and its subsidiaries may, in the
absence of a default or an event of default
under the Credit Agreement, reinvest proceeds in
an amount to be determined during a period (to
be agreed upon) following the date of receipt of
such proceeds. Proceeds required to be applied
to mandatory repayments of Term Loans (if any)
and commitment reductions to the Revolving
Credit Facility shall be allocated between the
respective facilities on a basis to be
determined.
Commitment Termination: The commitments under the Commitment Letter
shall
<PAGE>
Exhibit A
Page 7
terminate on June 30, 1999 unless definitive
Credit Documents (as defined below) have been
executed and delivered and the Initial Borrowing
Date has occurred prior to such date.
Commitment Fees: The Applicable Commitment Fee Percentage on the
unutilized total commitments under the Revolving
Credit Facility, as in effect from time to time,
commencing on the Initial Borrowing Date and
continuing to and including the termination of
the Revolving Credit Facility, payable quarterly
in arrears and upon the termination of the
Revolving Credit Facility. The "Applicable
Commitment Fee Percentage" shall mean initially
1/2 of 1% per annum, provided that (i) the
--------
Applicable Commitment Fee Percentage shall be
subject to quarterly adjustments to percentages
as set forth on Annex I hereto, with the first
test date (the "Initial Test Date") for any such
adjustment to be the date of delivery (or
required delivery) of the financial statements
for the first fiscal quarter ending nearest to
the six-month anniversary of the Initial
Borrowing Date (based on the financial
performance for the four quarter period most
recently ended) and (ii) the highest fee level
set forth on Annex I shall be applicable at all
times a default or event of default exists under
the Credit Agreement, provided further that the
-------- -------
Applicable Commitment Fee Percentage set forth
in Annex I shall be increased by 0.25% at all
times after the Initial Test Date when the total
unutilized commitments under the Revolving
Credit Facility exceed 75% of the total
commitments under the Revolving Credit Facility.
Letter of Credit Fees: The Applicable Margin for Revolving Loans
maintained as Eurodollar Loans on the aggregate
outstanding stated amounts of letters of credit
plus an additional 1/4 of 1% on the aggregate
outstanding stated amounts of letters of credit
to be paid as a fronting fee to the issuing
Lender. In addition, the issuer of a letter of
credit will be paid its customary administrative
charges in connection with each letter of credit
issued by it.
Additional Fees: BTCo shall receive such fees as have been
separately
<PAGE>
Exhibit A
Page 8
agreed upon.
Documentation: The Lenders' commitments will be subject to the
negotiation, execution and delivery of
definitive financing agreements (and related
security documentation, guaranties, etc.) in
connection with the Senior Bank Financing (the
"Credit Documents") reasonably consistent with
the terms of the Commitment Letter and this
Summary of Terms, in each case prepared by White
& Case LLP, counsel to the Administrative Agent.
Conditions Precedent: In addition to conditions precedent typical for
these types of facilities and any other
conditions appropriate in the context of the
proposed transaction, the following conditions
shall apply:
A. To the Initial Borrowing Date
-----------------------------
(i) The structure and all terms of, and the
documentation for, each component of the
Transaction shall be reasonably satisfactory to
the Administrative Agent and the Required
Lenders (including, without limitation, with
respect to the Senior Subordinated Notes and the
Convertible Subordinated Notes, covenants,
amortizations, maturities, interest rate,
defaults, remedies, guaranties, security,
limitation on cash interest payable, conversion
features, redemption provisions and
subordination provisions, as applicable). All
material agreements relating to the Transaction
shall be in full force and effect. All
conditions in the documentation governing the
Transaction (including the accuracy of all
representations and warranties in all material
respects) shall have been satisfied to the
reasonable satisfaction of BTCo and not waived,
except with the consent of BTCo (such consent
not to be unreasonably withheld or delayed).
Each component of the Transaction shall have
been consummated in accordance with the
documentation therefor and all applicable law.
After giving effect to the Transaction, the
Borrower and its subsidiaries shall have no
outstanding indebtedness or preferred stock
other than pursuant to the Financing
Transactions and certain indebtedness existing
on the Initial Borrowing Date in an aggregate
amount not to
<PAGE>
Exhibit A
Page 9
exceed $10.0 million, and in form, satisfactory
to BTCo (the "Existing Indebtedness").
(ii) BTCo shall be satisfied that the Borrower, at
the time of the consummation of the Common Stock
Repurchase has cash on hand equal to at least
$200.0 million less such amount of cash on hand
----
(not to exceed $85.0 million) utilized to make
Post-Signing Payments (which cash on hand is
available to make payments owing in connection
with the Transaction).
(iii) The Borrower shall have received the cash
proceeds from the issuance of the Senior
Subordinated Notes and the Convertible
Subordinated Notes, in each case in the amounts
and as otherwise contemplated by the Commitment
Letter, and shall have used the net cash
proceeds received therefrom, together with the
cash on hand, (x) to make payments owing in
connection with the Common Stock Repurchase and
(y) to pay fees in connection with the Financing
Transactions before utilizing any proceeds of
Loans for any such purpose.
(iv) Since December 31, 1997 (or, on and after the
date of receipt by BTCo of the audited
consolidated financial statements of the
Borrower and its subsidiaries for the fiscal
year ended December 31, 1998, in form and
substance satisfactory to BTCo, December 31,
1998), there shall have been no material adverse
change in the business, property, assets,
operations, liabilities, condition (financial or
otherwise) or prospects of the Borrower or the
Borrower and its subsidiaries taken as a whole,
both before and after giving effect to the
Transaction.
(v) All Revolving Loans and other financing to the
Borrower shall be in full compliance with all
requirements of Regulations T, U and X of the
Board of Governors of the Federal Reserve
System.
(vi) The Lenders shall have received such opinions,
other appropriate factual information and expert
advice and financial statements as follows: (i)
legal opinions from counsel, in form and
substance and covering matters, reasonably
acceptable to BTCo and the Required Lenders
(including, without limitation, an unqualified
opinion as to compliance by the Borrower
<PAGE>
Exhibit A
Page 10
with the requirements of the Investment Company
Act of 1940, as amended), (ii) either a solvency
certificate from the chief financial officer of
the Borrower or an opinion from a valuation firm
reasonably acceptable to BTCo and the Required
Lenders, with respect to the Borrower and its
subsidiaries (on a consolidated basis) and the
Borrower (on a stand-alone basis), after giving
effect to the consummation of the Transaction
and the financing therefor, in either case
reasonably acceptable to BTCo and the Required
Lenders, (iii) audited consolidated financial
statements of the Borrower and its subsidiaries
for the fiscal year ended December 31, 1998 in
form and substance reasonably satisfactory to
BTCo and (iv) unaudited consolidated income
statements and balance sheets of the Borrower
and its subsidiaries for each month ended after
December 31, 1998 and prior to the 30th day
preceding the Initial Borrowing Date.
(vii) Each of the Guaranties shall have been executed
and delivered. The security agreements required
as described under the heading "Security" above
shall have been executed and delivered in form,
scope and substance reasonably satisfactory to
BTCo, and the Lenders shall have a first
priority perfected security interest in all
assets as are required above.
(viii) All reasonable costs, fees, expenses (including,
without limitation, reasonable legal fees and
expenses) and other compensation contemplated
hereby or any letter executed in connection
herewith and payable to the Lenders or BTCo (or
their respective affiliates) shall have been
paid to the extent due.
B. Conditions to All Loans
-----------------------
Absence of material adverse change, absence of
material litigation, absence of default or
unmatured default under the Credit Agreement,
continued accuracy of representations and
warranties in all material respects and receipt
of such documentation as shall be required by
the Administrative Agent.
Representations The Credit Agreement and related documentation
and Warranties shall contain representations and warranties
typical for these
<PAGE>
Exhibit A
Page 11
types of facilities (including customary
"Investment Company Act" representations), as
well as any additional ones appropriate in the
context of the proposed transaction.
Covenants: The following covenants and any additional
covenants appropriate in the context of the
proposed transaction (with all such covenants
having such exceptions or baskets as may be
mutually agreed upon):
(i) Restrictions on indebtedness, with exceptions to
include extensions of credit under the Senior
Bank Financing, the Senior Subordinated Notes,
certain Existing Indebtedness, Permitted Debt,
certain other indebtedness to be mutually agreed
upon and the Convertible Subordinated Notes,
provided that accrued interest on Convertible
--------
Subordinated Notes shall be payable (and shall
be permitted to be payable) through the issuance
of additional Convertible Subordinated Notes,
provided further that such interest may be
-------- -------
payable in cash, so long as (w) no default or
event of default exists under the Credit
Agreement or would result therefrom, (x) such
payment is permitted under the indenture
governing the Senior Subordinated Notes, (y) in
the case of any such cash payment made or to be
made after the Initial Borrowing Date and prior
to the Second Anniversary thereof, the Leverage
Ratio (as defined below) is less than 2.50:1.0
(calculated on a pro forma basis to give effect
--- -----
to any indebtedness incurred (or to be incurred)
to make the respective cash interest payment)
and (z) the Borrower establishes compliance with
an Interest Coverage Ratio (as defined below) to
be determined after giving effect, on a pro
---
forma basis, to the respective cash interest
-----
payment. As used herein, "Permitted Debt" shall
mean (i) certain existing indebtedness assumed
in connection with Permitted Acquisitions that
meets requirements to be agreed upon, (ii) lease
financings and purchase money debt incurred
after the Initial Borrowing Date in connection
with the acquisition of equipment, (iii) certain
indebtedness evidenced by surety bonds and (iv)
additional unsecured indebtedness of the
Borrower and its subsidiaries; provided that the
aggregate principal amount of indebtedness at
any time outstanding pursuant to each
<PAGE>
Exhibit A
Page 12
(and all) of the preceding clauses (i) through
(iv) shall not exceed amounts to be determined.
(ii) Restrictions on mergers, acquisitions and
dispositions of assets; provided that the
--------
Borrower may acquire assets constituting a
business, division or product line of any Person
(to be defined) not already a subsidiary of the
Borrower or the capital stock of any such Person
who becomes a wholly-owned subsidiary of the
Borrower (each, a "Permitted Acquisition"), (i)
so long as no default or event of default exists
under the Credit Agreement at the time of the
consummation of the respective Permitted
Acquisition or would exist immediately after
giving effect thereto, (ii) so long as the
Borrower establishes pro forma compliance with
--- -----
the financial covenants contained in the Credit
Agreement, (iii) so long as the aggregate
consideration payable in respect of any
individual Permitted Acquisition shall not
exceed $80.0 million, of which consideration no
more than $50.0 million shall consist of cash,
(iv) so long as the cash consideration payable
in connection with such Permitted Acquisition,
when combined with the aggregate cash
consideration paid in connection with all other
Permitted Acquisitions consummated during the
six-month period prior to such Permitted
Acquisition, does not exceed $125.0 million, (v)
so long as after giving effect to the respective
Permitted Acquisition, the total unutilized
commitments under the Revolving Credit Facility
shall equal or exceed (x) $25.0 million plus (y)
the amount of additional unutilized commitments
under the Revolving Credit Facility required (in
the good faith determination of the Borrower) to
cover all post-closing purchase price
adjustments relating to the respective Permitted
Acquisition (and all other Permitted
Acquisitions for which such adjustments may be
required to be made) and all capital
expenditures reasonably anticipated to be made
in the business acquired pursuant to the
respective Permitted Acquisition within a to-be-
determined period (such period for any Permitted
Acquisition, a "Post-Closing Period") following
such Permitted Acquisition (and in the
businesses acquired pursuant to all other
Permitted Acquisitions with Post-Closing Periods
ended during
<PAGE>
Exhibit A
Page 13
the Post-Closing Period of the respective
Permitted Acquisition), (vi) so long as the
Senior Debt-to-EBITDA Ratio is less than
2.50:1.0, in each case upon the consummation of,
and after giving effect on a pro forma basis
--- -----
(giving effect to all acquisitions and
divestitures during the 12 month period then
most recently ended as if same occurred at the
beginning of such period) to, such Permitted
Acquisition (after giving effect to cost savings
and other synergies in a manner to be agreed
upon), (vii) the assets or the Person, as the
case may be, acquired pursuant to the respective
Permitted Acquisition is in the same "line of
business" as conducted by the Borrower and its
subsidiaries on the Initial Borrowing Date and
(viii) subject to such other reasonable
requirements as may be established pursuant to
the Credit Agreement.
(iii) Restrictions on sale-leaseback transactions and
capital lease payments.
(iv) Limitations on dividends, redemptions and other
distributions.
(v) Restrictions on voluntary prepayments of the
Senior Subordinated Notes, the Convertible
Subordinated Notes and other indebtedness and
amendments of organizational, corporate and
other documents.
(vi) Restrictions on transactions with affiliates and
formation of subsidiaries (it being understood
that Apollo may receive (x) closing fees in the
amount set forth in the fee letter, dated the
date of the Commitment Letter, between Apollo
and the Borrower (as in effect on such date) on
terms to be agreed upon and (y) future
investment banking fees from the Borrower on
terms, and in amounts, to be agreed upon).
(vii) Restrictions on advances, credit extensions,
capital contributions and investments, provided
--------
that the Borrower shall be permitted to make
investments (including investments in joint
ventures and partnerships), so long as (i) no
default or event of default exists under the
Credit Agreement at the time of the consummation
of the respective investment and
<PAGE>
Exhibit A
Page 14
immediately after giving effect thereto, (ii)
any Person in whom an investment is made is in
the same "line of business" as the Borrower and
its subsidiaries and (iii) the aggregate amount
of all such investments in persons who are not
Guarantors does not exceed $25.0 million (with
any return on investments to build the permitted
investment basket in a manner to be determined).
(viii) Maintenance of existence and material
properties.
(ix) No liens, with exceptions to be negotiated.
(x) Financial covenants to consist of the following:
(a) Minimum Interest Coverage. The Borrower will
-------------------------
not permit the ratio (the "Interest Coverage
Ratio") of Consolidated EBITDA to Consolidated
Interest Expense (to be defined but in any event
to include cash interest paid on the Convertible
Subordinated Notes) for any Test Period (to be
defined) ended during a period set forth below,
to be less than the ratio specified opposite
such period below:
Minimum Interest
Period Coverage Ratio
------ ----------------
Initial Borrowing Date to and including the first 2.25:1.0
anniversary thereof
First day after the first anniversary of the Initial 2.50:1.0
Borrowing Date to and including the second anniversary
of the Initial Borrowing Date
First day after the second anniversary of the Initial 2.75:1.0
Borrowing Date to and including the third anniversary of
the Initial Borrowing Date
First day after the third anniversary of the 3.00:1.0
Initial Borrowing Date to and including the
fourth anniversary of the
<PAGE>
Exhibit A
Page 15
Initial Borrowing Date
Thereafter 3.25:1.0
(b) Maximum Leverage Ratio. The Borrower will not
----------------------
permit the ratio (the "Leverage Ratio") of Total Debt
(to be defined but to exclude in any event all
outstanding Convertible Subordinated Notes) to
Consolidated EBITDA at any time during any period set
forth below to exceed the ratio specified opposite such
period below:
Period Leverage Ratio
------ --------------
Initial Borrowing Date to and including the 4.00:1.0
first anniversary thereof
First day after the first anniversary of the 3.75:1.0
Initial Borrowing Date to and including the
second anniversary of the Initial Borrowing
Date
First day after the second anniversary of 3.50:1.0
the Initial Borrowing Date to and including
the third anniversary of the Initial
Borrowing Date
First day after the third anniversary of the 3.25:1.0
Initial Borrowing Date to and including the
fourth anniversary of the Initial Borrowing
Date
Thereafter 3.00:1.0
For purposes of determinations of the Leverage
Ratio, pro forma effect shall be given to
Permitted Acquisitions, it being understood that
cost savings in respect of Permitted
Acquisitions shall be determined in a manner to
be mutually agreed upon.
(xi) Limitation on capital expenditures.
(xii) Adequate insurance coverage.
<PAGE>
Exhibit A
Page 16
(xiii) ERISA covenants.
(xiv) Limitation on issuances of redeemable common
stock and preferred stock by the Borrower and
its subsidiaries, provided that the Borrower may
--------
issue Qualified Preferred Stock. "Qualified
Preferred Stock" shall mean any preferred stock
of the Borrower, the express terms of which
shall provide that dividends thereon shall not
be required to be paid at any time (and to the
extent) that such payment would be prohibited by
the terms of the Credit Agreement or any other
agreement of the Borrower relating to
outstanding indebtedness and which, by its terms
(or by the terms of any security into which it
is convertible or for which it is exchangeable),
or upon the happening of any event (including
any change of control event), cannot mature
(excluding any maturity as the result of an
optional redemption by the issuer thereof) and
is not mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, and is not
redeemable, or required to be repurchased, at
the sole option of the holder thereof
(including, without limitation, upon the
occurrence of a change of control event), in
whole or in part, on or prior to the first
anniversary of the Maturity Date.
(xv) Financial reporting and visitation and
inspection rights.
(xvi) Compliance with all applicable laws in all
material respects.
(xvii) Restrictions on changes in the business of the
Borrower and its subsidiaries as conducted on
the Initial Borrowing Date.
(xviii) Limitations on dividend, asset transfer and
certain other restrictions on subsidiaries of
the Borrower.
(xix) Limitations on creation of subsidiaries and
joint ventures.
Events of Default: Those typical for these types of facilities and
any additional ones appropriate in the context
of the
<PAGE>
Exhibit A
Page 17
proposed transaction including, without
limitation, payment, material
misrepresentations, covenant defaults,
bankruptcy and a Change of Control Event (to be
defined).
Assignments and The Borrower may not assign its rights or
Participations: obligations under the Credit Documents without
the prior written consent of the Administrative
Agent and the Lenders. Any Lender may assign,
and may sell participations in, its rights and
obligations under the Credit Agreement, subject
(x) in the case of participations, to customary
restrictions on the voting rights of the
participants and (y) in the case of assignments,
to a minimum assignment requirement of
$5,000,000 (or to the extent the amount held by
such Lender is less than $5,000,000, such lesser
amount) and such other limitations as may be
established by the Administrative Agent. So long
as no event of default exists pursuant to the
Credit Agreement, the consent of the Borrower
shall be required with respect to assignments of
Loans (other than assignments to (x) affiliates
of the respective Lender or (y) any entity which
is already a Lender), such consent not to be
unreasonably withheld or delayed. The Credit
Agreement shall provide for a mechanism which
will allow for each assignee to become a direct
signatory to the Credit Agreement and will
relieve the assigning Lender of its obligations
with respect to the assigned portion of its
commitment.
Governing Law: The rights and obligations of the parties under
the Credit Documents shall be construed in
accordance with and governed by the law of the
State of New York.
Required Lenders: Majority.
<PAGE>
ANNEX I
TO
EXHIBIT A
---------
PRICING GRID
------------
<TABLE>
<CAPTION>
Applicable
Commitment Fee
Leverage Ratio Eurodollar Margin Base Rate Margin Percentage
- -------------- ----------------- ---------------- ---------------
<S> <C> <C> <C>
Greater than 2.75 to 1.0 2.50% 1.50% 0.500%
Greater than 2.25 to 1.0 2.25% 1.25% 0.500%
but less than or equal to
2.75 to 1.0
Less than or equal to 2.25 2.00% 1.00% 0.375%
to 1.0
</TABLE>
<PAGE>
Goldman Sachs Credit Partners L.P. Citicorp USA, Inc.
85 Broad St. 399 Park Avenue
New York, NY 10004 New York, NY 10043
March 25, 1999
Building One Services Corporation
800 Connecticut Avenue, N.W.
Suite 1111
Washington, DC 20006
Attn: Tim Clayton and Joe Ivey
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Attn: Mr. Ryan Zanin
Re: Bank Commitment Letter
----------------------
Gentlemen:
Reference is made to (i) the Commitment Letter, dated as of March 22,
1999 (the "Commitment Letter"), among Building One Services Corporation (the
"Borrower") and Bankers Trust Company ("BTCo") regarding the proposed
Transaction described therein and (ii) the related Fee Letter, dated as of March
22, 1999 (the "Fee Letter"), among the Borrower and BTCo. Unless otherwise
defined herein, all capitalized terms used herein shall have the respective
meanings provided such terms in the Commitment Letter.
Each of Goldman Sachs Credit Partners LP ("GSCP") and Citicorp USA,
Inc. ("Citicorp") is pleased to advise you of its commitment, on a several basis
and subject to the terms and conditions set forth herein and the Summary of
Terms, to provide (x) $87.5 million, in the case of GSCP and (y) $87.5 million,
in the case of Citicorp, of the Revolving Credit Facility, it being understood
and agreed that in the event a portion of the Revolving Credit Facility is
allocated to a
<PAGE>
term facility as contemplated by the seventh paragraph of the Commitment Letter,
the commitment of each of BTCo, GSCP and Citicorp shall be allocated pro rata
--- ----
among the revolving portion of the Revolving Credit Facility and such term
facility based on the aggregate amount of the commitments hereunder and under
the Commitment Letter (as adjusted pursuant to the immediately succeeding
sentence). For its part, the Borrower hereby acknowledges and agrees that the
commitment of BTCo to provide the Revolving Credit Facility as provided in the
Commitment Letter shall be (and hereby is) irrevocably reduced to $175.0
million, with such remaining commitment of BTCo to be several and subject to the
terms and conditions contained in the Commitment Letter and the Summary of
Terms.
Each of GSCP's and Citicorp's commitment to provide a portion of the
Revolving Credit Facility hereunder is expressly subject to (i) the execution
and delivery of definitive documentation for the Revolving Credit Facility,
satisfactory in form and substance to GSCP and Citicorp and their respective
counsel, reasonably consistent with the terms and conditions set forth in the
Summary of Terms, (ii) there not occurring or becoming known to BTCo, GSCP or
Citicorp any material adverse condition or material adverse change in or
affecting the business, property, assets, nature of assets, liabilities,
condition (financial or otherwise) or prospects of the Borrower or the Borrower
and its subsidiaries taken as a whole, (iii) the absence of any material adverse
change after the date hereof in the market for syndicated facilities similar in
nature to the Revolving Credit Facility and the absence of any material
disruption of or a material adverse change in financial, banking or capital
markets generally, in each case as determined by BTCo, GSCP and Citicorp in
their reasonable discretion and (iv) the other conditions set forth or referred
to in the Summary of Terms (for such purpose treating each reference to "BTCo"
contained therein instead as a reference to "BTCo, GSCP and Citicorp", except
any such reference under a heading setting forth applicable titles).
For purposes of clarification, the parties hereto acknowledge and
agree that the references to "its commitments with respect to the Revolving
Credit Facility" and "its commitment hereunder" contained in the seventh
paragraph of the Commitment Letter shall be deemed to be references to all
commitments with respect to the Revolving Credit Facility (i.e., whether
----
provided hereunder or under the Commitment Letter as modified hereby).
To induce GSCP and Citicorp to issue this letter, BTCo and the
Borrower hereby agree that, for the purposes of the Revolving Credit Facility,
Salomon Smith Barney Inc. shall act as Syndication Agent and GSCP shall act as
Documentation Agent, on terms satisfactory to BTCo, the Borrower, Apollo, GSCP
and Citicorp. In addition, the Borrower hereby agrees that the expense
reimbursement, indemnification and release provisions set forth in the eighth
paragraph of the Commitment Letter, the affiliate employment and information
sharing rights set forth in the ninth paragraph of the Commitment Letter, the
review and approval rights of BTCo set forth in the twelfth paragraph of the
Commitment Letter and the termination survival provisions set forth in the
eleventh paragraph of the Commitment Letter shall apply mutatis mutandis to both
----------------
GSCP and Citicorp, in addition to BTCo, to the same extent as if each such
reference to "BTCo" in each such paragraph were also a reference to GSCP and
Citicorp.
The Borrower is not authorized to show or circulate this letter or any
portion thereof to any other person or entity (other than Apollo and its and
Apollo's legal and financial advisors in connection with its evaluation hereof)
without our prior written consent, unless (and then only to the
-2-
<PAGE>
extent) the Borrower's counsel advises it that such disclosure is required by
law in which case it shall first give BTCo, GSCP and Citicorp prior notice
thereof. If this letter is not accepted by the Borrower as provided in the last
paragraph hereof, the Borrower is to immediately return this letter (and any
copies hereof) to the undersigned.
The willingness of each of GSCP and Citicorp to provide their
respective commitments as set forth above will terminate on June 30, 1999,
unless definitive documentation evidencing the Revolving Credit Facility,
satisfactory in form and substance to GSCP and Citicorp, shall have been entered
into prior to such date and the Initial Borrowing Date shall have occurred.
This letter agreement shall not be assignable by the Borrower without
the prior written consent of BTCo, GSCP and Citicorp (and any purported
assignment without such consent shall be null and void), and is intended to be
solely for the benefit of the parties hereto and is not intended to confer any
benefits upon, or create any rights in favor of, any person other than the
parties hereto. This letter may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which
counterparts shall be an original, but all of which, when taken together, shall
constitute one agreement. THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES GOVERNING CONFLICTS OF LAWS, AND ANY RIGHT TO TRIAL BY JURY WITH
RESPECT TO ANY CLAIM, ACTION, SUIT OR PROCEEDING ARISING OUT OF OR CONTEMPLATED
BY THIS LETTER IS HEREBY WAIVED. YOU HEREBY SUBMIT TO THE NON-EXCLUSIVE
JURISDICTION OF THE FEDERAL AND NEW YORK STATE COURTS LOCATED IN THE CITY OF NEW
YORK IN CONNECTION WITH ANY DISPUTE RELATED TO THIS LETTER OR ANY MATTERS
CONTEMPLATED HEREBY. This letter, the Commitment Letter and the Fee Letter
represent the entire understanding of the parties with respect to the matters
addressed herein and may only be amended in writing by the Borrower, Boss, BTCo,
GSCP and Citicorp.
If you are in agreement with the foregoing, please sign and return to
GSCP and Citicorp the enclosed copy of this letter. This offer shall terminate
at 5:00 P.M., New York time, on March 25, 1999 unless a signed copy of this
letter has been delivered to each of GSCP and Citicorp (including by way of
facsimile transmission) by such time.
Very truly yours,
GOLDMAN SACHS CREDIT PARTNERS L.P.
By
--------------------------------
Name:
Title:
-3-
<PAGE>
CITICORP USA, INC.
By
--------------------------------
Name:
Title:
Accepted and Agreed:
BUILDING ONE SERVICE CORPORATION
By:
----------------------------
Name:
Title:
BANKERS TRUST COMPANY
By:
----------------------------
Name:
Title:
-4-
<PAGE>
CONSENT
Reference is made to (i) the Commitment Letter, dated as of March 22,
1999 (the "Commitment Letter"), among Building One Services Corporation (the
"Borrower") and Bankers Trust Company ("BTCo") regarding the proposed
Transaction described therein and (ii) the related Fee Letter, dated as of March
22, 1999 (the "Fee Letter"), among the Borrower and BTCo. Unless otherwise
defined herein, all capitalized terms used herein shall have the respective
meanings provided such terms in the Commitment Letter.
By your execution and delivery, you hereby consent to the entering of
the attached amendment to amend and modify the Commitment Letter in the form
attached hereto.
From and after the date hereof, all references to the Commitment
Letter shall be deemed to be references to the Commitment Letter as modified
hereby.
* * *
<PAGE>
IN WITNESS WHEREOF, the undersigned hereto have caused its duly
authorized officer to execute and deliver this Consent as of March __, 1999.
BOSS INVESTMENT LLC
By:
--------------------------------
Name:
Title:
-6-
<PAGE>
BT ALEX. BROWN INCORPORATED
130 LIBERTY STREET
NEW YORK, NEW YORK 10006
EXHIBIT (b)(6)
March 22, 1999
Building One Services Corporation
800 Connecticut Avenue, NW
Suite 1111
Washington, D.C. 20006
Attention: Joseph M. Ivey
Timothy C. Clayton
Ladies and Gentlemen:
You have advised BT Alex. Brown Incorporated ("BTAB") that Boss
Investment LLC ("Boss"), an affiliate of Apollo Management, L.P. ("Apollo"),
intends to acquire through a newly-formed wholly-owned subsidiary, $100 million
initial principal amount of 7 1/2% Convertible Junior Subordinated Debentures
due 2012 (the "Convertible Debentures") to be issued by Building One Services
Corporation (the "Company") (which when issued shall initially represent, on an
as-converted basis, approximately 18% of the outstanding common stock of the
Company). In connection with (and concurrently with the consummation of) the
sale of the Convertible Debentures to Boss, we understand that the Company
intends to repurchase, pursuant to a tender offer, approximately 25.7 million
shares of common stock (which includes shares outstanding and shares subject to
stock options with a strike price of less than $22.50) representing
approximately 57% of the Company's outstanding common stock as of the date
hereof from existing stockholders of the Company for an aggregate purchase price
of approximately $578.6 million (the "Common Stock Repurchase") (based on the
number of shares of the Company outstanding as of the date hereof). You have
asked us to assist you in raising a portion of the funds required to consummate
the Common Stock Repurchase through the sale or placement of up to $200 million
aggregate principal amount of senior subordinated debt securities (the "Notes")
to be issued by the Company.
<PAGE>
-2-
We understand that the sources of funds needed to effect the Common
Stock Repurchase and to pay all fees and expenses incurred in connection
therewith and to provide for the ongoing working capital needs and general
corporate requirements of the Company and its subsidiaries shall be provided
solely through (i) a revolving credit facility pursuant to which the Company may
borrow up to $350 million; provided that proceeds of the Bank Financing in an
--------
amount not to exceed the sum of (x) $100 million plus (y) the amount of (a)
all cash earnout payments made after the date hereof and prior to the closing
date of the Common Stock Repurchase (the "Closing Date") in connection with
acquisitions consummated by the Company and its subsidiaries prior to the date
hereof, (b) all cash payments made after the date hereof and prior to the
Closing Date in connection with acquisitions consummated after the date hereof
and prior to the Closing Date, and (c) cash payments required to be made to
repurchase common stock as part of the Common Stock Repurchase, which common
stock is issued after the date hereof in connection with acquisitions
consummated by the Company and its subsidiaries after the date hereof and prior
to the Closing Date, may be utilized on the Closing Date to make payments owing
in connection with the transactions contemplated by this letter agreement, (ii)
at least $200/A/ million of cash on hand at the Company and its subsidiaries on
the Closing Date, (iii) $100 million from the issuance of the Convertible
Debentures to Boss (the "Convertible Debenture Financing") and (iv) the Notes.
The Common Stock Repurchase, the Convertible Debenture Financing and the other
transactions contemplated by clauses (i) (other than the transactions referred
to in or contemplated by clauses (a) - (c) of clause (i)) through (iv) of the
preceding sentence are collectively referred to herein as the "Transaction". It
is our understanding that other than the Bank Financing, the Convertible
Debenture Financing, the Notes and other indebtedness reasonably acceptable to
BTAB, the Company and its subsidiaries will have no
- ---------------------------
BTAB understands that up to $85 million of such cash may be used to
consummate certain acquisitions prior to the Closing Date and to provide
additional earnout consideration on acquisitions consummated prior to
the date of this letter, in which case the financing required to effect
the Convertible Debenture Financing and the Common Stock Repurchase
would be increased by the amount of cash so utilized.
<PAGE>
-3-
other indebtedness for money borrowed after giving effect to the consummation of
the Transaction. We further understand that the total consideration payable in
connection with the Transaction (including fees and expenses not to exceed $35
million) shall not exceed $630 million (based on the number of shares of the
Company outstanding as of the date hereof).
We are pleased to inform you that, based upon our understanding of the
Transaction as summarized above and current market conditions and subject to the
conditions set forth below, we are highly confident of our ability to sell or
place the Notes in connection with the Transaction. The structure, covenants and
terms of the Notes will be on terms mutually acceptable to both parties based on
market conditions at the time of the sale or placement and on the structure and
documentation of the Transaction. Without limiting the generality of the
proceeding sentence and without creating any commitment on the part of BTAB,
based upon our understanding of the proposed transaction and current market
conditions, we anticipate that the Notes (i) will have a final maturity of seven
to ten years from the date of issuance , (ii) will not be subject to
amortization prior to the final maturity thereof and (iii) will not require the
issuance of equity or warrants to purchase equity in connection with their sale.
Our confidence in our ability to consummate the sale or placement of the Notes
is subject to (i) there not having occurred any material adverse change in the
condition (financial or otherwise), results of operations, business or prospects
of the Company and its subsidiaries taken as a whole since December 31, 1998,
(ii) there not existing any pending or threatened claim, suit or proceeding by
any governmental or regulatory authority which BTAB shall reasonably determine
could have a materially adverse effect on the business, property, assets,
liabilities, condition (financial or otherwise) or prospects of the Company and
its subsidiaries taken as a whole, (iii) the receipt of all necessary
governmental, regulatory or third party approvals or consents in connection with
the Transaction, (iv) the execution and delivery of documentation for the
Transaction in form and substance reasonably satisfactory to BTAB and such
documentation being in full force and effect (it being understood that BTAB has
received and is reasonably satisfied with the Securities Purchase Agreement
between Boss and the Company dated as of March 22, 1999 (the "Securities
Purchase Agreement") and the exhibits thereto but BTAB has not had the
opportunity to review the schedules thereto), (v) agreement on the terms of the
Notes and negotiation and execution of satisfactory documentation with respect
to the Notes and the offering and sale thereof, (vi) the terms and structure of
the Bank Financing and Convertible Debenture Fi-
<PAGE>
-4-
nancing (it being understood that BTAB has reviewed and is reasonably satisfied
with, subject to review of final documentation, the terms of the Convertible
Debentures and the Indenture related thereto included as Exhibit 1.1C to the
Securities Purchase Agreement, the Investors' Rights Agreement dated March 22,
1999 (the "Investors' Rights Agreement") among the Company and certain of its
investors, included Boss, attached as Exhibit A to the Securities Purchase
Agreement and the form of Amended and Restated Certificate of Incorporation of
the Company attached as Exhibit A to the Investors' Rights Agreement) being
reasonably acceptable to BTAB and the execution of documentation relating
thereto reasonably satisfactory in form and substance to BTAB, (vii) the receipt
and review (to our reasonable satisfaction) of either a solvency opinion from an
independent third party or a solvency certificate from the chief financial
officer of the Company, and an unqualified opinion of counsel as to compliance
by the Company with the requirements of the Investment Company Act of 1940, as
amended, (viii) the availability of audited and unaudited historical
consolidated financial statements of the Company and its subsidiaries and pro
forma financial statements of the Company and its subsidiaries after giving
effect to the Transaction, in each case reasonably acceptable to BTAB and in
form and presentation as required by the Securities Act of 1933, as amended, and
the rules and regulations thereunder applicable to registration statements filed
thereunder, (ix) no change or proposed change in United States law having
occurred that could reasonably be expected to adversely affect in a material way
the economic consequences that the Company or its stockholders contemplate
deriving from, or with respect to, the Transaction, (x) there not having been a
material disruption or material adverse change in the market for new issues of
high yield securities or the financial or capital markets in general, in the
reasonable judgment of BTAB and (xi) BTAB having a reasonable time to market the
Notes based on BTAB's experience in comparable transactions.
This letter is not intended to be and should not be construed as a
commitment with respect to the underwriting, sale or placement of the Notes.
<PAGE>
-5-
Except as otherwise required by law or unless BTAB has otherwise
consented in writing, you are not authorized to show or circulate this letter to
any other person or entity (other than your legal or financial advisors in
connection with your evaluation hereof and Boss, its affiliates and legal and
financial advisors). If this letter is not accepted by you by 6:00 p.m. on March
23, 1999, you are to immediately return this letter (and any copies hereof) to
the undersigned.
Very truly yours,
BT ALEX. BROWN INCORPORATED
By: -----------------------
Name:
Title:
AGREED TO AND ACCEPTED as of
the date first written above:
BUILDING ONE SERVICES CORPORATION
By: ----------------------------
Name:
Title:
