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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
CB Richard Ellis Services, Inc.
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(Name of Issuer)
Common Stock, $0.01 par value
--------------------------------------------------------------------------------
(Title of Class of Securities)
12489L108
--------------------------------------------------------------------------------
(CUSIP Number)
William M. Wardlaw
11100 Santa Monica Blvd., Suite 1900
Los Angeles, California 90025
Telephone: (310) 444-1822
--------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
November 10, 2000
--------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of (S)(S)240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box. [ ]
Note: Schedules filed in paper format shall include a signed original and
five copies of this schedule, including all exhibits. See (S)240.13d-7 for
other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the
Act (however, see the Notes).
Potential persons who are to respond to the collection of information
contained in this form are not required to respond unless the form displays
a currently valid OMB control number.
SEC 1746 (2-98)
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<S> <C>
CUSIP No. 12489L108 Page 2 of 21
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1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only).
FS Equity Partners III, L.P., a Delaware limited partnership
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) X
(b)
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3. SEC Use Only
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4. Source of Funds (See Instructions) OO (See Item 3)
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
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6. Citizenship or Place of Organization Delaware
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Number of 7. Sole Voting Power -0-
Shares ------------------------------------------------------------------------------------------------------------------
Beneficially 8. Shared Voting Power 8,564,419 (See Item 5)
Owned by ------------------------------------------------------------------------------------------------------------------
Each 9. Sole Dispositive Power -0-
Reporting ------------------------------------------------------------------------------------------------------------------
Person With 10. Shared Dispositive Power 8,564,419 (See Item 5)
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11. Aggregate Amount Beneficially Owned by Each Reporting Person 8,564,419 (See Item 5)
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
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13. Percent of Class Represented by Amount in Row (11) 40.1% (See Item 5)
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14. Type of Reporting Person (See Instructions)
PN
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
CUSIP No. 12489L108 Page 3 of 21
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15. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only).
FS Capital Partners L.P., a California limited partnership
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16. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) X
(b)
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17. SEC Use Only
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18. Source of Funds (See Instructions) OO (See Item 3)
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19. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
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20. Citizenship or Place of Organization California
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Number of 21. Sole Voting Power -0-
Shares ------------------------------------------------------------------------------------------------------------------
Beneficially 22. Shared Voting Power 8,564,419 (See Item 5)
Owned by ------------------------------------------------------------------------------------------------------------------
Each 23. Sole Dispositive Power -0-
Reporting ------------------------------------------------------------------------------------------------------------------
Person With 24. Shared Dispositive Power 8,564,419 (See Item 5)
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25. Aggregate Amount Beneficially Owned by Each Reporting Person 8,564,419 (See Item 5)
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26. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
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27. Percent of Class Represented by Amount in Row (11) 40.1% (See Item 5)
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28. Type of Reporting Person (See Instructions)
PN
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
CUSIP No. 12489L108 Page 4 of 21
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1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only).
FS Holdings, Inc., a California corporation
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) X
(b)
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3. SEC Use Only
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4. Source of Funds (See Instructions) OO (See Item 3)
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
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6. Citizenship or Place of Organization California
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Number of 7. Sole Voting Power -0-
Shares ------------------------------------------------------------------------------------------------------------------
Beneficially 8. Shared Voting Power 8,564,419 (See Item 5)
Owned by ------------------------------------------------------------------------------------------------------------------
Each 9. Sole Dispositive Power -0-
Reporting ------------------------------------------------------------------------------------------------------------------
Person With 10. Shared Dispositive Power 8,564,419 (See Item 5)
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11. Aggregate Amount Beneficially Owned by Each Reporting Person 8,564,419 (See Item 5)
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
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13. Percent of Class Represented by Amount in Row (11) 40.1% (See Item 5)
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14. Type of Reporting Person (See Instructions)
CO
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
CUSIP No. 12489L108 Page 5 of 21
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1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only).
FS Equity Partners International, L.P., a Delaware limited partnership
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) X
(b)
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3. SEC Use Only
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4. Source of Funds (See Instructions) OO (See Item 3)
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
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6. Citizenship or Place of Organization Delaware
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Number of 7. Sole Voting Power -0-
Shares ------------------------------------------------------------------------------------------------------------------
Beneficially 8. Shared Voting Power 8,564,419 (See Item 5)
Owned by ------------------------------------------------------------------------------------------------------------------
Each 9. Sole Dispositive Power -0-
Reporting ------------------------------------------------------------------------------------------------------------------
Person With 10. Shared Dispositive Power 8,564,419 (See Item 5)
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11. Aggregate Amount Beneficially Owned by Each Reporting Person 8,564,419 (See Item 5)
-----------------------------------------------------------------------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
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13. Percent of Class Represented by Amount in Row (11) less than 40.1% (See Item 5)
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14. Type of Reporting Person (See Instructions)
PN
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
CUSIP No. 12489L108 Page 6 of 21
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1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only).
FS & Co. International, L.P., a Cayman Islands exempted limited partnership
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) X
(b)
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3. SEC Use Only
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4. Source of Funds (See Instructions) OO (See Item 3)
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
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6. Citizenship or Place of Organization Cayman Islands
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Number of 7. Sole Voting Power -0-
Shares ------------------------------------------------------------------------------------------------------------------
Beneficially 8. Shared Voting Power 8,564,419 (See Item 5)
Owned by ------------------------------------------------------------------------------------------------------------------
Each 9. Sole Dispositive Power -0-
Reporting ------------------------------------------------------------------------------------------------------------------
Person With 10. Shared Dispositive Power 8,564,419 (See Item 5)
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11. Aggregate Amount Beneficially Owned by Each Reporting Person 8,564,419 (See Item 5)
-----------------------------------------------------------------------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
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13. Percent of Class Represented by Amount in Row (11) less than 40.1% (See Item 5)
-----------------------------------------------------------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
PN
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
CUSIP No. 12489L108 Page 7 of 21
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1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only).
FS International Holdings Limited, a Cayman Islands exempted company limited by shares
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) X
(b)
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3. SEC Use Only
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4. Source of Funds (See Instructions) OO (See Item 3)
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
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6. Citizenship or Place of Organization Cayman Islands
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Number of 7. Sole Voting Power -0-
Shares ------------------------------------------------------------------------------------------------------------------
Beneficially 8. Shared Voting Power 8,564,419 (See Item 5)
Owned by ------------------------------------------------------------------------------------------------------------------
Each 9. Sole Dispositive Power -0-
Reporting ------------------------------------------------------------------------------------------------------------------
Person With 10. Shared Dispositive Power 8,564,419 (See Item 5)
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11. Aggregate Amount Beneficially Owned by Each Reporting Person 8,564,419 (See Item 5)
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
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13. Percent of Class Represented by Amount in Row (11) 40.1% (See Item 5)
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14. Type of Reporting Person (See Instructions)
CO
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
CUSIP No. 12489L108 Page 8 of 21
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1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only).
Bradford M. Freeman
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) X
(b)
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3. SEC Use Only
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4. Source of Funds (See Instructions) OO (See Item 3)
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
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6. Citizenship or Place of Organization United States
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Number of 7. Sole Voting Power -0-
Shares ------------------------------------------------------------------------------------------------------------------
Beneficially 8. Shared Voting Power 8,564,419 (See Item 5)
Owned by ------------------------------------------------------------------------------------------------------------------
Each 9. Sole Dispositive Power -0-
Reporting ------------------------------------------------------------------------------------------------------------------
Person With 10. Shared Dispositive Power 8,564,419 (See Item 5)
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11. Aggregate Amount Beneficially Owned by Each Reporting Person 8,564,419 (See Item 5)
-----------------------------------------------------------------------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
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13. Percent of Class Represented by Amount in Row (11) 40.1% (See Item 5)
-----------------------------------------------------------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
IN
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
CUSIP No. 12489L108 Page 9 of 21
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1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only).
Ronald P. Spogli
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) X
(b)
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3. SEC Use Only
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4. Source of Funds (See Instructions) OO (See Item 3)
-----------------------------------------------------------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
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6. Citizenship or Place of Organization United States
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Number of 7. Sole Voting Power -0-
Shares ------------------------------------------------------------------------------------------------------------------
Beneficially 8. Shared Voting Power 8,564,419 (See Item 5)
Owned by ------------------------------------------------------------------------------------------------------------------
Each 9. Sole Dispositive Power -0-
Reporting ------------------------------------------------------------------------------------------------------------------
Person With 10. Shared Dispositive Power 8,564,419 (See Item 5)
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11. Aggregate Amount Beneficially Owned by Each Reporting Person 8,564,419 (See Item 5)
-----------------------------------------------------------------------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
-----------------------------------------------------------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11) 40.1% (See Item 5)
-----------------------------------------------------------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
IN
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
CUSIP No. 12489L108 Page 10 of 21
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1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only).
William M. Wardlaw
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) X
(b)
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3. SEC Use Only
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4. Source of Funds (See Instructions) OO (See Item 3)
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
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6. Citizenship or Place of Organization United States
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Number of 7. Sole Voting Power -0-
Shares ------------------------------------------------------------------------------------------------------------------
Beneficially 8. Shared Voting Power 8,564,419 (See Item 5)
Owned by ------------------------------------------------------------------------------------------------------------------
Each 9. Sole Dispositive Power -0-
Reporting ------------------------------------------------------------------------------------------------------------------
Person With 10. Shared Dispositive Power 8,564,419 (See Item 5)
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11. Aggregate Amount Beneficially Owned by Each Reporting Person 8,564,419 (See Item 5)
-----------------------------------------------------------------------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
-----------------------------------------------------------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11) 40.1% (See Item 5)
-----------------------------------------------------------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
IN
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
CUSIP No. 12489L108 Page 11 of 21
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1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only).
J. Frederick Simmons
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) X
(b)
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3. SEC Use Only
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4. Source of Funds (See Instructions) OO (See Item 3)
-----------------------------------------------------------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
-----------------------------------------------------------------------------------------------------------------------------------
6. Citizenship or Place of Organization United States
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Number of 7. Sole Voting Power -0-
Shares ------------------------------------------------------------------------------------------------------------------
Beneficially 8. Shared Voting Power 8,564,419 (See Item 5)
Owned by ------------------------------------------------------------------------------------------------------------------
Each 9. Sole Dispositive Power -0-
Reporting ------------------------------------------------------------------------------------------------------------------
Person With 10. Shared Dispositive Power 8,564,419 (See Item 5)
-----------------------------------------------------------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person 8,564,419 (See Item 5)
-----------------------------------------------------------------------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
-----------------------------------------------------------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11) 40.1% (See Item 5)
-----------------------------------------------------------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
IN
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
CUSIP No. 12489L108 Page 12 of 21
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1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only).
John M. Roth
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) X
(b)
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3. SEC Use Only
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4. Source of Funds (See Instructions) OO (See Item 3)
-----------------------------------------------------------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
-----------------------------------------------------------------------------------------------------------------------------------
6. Citizenship or Place of Organization United States
-----------------------------------------------------------------------------------------------------------------------------------
Number of 7. Sole Voting Power -0-
Shares ------------------------------------------------------------------------------------------------------------------
Beneficially 8. Shared Voting Power 8,564,419 (See Item 5)
Owned by ------------------------------------------------------------------------------------------------------------------
Each 9. Sole Dispositive Power -0-
Reporting ------------------------------------------------------------------------------------------------------------------
Person With 10. Shared Dispositive Power 8,564,419 (See Item 5)
-----------------------------------------------------------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person 8,564,419 (See Item 5)
-----------------------------------------------------------------------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
-----------------------------------------------------------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11) 40.1% (See Item 5)
-----------------------------------------------------------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
IN
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
CUSIP No. 12489L108 Page 13 of 21
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1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only).
Charles P. Rullman, Jr.
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) X
(b)
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3. SEC Use Only
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4. Source of Funds (See Instructions) OO (See Item 3)
-----------------------------------------------------------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)
-----------------------------------------------------------------------------------------------------------------------------------
6. Citizenship or Place of Organization United States
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Number of 7. Sole Voting Power -0-
Shares ------------------------------------------------------------------------------------------------------------------
Beneficially 8. Shared Voting Power 8,564,419 (See Item 5)
Owned by ------------------------------------------------------------------------------------------------------------------
Each 9. Sole Dispositive Power -0-
Reporting ------------------------------------------------------------------------------------------------------------------
Person With 10. Shared Dispositive Power 8,564,419 (See Item 5)
-----------------------------------------------------------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person 8,564,419 (See Item 5)
-----------------------------------------------------------------------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)
-----------------------------------------------------------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11) 40.1% (See Item 5)
-----------------------------------------------------------------------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
IN
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</TABLE>
<PAGE>
This Amendment No. 1 amends and restates the statement on Schedule 13D
filed with the Securities and Exchange Commission (the "Commission") on
September 5, 1997 (the "Initial Filing").
Item 1. Security and Issuer
Item 1 of the Initial Filing is amended and restated to read as
follows:
This statement on Schedule 13D (this "Statement") relates to the Common
Stock, $0.01 par value per share, CUSIP Number 12489L108 (the "Common Stock") of
CB Richard Ellis Services, Inc., a Delaware corporation (the "Issuer"). The
principal executive office and mailing address of the Issuer is 200 North
Sepulveda Boulevard, El Segundo, California 90245-4380.
Item 2. Identity and Background
Item 2 of the Initial Filing is amended by adding the following
paragraphs after the last paragraph thereof:
As described in Items 3 and 4 below, BLUM CB Corp., a Delaware
corporation ("Newco"), submitted a merger proposal to the Issuer pursuant to
which it would, subject to the conditions set forth in such proposal, merge into
the Issuer and the holders of the Common Stock (other than certain holders
described in Item 4 below) would receive consideration of $15.50 per share in
cash in exchange for their shares of Common Stock. As further described in Items
3 and 4 below, FSEP III, FSEP International, RCBA Strategic Partners, L.P., a
Delaware limited partnership ("Strategic"), Raymond E. Wirta ("Wirta"), W. Brett
White ("White"), Frederic V. Malek ("Malek") and The Koll Holding Company, a
California corporation ("Koll Holding") have entered into a letter agreement,
dated as of November 9, 2000 (the "Letter Agreement") (attached as Exhibit 1
---------
hereto), pursuant to which, among other things, the parties to the Letter
Agreement other than Strategic have agreed to certain terms with respect to
their ability to vote or to dispose of the shares of Common Stock beneficially
owned by them. As a result of the Letter Agreement, the Filing Persons, together
with BLUM Capital Partners, L.P., a California limited partnership ("BLUM LP"),
Richard C. Blum & Associates, Inc., a California corporation ("RCBA Inc."),
Strategic, RCBA GP, L.L.C., a Delaware limited liability company ("RCBA GP"),
Richard C. Blum ("Blum"), Newco (together with BLUM LP, RCBA Inc., Strategic,
RCBA GP and Blum, the "BLUM Parties"), Wirta, White, Malek and Koll Holding
(collectively, the "Other Parties") may be deemed to constitute a group within
the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (together with the rules and regulations promulgated by the Securities
and Exchange Commission thereunder, the "Exchange Act").
The Filing Persons have been advised by the BLUM Parties of the
following information with respect to the BLUM Parties as set forth below:
Newco is a Delaware corporation newly formed by Strategic. The
principal business of Newco is to engage in the Proposed Transaction described
in items 3 and 4 below. The principal business office address of Newco is 909
Montgomery Street, Suite 400, San Francisco, California 94133.
Strategic is a Delaware limited partnership whose principal business is
investing in securities and whose principal office is 909 Montgomery Street,
Suite 400, San Francisco, California 94133.
RCBA GP is a Delaware limited liability company whose principal
business is acting as the sole general partner of Strategic and whose principal
office is 909 Montgomery Street, Suite 400, San Francisco, California 94133.
BLUM LP is a California limited partnership whose principal business is
acting as general partner for investment partnerships and providing investment
advisory services. BLUM LP is a registered investment adviser with the
Securities and Exchange Commission. The sole general partner of BLUM LP is RCBA
Inc.
The principal business office address of RCBA GP is 909 Montgomery
Street, Suite 400, San Francisco, CA 94133. The names of the managing members
and members of RCBA GP, their addresses, citizenship and principal occupations
are as follows:
<TABLE>
<CAPTION>
Name and Office Held Business Address Citizenship Principal Occupation or Employment
--------------------------- -------------------------- ------------------ ------------------------------------
<S> <C> <C> <C>
Richard C. Blum 909 Montgomery St. USA President & Chairman, BLUM, LP
Managing Member Suite 400
San Francisco, CA 94133
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Name and Office Held Business Address Citizenship Principal Occupation or Employment
--------------------------- -------------------------- ------------------ ------------------------------------
<S> <C> <C> <C>
Nils Colin Lind 909 Montgomery St. Norway Managing Partner, BLUM LP
Managing Member Suite 400
San Francisco, CA 94133
Jeffrey W. Ubben 909 Montgomery St. USA Managing Partner, BLUM LP
Managing Member Suite 400
San Francisco, CA 94133
George F. Hamel, Jr. 909 Montgomery St. USA Partner, BLUM LP
Member Suite 400
San Francisco, CA 94133
Marc T. Scholvinck 909 Montgomery St. USA Partner and Chief Financial Officer,
Member Suite 400 BLUM LP
San Francisco, CA 94133
Murray A. Indick 909 Montgomery St. USA Partner and General Counsel,
Member Suite 400 BLUM LP
San Francisco, CA 94133
John C. Walker 909 Montgomery St. USA Partner, BLUM LP
Member Suite 400
San Francisco, CA 94133
</TABLE>
The principal business office address of BLUM LP and RCBA Inc. is 909
Montgomery Street, Suite 400, San Francisco, California 94133. The
name of the executive officers and directors of RCBA Inc., their
addresses, citizenship and principal occupations are as follows:
<TABLE>
<CAPTION>
Name and Office Held Business Address Citizenship Principal Occupation or Employment
--------------------------- -------------------------- ----------------- -------------------------------------
<S> <C> <C> <C>
Richard C. Blum 909 Montgomery St. USA President & Chairman,
President, Chairman Suite 400 BLUM LP
and Director San Francisco, CA 94133
Nils Colin Lind 909 Montgomery St. Norway Managing Partner, BLUM LP
Managing Partner Suite 400
and Director San Francisco, CA 94133
Jeffrey W. Ubben 909 Montgomery St. USA Managing Partner, BLUM LP
Managing Partner and Suite 400
Director San Francisco, CA 94133
Claus J. Moller 909 Montgomery St. Denmark Managing Partner, BLUM LP
Managing Partner and Suite 400
Director San Francisco, CA 94133
George F. Hamel, Jr. 909 Montgomery St. USA Partner, BLUM LP
Partner Suite 400
San Francisco, CA 94133
Marc T. Scholvinck 909 Montgomery St. USA Partner and Chief Financial
Partner, Chief Financial Suite 400 Officer, BLUM LP
Officer, Assistant San Francisco, CA 94133
Secretary and Director
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Name and Office Held Business Address Citizenship Principal Occupation or Employment
--------------------------- -------------------------- ------------------ ------------------------------------
<S> <C> <C> <C>
Murray A. Indick 909 Montgomery St. USA Partner and General
Partner, General Suite 400 Counsel, BLUM LP
Counsel & Secretary San Francisco, CA 94133
John C. Walker 909 Montgomery St. USA Partner, BLUM LP
Partner Suite 400
San Francisco, CA 94133
Kevin A. Richardson 909 Montgomery St. USA Partner, BLUM LP
Partner Suite 400
San Francisco, CA 94133
</TABLE>
The Filing Persons have been advised by the Other Parties of the
following information with respect to the Other Parties as set forth below:
Wirta is a United States citizen whose principal occupation is Chief
Executive Officer and a Director of the Issuer. His business address is CB
Richard Ellis Services, Inc., 200 North Sepulveda Boulevard, El Segundo,
California 90245-4380.
White is a United States citizen whose principal occupation is Chief
Operating Officer and a Director of the Issuer. His business address is CB
Richard Ellis Services, Inc., 200 North Sepulveda Boulevard, El Segundo,
California 90245-4380.
Malek is a United States citizen and a Director of the Issuer. His
principal business occupation is Chairman of Thayer Capital Partners. His
business address is Thayer Capital Partners, 1455 Pennsylvania Avenue, N.W.,
Suite 350, Washington DC 20004.
Koll Holding is wholly-owned by The Koll Company ("Koll Co."), which is
a California corporation wholly-owned by the Don Koll Separate Property Trust
("Koll Trust"), a trust for which Donald M. Koll ("Koll") is trustee. Koll is a
United States citizen and a Director of the Issuer. Koll Holding was formed to
acquire and hold equity in Koll Real Estate Services, which was acquired by the
Issuer on August 28, 1997 (as further described in Item 4]. The principal office
and business address of Koll Holding, Koll Co., Koll Trust and Koll is 4343 Von
Karman Avenue, Newport Beach, California 92660.
The BLUM Parties and the Other Parties have advised the Filing Persons
that during the last five years, to the best knowledge of the BLUM Parties and
the Other Parties, respectively, none of the BLUM Parties and the Other Parties
has been (i) convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) a party to any civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subjected to a judgment, decree or final order enjoining any future
violations of, or prohibiting or mandating activities subject to federal or
state securities laws or finding any violation with respect to such laws.
16
<PAGE>
Item 3. Source and Amount of Funds or Other Consideration
Item 3 of the Initial Filing is amended and supplemented by adding the
following paragraphs after the first paragraph thereof:
The Proposed Transaction (as defined in Item 4 below) would be funded
through a combination of equity and debt financing. Pursuant to, and subject to
the terms and conditions of, the Letter Agreement, FSEP III and FSEP
International will contribute to Acquisition all of the Common Stock
beneficially owned by them and Strategic and/or its affiliates are prepared to
provide approximately $116.9 million of additional equity to Acquisition for the
Proposed Transaction. In addition, Acquisition has had discussions with Credit
Suisse First Boston to provide debt financing to consummate the Proposed
Transaction; however, Acquisition has not yet entered into a commitment letter
with respect to the debt financing for the Proposed Transaction, and there is no
assurance that one will be successfully obtained. In addition, the proposed
financing of the Proposed Transaction may change based on availability of such
financing and on other facts and circumstances with respect to such Proposed
Transaction or financing.
None of the Filing Persons has contributed any funds or other
consideration toward the purchase of shares of Common Stock that may be deemed
to be owned by the BLUM Parties or the Other Parties as described in Item 5.
The transactions contemplated by the Letter Agreement are subject to a
number of terms and conditions set forth therein, including, among others, the
approval of the Issuer's Board of Directors, the execution of mutually
acceptable documentation and the satisfaction of the conditions set forth in the
Proposal Letter (as defined in Item 4 below). All decisions regarding the
Proposed Transaction will be made by the BLUM Parties; however, the Filing
Persons have the right to withdraw from the Proposed Transaction if there is a
change in the amount of consideration payable per share of Common Stock or any
other material economic term of the Proposed Transaction in which event, the
Filing Persons will no longer be bound by certain terms of the Letter Agreement,
as set forth. The information set forth in response to this Item 3 is qualified
in its entirety by reference to the Letter Agreement attached hereto as Exhibit
1, which is expressly incorporated by reference.
Item 4. Purpose of Transaction
Item 4 of the Initial Filing is hereby deleted in its entirety and
replaced with the following paragraphs:
As described in a letter dated November 9, 2000, from Acquisition to
the Issuer (the "Proposal Letter") (attached hereto as Exhibit 2), Acquisition
---------
has made a proposal with respect to a transaction in which Acquisition would
merge with and into the Issuer (the "Proposed Transaction"). Pursuant to the
terms of the Proposed Transaction, among other things, (i) each of Strategic,
FSEP III, FSEP International and the Other Parties will contribute all of the
shares of Common Stock beneficially owned by such person to Acquisition in
exchange for newly-issued shares of Acquisition, and (ii) immediately following
completion of the foregoing contributions, Acquisition will be merged into the
Issuer. Pursuant to the merger, all shares of Common Stock (other than the
shares held by Acquisition) will be converted into the right to receive
consideration of $15.50 per share, all shares of Common Stock held by
Acquisition will be cancelled and all shares of common stock of Acquisition will
be converted into shares of the Common Stock. In connection with the Proposed
Transaction, the Common Stock would be delisted from the New York Stock
Exchange. The Filing Persons currently do not intend to deregister the Common
Stock under the Exchange Act but may do so in the future, to the extent
permitted under the Exchange Act.
Annex B of the Letter Agreement provides that the Board of Directors of
the Issuer after consummation of the Proposed Transaction will consist of six
directors, including three directors designated by Strategic, one director
designated by the Filing Persons and Wirta and White (each for so long as he
remains an employee of the Issuer). In addition, Strategic will be entitled to
designate one additional director at any time.
The Proposal Letter provides that the Proposed Transaction would be
subject to a number of conditions, including, among others, (i) approval by the
Issuer's Board of Directors and stockholders pursuant to the requirements of
Delaware law and the rules of the New York Stock Exchange, (ii) receipt of any
material governmental and third party approvals (including expiration of all
applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended), (iii) receipt of consents from the holders of a
majority of the Issuer's outstanding 8-7/8% Senior Subordinate Notes due 2006,
(iv) completion of the financing arrangements necessary to consummate the
Proposed Transaction, (v) completion of confirmatory due diligence, and (vi) the
negotiation and execution of definitive agreements providing for the Proposed
Transaction and the transactions described in the Letter Agreement and the
satisfaction of the conditions set forth therein, including a mutually
satisfactory definitive merger agreement which would contain customary
covenants, representations, warranties, conditions and other provisions normal
to such agreements.
Acquisition's proposal contained in the Proposal Letter expires by its
terms at 5:00 p.m. Pacific Standard Time on December 1, 2000. All decisions
regarding the Proposed Transaction will be made by the BLUM Parties. The Filing
17
<PAGE>
Persons, BLUM Parties and Other Parties expect to evaluate on an ongoing basis
the Issuer's financial condition, business, operations and prospects, market
price of the Common Stock, conditions in securities markets generally, general
economic and industry conditions and other factors. Accordingly, the Filing
Persons reserve the right to change their plans and intentions at any time, as
they deem appropriate, and reserve the right to withdraw from the Proposed
Transaction. In particular, the Filing Persons may at any time and from time to
time acquire shares of Common Stock or securities convertible or exchangeable
for Common Stock or dispose of shares of Common Stock. Any such transactions may
be effected at any time and from time to time subject to any applicable
limitations of the Securities Act of 1933, as amended, and the Exchange Act.
The Filing Persons originally acquired the shares of Common Stock
beneficially owned by them pursuant to the terms and conditions of an Agreement
and Plan of Reorganization, dated as of May 14, 1997 (the "Merger Agreement") by
and among the Issuer, CBC Acquisition Corporation ("Acquisition Corp."), Koll
Real Estate Services ("KRES"), FSEP III, FSEP International, AP KMS Partners,
L.P., AP KMS II, LLC, The Koll Holding Company, Koll, William S. Rothe and
Wirta. On August 28, 1997, Acquisition Corp. was merged with and into KRES (the
"Merger") and KRES became a wholly-owned subsidiary of the Issuer. In the
Merger, FSEP III received 3,278,448 shares of Common Stock and warrants to
acquire 351,585 shares of Common Stock (the "FSEP III Warrant") and FSEP
International received 124,015 shares of Common Stock and warrants to acquire
13,299 shares of Common Stock (the "FSEP International Warrant", and
collectively with the FSEP III Warrant, the "FS Warrants").
The Letter Agreement provides, among other things, that upon completion
of the Proposed Transaction, the FS Warrants will be cancelled and the Issuer
will issue a new warrant to each of FSEP III and FSEP International, which
warrants will expire on August 27, 2007 and, collectively, be exercisable for a
number of shares of Common Stock equal to the number that represents the same
percentage of the total outstanding shares of Common Stock immediately after the
consummation of the Proposed Transaction as the FS Warrants were entitled to
immediately prior to the consummation of the Proposed Transaction.
Freeman serves on the Issuer's Board of Directors.
The Filing Parties have been advised that the BLUM Parties originally
acquired the shares of Common Stock beneficially owned by them through open
market purchases of the Common Stock.
Blum serves on the Issuer's Board of Directors.
The Filing Persons have been advised that each of the Other Parties
originally acquired the shares of Common Stock beneficially owned by each of
them in their respective capacities as a founder, officer or director of the
Issuer or its predecessors, as the case may be.
Other than as described above in Item 3 and this Item 4, none of the
Filing Persons have, and the Filing Persons have been advised by the BLUM
Parties and the Other Parties that none of the BLUM Parties or the Other
Parties, respectively, have, any plans or proposals which relate to or would
result in any of the matters described in subparagraphs (a) through (j) of Item
4 of Schedule 13D (although they reserve the right to develop such plans).
The information set forth in response to this Item 4 is qualified in
its entirety by reference to the Letter Agreement (attached hereto as Exhibit 1)
---------
and the Proposal Letter (attached hereto as Exhibit 2), each of which is
---------
expressly incorporated herein by reference.
Item 5. Interest in Securities of the Issuer
Item 5 of the Initial Filing is hereby deleted in its entirety and
replaced with the following paragraphs:
(a),(b) The Filing Persons believe that there are currently 21,213,928
shares of Common Stock outstanding. Based on such number of outstanding shares,
the Filing Persons beneficially own the following amounts and corresponding
percentage interests of total shares outstanding: (i) FSEP III, Capital Partners
and FS Holdings each is deemed to beneficially own 3,278,448 shares (15.5%) of
the Common Stock, (ii) FSEP International, FS&Co. International and
International Holdings each is deemed to beneficially own 124,015 shares (less
than 1%) of the Common Stock and (iii) Freeman, Spogli, Wardlaw, Simmons, Roth
and Rullman each may be
18
<PAGE>
deemed to beneficially own 3,402,463 shares (16.0%) of the Common Stock. As the
directors, executive officers and shareholders of FS Holdings and International
Holdings, Freeman, Spogli, Wardlaw, Simmons, Roth and Rullman may be deemed to
be the beneficial owners of the securities beneficially owned by FS Holdings and
International Holdings. Although Freeman, Spogli, Wardlaw, Simmons, Roth and
Rullman are joining in this Schedule 13D as Filing Persons, the filing of this
Schedule 13D shall not be construed as an admission that they, or any of the
other directors, executive officers or shareholders of FS Holdings or
International Holdings, are, for any purpose, the beneficial owner of any of the
securities that are beneficially owned by FS Holdings or International Holdings
except to the extent of any pecuniary interest therein. None of the beneficial
ownership information in this paragraph includes any Common Stock beneficially
owned by the BLUM Parties or the Other Parties.
The Filing Persons have been advised that based on the assumption that
there are 21,213,928 shares of Common Stock outstanding, (i) Strategic reports
direct holdings of 2,345,900 shares of the Common Stock (11.1%); and (ii) BLUM
LP and RCBA Inc. report holdings of 1,077,986 shares of the Common Stock (5.1%)
owned directly by BLUM LP or the limited partnerships for which BLUM LP serves
as the general partner and BLUM LP's investment advisory client accounts.
As a result of the matters described in items 2, 3 and 4 above, Newco,
which was formed by Strategic, may be deemed to have acquired beneficial
ownership of the Common Stock owned or deemed to be owned by the BLUM Parties.
The Filing Persons have been advised that Wirta beneficially owns
70,000 shares of Common Stock, which includes 35,000 shares of Common Stock
underlying stock options which are currently exercisable or which become
exercisable within 60 days after November 10, 2000. In addition, Wirta holds an
immediately-exercisable option to purchase 521,590 shares of Common Stock, and
warrants to acquire 55,936 shares of Common Stock, from Koll Holding. As such,
Wirta is deemed to beneficially own 647,526 shares of Common Stock, which
constitute approximately 3.1% of the Common Stock.
The Filing Persons have been advised that White beneficially owns
125,200 shares of Common Stock, which includes 66,600 shares of Common Stock
underlying stock options which are currently exercisable or which become
exercisable within 60 days after November 10, 2000. These holdings constitute
less than one percent of the Common Stock.
The Filing Persons have been advised that each of Koll Co., Koll Trust
and Koll is deemed to beneficially own 1,132,886 shares of Common Stock owned
by Koll Holding, which includes 398,596 shares of Common Stock underlying stock
options and warrants which are currently exercisable or which become exercisable
within 60 days after November 10, 2000. As described above in this Item 5, Koll
Holding has granted an option and warrant to Wirta exercisable for up to 577,526
shares of Common Stock. Under the option agreement, Holl Holding presently has
no right to dispose of the shares subject to the option, although it retains
sole voting power. These holdings constitute approximately 5.3% of the Common
Stock.
The Filing Persons have been advised that Malek beneficially owns
409,984 shares of Common Stock, which includes 12,110 shares of Common Stock
underlying stock options which are currently exercisable or which become
exercisable within 60 days after November 10, 2000. These holdings constitute
approximately 1.9% of the Common Stock.
The Filing Persons have been advised that each of the Other Parties has
sole power (and does not share any power) to vote or direct the vote of all
shares of Common Stock beneficially owned by him or it and has sole owner (and
does not share any power) to dispose or to direct the disposition all shares of
Common Stock beneficially owned by him or it.
Other than as set forth above, the Filing Persons have been advised by
the BLUM Parties and the Other Parties that, as of November 10, 2000, none of
the BLUM Parties or the Other Parties, respectively, beneficially owns any
shares of any class of capital stock of the Issuer.
(c) The Filing Persons have been advised that none of the BLUM Parties
has effected any transactions in any shares of Common Stock during the 60-day
period ended November 10, 2000, except as disclosed in this Schedule 13D.
The Filing Persons have been advised by the Other Parties that none of
the Other Parties has effected any transactions in any shares of Common Stock
during the 60-day period ended November 10, 2000, except as disclosed in this
Schedule 13D.
19
<PAGE>
(d) No one other than the Filing Persons has the right to receive, or
the power to direct the receipt of, dividends from, or the proceeds from the
sale of, any of the securities of the Issuer acquired by the Filing Persons as
described in Item 5. The Filing Persons have been advised that no person other
than the BLUM Parties and the Other Parties has the right to receive or the
power to direct the receipt of dividends from, or the proceeds from the sale of,
the shares of Common Stock beneficially owned by the BLUM Parties or the Other
Parties respectively, as described above.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer
As described in Item 3 of this Schedule 13D, the Letter Agreement
(attached hereto as Exhibit 1) sets forth certain understandings among
---------
Strategic, FSEP III, FSEP International and the Other Parties with respect to
the Proposed Transaction including, among other things, the negotiation of the
Proposed Transaction, the contribution of equity, a stockholders agreement,
agreements with management and employees, exclusivity and voting and fees and
expenses. The consummation of the contributions and the entering into of a
stockholders agreement and the agreements with management and employees are
conditioned upon the prior negotiation and execution of a definitive merger
agreement for the Proposed Transaction and other definitive documentation.
Annex B to the Letter Agreement sets forth the understandings between
such persons with respect to their ownership of Common Stock in the event that
the Proposed Transaction is consummated, including without limitation as to
restrictions on transfer, co-sale/tag along rights, right of first offer,
preemptive rights, sale of Issuer, an initial public offering of the Issuer,
registration rights, voting, representation on the Issuer's Board of Directors,
advisory assistance, general consent rights, consent rights of FSEP III and FSEP
International, information and inspection rights and indemnification.
As described in Item 4 of this Schedule 13D, the Proposal Letter
(attached hereto as Exhibit 2) contains the proposal by Acquisition to Issuer
---------
with respect to the Proposed Transactions, including with respect to the Issuer
a discussion of, among other things, the purchase price, the equity financing,
the debt financing, the structure, the treatment of existing indebtedness, the
employees, the headquarters and the legal documentation and conditions regarding
the Proposed Transactions.
The descriptions of the Letter Agreement and the Proposal Letter
contained in this Schedule 13D are qualified in their entirety by reference,
respectively, to the Letter Agreement (attached hereto as Exhibit 1) and the
---------
Proposal Letter (attached hereto as Exhibit 2).
---------
The Filing Persons have been advised that on August 27, 1997, in
connection with the merger of KRES into a wholly-owned subsidiary of the Issuer
in exchange for shares of the Common Stock and warrants to acquire additional
shares of the Common Stock (as described above in Item 4), Koll Co., Koll
Holding and KRES entered into an Amended and Restated Option Agreement ("Option
Agreement") with Wirta, pursuant to which an option previously granted to Wirta
to purchase 672,000 shares of KRES common stock was converted into (i) an
immediately-exercisable option ("Option") to purchase up to 521,590 shares of
the Common Stock from Koll Holding at an exercise price of $5.84 and (ii) the
right to obtain in connection with each exercise of such Option .1072413
warrants per share of Common Stock rounded to the nearest warrant, for a maximum
of 55,936 shares of the Common Stock. The exercise period for the Option and
warrants currently extends to May 30, 2004. Under the Option Agreement, Koll
Holding may not sell any shares of the Common Stock or exercise or transfer any
warrants to acquire the Common Stock if as a result of such sale, exercise or
transfer Koll Holding will not retain a sufficient number of shares of Common
Stock and warrants to permit Wirta to exercise his rights in full under the
Wirta Option Agreement. There are no voting restrictions on the shares prior to
exercise of the Option and warrant.
None of the Filing Persons or, to the best knowledge of the Filing
Persons, the other persons named in Item 2 other than the BLUM Parties or the
Other Parties, is a party to any contract, arrangement, understanding or
relationship with respect to any securities of the Issuer, including but not
limited to the transfer or voting of any securities of the Issuer, finder's
fees, joint ventures, loan or option arrangements, puts or calls, guarantees of
profits, division of profits or loss, or the giving or withholding of proxies,
except as previously disclosed.
The Filing Persons have been advised that none of the BLUM Parties or
the Other Parties is a party to any contract, arrangement, understanding or
relationship with respect to any securities of the Issuer, including but not
limited to the transfer or voting of any securities of the Issuer, finder's
fees, joint ventures, loan or option arrangements, puts or calls, guarantees of
profits, division of profits or loss, or the giving or withholding of proxies,
except as previously disclosed.
Item 7. Material to Be Filed as Exhibits
Item 7 of the Initial Filing is hereby amended by adding the following
paragraphs after the last paragraph thereof:
1. Letter Agreement dated November 10, 2000 among Strategic, FSEP
III, FSEP International and the Other Parties.
2. Proposal Letter dated November 10, 2000.
20
<PAGE>
Signature
After reasonable 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.
Dated: November 13, 2000
FS EQUITY PARTNERS III, L.P.,
a Delaware limited partnership
By: FS Capital Partners, L.P.
Its: General Partner
By: FS Holdings, Inc.
Its: General Partner
By: /s/ J. Frederick Simmons
------------------------
J. Frederick Simmons
Title: Vice President
FS CAPITAL PARTNERS, L.P.,
a California limited partnership
By: FS Holdings, Inc.
Its: General Partner
By: /s/ J. Frederick Simmons
------------------------
J. Frederick Simmons
Title: Vice President
FS HOLDINGS, INC.,
a California corporation
By: /s/ J. Frederick Simmons
------------------------
J. Frederick Simmons
Title: Vice President
<PAGE>
FS EQUITY PARTNERS INTERNATIONAL, L.P.,
a Delaware limited partnership
By: FS&Co. International, L.P.,
Its: General Partner
By: FS International Holdings Limited
Its: General Partner
By: /s/ J. Frederick Simmons
------------------------
J. Frederick Simmons
Title: Vice President
FS&CO. INTERNATIONAL, L.P.,
a Cayman Islands exempted limited partnership
By: FS International Holdings Limited
Its: General Partner
By: /s/ J. Frederick Simmons
------------------------
J. Frederick Simmons
Title: Vice President
FS INTERNATIONAL HOLDINGS LIMITED,
a Cayman Islands exempted company limited by
shares
By: /s/ J. Frederick Simmons
------------------------
J. Frederick Simmons
Title: Vice President
/s/ Bradford M. Freeman
-----------------------
Bradford M. Freeman
/s/ Ronald P. Spogli
--------------------
Ronald P. Spogli
/s/ William M. Wardlaw
----------------------
William M. Wardlaw
/s/ J. Frederick Simmons
------------------------
J. Frederick Simmons
/s/ John M. Roth
----------------
John M. Roth
/s/ Charles P. Rullman, Jr.
---------------------------
Charles P. Rullman, Jr.
<PAGE>
EXHIBIT 1
RCBA Strategic Partners, L.P.
c/o BLUM Capital Partners, L.P.
909 Montgomery Street
Suite 400
San Francisco, California 94133
November 10, 2000
FS Equity Partners III, L.P.
FS Equity Partners International, L.P.
11100 Santa Monica Boulevard, Suite 1900
Los Angeles, California 90025
Attention: J. Fredrick Simmons
Gentlemen:
This letter outlines the general terms and conditions under which RCBA
Strategic Partners, L.P. ("BLUM"), which is an affiliate of BLUM Capital
Partners, L.P., FS Equity Partners III, L.P. and FS Equity Partners
International, L.P. (together with their affiliates other than the Company,
"FS") and the other signatories hereto (the "Other Investors") would propose to
acquire all of the Common Stock, par value $0.01 per share (the "Common Stock"),
of CB Richard Ellis Services, Inc. (the "Company"). Such acquisition would be
structured as a proposed merger of BLUM CB Corp. ("Newco") with and into the
Company (the "Proposed Transaction").
1. Proposal to the Board; Negotiation of Proposed Transaction.
----------------------------------------------------------
Attached hereto as Annex A is a letter from Newco to the Board of Directors of
the Company (the "Board") proposing the Proposed Transaction (the "Proposal
Letter"). The parties hereto agree that Newco will submit the Proposal Letter to
the Board. The specific terms and conditions of the Proposed Transaction
(including, without limitation, the financing thereof and the agreement and plan
of merger (the "Merger Agreement")), except as specifically provided in Sections
2, 3 and 4 of this letter, will be determined by BLUM in its sole discretion and
BLUM will determine whether Newco will enter into the Merger Agreement and
proceed with the Proposed Transaction; provided, however that if either the
-------- -------
amount of consideration payable per share of Common Stock or any other material
economic terms of the Proposed Transaction (including, without limitation, the
material economic terms of the financing thereof) are changed without the prior
consent of FS, then FS will thereafter no longer be bound by the terms of
Sections 2 and 3 of this letter if FS objects in writing to such revised terms
within three business days of being notified of such terms (in which event FS
will no longer have the right to invest in the Proposed Transaction or receive
the New FS Warrant as contemplated by Section 2 below). In addition, with
respect to all material terms of the Proposed Transaction (including, without
limitation, the financing thereof), BLUM will use its good faith efforts to (i)
promptly communicate such terms
<PAGE>
to the other parties hereto, (ii) permit the other parties hereto to participate
in the negotiation of such terms and (iii) consider the views of the other
parties hereto in the negotiation of such terms.
2. Equity Contributions. (a) In furtherance of the Proposed
--------------------
Transaction, on the closing date of the Proposed Transaction, (x) BLUM would
contribute to Newco all of the Common Stock beneficially owned by it as of the
date hereof (which is equal to 2,345,900 shares) and receive in exchange
therefor an equivalent number of shares of Newco common stock, (y) FS would
contribute to Newco all of the Common Stock beneficially owned by it as of the
date hereof (which is equal to 3,402,463 shares) and receive in exchange
therefor an equivalent number of shares of Newco common stock, and (z) the Other
Investors would contribute to Newco all of the outstanding Common Stock
beneficially owned by them as of the date hereof (which shares are set forth
opposite the names of such Other Investors on Schedule I hereto) and receive in
exchange therefor an equivalent number of shares of Newco common stock. In
addition, on the closing date of the Proposed Transaction, BLUM and its
affiliates would purchase from Newco between approximately $64.3 million and
$116.9 million (depending upon the extent that employees of the Company decide
to purchase equity of the Company anticipated to be made available on the
closing date of the Proposed Transaction) (the "Additional Equity Contribution")
of newly issued common stock of Newco for a cash price per share of common stock
equal to the cash price per share of Common Stock paid to the stockholders of
the Company in the Proposed Transaction. In connection with the consummation of
the Proposed Transaction, each outstanding share of Newco common stock would be
converted automatically into one share of Common Stock. Each of the parties
hereto agrees to negotiate in good faith and use all reasonable efforts to enter
into definitive documentation with respect to the matters set forth in this
paragraph (the "Investment Documentation") prior to the execution of the Merger
Agreement. The Investment Documentation will be drafted by Simpson Thacher &
Bartlett (counsel to Newco and BLUM).
(b) On the closing date of the Proposed Transaction, the warrant currently
held by FS to acquire Common Stock (the "Old FS Warrant") will be cancelled and
the Company will issue to FS a new warrant to acquire Common Stock (the "New FS
Warrant") at an exercise price of $30 per share and that is substantially
similar to the Old FS Warrant, with the following exceptions: (i) the New FS
Warrant will expire on August 27, 2007, (ii) the New FS Warrant will be a
warrant to acquire a number of shares of Common Stock equal to the number that
represents the same percentage of the total outstanding shares of Common Stock
immediately after consummation of the Proposed Transaction as the Old FS Warrant
entitled FS immediately prior to the consummation of the Proposed Transaction,
and (iii) the New FS Warrant will not be exercisable unless and until (x) a
merger, sale or other acquisition of the Company, (y) an underwritten initial
public offering of the Common Stock or (z) August 26, 2007, and upon the
occurrence of any event specified in clause (x) or (y) the New FS Warrant will
automatically be exercised in a cashless manner.
3. Stockholders Agreement. Attached hereto as Annex B is a summary
----------------------
setting forth the principal terms governing the ownership of Common Stock by the
parties hereto subsequent to the consummation of the Proposed Transaction. Each
of the parties hereto agrees to negotiate in good faith and use all reasonable
efforts to enter into a definitive stockholders agreement with terms reflecting
those set forth in Annex B to this letter (the "Stockholders
<PAGE>
Agreement") prior to the execution of the Merger Agreement. The Stockholders
Agreement will be drafted by Simpson Thacher & Bartlett.
4. Management and Employee Arrangements. Each of the parties hereto
------------------------------------
agrees to negotiate in good faith and, to the extent a party thereto, use all
reasonable efforts to enter into, mutually agreeable definitive agreements (the
"Management and Employee Agreements") prior to the execution of the Merger
Agreement that set forth the employment terms of, and the receipt of equity-
based and other compensation by, certain of the Other Investors and other
employees of the Company subsequent to the consummation of the Proposed
Transaction. Such definitive agreements will be drafted by Simpson Thacher &
Bartlett.
5. Representation and Warranty. Each of the parties hereto represents
---------------------------
and warrants to each of the other parties hereto that the total number of shares
of Common Stock beneficially owned by such first party and its affiliates as of
the date hereof is accurately set forth on Schedule I to this letter.
6. Exclusivity; Voting. (a) During the Exclusivity Period (as defined
-------------------
below), each of the parties hereto other than BLUM (in their individual
capacities as stockholders of the Company and not in their capacities as
officers or directors of the Company, if applicable) will (i) not, directly or
indirectly, make, participate in or agree to, or initiate, solicit, encourage or
knowingly facilitate any inquiries or the making of, any proposal or offer with
respect to, or a transaction to effect, a merger, reorganization, share
exchange, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
subsidiaries, or any purchase or sale of 20% or more of the consolidated assets
(including without limitation stock of its subsidiaries) of the Company and its
subsidiaries, taken as a whole, or any purchase or sale of, or tender or
exchange offer for, the equity securities of the Company that, if consummated,
would result in any person or entity beneficially owning securities representing
20% or more of the total voting power of the Company (or of the surviving parent
entity in such transaction) or any of its subsidiaries (any such proposal, offer
or transaction (other than the transactions contemplated by this letter) being
hereinafter referred to as a "Competing Acquisition Proposal"), (ii) vote or
consent (or cause to be voted or consented), in person or by proxy, any shares
of Common Stock beneficially owned or held by record such party hereto or to
which such party has, directly or indirectly, the right to vote or direct the
voting (the "Subject Shares") against any Competing Acquisition Proposal at any
meeting (whether annual or special and whether or not an adjourned or postponed
meeting) of stockholders of the Company, (iii) not, directly or indirectly,
sell, transfer or otherwise dispose of any shares of Common Stock beneficially
owned by such party and (iv) not enter into any agreement, commitment or
arrangement that is inconsistent with any of the foregoing. Notwithstanding
anything to the contrary stated herein, each of the parties hereto other than
BLUM may undertake any of the acts otherwise not permitted by this Section 6(a)
to the extent such act is part of the Proposed Transaction.
(b) During the Exclusivity Period, each of the parties hereto agrees
to vote or consent (or cause to be voted or consented), in person or by proxy,
any Subject Shares in favor of the Proposed Transaction and the approval and
adoption of the Merger Agreement and any related transactions at any meeting
(whether annual or special and whether or not an adjourned or postponed meeting)
of stockholders of the Company.
<PAGE>
(c) For purposes of this letter, the "Exclusivity Period" shall be
defined as the period beginning upon execution of this letter and ending upon
the earliest to occur of the following events: (i) 6 months after the date
hereof, (ii) if Credit Suisse First Boston ("CSFB") notifies BLUM that CSFB will
be unable to arrange or provide the debt financing necessary to consummate the
Proposed Transaction at the expected closing date, (iii) the date that the Board
enters into a binding agreement to effect a Competing Acquisition Proposal, (iv)
30 days after the date the Board rejects the Proposed Transaction in writing and
(v) Newco's proposal to enter into the Proposed Transaction is terminated;
provided, however that, in the case of clause (iv), if the process implemented
-------- -------
by the Board to consider the Proposed Transaction and/or a Competing Acquisition
Proposal is continuing and BLUM in good faith is continuing to pursue the
Transaction in a manner consistent with such process, then the duration of the
period set forth in such clause shall continue for so long as such process and
BLUM's good faith pursuit continue.
(d) Notwithstanding anything to the contrary in this Section 6,
Section 6(a) and (b) of this letter shall terminate and be of no further force
and effect in the event that any of the following shall occur: (i) BLUM or BLUM
Capital Partners, L.P. ("BLUM Capital") sells, transfers or otherwise disposes
of, or agrees to sell, transfer or otherwise dispose of, any shares of Common
Stock beneficially owned by BLUM or BLUM Capital other than in connection with
the Proposed Transaction, or (ii) BLUM or BLUM Capital votes or agrees to vote
in favor of, or sells or agrees to sell any shares of Common Stock beneficially
owned by BLUM or BLUM Capital pursuant to, a Competing Acquisition Proposal.
BLUM agrees to provide reasonable prior notice to each of the other parties
hereto of any intention by BLUM or BLUM Capital to undertake any of the acts set
forth in this Section 6(d).
(e) During the Exclusivity Period, without the prior consent of FS,
BLUM will not make a Competing Acquisition Proposal other than the Proposed
Transaction; provided, however that for purposes of this clause (e), the
-------- -------
"Exclusivity Period" shall be determined without regard to clause (c)(v) of this
paragraph 6.
(f) The obligations of the parties hereto under paragraphs 2, 3 and 4
will terminate immediately upon expiration of the Exclusivity Period.
7. Fees and Expenses. (a) Except to the extent otherwise set forth in
-----------------
the Merger Agreement, all costs incurred by any party hereto in preparing this
letter and the annexes hereto and in pursuing and negotiating the transactions
contemplated hereby (including all attorneys' fees and costs relating thereto)
("Transaction Expenses") will be paid by the party incurring such Transaction
Expenses; provided, that the parties hereto agree that if a Merger Agreement is
--------
executed it shall provide for the reimbursement of all such Transaction Expenses
by the Company at the time of the consummation of the Proposed Transaction.
(b) Any break-up fee or similar payment made to Newco in connection
with the Proposed Transaction that is not required to be paid to the debt
financing sources for the Proposed Transaction shall be distributed to BLUM and,
if and to the extent as may be agreed pursuant to paragraph 4 above, to Raymond
E. Wirta and W. Brett White.
(c) In the event that the Proposed Transaction is consummated, the
parties hereto agree that RCBA GP, L.L.C. and FS Holdings, Inc. shall be
entitled to receive from the
<PAGE>
Company at closing a transaction fee of $3 million and $2 million, respectively.
8. Confidentiality. Except as otherwise required by law or paragraph
---------------
1 above or as may be required to be disclosed by any party in any Schedule 13D
filing, the terms of the Proposed Transaction and this letter will be kept
strictly confidential by the parties hereto regarding persons other than their
attorneys and accountants (under duties of confidentiality) unless each of the
other parties hereto releases or consents to the release of any such
information.
9. Governing Law; Jurisdiction. This letter agreement shall be
---------------------------
governed by and interpreted and enforced in accordance with the laws of the
State of New York as applied to contracts made and fully performed in such
state. Each of the parties hereto hereby submits to the exclusive jurisdiction
of any state or federal court sitting in the Borough of Manhattan in the City of
New York. The parties hereto waive all right to trial by jury in any action,
suit or proceeding brought to enforce or defend any rights or remedies under
this Agreement.
10. Legal Effect. The consummation of the transactions contemplated
------------
by Sections 2, 3 and 4 of this letter are conditioned upon the negotiation and
execution of the Merger Agreement and of definitive Investment Documentation, a
definitive Stockholders Agreement and definitive Management and Employee
Agreements, respectively, that are consistent with the terms of Sections 1, 2, 3
and 4 of this letter (and any Annexes referred to therein) and such other terms
as the parties thereto may agree among themselves.
[Remainder of Page Intentionally Left Blank]
<PAGE>
If this letter agreement correctly sets forth our agreements with
respect to the matters described herein, please so indicate by signing this
letter in the space provided below for that purpose.
Very truly yours,
RCBA STRATEGIC PARTNERS, L.P.
By: RCBA GP, L.L.C., its general partner
By: _____________________________
Name:
Title:
ACCEPTED AND AGREED TO AS OF
THE DATE FIRST SET FORTH ABOVE:
FS EQUITY PARTNERS III, L.P.
By: FS Capital Partners, L.P., its general
Partner
By: FS Holdings, Inc., its general
partner
By: ________________________
Name:
Title:
FS EQUITY PARTNERS INTERNATIONAL, L.P.
By: FS&Co. International, L.P., its general
Partner
By: FS International Holdings Limited,
its general partner
By: ________________________
Name:
Title:
<PAGE>
OTHER INVESTORS:
______________________________
Raymond E. Wirta
______________________________
W. Brett White
______________________________
Frederic V. Malek
THE KOLL HOLDING COMPANY
______________________________
By: Donald M. Koll
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Total Shares of Total Shares of
Outstanding Common Stock Owned Common Stock Beneficially Owned /1/
------------------------------ -------------------------------
<S> <C> <C>
BLUM and its affiliates 3,423,886 3,439,091
FS and its affiliates 3,402,463 3,402,463
Raymond E. Wirta 35,000 647,526 /2/
W. Brett White 58,600 125,200
Frederic V. Malek 397,874 409,984
Donald M. Koll 734,290 555,360 /2/
</TABLE>
-----------------------------------
/1/ Except as set forth in footnote 2, as determined in accordance with Rule
13d-3 promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended.
/2/ The shares listed as beneficially owned by Raymond E. Wirta include
currently exercisable options (the "Wirta-Koll Options") granted by The Koll
Holding Company (which is the wholly-owned subsidiary of The Koll Company, which
is wholly-owned by the Don Koll Separate Property Trust, a trust for which
Donald M. Koll is trustee) to Mr. Wirta with respect to 521,590 shares of Common
Stock held by The Koll Holding Company and warrants to acquire 55,936 shares of
Common Stock, which warrants are also held by The Koll Holding Company. The
shares listed as beneficially owned by Donald M. Koll do not include the Wirta-
Koll Options.
<PAGE>
ANNEX A
[Insert Proposal Letter]
<PAGE>
ANNEX B
Stockholders Agreement
Outline of Material Terms
-------------------------
All capitalized terms not otherwise defined herein shall have the meanings
given such terms in the letter agreement dated as of November 10, 2000 to which
this term sheet is attached.
Restrictions on Transfer Except as described under "Co-Sale/Tag Along
Right" and "Right of First Offer" below, no
holder (each a "Stockholder") of Common Stock
may transfer such Common Stock except (a) in
the case each of FS, Frederic V. Malek and The
Koll Holding Company, to its or his affiliates
or, commencing on or after April 12, 2003, pro
rata to its partners, provided that each such
transferee agrees to be bound by the terms of
the Stockholders Agreement, (b) in the case of
each of Raymond E. Wirta and W. Brett White, to
the members of such Stockholder's immediate
family or a trust for the benefit of such
Stockholder's immediately family members,
provided that such transferee agree to be bound
by the terms of the Stockholders Agreement, or
(c) as provided by, and in compliance with, the
other sections hereof.
The restrictions on transfer set forth in the
prior paragraph shall terminate upon the
earlier of (x) ten years after the closing, and
(y) the first date on which Common Stock has
been sold in an underwritten public offering
registered under the Securities Act of 1933
(the "Initial Public Offering"). Each
Stockholder (including BLUM) will agree to a
180 day lock-up period on transfers in
connection with an Initial Public Offering.
In addition, no Common Stock may be transferred
prior to its registration under applicable
securities laws unless the transferring
Stockholder (x) delivers to the Company an
opinion of counsel reasonably satisfactory to
the Company indicating that the proposed
transfer is exempt from applicable securities
laws and (y) causes the transferee(s) to
execute and deliver to the Company a
counterpart to the Stockholders Agreement.
Co-Sale/Tag Along Right BLUM may transfer its Common Stock in its sole
discretion; however, prior to the Initial
Public Offering, each Stockholder may elect to
participate pro-rata in any such transfer
(other than transfers to affiliates of BLUM who
agrees in writing to be bound by the
Stockholders Agreement).
<PAGE>
Right of First Offer Beginning on the third anniversary of the
closing of the Merger Agreement, each of FS,
Frederick V. Malek and The Koll Holding Company
may transfer the shares of Common Stock it or
he beneficially owns to any unaffiliated entity
if prior to such transfer (i) such Stockholder
has offered to transfer such shares to BLUM
pursuant to a written notice of offer (which
notice shall include the per share offer price
and any other material terms of the offer),
(ii) BLUM has refused to purchase such shares
on the terms of such offer notice and (iii)
such shares are transferred to the proposed
transferee within 120 days of BLUM's refusal on
terms no more favorable to the proposed
transferee than those identified to BLUM in the
offer notice, provided that such transferee (A)
is acceptable to BLUM (such acceptance to not
be unreasonably withheld; it is understood that
if the proposed transfer is to a nationally-
recognized private equity sponsor or
institutional equity fund such consent will not
be withheld unless BLUM's decision to withhold
consent results from BLUM's direct experience
with such proposed transferee in connection
with another actual or proposed transaction),
and (B) agrees to be bound by the terms of the
Stockholders Agreement.
Preemptive Right Prior to the Initial Public Offering, if the
Company issues any shares of capital stock of
the Company or any options, warrants,
convertible securities or other right to
acquire such capital stock, the other
Stockholders will be entitled to purchase a pro
rata portion of such securities upon the same
terms in order to maintain their percentage
ownership of the capital stock of the Company,
provided that such preemptive right will be
subject to customary exceptions, including,
without limitation, issuances (i) to Company
employees, outside directors and consultants
and (ii) to customers, venders, lenders and
other non-equity financing sources, lessors of
equipment and other providers of goods or
services to the Company.
Sale of the Company If BLUM sells to a third party a majority of
the Common Stock beneficially owned by BLUM,
BLUM will have the right to require that all
other Stockholders sell a pro rata portion of
their shares of Common Stock on the same terms
as BLUM.
Initial Public Offering Each Stockholder will vote for, consent to,
raise no objections against and participate in
any reorganization of the Company effectuated
to facilitate an Initial Public Offering,
provided that such reorganization may not have
a disproportionate impact upon any of the
Stockholders.
<PAGE>
Registration Rights Subsequent to an Initial Public Offering, each
Stockholder (including BLUM) will be entitled
to one demand registration right for each 7.5%
of the Common Stock owned by such Stockholder
at the closing of the merger (rounded down to
the nearest whole number of demands). Such
demand rights may be exercised beginning 180
days after an Initial Public Offering and will
be subject to customary restrictions and
limitations.
Subsequent to an Initial Public Offering,
whenever the Company proposes to register any
of its securities under the Securities Act of
1933 and the form to be used may be used for
the registration of a Stockholder's Common
Stock, such Stockholder may elect to
participate in the registration, subject to
customary priorities, cutbacks and other terms
and conditions.
All of the reasonable costs and expenses of
registering such Common Stock pursuant to the
foregoing paragraphs (other than any
underwriters discounts and commissions) will be
paid by the Company.
Voting In addition to the voting requirements
otherwise set forth in this term sheet, each
Stockholder other than BLUM shall vote all
shares beneficially owned by such Stockholder
in the manner directed by BLUM, except with
respect to the following matters:
. any transaction with BLUM and its
affiliates, other than a transaction with
another portfolio company of BLUM that has
been negotiated on arms-length terms in
the ordinary course of business between
the managements of the Company and such
other portfolio company
. any amendment to the certificate of
incorporation or bylaws of the Company
that adversely affects any Stockholder,
other than an increase in the authorized
capital stock of the Company.
<PAGE>
Board Representation Each Stockholder agrees to vote all shares
beneficially owned by such Stockholder at any
meeting of the stockholders of the Company (or
to consent in any written consent in lieu
thereof) in favor of the election of the
following directors of the Company:
. 3 directors designated by BLUM
. Raymond E. Wirta and W. Brett White (each
for so long as remaining an employee of
the Company)
. 1 director designated by FS
The Stockholders further agree, upon the
request of BLUM at any time, to vote all shares
beneficially owned by such Stockholder at any
meeting of the stockholders of the Company (or
to consent in any written consent in lieu
thereof) in favor of the election of 1
additional director designed by BLUM.
FS shall have the additional right to designate
up to two non-voting observers to the Board.
Advisory Assistance Frederic V. Malek and Donald M. Koll each will
continue to assist the Company in an advisory
capacity for so long as he beneficially owns
Common Stock.
General Consent Rights Prior to an Initial Public Offering, without
the approval of a majority of the directors
that are not appointed by BLUM, the Company
will not do any of the following:
. enter into any transaction with BLUM and
its affiliates, other than a transaction
with another portfolio company of BLUM
that has been negotiated on arms-length
terms in the ordinary course of business
between the managements of the Company and
such other portfolio company
. amend its certificate of incorporation or
bylaws in a manner that adversely affects
any Stockholder, other than an increase in
the authorized capital stock of the
Company
. repurchase or redeem, or declare or pay a
dividend with respect to or make a
distribution upon, any shares of capital
stock of the Company beneficially owned by
BLUM unless (x) all other holders of such
class of capital stock of the Company are
given the same right and (y) if such
capital stock is not Common Stock, such
repurchase, redemption or dividend is
required by the terms of such capital
stock
<PAGE>
FS Consent Rights Prior to an Initial Public Offering, without
the approval of the director designated by FS,
the Company will not do any of the following:
. acquire by purchase or otherwise any
business or assets for a purchase price in
excess of $75 million
. sell or dispose of assets which have an
aggregate fair market value in excess of
$75 million
. incur indebtedness, unless such
indebtedness would (i) be permitted
pursuant to the terms of the debt
financing entered into in connection with
the Proposed Transaction or (ii) not cause
the Company to exceed a 4.5:1 ratio of
total outstanding indebtedness to
normalized EBITDA for the trailing 12-
month period
. issue to Company employees, outside
directors or consultants capital stock, or
options, warrants or other securities to
acquire capital stock if such other
issuances, in the aggregate, on a fully
diluted basis, exceed 5% of the total
amount of outstanding capital stock of the
Company immediately after the closing of
the Merger Agreement, other than (i)
issuances pursuant to the Management and
Employee Agreements or (ii) issuances in
amounts equal to the capital stock
repurchased from, or the options, warrants
or other securities to acquire capital
stock cancelled with respect to Company
employees, outside directors or
consultants
Information Rights/ Prior to an Initial Public Offering, any group
Inspection Rights of affiliated Stockholders beneficially owning
greater than 10% of the Common Stock will be
entitled to (i) receive the annual, quarterly
and monthly financial statements of the Company
that are prepared for the Board of Directors of
the Company, (ii) exercise customary inspection
rights with respect to the books, records and
employees of the Company.
Indemnification The Company would agree to indemnify each
Stockholder in its or his capacity as such,
and, with respect to BLUM, FS and The Koll
Holding Company, its officers, directors,
members, partners and affiliates, against all
third party claims arising from the operation
of the Company or the ownership of Common
Stock, unless such loss resulted from such
party's (or such party's representative's)
committing fraud, gross negligence, or willful
misconduct.
<PAGE>
Exhibit 2
BLUM CB Corp.
c/o BLUM Capital Partners, L.P.
909 Montgomery Street, Suite 400
San Francisco, California 94133
(415) 434-1111
November 10, 2000
Board of Directors
CB Richard Ellis Services, Inc.
200 North Sepulveda Boulevard
El Segundo, California 90245-4380
Attention: James J. Didion
Chairman of the Board of Directors
Dear Sirs:
BLUM CB Corp., a Delaware corporation ("Newco"), is very pleased to present
its all-cash proposal ("Proposal") to purchase all of the common stock of CB
Richard Ellis Services, Inc. (the "Company") not owned by the Offering Group
identified below at a price of $15.50 per share (the "Transaction"). The
purchase price we are offering your stockholders represents a premium of 29.4%
to the average closing price of the Company's common stock on the New York Stock
Exchange for the three-month period ended on November 9, 2000. Newco has been
formed by RCBA Strategic Partners, L.P. ("BLUM"), an affiliate of BLUM Capital
Partners, L.P., for the purpose of effecting the Proposal. The Offering Group
includes (i) BLUM and other entities affiliated with BLUM, (ii) Freeman Spogli &
Co. Incorporated through its affiliates FS Equity Partners III, L.P., a Delaware
limited partnership, and FS Equity Partners International, L.P., a Delaware
limited partnership (collectively, "Freeman Spogli"), and (iii) certain
directors and senior management of the Company, including Mr. Ray Wirta. The
Offering Group presently owns or controls approximately 38% of the outstanding
common stock of the Company.
We believe that the Proposal constitutes an excellent opportunity for the
stockholders of the Company to realize full value for their shares to an extent
not available to them in the marketplace, and that they will find this value
compelling. In addition, we believe the financing needed to complete the
Transaction can be obtained in a timely manner and the conditions to the
Transaction will be limited. As a result, we believe we have the ability to
complete the Transaction quickly and provide near-term liquidity for your
stockholders.
<PAGE>
The terms of the Proposal are summarized below:
Purchase Price
--------------
Our cash purchase price of $15.50 per share for the Company's common stock
places a total value on the Company's common stock of approximately $340 million
(including for each option to acquire the Company's common stock the difference
between the purchase price and the exercise price). The Proposal represents a
substantial premium to the Company's current stock price and prior averages. The
offer represents a 24.0% premium to the Company's closing stock price of $12.50
on November 9, 2000; a 29.4% premium to the Company's three-month average of
$11.98 per share for the period ending November 9, 2000; and a 37.1% premium to
the Company's six-month average of $11.31 per share for the period ending
November 9, 2000. In addition, the Company's "public float" is extraordinarily
limited with an average of 17,114 shares trading each market day during the 3-
month period ending November 9, 2000. In other words, we believe the Proposal
gives the Company's public stockholders an opportunity to obtain liquidity at a
full and fair valuation.
Equity Financing
-----------------
It is contemplated that the 8,052,113 outstanding shares of the Company
common stock currently owned by the Offering Group effectively will be converted
into shares of common stock of the Company after the closing of the Transaction.
In addition, BLUM will provide approximately an additional $47.6 million of
equity to the Company, as well as up to approximately an additional $52.6
million to the extent that the employees of the Company do not subscribe for all
of the common stock that we anticipate making available to them for purchase at
the closing of the Transaction.
BLUM Capital Partners, L.P., which together with its affiliates currently
beneficially owns approximately 16.1% of the Company's outstanding common stock,
is a leading private equity/strategic block investment firm with approximately
$3.8 billion of equity capital under management, including through its
affiliates. BLUM Capital was founded over 25 years ago and, together with its
affiliates, has invested in a wide variety of businesses in partnership with
management teams to create long-term value.
The proposal contained in this letter has received all necessary internal
approvals from BLUM and no other internal approvals are required. A description
of the terms relating to the Equity Financing is contained within the letter
agreement (and related term sheet) attached hereto as Exhibit A.
Debt Financing
--------------
We have had discussions with Credit Suisse First Boston ("CSFB") regarding
debt financing totaling $600 million dollars to support the Transaction. This
debt would be comprised of funded senior term loans of up to $275 million and
$225 million of subordinated indebtedness. In addition, a revolving credit
facility of $100 million would be provided for ongoing working capital purposes
post-closing. The contemplated debt structure is structured to
<PAGE>
allow for the consummation of the Proposal and provide ample capital for the
Company' future growth and working capital needs.
As is customary for transactions of this nature, consummation of the
Transaction is subject to receipt of the required debt financing. We intend to
execute commitment letters for all of the required debt financing at the time a
definitive merger agreement is executed. We anticipate that definitive
documentation for the debt financing would be finalized in the period prior to
the vote of the Company's stockholders with respect to the Transaction.
CSFB is prepared to devote the necessary resources to close the transaction
expeditiously. Should you wish to discuss any aspect of the proposed financing
with CSFB, we would be happy to arrange an opportunity for you to meet with
appropriate representatives.
Structure
---------
We currently contemplate that the Transaction will be consummated in two
steps. In the first step, each of the members of the Offering Group will
contribute all of the shares of common stock of the Company beneficially owned
by such member to Newco in exchange for newly-issued shares of Newco.
Immediately following completion of the first step of the Transaction, Newco
will be merged into the Company. Pursuant to the merger, all shares of the
Company's common stock (other than the shares held by Newco) will be converted
into the right to receive the Purchase Price, all shares of common stock of the
Company held by Newco will be cancelled and all shares of common stock of Newco
will be converted into shares of the common stock of the Company. At the
conclusion of the Transaction, assuming the Company's employees agree to
purchase the full amount of the common stock that we make available to them, the
outstanding equity ownership of the Company would approximately be as follows:
BLUM and affiliates, 45%; management and employees of the Company, 25%; Freeman
Spogli, 23% and other investors, 7%. We and our representatives are prepared to
discuss our proposed acquisition structure with you in detail at your request.
Treatment of Existing Indebtedness
----------------------------------
At the closing of the Transaction, the Company's existing bank credit
facility would be refinanced with the proceeds of the debt financing. In
addition, prior to the closing we would tender for all of the outstanding 8-7/8%
Senior Subordinated Notes of the Company. We would also seek consents from the
holders of the 8-7/8% Senior Subordinated Notes to the deletion of substantially
all of the negative covenants contained within the indenture relating to such
notes.
<PAGE>
Employees
---------
We are keenly aware of the importance of the Company's employees, in
particular, sales professionals, and we believe the Transaction will benefit the
employees of the Company. Our capital structure is designed to enable the
Company to grow and thereby enhance the opportunities available to its
employees. In addition, the employees will be given the opportunity to own a
significant amount of equity in the Company going forward. At the closing of the
Transaction, we anticipate taking the following actions with respect to certain
of the compensation and benefit programs available to the Company's employees:
. Deferred Compensation Plan. We will leave the Company Match, Retention and
--------------------------
Recruitment Programs under the Deferred Compensation Plan in place at
closing and allow each participant in the Deferred Compensation Plan who
has invested his or her own funds in the stock fund alternatives under the
DCP to (i) convert the value of that investment (based upon the purchase
price paid to the Company's stockholders in the Transaction) into any of
the insurance mutual fund alternatives now provided under the Deferred
Compensation Plan, (ii) receive a cash payment equal to the value of that
investment (based upon the purchase price paid to the Company's
stockholders in the Transaction), which payment may at the option of such
participant be used to purchase shares of the common stock of the Company
that the Offering Group intends to make available after the closing of the
Transaction (which shares are included in the approximate aggregate 12%
made available to employees as discussed below), or (iii) continue that
investment after the closing of the Transaction as part of the approximate
aggregate 12% to be made available to employees. After the closing of the
Transaction, deferrals under the DCP will only be invested in the insurance
mutual fund alternatives under the DCP.
. Capital Appreciation Plan (401(k)). For legal reasons, it is impractical
----------------------------------
for the Company's 401(k) plan to hold stock of a private company. However,
we will purchase all of the stock held in that plan at the price paid to
the Company's stockholders in the Transaction and permit participants to
invest the proceeds in any of the other funds available under the 401(k)
plan.
. Stock Options and Equity Incentive Plan Awards. Each outstanding employee
----------------------------------------------
option and equity incentive plan award will be purchased for a cash amount
equal to the difference between the price paid to the Company's
stockholders in the Transaction and such option's exercise price or such
award's purchase price, which amount may be used to purchase part of the
approximate aggregate 12% to be made available to employees.
. Stock Ownership in the New Private Company. We will make available up to
------------------------------------------
approximately 12% of the outstanding common stock of the Company for
purchase by employees at a purchase price equal to the price paid to the
Company's stockholders in the Transaction.
We also intend to maintain the Company's training and performance
recognition programs for its sales professionals going forward, including CBRE
University, the annual recognition event and the Las Vegas World Conference.
<PAGE>
In addition, we intend to enter into agreements with certain members of
senior management of the Company allowing them to purchase, and to receive
options to purchase, common stock of the Company. We also anticipate entering
into employment agreements with certain members of senior management of the
Company.
Legal Documentation/Conditions
------------------------------
The Proposal is subject to the following conditions: (1) approval by the
board of directors of the Company and stockholders pursuant to the requirements
of the Delaware General Corporate Law and the rules of the New York Stock
Exchange, (ii) receipt of any material governmental and third party approvals
(including expiration of all applicable waiting periods under Hart-Scott-
Rodino), (iii) receipt of consents from the holders of a majority of the
outstanding 8-7/8% Senior Subordinated Notes as described above, (iv) receipt of
the necessary debt financing as described above and (v) the negotiation and
execution of definitive agreements providing for the merger and the transactions
outlined in Exhibit A to this letter, including a mutually satisfactory
definitive merger agreement which would contain customary covenants,
representations, warranties, conditions and other provisions. While we have
devoted a great deal of time and effort to studying the Company and have
completed substantially all of our business and financial due diligence, our
Proposal is also subject to completion of confirmatory legal due diligence to be
conducted by BLUM and its legal advisors. Given the familiarity of BLUM with the
Company, this diligence would be completed expeditiously and should not delay
consummation of a definitive merger agreement.
Our Proposal is based on our understanding that the Company's
capitalization consists of: (i) 21,213,928 common shares issued and outstanding,
(ii) 1,345,587 "phantom shares" outstanding under the Company's Deferred
Compensation Plan, (iii) 902,918 options to purchase common stock outstanding
that have exercise prices at or below $15.50 per share with an unweighted
average exercise price of $5.81 and (iv) 2,439,299 additional options and
warrants outstanding with exercise prices in excess of $15.50 per share.
We are prepared to negotiate a definitive merger agreement immediately and
would be delighted to provide a draft of such agreement at your request. If the
Company determines to promptly accept our Proposal, the Transaction could be
completed as early as February 2001.
<PAGE>
* * *
We believe the Board of Directors should feel confident that this Proposal
represents a fair and attractive price for the Company. The Proposal provides
liquidity at a significant premium for the current stockholders. We have no
intention of attempting to acquire the Company other than in a transaction
approved by the Board of Directors. Unless earlier accepted, the Proposal will
terminate at 5:00 PM (PST) on December 1, 2000.
We are prepared to discuss this offer with you immediately. In responding to
us or in seeking further information concerning our Proposal, or for any other
matter, please call Claus Moller, Managing Partner, BLUM Capital Partners, L.P.
at 415-288-7262 or 212-521-4192.
Sincerely yours,
BLUM CB CORP.
By: _____________________
Name: Claus J. Moller
Title: President
<PAGE>
EXHIBIT A
