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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D) (4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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CORT BUSINESS SERVICES CORPORATION
(Name of subject company)
CORT BUSINESS SERVICES CORPORATION
(Name of person(s) filing statement)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of classes of securities)
COMMON STOCK--220493-10-0
(CUSIP number of classes of securities)
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PAUL N. ARNOLD
President and Chief Executive Officer
CORT Business Services Corporation
11250 Waples Mill Road
Suite 500
Fairfax, Virginia 22030
(703) 968-8524
(Name, address and telephone number of person authorized to receive notice and
communications on behalf of the person(s) filing)
With a copy to:
G. DANIEL O'DONNELL, ESQ.
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, Pennsylvania 19103
(215) 994-4000
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ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is CORT Business Services Corporation, a
Delaware corporation ("CORT" or the "Company"). The address of the principal
executive offices of the Company is CORT Business Services Corporation, 11250
Waples Mill Road, Suite 500, Fairfax, Virginia 22030. The titles of the
classes of equity securities to which this Statement relates are the Common
Stock, par value $0.01 per share, of the Company ("Voting Stock" or "Voting
Shares") and the Class B Common Stock, par value $0.01 per share, of the
Company (the "Class B Common Stock" or "Class B Shares" and, together with the
Voting Stock, the "Shares" or the "Securities").
ITEM 2. TENDER OFFER OF THE BIDDER
This Statement relates to the tender offer by Wesco Financial Corporation, a
Delaware corporation ("Ultimate Parent"), Wesco Holdings Midwest, Inc., a
Nebraska corporation and a wholly owned subsidiary of Ultimate Parent
("Parent"), and C Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Parent ("Purchaser"), disclosed in a Tender Offer Statement on
Schedule 14D-1 filed with the Securities and Exchange Commission on January
21, 2000 (as the same may be amended from time to time, the "Schedule l4D-l"),
to purchase for cash all of the outstanding Shares at a price of $28.00 per
Share, net to the seller in cash (subject to applicable withholding of taxes)
upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated January 21, 2000 (the "Offer to Purchase"), and the related
Letters of Transmittal (which, together with any amendments and supplements
thereto, collectively constitute the "Offer") included in the Schedule 14D-l.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of January 14, 2000, among Ultimate Parent, Parent, Purchaser and the
Company (the "Merger Agreement"). The Offer is subject to the conditions set
forth in the Merger Agreement, including the condition that the number of
Securities validly tendered and not withdrawn prior to the expiration date of
the Offer shall not be less than a majority of the Shares then outstanding on
a fully diluted basis on the date of purchase, when aggregated with any Shares
owned by Parent, the Purchaser or an affiliate of Parent or the Purchaser (the
"Minimum Condition").
Pursuant to the Merger Agreement, following the consummation of the Offer
and subject to the satisfaction or waiver of certain conditions, Purchaser
will merge with and into the Company (the "Merger") and the Company will
continue as the surviving corporation and a wholly owned subsidiary of Parent.
The company surviving the Merger is referred to as the "Surviving
Corporation." Upon effectiveness of the Merger, each issued and outstanding
Share (other than Shares purchased in the Offer or otherwise owned by Parent,
the Purchaser or any other wholly owned subsidiary of Parent or by the Company
or any of its subsidiaries and dissenting Shares) will be converted into the
right to receive $28.00 per Share in cash or such higher price per share as
may be paid in the Offer (the "Merger Consideration") upon surrender of the
certificate formerly representing such Share. The terms of the Merger
Agreement, a copy of which is filed as an Exhibit hereto and is incorporated
herein by reference, are summarized below under Item 3(b) of this Schedule
14D-9.
Parent and Purchaser have also entered into a Stockholder Agreement, dated
as of January 14, 2000 (the "Stockholder Agreement"), with Citicorp Venture
Capital Ltd. ("CVC") which beneficially owns approximately 5,778,518 of the
outstanding Shares (such Shares, together with any other Shares acquired by
CVC, the "CVC Shares"), or approximately 44% of the outstanding Shares,
pursuant to which CVC has agreed (i) to tender the CVC Shares into the Offer,
(ii) to grant to Parent an option to purchase all of the CVC Shares, in each
case upon the terms and subject to the conditions set forth therein, (iii) to
the extent it becomes entitled to vote the CVC Shares, at any meeting of the
stockholders of the Company (individually, a "Stockholder" and collectively,
the "Stockholders") however called, to vote the CVC Shares in favor of the
Merger and the Merger Agreement, against any Takeover Proposal (as hereinafter
defined) and against any proposal for action or agreement that would result in
a breach of any covenant or agreement of the Company under the Merger
Agreement or which is reasonably likely to result in any of the Company's
obligations under the Merger Agreement not being fulfilled, any change in the
directors of the Company (except as contemplated by the Merger Agreement), any
change in the Company's capitalization, corporate structure or business or any
other action which could reasonably be
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expected to interfere with, delay or materially adversely affect the
likelihood that the transactions contemplated by the Merger Agreement will be
consummated, and (iv) subject to the prior rights granted under the Trust
Agreement (as defined below), to grant to Parent and Purchaser, or any of
their nominees, an irrevocable proxy to demand that the Company call a special
meeting to consider the Merger and the Merger Agreement and to vote the CVC
Shares at any meeting of the Stockholders, however called, for such purpose.
The terms of the Stockholder Agreement, a copy of which is filed as an Exhibit
hereto and is incorporated herein by reference, are summarized below under
Item 3(b) of this Schedule l4D-9.
Parent and Purchaser have also entered into a Voting Agreement, dated as of
January 14, 2000 (the "Voting Agreement"), with Robert N. Pokelwaldt
("Trustee"), pursuant to which Trustee, as trustee under that certain Amended
and Restated Voting Trust Agreement (the "Trust Agreement") dated as of
November 15, 1999, by and among CVC, Trustee and certain former trustees of
such trust, has agreed, (i) at any meeting of the Stockholders however called,
to vote the CVC Shares in favor of the Merger and the Merger Agreement,
against any Takeover Proposal (as hereinafter defined) and against any
proposal for action or agreement that would result in a breach of any covenant
or agreement of the Company under the Merger Agreement or which is reasonably
likely to result in any of the Company's obligations under the Merger
Agreement not being fulfilled, any change in the directors of the Company
(except as contemplated by the Merger Agreement), any change in the Company's
capitalization, corporate structure or business or any other action which
could reasonably be expected to interfere with, delay or materially adversely
affect the likelihood that the transactions contemplated by the Merger
Agreement will be consummated and (ii) to grant to Parent and Purchaser, or
any of their nominees, an irrevocable proxy to demand that the Company call a
special meeting to consider the Merger and the Merger Agreement and to vote
the CVC Shares at any meeting of the Stockholders, however called, for such
purpose. The terms of the Voting Agreement, a copy of which is filed as an
Exhibit hereto and is incorporated herein by reference, are summarized below
under Item 3(b) of this Schedule 14D-9.
All information contained in this Schedule 14D-9 or incorporated herein by
reference concerning Ultimate Parent, Parent, Purchaser or their affiliates,
or actions or events with respect to any of them, was provided by Parent, and
the Company takes no responsibility for the accuracy or completeness of such
information or for any failure by such entities to disclose events or
circumstances that may have occurred and may affect the significance,
completeness or accuracy of any such information.
According to the Schedule 14D-1, the address of the principal executive
offices of the Ultimate Parent is Wesco Financial Corporation, 301 East
Colorado Boulevard, Suite 300, Pasadena, California 91101, of Parent is Wesco
Holdings Midwest, Inc., 1440 Kiewit Plaza, Omaha, Nebraska 68131 and of
Purchaser is C Acquisition Corp., 1440 Kiewit Plaza, Omaha, Nebraska 68131.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and business address of the Company, which is the person filing
this Statement, are set forth in Item 1 above, which information is
incorporated herein by reference.
(b) Except as described herein, in the Company's Information Statement
pursuant to Section 14(f) of the Securities Exchange Act of 1934, as amended
("the Exchange Act") which is attached hereto as Annex A and in the Exhibits
hereto, to the knowledge of the Company, as of the date hereof there are no
material contracts, agreements, arrangements or understandings, or any
potential or actual conflicts of interest between the Company or its
affiliates and (1) the Company, its executive officers, directors or
affiliates or (2) Ultimate Parent, Parent or Purchaser or any of their
respective executive officers, directors or affiliates.
Merger Agreement
The following is a summary of certain provisions of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in its entirety by reference to the Merger
Agreement filed as an exhibit to this Schedule 14D-9 and incorporated herein
by reference. Capitalized terms not otherwise defined below shall have the
meanings set forth in the Merger Agreement.
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The Offer. The Merger Agreement provides for the commencement of the Offer
as promptly as practicable, but in no event later than five business days
after the public announcement of the execution of the Merger Agreement. The
obligation of Purchaser to accept for payment and pay for Shares tendered
pursuant to the Offer is subject to the satisfaction of certain conditions
that are described below under the caption "--Conditions of the Offer."
Purchaser and Parent have agreed that, without the prior written consent of
the Company, no change in the Offer may be made which decreases the price per
Share payable in the Offer, which reduces the maximum number of Shares to be
purchased in the Offer, or which adds to or modifies the conditions to the
Offer set forth below under the caption "--Conditions of the Offer."
Notwithstanding the foregoing, Purchaser is entitled and required to extend
the Offer at any time up to 40 days in the aggregate, in one or more periods
of not more than 10 business days, if at the initial expiration date of the
Offer, or any extension thereof, any condition to the Offer is not satisfied
or waived, provided that Purchaser is not required to so extend the Offer
unless (i) each such condition is reasonably capable of being satisfied and
(ii) the Company is in material compliance with all of its covenants under the
Merger Agreement after Purchaser shall have given the Company 10 days prior
written notice of any noncompliance. In addition, if Purchaser and Parent are
not in material breach of the Merger Agreement, Purchaser may, without the
consent of the Company, extend the Offer for up to an additional 40 days, in
one or more periods of not more than 10 business days, if any condition to the
Offer is not satisfied or waived and such condition is reasonably capable of
being satisfied. If, on the expiration date of the Offer, the Shares validly
tendered and not withdrawn pursuant to the Offer equal at least 75% of the
outstanding Shares but less than 90% of the outstanding Shares on a fully-
diluted basis, Purchaser may, without the consent of the Company, extend the
Offer on one occasion for up to 10 business days notwithstanding that all the
conditions to the Offer have been satisfied so long as (i) Purchaser
irrevocably waives the satisfaction of any of the conditions to the Offer
(other than in the case of the first condition described under the caption "--
Conditions of the Offer," the occurrence of any statute, rule, regulation,
judgment, order or preliminary or permanent injunction making illegal or
prohibiting the consummation of the Offer (a "Prohibition")) that subsequently
may not be satisfied during any such extension of the Offer. In addition, the
Offer Price may be increased and the Offer may be extended to the extent
required by law or the SEC in connection with such increase in each case
without the consent of the Company.
Board Representation. Pursuant to the Merger Agreement, upon the purchase by
Purchaser of Shares pursuant to the Offer, and from time to time thereafter as
Shares are acquired by Purchaser, Parent or their affiliates, Purchaser shall
be entitled to designate such number of directors, rounded up to the next
whole number, on the Board of Directors of the Company (the "Board") as will
give Purchaser, subject to compliance with Section 14(f) of the Exchange Act,
representation on the Board equal to that number of directors which equals the
product of the total number of directors on the Board (giving effect to the
election or appointment of any additional directors pursuant to this paragraph
and including current directors serving as officers of the Company) multiplied
by the percentage that the aggregate number of Shares beneficially owned by
Parent, Purchaser or any of their affiliates (including such Shares as are
accepted for payment pursuant to the Offer, but excluding Shares held by the
Company or any of its subsidiaries) bears to the total number of Shares then
issued and outstanding. The Company has agreed, upon request by Purchaser, to
promptly increase the size of the Board as is necessary to enable Purchaser's
designees to be elected to the Board and to cause Purchaser's designees to be
so elected; provided that, if Purchaser's designees are appointed or elected
to the Board, until the Effective Time, the Board shall have at least two
directors who are directors on the date of the Merger Agreement and who are
neither officers of the Company nor designees, stockholders, affiliates or
associates (within the meaning of the federal securities laws) of Parent (the
"Independent Directors"). The Merger Agreement also provides that, during the
period after such election of directors designated by Purchaser but prior to
the Effective Time, the Board shall delegate to a committee of the Board
comprised solely of the Independent Directors the sole responsibility for (i)
the amendment or termination of the Merger Agreement (in either case in
accordance with the Merger Agreement) on behalf of the Company, but excluding
a termination by the Company because it has entered into a definitive
agreement providing for a Superior Proposal, which is not delegated, (ii) the
waiver of any of the Company's rights or remedies under the Merger Agreement,
(iii) the extension of the time for performance of
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Parent's or Purchaser's obligations under the Merger Agreement, or (iv) the
assertion or enforcement of the Company's rights under the Merger Agreement to
(a) object to a failure to consummate the Merger for a failure of the
condition that the Company perform in all material respects all material
obligations required by it under the Merger Agreement to be satisfied or (b)
object to a termination of the Merger Agreement by the Parent based upon any
alleged inaccuracy in the representations and warranties of the Company in the
Merger Agreement.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions therein, and in accordance with the Delaware General
Corporation Law ("DGCL"), at the Effective Time Purchaser shall be merged with
and into the Company. As a result of the Merger, the separate corporate
existence of Purchaser will cease and the Company will continue as the
Surviving Corporation. Upon consummation of the Merger, each Share issued and
outstanding immediately prior to the Effective Time held by a Stockholder
(other than any Dissenting Shares) shall be canceled and shall be converted
automatically into the right to receive from Surviving Corporation the Merger
Consideration payable, without interest. All Shares that are owned by the
Company as treasury stock, all Shares owned by any subsidiary of the Company
and any Shares owned by Parent, Purchaser or any other wholly owned subsidiary
of Parent will be canceled and retired and will cease to exist and no
consideration will be delivered in exchange therefor.
Pursuant to the Merger Agreement, at the Effective Time each share of common
stock, par value $.01 per share, of Purchaser issued and outstanding
immediately prior to the Effective Time shall be converted into and exchanged
for one validly issued, fully paid and nonassessable share of common stock,
par value $.01 per share, of the Surviving Corporation.
The Merger Agreement provides that the Certificate of Incorporation of the
Company, as in effect immediately prior to the Effective Time, will be amended
as set forth in the Merger Agreement, and the Certificate of Incorporation as
so amended at the Effective Time will be the Certificate of Incorporation of
the Surviving Corporation. The Merger Agreement also provides that the By-laws
of Purchaser, as in effect immediately prior to the Effective Time, will be
the By-laws of the Surviving Corporation.
Directors and Officers of the Surviving Corporation. The Merger Agreement
provides that the directors of Purchaser and the officers of the Company
immediately prior to the Effective Time will, from and after the Effective
Time, be the directors and officers, respectively, of the Surviving
Corporation until their successors have been duly elected or appointed or
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Certificate of Incorporation and By-laws.
Treatment of Options. The Merger Agreement also provides that each holder of
an outstanding option to purchase Shares (an "Option") granted under any
employee stock option plan of the Company, whether or not exercisable, shall
be entitled to receive no later than the Effective Time, an amount in cash in
cancellation of such Option equal to the excess if any of the Merger
Consideration over the exercise price per Share of such Option multiplied by
the number of Shares subject to such Option (net of applicable withholding
taxes), and that as of the Effective Time, all Company stock option plans
shall terminate and all rights under any provision of any other plan, program
or arrangement providing for the issuance or grant of any other interest in
respect of the Company's or any of its subsidiaries' capital stock shall be
canceled.
Stockholders' Meeting. The Merger Agreement provides that the Company will,
if required by applicable law in order to consummate the Merger, (i) duly
call, give notice of, convene and hold a meeting of the Stockholders (the
"Special Meeting") as soon as practicable following the acceptance for payment
and purchase of Shares by Purchaser pursuant to the Offer for the purpose of
considering and taking action upon the Merger Agreement, (ii) prepare and file
with the SEC a preliminary proxy or information statement relating to the
Merger and the Merger Agreement and use its reasonable efforts (x) to obtain
and furnish the information required to be included by the federal securities
laws (and the rules and regulations thereunder) in the Proxy Statement (as
hereinafter defined) and, after consultation with Parent, to respond promptly
to any comments made by the SEC with respect to the preliminary proxy or
information statement and cause a definitive proxy or information statement
(the "Proxy Statement") to be mailed to its Stockholders and (y) to obtain the
necessary approvals of
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the Merger and the Merger Agreement by its Stockholders; and (iii) include in
the Proxy Statement the recommendation of the Board that Stockholders vote in
favor of the approval of the Merger and the adoption of the Merger Agreement,
unless such recommendation has been withdrawn, or as such recommendation has
been modified, in accordance with the Merger Agreement.
Parent has agreed to provide the Company with the information concerning
Parent and Purchaser required to be included in the Proxy Statement and to
vote, or cause to be voted, all of the Shares then owned by it, Purchaser or
any of its other subsidiaries and affiliates in favor of the approval of the
Merger and the approval and adoption of the Merger Agreement.
Merger Without Meeting of Stockholders. In the event that Parent or
Purchaser or any other subsidiary of Parent acquires at least 90% of the
outstanding Shares pursuant to the Offer or otherwise, each of the parties to
the Merger Agreement has agreed to take all necessary and appropriate action
to cause the Merger to become effective as soon as practicable after such
acquisition, without a meeting of Stockholders, in accordance with Section 253
of the DGCL.
Conduct of Business. Pursuant to the Merger Agreement, during the period
from the date of the Merger Agreement to the Effective Time, unless Parent
otherwise agrees in writing, the Company shall, and shall cause its
subsidiaries to, in all material respects, (i) conduct its business in the
usual, regular and ordinary course consistent with past practice and (ii) use
all reasonable efforts to maintain and preserve intact its business
organization and the good will of those having business relationships with it
and retain the services of its present officers and key employees.
The Company has further agreed that during this period, except as expressly
provided in the Merger Agreement, it will not, nor will it permit any of its
subsidiaries to, without the prior written consent of Parent:
(i) (1) issue, sell, grant, dispose of, pledge or otherwise encumber, or
authorize or propose the issuance, sale, disposition or pledge or other
encumbrance of (A) any additional shares of its capital stock or any
securities or rights convertible into, exchangeable for, or evidencing the
right to subscribe for any shares of its capital stock, or any rights,
warrants, option, calls, commitments or any other agreements of any character
to purchase or acquire any shares of its capital stock or any securities or
rights convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of its capital stock or (B) any other securities in
respect of, in lieu of, or in substitution for, any shares of its capital
stock outstanding on the date of the Merger Agreement other than pursuant to
(x) the exercise of stock options or warrants outstanding as of the date of
the Merger Agreement and (y) acquisitions and investments permitted by
paragraph (iv) below; (2) redeem, purchase or otherwise acquire, or propose to
redeem, purchase or otherwise acquire, any of its outstanding shares of
capital stock; or (3) split, combine, subdivide or reclassify any shares of
its capital stock or declare, set aside for payment or pay any dividend, or
make any other actual, constructive or deemed distribution in respect of any
shares of its capital stock or otherwise make any payments to its Stockholders
in their capacity as such;
(ii) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money or guarantee any such
indebtedness or make any loans, advances or capital contributions to, or
investments in, any other person other than the Company or its subsidiaries;
(iii) sell, transfer, mortgage, encumber or otherwise dispose of any of its
properties or assets with a minimum value in excess of $10 million to any
individual, corporation or other entity other than a direct or indirect wholly
owned subsidiary, or cancel, release or assign any indebtedness in excess of
$1 million to any such person or any claims held by any such person, in each
case that is material to the Company and its subsidiaries, taken as a whole,
except (1) in the ordinary course of business consistent with past practice,
(2) pursuant to contracts or agreements in force at the date of the Merger
Agreement or (3) pursuant to plans disclosed in writing prior to the execution
of the Merger Agreement to the other party;
(iv) except for transactions in the ordinary course of business consistent
with past practice, make any material acquisition or investment either by
purchase of stock or securities, merger or consolidation,
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contributions to capital, property transfers, or purchases of any property
or assets of any other individual, corporation or other entity other than a
wholly owned subsidiary thereof;
(v) increase in any manner the compensation of any of its directors,
officers or employees or enter into, establish, amend, or terminate any
employment, consulting, retention, change in control, collective
bargaining, bonus or other incentive compensation, profit sharing, health
or other welfare, stock option or other equity, pension, retirement,
vacation, severance, deferred compensation or other compensation or benefit
plan or arrangement with or for any stockholder, officer, director,
employee, agent, consultant or affiliate other than (1) as required
pursuant to existing agreements and (2) increases in salaries and benefits
of employees who are not directors or officers of the Company made in the
ordinary course of business consistent with past practices;
(vi) amend its certificate of incorporation, bylaws or similar governing
documents; or
(vii) make any commitment to or take any of these aforementioned actions.
Access to Information. Pursuant to the Merger Agreement, upon reasonable
notice and subject to applicable laws, the Company has agreed to, and to cause
each of its subsidiaries to, afford to the officers, employees, accountants,
counsel and other representatives of Parent, during normal business hours
during the period prior to the Effective Time, reasonable access to all its
properties, books, contracts, commitments and records, and to its officers,
employees, accountants, counsel and other representatives and, during such
period, to make available to Parent (i) a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to the requirements of federal securities laws (other than
reports or documents which Parent or the Company is not permitted to disclose
under applicable law) and (ii) all other information concerning its business,
properties and personnel as Parent may reasonably request.
Further Assurances. Parent and the Company have agreed to, and to cause
their subsidiaries to, use all reasonable efforts (i) to take, or cause to be
taken, all actions necessary, proper or advisable to comply promptly with all
legal requirements which may be imposed on such party or its subsidiaries with
respect to the Merger and, subject to certain conditions set forth in the
Merger Agreement, to consummate the transactions contemplated by the Merger
Agreement as promptly as practicable and (ii) to obtain (and to cooperate with
the other party to obtain) any consent, authorization, order or approval of,
or any exemption by, any Governmental Entity and any other third party which
is required to be obtained by the Company or Parent or any of their respective
subsidiaries in connection with the Merger and the other transactions
contemplated by the Merger Agreement, and to comply with the terms and
conditions of any such consent, authorization, order or approval.
The Company and Parent have further agreed to use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective, as
soon as practicable after the date of the Merger Agreement, the transactions
contemplated therein, including, without limitation, using all reasonable
efforts to lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the transactions
contemplated hereby and using all reasonable efforts to defend any litigation
seeking to enjoin, prevent or delay the consummation of the transactions
contemplated thereby or seeking material damages.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto including
representations by the Company, Parent and Purchaser as to the enforceability
of the Merger Agreement. The Company also has provided representations and
warranties as to absence of certain changes or events concerning its business,
compliance with law, absence of litigation, corporate status, capitalization,
and the accuracy of financial statements and filings with the SEC.
Indemnification of Officers and Directors. The Merger Agreement provides
that from and after the Effective Time, Parent and Purchaser shall, and shall
cause the Surviving Corporation to, indemnify, defend and hold harmless each
person who is now, or has been at any time prior to the date of the Merger
Agreement or who becomes such prior to the Effective Time, an officer,
director, agent, fiduciary or employee of the Company or any of its
subsidiaries (the "Indemnified Parties") against (i) all losses, claims,
damages, costs, expenses,
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fines, liabilities or judgments or amounts that are paid in settlement with
the approval of the indemnifying party (which approval will not be
unreasonably withheld) of or in connection with any claim, action, suit,
proceeding or investigation based in whole or in part on or arising in whole
or in part out of the fact that such person is or was a director, officer,
agent, fiduciary or employee of the Company or any of its subsidiaries,
whether pertaining to any matter existing or occurring at or prior to the
Effective Time and whether asserted or claimed prior to, or at or after, the
Effective Time ("Indemnified Liabilities") and (ii) all Indemnified
Liabilities based in whole or in part on, arising in whole or in part out of,
or pertaining to the Merger Agreement or the transactions contemplated
thereby. In the case of Purchaser and the Surviving Corporation, such
indemnification will only be to the fullest extent a corporation is permitted
under the DGCL to indemnify its own directors, officers, agents, fiduciaries
and employees; and in the case of Parent, such indemnification will not be
limited by the DGCL but will not be applicable to any claims made against the
Indemnified Parties (A) if a judgment or other final adjudication established
that their acts or omissions were committed in bad faith or were the result of
active and deliberate dishonesty and were material to the cause of action so
deliberated or (B) arising out of, based upon or attributable to the gaining
in fact of any financial profit or other advantage to which they were not
legally entitled. Parent, Purchaser and the Surviving Corporation, as the case
may be, will pay all expenses of each Indemnified Party in advance of the
final disposition of any such action or proceeding, which in the case of
Purchaser and the Surviving Corporation will be only to the fullest extent
permitted by law upon receipt of any undertaking contemplated by Section
145(e) of the DGCL.
Treatment of Employee Benefits. Parent has agreed to honor, in accordance
with their terms, all employee benefit plans and other employment, consulting,
benefit, compensation or severance agreements, arrangements and policies of
the Company.
Conditions to Each Party's Obligation to Effect the Merger. Under the Merger
Agreement, the respective obligations of each party to effect the Merger are
subject to the satisfaction at or prior to the Closing Date of the following
conditions: (i) the Merger Agreement and the transactions contemplated thereby
shall have been approved and adopted by the requisite vote of the Stockholders
to the extent required by the applicable law and the Certificate of
Incorporation of the Company; (ii) no statute, rule, order, decree or
regulation shall have been enacted by any Governmental Entity or authority of
competent jurisdiction which prohibits the consummation of the Merger and all
governmental consents, orders and approvals required for consummation of the
Merger and the other transactions contemplated by the Merger Agreement shall
have been obtained and shall be in effect at the Effective Time; (iii) no
order or injunction of any Governmental Entity shall be in effect which
precludes, restrains, enjoins or prohibits the consummation of the Merger
provided the parties used reasonable best efforts to prevent such order or
injunction; and (iv) Parent, Purchaser or one of their affiliates shall have
purchased all Shares validly tendered and not withdrawn pursuant to the Offer,
provided, that this condition shall be deemed satisfied if Purchaser shall
have failed to purchase Shares pursuant to the Offer in breach of its
obligations under the Merger Agreement. In addition, the obligations of Parent
and Purchaser to effect the Merger are subject to the further condition (which
Parent may waive) that the Company shall have performed in all material
respects all of its material obligations under the Merger Agreement required
to be performed prior to the earlier of (a) such time as Parent's or
Purchaser's designees constitute a majority of the Board, and (b) the Closing
Date; provided that the Company's failure of performance was not caused by
Parent or was not actually known to Parent at or prior to the time Purchaser
accepted for payment any Shares pursuant to the Offer.
No Solicitation. Pursuant to the Merger Agreement, the Company has agreed to
immediately cease any discussions or negotiations with any parties that may be
ongoing with respect to a Takeover Proposal (as hereinafter defined) and, from
the date of the Merger Agreement until the Expiration Date, to not, and to not
permit any of its subsidiaries, or any of its officers, directors or employees
or any affiliate, investment banker, financial advisor, attorney, accountant
or other representative retained by it or any of its subsidiaries to, directly
or indirectly, (i) solicit, initiate or knowingly encourage (including by way
of furnishing information which has not been previously publicly
disseminated), or take any other action designed to facilitate any inquiries
or the making of any proposal which constitutes, or may reasonably be expected
to lead to, any Takeover Proposal or (ii) participate in any discussions or
negotiations regarding any Takeover Proposal; provided that if, prior to the
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Expiration Date and following the receipt of a Superior Proposal (as
hereinafter defined) or a proposal which is reasonably expected to lead to a
Superior Proposal that was unsolicited and made in circumstances not otherwise
involving a breach of the Merger Agreement, the Board determines in good
faith, after considering applicable provisions of state law and after
consultation with outside counsel, that a failure to do so could reasonably be
expected to constitute a breach by it of its fiduciary duties to its
Stockholders under applicable law, the Company may, in response to such
Takeover Proposal and subject to compliance with the Merger Agreement, (x)
furnish information with respect to the Company to the party making such
Takeover Proposal pursuant to a customary confidentiality agreement, provided
that (i) such confidentiality agreement must include a provision prohibiting
solicitation of key employees of the Company or its subsidiaries, such
provision lasting at least one year, and may not include any provision calling
for an exclusive right to negotiate with the Company and (ii) the Company
advises Parent of all such nonpublic information delivered to such person
concurrently with its delivery to the requesting party, and (y) participate in
negotiations with such party regarding such Takeover Proposal.
Except as expressly permitted in the Merger Agreement, the Company has
agreed that neither the Board nor any committee thereof shall (i) withdraw or
modify, or propose publicly to withdraw or modify, in a manner adverse to
Parent, the approval, determination of advisability, or recommendation by such
Board of Directors or such committee of the Transactions, (ii) approve,
determine to be advisable, or recommend, or propose publicly to approve,
determine to be advisable, or recommend, any Takeover Proposal or (iii) cause
the Company to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each, an "Acquisition
Agreement") related to any Takeover Proposal. Notwithstanding the foregoing,
in the event that prior to the Expiration Date the Board determines in good
faith, in response to a Superior Proposal that was unsolicited and made in
circumstances not otherwise involving a breach of the Merger Agreement, and
after consideration of applicable provisions of state law and after
consultation with outside counsel, that the failure to do so could reasonably
be expected to constitute a breach of its fiduciary duties to the Company's
Stockholders under applicable law, the Board may (subject to this and the
following sentences and to compliance with the provisions of the immediately
preceding paragraph) (x) withdraw or modify its approval, determination, or
recommendation of the Transactions or (y) approve, determine to be advisable,
or recommend a Superior Proposal, provided that any actions described in
clause (y) may be taken only at a time that is after the second business day
following Parent's receipt of written notice from the Company advising Parent
that the Board has received a Superior Proposal, specifying the material terms
and conditions of such Superior Proposal, identifying the person making such
Superior Proposal and providing notice of the determination of the Board of
what action referred to in clause (y) the Board has determined to take.
The Company has further agreed to promptly advise Parent orally and in
writing of any request for information or of any Takeover Proposal, the
material terms and conditions of such request or the Takeover Proposal and the
identity of the person making such request or Takeover Proposal and to keep
Parent reasonably informed of the status and details of any such request or
Takeover Proposal.
For purposes of the Merger Agreement, (i) a "Takeover Proposal" means any
inquiry, proposal or offer from any person (other than Parent and its
subsidiaries, affiliates, and representatives) relating to any direct or
indirect acquisition or purchase of 15% or more of the assets of the Company
and its subsidiaries or 15% or more of any class of equity securities of the
Company or any of its Significant Subsidiaries, any tender offer or exchange
offer that if consummated would result in any person beneficially owning 15%
or more of any class of equity securities of the Company or any of its
Significant Subsidiaries, or any merger, consolidation, share exchange,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company or any of its Significant Subsidiaries,
other than the transactions contemplated by the Merger Agreement, and (ii) a
"Superior Proposal" means a bona fide written offer from any person (other
than Parent and its subsidiaries, affiliates and representatives) for a direct
or indirect acquisition or purchase of 50% or more of the assets of the
Company or any of its Significant Subsidiaries or 50% or more of any class of
equity securities of the Company or any of its Significant Subsidiaries, any
tender offer or exchange offer that if consummated would result in any person
beneficially owning 50% or more of any class of equity securities of the
Company or any of its Significant Subsidiaries, or any merger, consolidation,
share exchange, business
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combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any of its Significant Subsidiaries, other than the
transactions contemplated by the Merger Agreement, (A) which provides for
consideration on a per share basis to the Stockholders with a value exceeding
the Offer and, considering all relevant factors, is more favorable to the
Company and its Stockholders than the Offer and the Merger, and (B) for which
the third party has demonstrated that financing is reasonably likely to be
obtained, in each case as determined by the Board in its good faith judgment
(based on the advice of independent financial advisors). Any Superior Proposal
is a Takeover Proposal.
Termination; Termination Fee and Expenses. The Merger Agreement may be
terminated and the Merger and the other transactions contemplated thereby may
be abandoned at any time prior to the Effective Time, whether before or after
stockholder approval thereof (i) by the mutual consent of Parent and the
Company; (ii) by either the Company or Parent if: (A) a Governmental Entity
issues an order or takes other action that becomes final and non-appealable,
restraining or prohibiting the transactions contemplated by the Merger
Agreement provided that the party seeking to terminate has used all reasonable
efforts to challenge the order or action, (B) the Offer expires or is
withdrawn without any Shares being purchased, provided that such right shall
not be available to any party whose failure to fulfill any obligation under
the Merger Agreement has resulted in the failure of Purchaser to purchase
shares in the Offer, or (C) the Offer has not been consummated by May 13,
2000, provided that such right shall not be available to any party whose
failure to fulfill any obligation under the Merger Agreement has resulted in
the failure of the Offer to be consummated by such time, and provided further
that such date will be extended for each day in which any party is subject to
a nonfinal order or action restraining or prohibiting the consummation of the
Offer (but shall be no later than June 30, 2000); (iii) by the Company if (A)
Parent, Purchaser or any of their affiliates shall have failed to commence the
Offer on or prior to five business days following the date of the initial
public announcement of the Offer; provided, that the Company may not terminate
the Merger Agreement if it is in material breach thereof; (B) it concurrently
enters into a definitive agreement providing for a Superior Proposal entered
into in accordance with the Merger Agreement, provided that prior thereto or
simultaneously therewith the Company has paid the Termination Fee (as defined
below) to Parent; or (C) if the representations and warranties of Ultimate
Parent, Parent and Purchaser are not true and correct as of the date of the
Merger Agreement and as of the Expiration Date as if made on such date, except
where the failure of such representations and warranties to be true and
correct does not, individually or in the aggregate, have a Material Adverse
Effect (as defined below) on Parent, or Ultimate Parent, Parent or Purchaser
has failed in any material respect to perform its obligations under the Merger
Agreement; or (iv) by Parent if (A) due to an occurrence that if occurring
after the commencement of the Offer would result in a failure to satisfy any
of the conditions set forth under the caption "--Conditions of the Offer,"
Parent, Purchaser, or any of their affiliates shall have failed to commence
the Offer on or prior to five business days following the date of the initial
public announcement of the Offer; provided, that Parent may not terminate the
Merger Agreement if Parent is in material breach of the Merger Agreement; (B)
the Board shall have withdrawn or modified, or proposed publicly to withdraw
or modify, in a manner adverse to Parent its approval or recommendation of the
Offer, the Merger Agreement or the Merger, or failed to reconfirm its
recommendation within four business days after a written request to do so, or
approved or recommended, or proposed publicly to approve or recommend, any
Takeover Proposal, or shall have resolved to do any of the foregoing, or (C)
if the representations and warranties of the Company are not true and correct
as of the date of the Merger Agreement and as of the Expiration Date as if
made on such date, except where the failure of such representations and
warranties to be true and correct does not, individually or in the aggregate,
have a Material Adverse Effect on the Company, or the Company has failed in
any material respect to perform its obligations under the Merger Agreement. A
"Material Adverse Effect" means, with respect to a party to the Merger
Agreement, a material adverse effect on the business, operations or financial
condition of such party and its subsidiaries taken as a whole or a material
adverse effect on such party's ability to consummate the Transactions,
provided that it does not include any change or effect attributable to (i)
general national, international or regional economic or financial conditions,
(ii) other developments which are not unique to the Company and its
subsidiaries, but also affect other persons who engage in their lines of
business, (iii) the announcement or pendency of the Merger Agreement or the
transactions contemplated thereby, including the Offer and Merger, or (iv) any
change in the price of the Shares.
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If the Merger Agreement (i) is terminated by Parent because the Board
changed its recommendation in a manner adverse to Parent, (ii) is terminated
by the Company if the Company concurrently enters into a definitive agreement
providing for a Superior Proposal, or (iii) if a Takeover Proposal has been
made known to the Company or made directly to its stockholders or any person
has publicly announced an intention to make a Takeover Proposal and thereafter
the Merger Agreement is terminated by the Company because the Offer has not
been consummated by the Outside Date or, if the Offer has remained open for
twenty business days and the Minimum Condition has not been satisfied and the
Company terminates the Merger Agreement because the Offer has expired or been
withdrawn without any Shares being purchased therein, and in either such event
such Takeover Proposal is consummated within one year of such termination,
then the Company shall pay to Parent a termination fee equal to $15 million in
cash. Each party to the Merger Agreement shall otherwise be solely responsible
for all fees and expenses incurred by such party.
Ultimate Parent Obligations. Wesco Financial Corporation has agreed to be
responsible, to the same extent as Parent, for (i) the payment for Shares
tendered and not withdrawn in the Offer and (ii) the obligations to indemnify
the Company's directors, officers, employees and agents set forth in the
Merger Agreement, and to guarantee the performance by Parent of all of its
other obligations under the Merger Agreement.
Amendment. Subject to applicable law, at any time prior to the Closing Date,
the Merger Agreement may be modified or amended by written agreement of the
parties thereto, provided that no modification or amendment shall be made
after consummation of the Offer which adversely affects the Stockholders, or
otherwise requires the approval of the Stockholders, unless approved by the
Independent Directors.
Conditions of the Offer. Notwithstanding any other provision of the Offer
(subject to the provisions of the Merger Agreement), Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, pay for, and may delay the acceptance for payment of
or, subject to such restrictions, the payment for, any tendered Shares, and
may terminate the Offer and not accept for payment any tendered shares if (i)
there shall not have been validly tendered and not withdrawn prior to the
expiration of the Offer such number of Shares which would constitute at least
a majority of the Shares outstanding on a fully-diluted basis on the date of
purchase (on a "fully-diluted basis" meaning the number of Shares outstanding,
together with the Shares which the Company may be required to issue pursuant
to options or obligations outstanding at that date and which do not terminate
upon the consummation of the Offer under any employee stock or benefit plans,
whether or not vested or then exercisable), when aggregated with any Shares
owned by Parent, Purchaser or an affiliate of Parent or Purchaser (the
"Minimum Condition"), (ii) any applicable waiting period under the HSR Act (as
hereinafter defined) has not expired or terminated prior to the expiration of
the Offer, or (iii) at any time on or after the date of the Merger Agreement,
and before the time of acceptance of Shares for payment pursuant to the Offer,
any of the following events shall occur and be continuing:
(a) there shall be any statute, rule, regulation, judgment, order or
injunction promulgated, entered, enforced, enacted, issued or applicable to
the Offer or the Merger by any domestic or foreign federal or state
governmental regulatory or administrative agency or authority or court or
legislative body or commission which (1) prohibits, or imposes any material
limitations on, Parent's or Purchaser's ownership or operation of all or a
material portion of the Company's and its subsidiaries businesses and assets,
taken as a whole, (2) prohibits, or makes illegal the acceptance for payment,
payment for or purchase of Shares or the consummation of the Offer or the
Merger, (3) renders Purchaser unable, to accept for payment, pay for or
purchase some or all of the Shares, or (4) imposes material limitations on the
ability of Purchaser or Parent effectively to exercise full rights of
ownership of the Shares, including, without limitation, the right to vote the
Shares purchased by it on all matters properly presented to the Stockholders,
provided that Parent shall have used all reasonable efforts to cause any such
judgment, order or injunction to be vacated or lifted;
(b) there shall be any action or proceeding pending by any domestic or
foreign federal or state governmental regulatory or administrative agency or
authority which (1) seeks to prohibit, or impose any material limitation on,
Parent's or Purchaser's ownership or operation of all or a material portion of
the Company's and its subsidiaries businesses and assets, taken as a whole,
(2) seeks to prohibit or make illegal the
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acceptance for payment, payment for or purchase of Shares or the consummation
of the Offer or the Merger, (3) is reasonably likely to result in a material
delay in or seeks to restrict the ability of Purchaser, or render Purchaser
unable to accept for payment, pay for or purchase some or all of the Shares,
or (4) seeks to impose material limitations on the ability of Purchaser or
Parent effectively to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote the Shares purchased by it on
all matters properly presented to the Stockholders; provided that Parent shall
have used all reasonable efforts to cause any such action or proceeding to be
dismissed;
(c) the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and correct in any respect, disregarding
for this purpose any standard of materiality contained in any such
representation or warranty, as of the date of consummation of the Offer as
though made on or as of such date or the Company shall have breached or failed
in any material respect to perform or comply with any material obligation,
agreement or covenant required by the Merger Agreement to be performed or
complied with by it (including without limitation if the Company shall have
entered into any definitive agreement or any agreement in principle with any
person with respect to a Takeover Proposal or similar business combination
with the Company in violation of Section 5.2 of the Merger Agreement), except,
in the case of the failure of any representation or warranty, (1) for changes
specifically permitted by the Merger Agreement and (2) (A) those
representations and warranties that address matters only as of a particular
date which are true and correct as of such date or (B) where the failure of
such representations and warranties to be true and correct, do not,
individually or in the aggregate, have a Material Adverse Effect on the
Company;
(d) (1) any general suspension of trading in securities on any national
securities exchange or in the over-the-counter market, (2) the declaration of
a banking moratorium or any suspension of payments in respect of banks by a
United States Governmental Entity (as defined in the Merger Agreement), or (3)
any mandatory limitation by a United States Governmental Entity that
materially and adversely affects the extension of credit by banks or other
financial institutions; or
(e) the Merger Agreement shall have been terminated in accordance with its
terms;
which in the reasonable judgment of Parent or Purchaser, in any such case, and
regardless of the circumstances giving rise to such condition, makes it
inadvisable to proceed with the Offer or with such acceptance for payment or
payments.
The foregoing conditions are for the sole benefit of Purchaser and Parent
and may be asserted by either of them or may be waived by Parent or Purchaser,
in whole or in part at any time and from time to time in the sole discretion
of Parent or Purchaser, provided that Parent and Purchaser agree that, if they
waive the Minimum Condition, they shall subsequently exercise the Company
Securities Option (as defined in the Stockholder Agreement), unless all of the
Shares subject thereto have been accepted for payment in the Offer.
Stockholder Agreement
The following is a summary of certain provisions of the Stockholder
Agreement. This summary is not a complete description of the terms and
conditions of the Stockholder Agreement and is qualified in its entirety by
reference to the Stockholder Agreement filed as an exhibit to this Schedule
14D-9 and incorporated herein by reference. Capitalized terms not otherwise
defined below shall have the meanings set forth in the Stockholder Agreement
Concurrently with the execution of the Merger Agreement, Parent and
Purchaser entered into the Stockholder Agreement with Citicorp Venture Capital
Ltd. ("CVC"). CVC is the owner of 5,778,518 Shares (such Shares, together with
any other Shares acquired by CVC, the "CVC Shares"), or approximately 44% of
the outstanding Shares, which Shares are subject to a voting trust pursuant to
an Amended and Restated Voting Trust Agreement, dated as of November 15, 1999,
among CVC, Robert N. Pokelwaldt, as trustee (the "Trustee") and certain former
trustees of such trust (the "Trust Agreement"). Pursuant to the Stockholder
Agreement, CVC has agreed to tender in the Offer, prior to the initial
expiration date of the Offer, all Shares owned beneficially
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and of record by it. CVC has also agreed, to the extent it becomes entitled to
vote the CVC Shares, at any meeting of the Stockholders however called, to
vote the CVC Shares in favor of the Merger and the Merger Agreement, against
any Takeover Proposal (as hereinafter defined) and against any proposal for
action or agreement that would result in a breach of any covenant or agreement
of the Company under the Merger Agreement or which is reasonably likely to
result in any of the Company's obligations under the Merger Agreement not
being fulfilled, any change in the directors of the Company (except as
contemplated by the Merger Agreement), any change in the Company's
capitalization, corporate structure or business or any other action which
could reasonably be expected to interfere with, delay or materially adversely
affect the likelihood that the transactions contemplated by the Merger
Agreement will be consummated. Subject to the prior rights granted under the
Trust Agreement, CVC has also granted to Parent and Purchaser, or any of their
nominees, an irrevocable proxy to demand that the Company call a special
meeting to consider the Merger and the Merger Agreement and to vote the CVC
Shares at any meeting of the Stockholders, however called.
In addition, CVC has covenanted and agreed not to (i) transfer or consent to
the transfer of any of the CVC Shares, enter into any contract, option or
other arrangement with respect to the transfer of the CVC Shares, grant any
proxies with respect to the CVC Shares, (ii) other than the Trust Agreement,
deposit the CVC Shares into a voting trust or enter into any voting agreement
with respect to the CVC Shares, (iii) take any other action that would make
any representation or warranty of CVC contained in the Stockholder Agreement
untrue or have the effect of preventing CVC from fulfilling its obligations
under the Stockholder Agreement or (iv) revoke the Trust Agreement or change
the trustee under the trust thereunder.
CVC has also agreed that it will not, directly or indirectly, solicit,
initiate, knowingly encourage or take any other action designed to facilitate
any inquiries or the making of any proposal from any person (other than
Ultimate Parent, Parent or Purchaser) relating to the acquisition of any
Shares or any transaction that constitutes a Takeover Proposal. CVC has agreed
not to, and to not permit its officers, directors or representatives to,
participate in any discussions (except with Ultimate Parent, Parent and
Purchaser) regarding, or furnish to any person (other than Ultimate Parent,
Parent or Purchaser) any information with respect to, or otherwise cooperate
with, or assist or encourage, any attempt by any person (other than Ultimate
Parent, Parent or Purchaser) to make, any transaction that may constitute a
Takeover Proposal. CVC has also agreed to immediately cease all existing
discussions or negotiations of CVC and its officers, directors or
representatives with any person (other than Ultimate Parent, Parent or
Purchaser) with respect to the foregoing. Notwithstanding any provisions of
this paragraph to the contrary, any officer, director, partner, or
representative of CVC who is a member of the Board may, in his or her capacity
as such, take such actions, if any, as are permitted by the Merger Agreement.
CVC has also granted to Parent and Purchaser an irrevocable option (the
"Company Securities Option") to purchase the CVC Shares at a price per Share
equal to the Offer Price or any higher price paid or to be paid by Parent or
Purchaser pursuant to the Offer or the Merger. The Company Securities Option
becomes exercisable, in whole but not in part, for all Shares subject thereto
not accepted for payment in the Offer, at the close of business on the
Expiration Date, if, but only if, Purchaser has accepted for payment all
Shares tendered and not withdrawn in the Offer (which may be less than the
number of Shares needed to satisfy the Minimum Condition), and remains
exercisable for 90 days from such date. If Purchaser purchases Shares tendered
in the Offer, it must exercise the Company Securities Option (unless the
Shares subject thereto have been purchased pursuant to the Offer).
Voting Agreement
The following is a summary of certain provisions of the Voting Agreement.
This summary is not a complete description of the terms and conditions of the
Voting Agreement and is qualified in its entirety by reference to the Voting
Agreement filed as an exhibit to this Schedule 14D-9 and is incorporated
herein by reference. Capitalized terms not otherwise defined below have the
meanings set forth in the Voting Agreement.
Concurrently with the execution of the Merger Agreement, Parent and
Purchaser also entered into the Voting Agreement with the Trustee. Pursuant
thereto, the Trustee has agreed, at any meeting of the Stockholders
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however called, to vote the CVC Shares in favor of the Merger and the Merger
Agreement, against any Takeover Proposal (as hereinafter defined) and against
any proposal for action or agreement that would result in a breach of any
covenant or agreement of the Company under the Merger Agreement or which is
reasonably likely to result in any of the Company's obligations under the
Merger Agreement not being fulfilled, any change in the directors of the
Company (except as contemplated by the Merger Agreement), any change in the
Company's capitalization, corporate structure or business or any other action
which could reasonably be expected to interfere with, delay or materially
adversely affect the transactions contemplated by the Merger Agreement, the
Stockholder Agreement or the Voting Agreement or the likelihood of such
transactions being consummated. The Trustee has also granted to Parent and
Purchaser, or any of their nominees, an irrevocable proxy to demand that the
Company call a special meeting to consider the Merger and the Merger Agreement
and to vote the CVC Shares at any meeting of the Stockholders, however called.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) Recommendation. The Board of Directors of the Company (the "Board") has
unanimously approved the Merger Agreement (including all terms and conditions
set forth therein) and the transactions contemplated thereby, including the
Offer and the Merger, determining that the Merger is advisable and that the
terms of the Offer and the Merger are fair to and in the best interests of the
Company's stockholders and unanimously recommends that the Company's
stockholders accept the Offer, tender their Shares thereunder to the Purchaser
and approve and adopt the Merger Agreement and the Merger.
A copy of a letter to the Company's stockholders communicating the Board's
recommendation is filed as an Exhibit hereto and is incorporated herein by
reference.
(b)(1) Background.
Beginning in the second half of 1998, the Board discussed the desirability
of pursuing alternatives for CORT to increase stockholder value. As a result
of these discussions, representatives of CORT met on separate occasions with
representatives of J.P. Morgan and Donaldson, Lufkin & Jenrette Securities
Corporation to discuss a potential sale of CORT and met with representatives
of Aaron Rents, Inc. to discuss a potential business combination between CORT
and Aaron. During this same time period, Bruce C. Bruckmann, a member of the
Board and principal of Bruckmann, Rosser, Sherrill & Co. ("BRS") indicated
that BRS might be willing to pursue a recapitalization transaction with CORT.
On March 25, 1999, CORT entered into an agreement and plan of merger with an
investor group led by BRS and members of CORT's management pursuant to which
the investor group agreed to acquire CORT in a merger transaction for a per
share consideration of $24.00 in cash plus $2.50 liquidation value of a new
series of preferred stock. Citicorp Venture Capital Ltd., which is the
beneficial owner of shares representing approximately 44% of CORT's
outstanding Shares, agreed to participate in the transaction by retaining a
portion of its equity interest in CORT.
Following announcement of the BRS merger agreement, in April 1999
representatives of CORT and CVC had numerous unsolicited contacts from
representatives of Fremont Partners ("Fremont") and Brook Furniture Rental,
Inc. ("Brook") regarding a recapitalization transaction in which CORT and
Brook would be combined. In letters dated April 15 and April 19, 1999, Fremont
and Brook proposed a transaction pursuant to which stockholders of CORT would
receive $28.00 per share in cash for 97% of the outstanding common stock,
subject to certain conditions. After receiving additional letters from Brook,
the Board of Directors rejected the Fremont/Brook proposal on May 10, 1999
based principally on its conclusion that it was unlikely that any transaction
with Fremont/Brook could be completed in the face of significant opposition
expressed by CORT's management and major stockholder.
On August 12, 1999, BRS informed the Board that BRS was increasing its offer
to a per share consideration of $25.00 in cash plus $3.00 liquidation value in
a new series of preferred stock.
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On November 4, 1999, CORT announced that CORT and BRS had mutually agreed to
terminate the merger agreement as a result of weakness in the high-yield debt
market and insufficient support from the Company's public stockholders.
Following the announcement of the termination of the BRS merger agreement,
on November 9, 1999, Brook sent a letter to CORT reiterating its interest in
pursuing a Fremont/Brook transaction.
On November 23, 1999, Paul Arnold, President and Chief Executive Officer of
CORT, met with Robert W. Crawford, President and Chief Executive Officer of
Brook, to discuss the Fremont/Brook proposal. At that meeting Mr. Arnold
informed Mr. Crawford that Mr. Arnold would present an offer to CORT's Board
only if it met the Board's criterion of certainty by being fully financed and
not subject to due diligence.
On November 23, 1999, Mr. Arnold received a call from Bruce Cort, an
acquaintance of Mr. Arnold. Mr. Arnold returned the call later that day. In
their discussion Mr. Cort informed Mr. Arnold that earlier that day he had
forwarded a recent Washington Post article about CORT to Warren E. Buffett,
Chairman of Berkshire Hathaway Inc. ("Berkshire"), and that Mr. Buffett had
responded that Berkshire would be interested in pursuing a friendly
transaction for CORT at $28.00 per share. Mr. Arnold requested that Mr. Cort
arrange a meeting with Mr. Buffett.
Mr. Arnold, who was accompanied by Mr. Cort, met Mr. Buffett in Omaha on
November 29, 1999. They talked about the business of the Company and the
Company's recent history. Mr. Buffett indicated an interest in acquiring the
Company at $28.00 per share, and said that he would need to talk to the
Company's largest shareholder, CVC. Mr. Arnold made no specific response to
Mr. Buffett, other than that he would attempt to arrange a meeting with CVC.
At a meeting of CORT's Board on November 30, 1999, Mr. Arnold informed the
Board of his discussions with Mr. Crawford and Mr. Buffett. The Board agreed
that representatives of CVC should meet with Mr. Buffett before the Board
could evaluate whether to engage in further discussions. Mr. Arnold
subsequently made the arrangements for representatives of CVC to meet with Mr.
Buffett.
On December 3, 1999, Fremont and Brook sent another letter to CORT
increasing the consideration to CORT's stockholders in their proposal to
combine CORT and Brook to $28.50 per share in cash for 97% of CORT's common
stock. This letter was accompanied by commitments for senior bank and bridge
financing from Paribas which were subject to numerous conditions including the
absence of adverse changes in market conditions and Paribas' successful
syndication of the bridge loan. On December 17, 1999, Fremont and Brook
further revised their proposal to provide for per share consideration of
$28.00 in cash plus an additional amount contingent on the value of CORT's
interest in Homestore.com, Inc.
On December 18, 1999, William T. Comfort, Chairman of CVC, as well as
Michael Delaney and James Urry, who are officers of CVC as well as directors
of CORT, met in Omaha with Mr. Buffett. The representatives of CVC talked
about the Company and CVC's history with the Company. Mr. Buffett said
Berkshire or Wesco Financial Corporation ("Wesco") would agree to buy the
Company for a price of $28.00 per share, provided he had the agreement of CVC
to support such a transaction. The CVC representatives encouraged Mr. Buffett
to make a proposal to buy the Company. Mr. Buffett and the CVC representatives
agreed that counsel for Berkshire and Wesco (Munger, Tolles & Olson LLP
("Munger, Tolles")) would talk with CVC about the structure of a proposal to
acquire the Company and about the terms of a commitment that CVC might make in
connection with such a proposal.
Munger, Tolles contacted Mr. Arnold and also contacted CVC, and was put in
contact with Dechert Price & Rhoads ("Dechert"), which was acting as counsel
for both the Company and CVC. Munger, Tolles additionally suggested that Mr.
Arnold meet with Mr. Charles Munger, Vice Chairman of Berkshire and Chairman
of Wesco, an 80.1% owned subsidiary of Berkshire, and that meeting was
arranged for December 30, 1999 in Los Angeles. In that meeting, Mr. Arnold and
Mr. Munger talked about the Company and its business. Mr. Munger described for
Mr. Arnold the approach of Berkshire and Wesco in working with subsidiary
companies, including their general approach to management incentive
compensation.
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In late December and early January, representatives of Munger, Tolles and
Dechert had several telephone discussions about the structure of an
acquisition transaction and the terms of a merger agreement, as well as the
terms of a stockholder agreement with CVC and a voting agreement with CVC's
voting trustee. On December 28, 1999, Dechert received a draft merger
agreement from Munger, Tolles, providing for a tender offer for all of CORT's
Shares to be followed by a merger with a subsidiary of Wesco. Dechert also
received a draft stockholder agreement to be delivered by CVC providing for an
agreement by CVC to tender in the offer and granting Wesco an option to
purchase the CVC Shares under certain circumstances.
On January 3, 2000, CORT engaged SunTrust Equitable Securities Corporation
("STES") as its financial advisor to assist the Board in evaluating potential
acquisition transactions. On that same day, representatives of STES and
Dechert contacted Brook's counsel and representatives of Fremont and Brook.
STES and Dechert informed Fremont and Brook that the Board was actively
considering alternatives available to CORT and asked Fremont and Brook to
submit their best and final offer in writing to the Company no later than
January 10, 2000. As they had not previously furnished drafts of definitive
agreements, Fremont and Brook were requested to provide forms of definitive
transaction documents as well as commitments to support any financing upon
which their transaction would be conditioned. Representatives of Dechert
stated that although the Board had not made a decision to engage in any
transaction, it was probable that a critical factor in a decision by the Board
would be the relative degree of certainty of any proposal. Representatives of
Dechert suggested that any proposal submitted by Fremont and Brook should
address prior uncertainties in their proposals including financing and due
diligence conditions.
On January 4, 2000 STES and Dechert contacted Munger, Tolles, and had the
same discussion regarding the Board's process and procedure that STES and
Dechert had had with Fremont and Brook the prior day. Shortly thereafter,
Dechert sent Munger, Tolles written comments to the draft merger agreement and
stockholders agreement which Munger, Tolles had previously delivered to
Dechert.
Later in the week of January 3, 2000, representatives of Dechert had
discussions with representatives of Munger, Tolles regarding their draft
agreements and responded to questions from representatives of Fremont seeking
information about CORT's ownership of shares of common stock of Homestore.com.
On January 10, 2000, CORT received written proposals from Wesco and
Fremont/Brook. Mr. Buffett, on behalf of Wesco Holdings Midwest, Inc., a
wholly owned subsidiary of Wesco ("Wesco Holdings"), delivered an offer letter
to Dechert on behalf of the Company, offering to buy all of the stock of the
Company pursuant to a cash tender offer and subsequent cash merger at a price
of $28.00 per share, as provided in a draft Agreement and Plan of Merger
delivered with the letter. The merger agreement was subject to customary
conditions but was not subject to due diligence or to a financing condition.
Mr. Buffett also furnished with this letter forms of a Stockholder Agreement
and Voting Agreement, which Wesco Holdings proposed to execute with CVC and
its voting trustee, respectively. The letter provided that the offer would
expire at noon Eastern time on January 17, unless it was previously accepted,
and would also expire in the event of unauthorized disclosure or leak.
The written proposal from Fremont/Brook received on January 10, 2000
provided for a merger of a newly formed subsidiary into CORT pursuant to which
CORT stockholders would receive per share consideration of $29.25 in cash for
98.1% of the Shares. The proposal was conditioned on the completion of
confirmatory due diligence by Fremont and Brook which Fremont stated was
expected to take ten business days. The proposed form of merger agreement
provided that Fremont and Brook's obligation to complete the merger was also
subject to receipt of financing. The proposal was accompanied by commitment
letters from Morgan Stanley Senior Funding, Inc. for bank financing and Morgan
Stanley & Co. Incorporated for bridge financing. Funding under the commitment
letters was subject to numerous conditions including (a) the "absence of any
disruption or change in financial, banking or capital markets or in the
regulatory environment that in the good faith judgment
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of [Morgan Stanley] could materially and adversely affect the [bridge
financing] or the refinancing thereof," (b) Morgan Stanley's satisfaction with
the results of its due diligence review of CORT (although Morgan Stanley
confirmed that it was satisfied with the results of its review of public
information and certain projected financial information prepared by Fremont)
and (c) Morgan Stanley's satisfaction with the structure of the CORT and Brook
combination. The Fremont/Brook proposal stated that it would expire on January
16, if not accepted prior to that time.
On the evening of January 10, 2000, the Board met to discuss the Wesco and
Fremont/Brook proposals. At the meeting, representatives of STES made a
presentation to the Board regarding Wesco, Fremont and Brook, certain
financial information regarding CORT and current conditions in the acquisition
and financing markets. Representatives of Dechert outlined the terms of the
two proposals. After discussion, the Board concluded that further information
on both proposals was necessary. The Board asked Gregory B. Maffei, one of
CORT's directors, to contact Mr. Buffett to determine whether Wesco would
increase the per share consideration. The Board asked representatives of STES
to contact Fremont to determine: (i) whether Fremont would provide an
unconditional written equity commitment; (ii) whether Fremont/Brook would
structure their transaction as a tender offer; (iii) whether Fremont/Brook
could narrow or eliminate certain conditions contained in the Morgan Stanley
debt commitments; (iv) whether Fremont/Brook would provide any financial
information regarding Brook to the Board to assist it in evaluating the
proposed transaction; and (v) how much of Fremont's fund remained uncommitted.
The Board determined that it would not allow Fremont/Brook to conduct due
diligence at that time because of the uncertainty surrounding their proposal
and the potential for harm to the Company if Fremont and Brook, a direct
competitor of the Company, conducted due diligence and the Company was
thereafter unable to complete a transaction with Fremont/Brook on the terms
proposed.
On January 11, Mr. Maffei called Mr. Buffett in an attempt to convince him
to increase Wesco's offer price. Mr. Maffei advised Mr. Buffett that another
proposal had been made at a higher nominal price. Mr. Buffett stated his
belief that this proposal was subject to uncertainties that the Wesco proposal
did not contain. Mr. Maffei acknowledged that the other offer was more
conditional than the Wesco proposal but also called Mr. Buffett's attention to
the increased value resulting from the Company's investment in Homestore.com.
Mr. Buffett explained that he had factored in the Homestore.com investment in
valuing the Company, and that the possibility that someone else would offer
more for the Company did not affect his view of what Wesco should offer. Mr.
Arnold similarly called Mr. Buffett on January 13, urging him to raise his
offer. Mr. Buffett again declined.
On January 11, representatives of STES telephoned Gregory P. Spivy of
Fremont to discuss the questions raised by the Board. On that date and in a
subsequent call on January 13, Mr. Spivy informed STES that (i) Fremont would
provide a written equity commitment; (ii) Fremont and Brook were not prepared
at that time to commit to structure their proposal as a tender offer; (iii)
Fremont believed the debt commitments it had provided were the best available
under current market conditions and that it was not possible to narrow or
eliminate the conditions to which the Board had objected; and (iv) Fremont was
not prepared to provide any financial information with respect to Brook except
that STES could assume Brook's revenues were $50 million and that Brook's
EBITDA margins were comparable to CORT's. On January 13, Fremont provided CORT
with a commitment letter for $98.8 million of equity and bridge financing and
stated that Fremont had approximately $215 million of uncommitted equity in
its fund. On January 13, representatives of STES informed Fremont that the
Board would be meeting in the next 24 hours to make a decision based on the
information that was available to them at that time.
On January 13, representatives of Dechert informed representatives of
Munger, Tolles that the Board would be meeting in the next 24 hours to make a
decision based on the information that was available at that time.
The Board met again to consider both proposals beginning on the evening of
January 13. The Board first considered the Fremont/Brook proposal. After
extensive discussion, the Board determined that it would not be in the best
interests of the stockholders to pursue the Fremont/Brook transaction despite
the fact that the nominal price of $29.25 for 98.1% of the Shares was higher
than the price being offered by Wesco. This conclusion was based principally
on the Board's belief that there was substantial risk that the transaction
could not be consummated on the terms proposed. In this regard, the Board
considered a number of factors the most material of which were:
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(i) That the Fremont/Brook proposal was conditioned on the receipt of
external debt financing. The Board considered the advice received from STES
to the effect that current debt financing market conditions were not
favorable for leveraged buyout transactions on the terms proposed by
Fremont/Brook. The Board took note of the fact that weakness in the high-
yield debt market had been a principal factor in the Company's recent
inability to complete the BRS transaction which was at a lower price than
the Fremont/Brook proposal. The Board also considered the conditions
contained in the commitments provided by Morgan Stanley and concluded that
there was a significant possibility that those conditions could not be
satisfied;
(ii) That Fremont/Brook was unable to commit to a tender offer. The Board
concluded that the longer time period necessary to complete a merger would
increase the risk that the financing would not be available due to changes
in the financing market;
(iii) The expected low trading value and probable delisting of the 1.9%
illiquid public stub that stockholders would be required to retain;
(iv) The possibility that CORT would lose the opportunity to enter into
an agreement with Wesco for the cash tender transaction while Fremont,
Brook and their financing sources were conducting due diligence; and
(v) The impact on future market value of the Company's common stock if
the Company were to announce a transaction with Fremont/Brook which it was
unable to consummate.
After concluding that it was not advisable to pursue the Fremont/Brook
transaction, the Board then discussed the Wesco proposal. During the
discussion of the Wesco proposal, Mr. Urry informed the Board that CVC, the
holder of approximately 44% of CORT's outstanding Shares, was prepared to
enter into the Stockholder Agreement and tender its Shares pursuant to the
Offer, which is a condition to Wesco's proposal, and that CVC had been advised
by its voting trustee, Mr. Pokelwaldt, that he was prepared to enter into the
Voting Agreement, which is a condition to Wesco's proposal. Mr. Urry also
informed the Board that CVC was currently in discussions with the Small
Business Administration regarding the termination of its voting trust
agreement and the conversion of some of CVC's Voting Shares into Class B
Shares.
For the reasons more fully outlined below, the Board unanimously approved
the Merger Agreement with Wesco.
On January 14, 2000 the Merger Agreement, the Stockholder Agreement and the
Voting Agreement were signed and Wesco and the Company issued a joint press
release announcing the agreements.
(b)(2) Reasons for the recommendation.
In making its recommendations to the Stockholders with respect to the Offer
and the Merger, the Board considered a number of factors, the most material of
which were the following:
(i) The terms and conditions of the Offer, the Merger and the Merger
Agreement, including (a) the price to be paid in the Offer and the Merger,
(b) that the transaction would be structured as a tender offer to enable
stockholders to obtain cash for their Shares at the earliest possible time,
and (c) that the obligations of Wesco to consummate the transaction would
not be conditioned upon the results of a due diligence review or the
receipt of external financing (the Board viewed the latter as having
particular significance in light of currently unsettled conditions in debt
financing markets);
(ii) The oral opinion of STES delivered to the Board at its January 13,
2000 meeting, and subsequently confirmed in writing, that the $28.00 per
Share in cash proposed to be paid in the Offer and the Merger to the
holders of Shares was fair from a financial point of view to such holders
(the entire text of the written opinion dated January 14, 2000 subsequently
delivered to the Board regarding the Offer and the Merger, which sets forth
the assumptions made, matters considered and limitations in connection with
such opinion, is attached as Annex B to this statement and Stockholders are
urged to read such opinion in its entirety);
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(iii) The business reputations of Mr. Buffett and Mr. Munger and the
substantial, liquid financial resources of Berkshire and Wesco which the
Board believed supported its conclusion that an acquisition transaction
with Wesco could be effectuated relatively quickly and in an orderly
manner;
(iv) The recommendation of the Company's management that the Merger
Agreement, including the Offer and the Merger, be approved;
(v) The willingness of CVC, as the beneficial owner of approximately 44%
of CORT's outstanding shares, to enter into the Stockholder Agreement and
tender its Shares pursuant to the Offer, thereby satisfying a condition to
the Offer;
(vi) The fact that Mr. Pokelwaldt would agree to enter into the Voting
Agreement, thereby satisfying a condition to the Offer;
(vii) Other possible alternatives to the Offer and the Merger, the value
to the Stockholders of such alternatives and the timing and likelihood of
achieving superior value from these alternatives, as well as the
possibility that equally suitable partners for merger and consolidation
would be available. In this connection, the Board considered the fact that
despite CORT's prior efforts to identify other alternative acquisition
candidates and the public disclosures about the proposed transaction with
BRS, no other parties, except Wesco and Fremont/Brook, had approached the
Company with an offer for an acquisition or a business combination. The
Board also considered the possibility of remaining an independent company.
The Board concluded that the transactions contemplated by the Merger
Agreement, including the Offer and the Merger, were superior to any other
alternatives, and that, if a superior alternative did subsequently become
available, the Company would be able to pursue such an alternative under
the terms of the Merger Agreement, subject to paying a $15 million
termination fee;
(viii) The Directors' knowledge of the Company's business, financial
condition, results of operations, current business strategy and future
prospects, the nature of the markets in which the Company operates and its
position in such markets and the Company's growth prospects; and
(ix) The historical and current market prices of, and recent trading
activity in, the Shares, in particular the fact that the $28.00 per Share
in cash to be paid in the Offer and the Merger represents a premium of
approximately 63.5% over the closing price of the Shares on January 14,
2000, the last trading day prior to the public announcement of the Merger
Agreement.
The Board also considered certain countervailing factors in its
deliberations concerning the Merger Agreement, the Offer and the Merger,
including:
(i) The requirement under the Merger Agreement that the Company pay a
termination fee of $15 million if the Merger Agreement is terminated under
certain circumstances specified in the Merger Agreement, including, among
others, if the Company exercised its right to terminate the Merger
Agreement and enter into an alternative transaction. Although the Board
recognized that this requirement could result in significant fees being
borne by the Company, it accepted this provision as a means to obtain other
terms favorable to the Company, in particular, the right to negotiate or
exchange information with potential bidders and the right to terminate the
Merger Agreement, under certain limited circumstances set forth in the
Merger Agreement, in the event of an alternative transaction that the Board
determined would be superior to the transactions contemplated by the Merger
Agreement; and
(ii) The fact that the Fremont/Brook proposal contemplated per share
consideration for 98.1% of the Company's Shares that was higher than that
provided for in the Merger Agreement. For the reasons described above (see
"Background"), the Board concluded that the prospects for receiving this
additional consideration were more than offset by the substantial risks
that the Fremont/Brook proposal would not be consummated on the terms
proposed.
The foregoing discussion of factors considered by the Board is not meant to
be exhaustive but includes the material factors considered by the Board in
approving the Merger Agreement and the transactions contemplated thereby and
in recommending that Stockholders tender their Securities pursuant to the
Offer. The Board did not
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find it practicable to, and did not, quantify or otherwise assign relative
weights to the specific factors considered. In addition, individual members of
the Board may have given different weights to different factors.
THE FULL TEXT OF THE SUNTRUST EQUITABLE SECURITIES CORPORATION OPINION IS
ATTACHED AS ANNEX B HERETO. STOCKHOLDERS ARE URGED TO AND SHOULD READ SUCH
OPINION IN ITS ENTIRETY. SUCH OPINION WAS PROVIDED FOR THE INFORMATION AND
ASSISTANCE OF THE BOARD IN CONNECTION WITH ITS CONSIDERATION OF THE
TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT AND IS DIRECTED ONLY TO THE
FAIRNESS OF THE CONSIDERATION TO BE RECEIVED PURSUANT TO THE MERGER AGREEMENT
BY STOCKHOLDERS IN THE OFFER AND THE MERGER. SUCH OPINION DOES NOT CONSTITUTE
A RECOMMENDATION AS TO WHETHER OR NOT ANY STOCKHOLDER SHOULD TENDER HIS, HER
OR ITS SECURITIES IN THE OFFER OR WHETHER ANY STOCKHOLDER SHOULD SEEK
APPRAISAL RIGHTS IN CONNECTION WITH THE MERGER.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The SunTrust Equitable Securities Corporation Engagement. The Company has
retained SunTrust Equitable Securities Corporation to render financial
advisory services to the Company with respect to the Offer, the Merger and
matters arising in connection therewith. Pursuant to a letter agreement dated
January 3, 2000, the Company has paid STES a fee of $100,000, which was
payable upon execution of STES's engagement letter, and has paid STES a fee of
$200,000, which was payable upon an oral opinion by STES to the Board of
Directors of the Company, and has agreed to pay STES $200,000, payable at the
closing of the Merger.
The Company has also agreed to reimburse STES for its reasonable out-of-
pocket expenses, including reasonable fees and expenses of counsel, and to
indemnify STES and certain related persons against certain liabilities in
connection with their engagement including liabilities under the federal
securities laws.
Except as described above, neither the Company nor any person acting on its
behalf has employed, retained or compensated any other person to make
solicitations or recommendations to security holders on its behalf with
respect to the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) Other than as described in the following paragraphs and except for the
issuance of Shares upon exercise of outstanding options, there have been no
transactions in the Securities during the past 60 days by the Company or, to
the best knowledge of the Company, by any executive officer, director,
affiliate or subsidiary of the Company.
(b) CVC, who beneficially owns approximately 44% of the Shares of the
Company, is a party to the Stockholder Agreement, pursuant to which it has
agreed to tender all of its Securities into the Offer upon the terms and
subject to the conditions set forth in the Stockholder Agreement. See Item
3(b) of this Schedule 14D-9, which is incorporated by reference into this Item
6(b).
(c) CVC is a party to the Amended and Restated Voting Trust Agreement (the
"Trust Agreement") dated as of November 15, 1999, with Harold O. Rosser,
Stephen C. Sherrill, Stephen F. Edwards and Robert N. Pokelwaldt, pursuant to
which CVC deposited 5,778,518 Voting Shares into a trust with Mr. Pokelwaldt
as the trustee. Pursuant to the Trust Agreement, Mr. Pokelwaldt has the right
to vote the Voting Shares in the trust on any issue presented to the Company's
shareholders as he may choose. He does not have the power to dispose of the
Voting Shares in the trust. The Trust Agreement will terminate upon the
earliest of the sale of all of the Voting Shares in the trust, conversion of
the Voting Shares in the trust into Class B Shares, or the tenth anniversary
of the Trust Agreement.
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To the best of the Company's knowledge, each of the Company's executive
officers and directors intends to tender all Securities over which such person
has sole dispositive power into the Offer except if such tender would subject
such person to liability under Section 16(b) of the Exchange Act.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Except as set forth in this Schedule l4D-9, the Company is not engaged
in any negotiations in response to the Offer which relate to or would result
in (i) an extraordinary transaction such as a merger or reorganization,
involving the Company or any subsidiary of the Company; (ii) a purchase, sale
or transfer of a material amount of assets by the Company or any subsidiary of
the Company; (iii) a tender offer for or other acquisition of securities by or
of the Company; or (iv) any material change in the present capitalization or
dividend policy of the Company.
(b) Except as described in Item 3(b) and Item 4 of this Schedule l4D-9,
which Items are hereby incorporated by reference into this Item 7(b), there
are no transactions, board resolutions, agreements in principle or signed
contracts in response to the Offer which relate to or would result in one or
more of the matters referred to in paragraph (a) of this Item 7, except that
the Board has adopted resolutions unanimously approving the Merger Agreement
(including all terms and conditions set forth therein) and the transactions
contemplated thereby, including the Offer and the Merger, determining that the
Merger is advisable and that the terms of the Offer and the Merger are fair to
and in the best interests of the Company's stockholders and unanimously
recommending that the Company's stockholders accept the Offer, tender their
Shares thereunder to the Purchaser and approve and adopt the Merger Agreement
and the Merger. Subject to the terms of the Merger Agreement, the Company may
engage in discussions or negotiations with respect to transactions or
proposals of the type referred to above in this Item 7. At its meeting held on
January 13, 2000, the Board determined that public disclosure with respect to
the parties to, and the possible terms of any proposals made in connection
with, or agreement that may result from, any such discussions or negotiations,
might jeopardize the continuation of such discussions or negotiations and
adopted a resolution authorizing and directing management not to make any such
public disclosure unless and until an agreement in principle is reached
relating thereto.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
Reference is made to the Information Statement Pursuant to Section 14(f) of
the Exchange Act and Rule 14f-1 thereunder, which is attached as Annex A and
filed as an Exhibit hereto and is incorporated herein by reference.
State Anti-takeover Statutes. Section 203 of the DGCL, in general, prohibits
a Delaware corporation, such as the Company, from engaging in a "Business
Combination" (defined to include a variety of transactions, including mergers)
with an "Interested Stockholder" (defined generally as a person that is the
beneficial owner of 15% or more of the outstanding voting stock of the subject
corporation) for a period of three years following the date that such person
became an Interested Stockholder unless, prior to the date such person became
an Interested Stockholder, the board of directors of the corporation approved
either the Business Combination or the transaction that resulted in the
stockholder becoming an Interested Stockholder. The provisions of Section 203
of the DGCL are not applicable to any of the transactions contemplated by the
Merger Agreement because the Merger Agreement and the transactions
contemplated thereby were approved by the Board prior to the execution thereof
and Article 11 of the Restated Certificate of Incorporation of the Company
provides that the Company shall not be governed by the provisions of Section
203 of the DGCL.
A number of states have adopted laws and regulations that purport to apply
to attempts to acquire corporations that are incorporated in such states, or
whose business operations have substantial economic effects in such states, or
which have substantial assets, security holders, employees, principal
executive offices or principal places of business in such states. In Edgar v.
MITE Corp., the Supreme Court of the United States (the "Supreme Court")
invalidated on constitutional grounds the Illinois Business Takeover statute,
which, as a matter of state securities law, made certain corporate
acquisitions more difficult. However, in 1987, in CTS Corp.
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v. Dynamics Corp. of America, the Supreme Court held that the State of Indiana
may, as a matter of corporate law and, in particular, with respect to those
aspects of corporate law concerning corporate governance, constitutionally
disqualify a potential acquirer from voting on the affairs of a target
corporation without the prior approval of the remaining stockholders. The
state law before the Supreme Court was by its terms applicable only to
corporations that had a substantial number of stockholders in the state and
were incorporated there.
The Company does not believe that the anti-takeover laws and regulations of
any state other than the State of Delaware will by their terms apply to the
Offer, and, except as set forth above with respect to Section 203 of the DGCL,
the Company has not attempted to comply with any state anti-takeover statute
or regulation. The Company reserves the right to challenge the applicability
or validity of any state law purportedly applicable to the Offer and nothing
in this Schedule 14D-9 or any action taken in connection with the Offer is
intended as a waiver of such right. If it is asserted that any state anti-
takeover statute is applicable to the Offer and an appropriate court does not
determine that it is inapplicable or invalid as applied to the Offer,
Purchaser might be required to file certain information with, or to receive
approvals from, the relevant state authorities, and Purchaser might be unable
to accept for payment or pay for Shares tendered pursuant to the Offer or may
be delayed in consummating the Offer. In such case, Purchaser may not be
obligated to accept for payment, or pay for, any Shares tendered pursuant to
the Offer. See Section 3(b) of this Schedule 14D-9 under the caption "--
Conditions of the Offer."
Antitrust Compliance. The Offer and the Merger are subject to the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"),
which provides that certain acquisition transactions may not be consummated
unless certain information has been furnished to the Antitrust Division of the
Department of Justice (the "Antitrust Division") and the Federal Trade
Commission (the "FTC") and certain waiting period requirements have been
satisfied.
The Company expects that Parent will file its Notification and Report Form
with respect to the Offer and the Merger with the Antitrust Division and the
FTC on January 26, 2000. The waiting period under the HSR Act with respect to
the Offer will expire at 11:59 p.m., New York City time, the fifteenth day
after the date Parent's form is filed, unless early termination of the waiting
period is granted. However, the DOJ or FTC may extend the waiting period by
requesting additional information or documentary material from Parent or the
Company. If such a request is made, such waiting period will expire at 11:59
p.m., New York City time, on the tenth calendar day after the date of
substantial compliance by Parent with such request. Thereafter, the waiting
period could be extended only by court order or with the consent of Parent. In
practice, complying with a request for additional information or material can
take a significant amount of time. In addition, if the DOJ or the FTC raises
substantive issues in connection with a proposed transaction, the parties
frequently engage in negotiations with the relevant governmental agency
concerning possible means of addressing those issues and may agree to delay
consummation of the transaction while such negotiations continue. Purchaser
will not accept for payment Shares tendered pursuant to the Offer unless and
until the waiting period requirements imposed by the HSR Act with respect to
the Offer have been satisfied. See Section 3(b) of this Schedule 14D-9 under
the caption "--Conditions of the Offer."
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares
by Purchaser pursuant to the Offer and the Merger. At any time before or after
Purchaser's purchase of Shares, the Antitrust Division or the FTC could take
such action under the anti-trust laws as it deems necessary or desirable in
the public interest, including seeking to enjoin the acquisition of Shares
pursuant to the Offer or seeking divestiture of Shares acquired by Purchaser
or the divestiture of substantial assets of Parent, the Company or any of
their respective subsidiaries. Private parties, as well as state governments,
may also bring legal action under the antitrust laws under certain
circumstances. There can be no assurance that a challenge to the Offer on
antitrust grounds will not be made or, if a challenge is made, what the result
will be. See Section 3(b) of this Schedule 14D-9 under the caption "--
Conditions of the Offer" for certain conditions to the Offer that could become
applicable in the event of such a challenge.
Purchaser's Designation of Persons To Be Elected to the Company Board. The
Information Statement attached as Annex A to this Statement is being furnished
in connection with the possible designation by the Purchaser, pursuant to the
terms of the Merger Agreement, of certain persons to be appointed to the Board
other than at a meeting of the Company's stockholders.
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ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<C> <S>
Exhibit 1 Form of Offer to Purchase, dated January 21, 2000 (incorporated by
reference to Exhibit (a)(1) to the Schedule 14D-1).*
Exhibit 2 Form of Letter of Transmittal to Tender Shares of Common Stock
(incorporated by reference to Exhibit (a)(2) to the Schedule 14D-
1).*
Exhibit 3 Letter to Stockholders of the Company, dated January 21, 2000.*
Exhibit 4 Opinion of SunTrust Equitable Securities dated January 14, 2000.
(Annex B to the Schedule 14D-9).*
Exhibit 5 Agreement and Plan of Merger, dated as of January 14, 2000, among
Parent, Purchaser and the Company (incorporated by reference to
Exhibit (c)(l) of the Schedule 14D-1).
Exhibit 6 Stockholder Agreement, dated as of January 14, 2000, among Parent,
Purchaser and Citicorp Venture Capital Ltd. (incorporated by
reference to Exhibit (c)(2) of the Schedule 14D-1).
Exhibit 7 Voting Agreement, dated January 14, 2000 between Parent, Purchaser
and Robert N. Pokelwaldt (incorporated by reference to Exhibit
(c)(3) to the Schedule 14D-1).
Exhibit 8 Joint Press Release, dated January 14, 2000 (incorporated by
reference to Exhibit (a)(6) to the Schedule 14D-1).
Exhibit 9 Information Statement Pursuant to Section 14(f) of the Exchange Act
and Rule 14f-1 thereunder (Annex A to the Schedule 14D-9).*
Exhibit 10 Letter Agreement dated March 25, 1999 between the Company and Paul
N. Arnold (incorporated by reference to Exhibit 10.13 of the
Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1999).
Exhibit 11 Letter Agreement dated March 25, 1999 between the Company and
Anthony J. Bellerdine (incorporated by reference to Exhibit 10.14
of the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999).
Exhibit 12 Letter Agreement dated March 25, 1999 between the Company and
Steven D. Jobes (incorporated by reference to Exhibit 10.15 of the
Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1999).
Exhibit 13 Letter Agreement dated March 25, 1999 between the Company and Lloyd
Lenson (incorporated by reference to Exhibit 10.16 of the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31,
1999).
Exhibit 14 Letter Agreement dated March 25, 1999 between the Company and
Kenneth W. Hemm (incorporated by reference to Exhibit 10.17 of the
Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1999).
Exhibit 15 Letter Agreement dated March 25, 1999 between the Company and
Frances Ann Ziemniak (incorporated by reference to Exhibit 10.18 of
the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1999).
Exhibit 16 Change of Control Bonus Plan dated March 25, 1999.
Exhibit 17 Amendment to Letter Agreement dated January 14, 2000 between the
Company and Paul N. Arnold.
Exhibit 18 Amendment to Letter Agreement dated January 14, 2000 between the
Company and Anthony J. Bellerdine.
Exhibit 19 Amendment to Letter Agreement dated January 14, 2000 between the
Company and Steven D. Jobes.
Exhibit 20 Amendment to Letter Agreement dated January 14, 2000 between the
Company and Lloyd Lenson.
Exhibit 21 Amendment to Letter Agreement dated January 14, 2000 between the
Company and Kenneth W. Hemm.
Exhibit 22 Amendment to Letter Agreement dated January 14, 2000 between the
Company and Frances Ann Ziemniak.
Exhibit 23 First Amendment to Change of Control Bonus Plan dated January 14,
2000.
Exhibit 24 Joint Press Release, dated January 21, 2000 (incorporated by
reference to Exhibit (a)(7) to the Schedule 14D-1).
</TABLE>
- --------
* Included with Schedule 14D-9 mailed to stockholders.
23
<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: January 21, 2000
CORT Business Services Corporation
By: /s/ Paul N. Arnold
---------------------------------
Name: Paul N. Arnold
Title: President and Chief
Executive Officer
24
<PAGE>
ANNEX A
INFORMATION STATEMENT PURSUANT TO SECTION 14(F)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
AND RULE 14F-1 PROMULGATED THEREUNDER
----------------
GENERAL
This Information Statement is being mailed on or about January 21, 2000 as
part of the Solicitation/Recommendation Statement on Schedule 14D-9 (as
amended from time to time, the "Schedule 14D-9") of CORT Business Services
Corporation (the "Company"). Capitalized terms used herein and not otherwise
defined have the respective meanings set forth in the Schedule l4D-9. You are
receiving this Information Statement in connection with the possible election
of persons designated by Purchaser (the "Purchaser Designees") to the Board.
The Merger Agreement requires the Company, upon the acceptance for payment of
and payment for any Securities by Purchaser pursuant to the Offer and upon
request of Purchaser, to take certain action to cause the Purchaser Designees
to be elected to the Board.
The Offer commenced on January 21, 2000 and is scheduled to expire at 12:00
midnight, New York City time, on February 17, 2000, unless extended upon the
terms set forth in the Offer to Purchase.
The information contained in this Information Statement concerning Parent
and Purchaser has been furnished to the Company by Parent. The Company assumes
no responsibility for the accuracy or completeness of such information.
THIS INFORMATION STATEMENT IS REQUIRED BY SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, AND RULE 14F-l THEREUNDER. YOU ARE URGED TO
READ THIS INFORMATION STATEMENT CAREFULLY. YOU ARE NOT, HOWEVER, REQUIRED TO
TAKE ANY ACTION.
INFORMATION REGARDING THE SHARES
The Voting Shares constitute the only class of voting securities of the
Company outstanding. As of January 19, 2000, there were 13,108,569 Voting
Shares outstanding. Each Voting Share is entitled to one vote.
DESIGNATION OF DIRECTORS BY PURCHASER
The Merger Agreement provides that, promptly upon the purchase of Shares by
Purchaser pursuant to the Offer, Purchaser shall be entitled to designate such
number of directors, rounded up to the next whole number, on the Board equal
to the product of the total number of directors on the Board of Directors of
the Company (giving effect to the directors appointed or elected pursuant to
this sentence and including current directors serving as officers of the
Company) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Parent, Purchaser or any of their affiliates (including
such Shares as are accepted for payment pursuant to the Offer, but excluding
Shares held by the Company or any of its subsidiaries) bears to the total
number of shares of Company Common Stock then issued and outstanding. The
Company has agreed, upon request by Purchaser, to promptly increase the size
of the Board of Directors of the Company as is necessary to enable Purchaser's
designees to be elected to the Board of Directors of the Company, and has
agreed to cause Purchaser's designees to be so elected. The Company has
agreed, upon the request of Purchaser, to use its best efforts to cause each
committee of the Board of Directors of the Company and the Board of Directors
of each subsidiary of the Company to include persons designated by Purchaser
constituting the same percentage of each
A-1
<PAGE>
such committee and the Board of Directors of each subsidiary of the Company as
Purchaser's designees are of the Board of Directors of the Company. During the
period after the election of directors designated by Purchaser but prior to
the Effective Time, the Board of Directors of the Company shall delegate to a
committee of the Board of Directors of the Company comprised solely of the
Independent Directors, the sole responsibility for (i) the amendment or
termination of the Merger Agreement (in either case in accordance with the
Merger Agreement) on behalf of the Company, but excluding a termination by the
Company because it has entered into a definitive agreement providing for a
Superior Proposal, which is not delegated, (ii) the waiver of any of the
Company's rights or remedies under the Merger Agreement, (iii) the extension
of the time for performance of Parent's or Purchaser's obligations under the
Merger Agreement, or (iv) the assertion or enforcement of the Company's rights
under the Merger Agreement to (a) object to a failure to consummate the Merger
for a failure of the condition that the Company perform in all material
respects all material obligations required by it under the Merger Agreement to
be satisfied or (b) a termination of the Merger Agreement by the Parent if the
representations and warranties of the Company set forth in the Merger
Agreement are not true and correct in any respect as of the date of the Merger
Agreement and as of the Expiration Date as if made on such date, except, in
the case of the failure of any representation or warranty, (1) for changes
specifically permitted by this Agreement, and (2)(A) those representations and
warranties that address matters only as of a particular date which are true
and correct as of such date or (B) where the failure of such representations
and warranties to be true and correct, do not, individually or in the
aggregate, have a Company Material Adverse Effect.
It is expected that the Purchaser Designees will assume office promptly
following the purchase by Purchaser of a majority of the outstanding Shares on
a fully diluted basis pursuant to the terms of the Offer, which purchase
cannot be earlier than February 17, 2000, and that, upon assuming office, the
Purchaser Designees together with the continuing directors of the Company will
thereafter constitute the entire Board.
As of the date of this Information Statement, Purchaser has not determined
who will be the Purchaser Designees. However, the Purchaser Designees will be
selected from among the persons listed in Schedule I attached hereto. Schedule
I also includes certain information with respect to each of the Purchaser
Designees.
CURRENT DIRECTORS OF THE COMPANY
The names of the current directors of the Company, their ages, and certain
other information about them are set forth below:
<TABLE>
<CAPTION>
Name of Director Age Business Experience
---------------- --- -------------------
<S> <C> <C>
Paul N. Arnold........ 53 Mr. Arnold has served as Director of the Company
since March 1993. Mr. Arnold has served as President
and Chief Executive Officer of the Company since
July 1992 and has been with CORT and Mohasco
Corporation, its former parent, for 31 years. He has
held group management positions within CORT since
1976. He is also a Director of Town Sports
International, Inc. and Penhall International Corp.
Keith E. Alessi....... 45 Mr. Alessi has served as a Director of the Company
since October 1993. Mr. Alessi has been President,
Chief Executive Officer and Chairman of the Board of
Directors of Telespectrum Worldwide, Inc. since
March 1998. Mr. Alessi was President and Chief
Executive Officer of Jackson Hewitt Inc. from June
1996 through March 1998. He was Vice Chairman and
Chief Financial Officer of Farm Fresh, Inc. (which
filed voluntary bankruptcy as part of a sale of the
company in January 1998 and emerged from bankruptcy
in February 1998) from June 1994 through June 1996.
He is also a Director of Town Sports International,
Inc.
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
Name of Director Age Business Experience
---------------- --- -------------------
<S> <C> <C>
Bruce C. Bruckmann.... 45 Mr. Bruckmann has served as a Director of the
Company since March 1993. Mr. Bruckmann is currently
Managing Director of Bruckmann, Rosser, Sherrill &
Co., Inc. Mr. Bruckmann was an officer of Citicorp
Venture Capital Ltd., which is an affiliate of the
Company, from 1983 through 1994. He is also a
Director of Mohawk Industries, Inc., AmeriSource
Health Corporation, Chromcraft-Revington, Inc.,
Jitney-Jungle Stores of America, Inc., Anvil
Knitwear, Inc., Town Sports International, Inc.,
MEDIQ, Inc., California Pizza Kitchen, Inc. and
Penhall International Corp.
Michael A. Delaney.... 45 Mr. Delaney has been a Director of the Company since
May 1995. Mr. Delaney has been a Managing Director
of Citicorp Venture Capital Ltd., which is an
affiliate of the Company since 1997. From 1989
through 1997, he was a Vice President of Citicorp
Venture Capital Ltd. Mr. Delaney is also a Director
of Allied Digital Technologies Corporation, Aetna
Industries, Inc., AmeriSource Health Corporation,
CLARK Material Handling Corporation, Delco Remy
International, Inc., Enterprise Media Inc.,
FabriSteel, Inc., Great Lakes Dredge & Dock
Corporation, GCV Holdings, IKS Corporation, JAC
Holdings, MSX International, Palomar Technologies,
Inc., SC Processing, Inc. and Triumph Group, Inc.
Charles M. Egan....... 63 Mr. Egan has been a Director and Chairman of the
Company since September 1993. He has been with CORT
since the acquisition of General Furniture Leasing
Company in September 1993. Mr. Egan joined General
Furniture Leasing Company in 1989 and became its
President and Chief Executive Officer in 1992. From
1985 to 1989, he was Executive Vice President of
Mohasco Corporation. Mr. Egan was President of CORT
from 1980 to 1985.
Gregory B. Maffei..... 39 Mr. Maffei has been a Director of the Company since
November 1995. Mr. Maffei joined Worldwide Fiber
Inc. in January 2000 as Chief Executive Officer. Mr.
Maffei was the Chief Financial Officer of Microsoft
Corporation from July 1997 to January 2000. He
served as Treasurer of Microsoft Corporation from
1994 to 1996 and Vice President, Corporate
Development of Microsoft Corporation from 1996 to
July 1997. Prior to January 1991, Mr. Maffei was a
Vice President of Citicorp Venture Capital Ltd.,
which is an affiliate of the Company. Mr. Maffei is
also a Director of Ragen MacKenzie Group Inc.,
Skytel Communications, Inc. and Starbucks
Corporation.
James A. Urry......... 46 Mr. Urry has been a Director of the Company since
March 1993. Mr. Urry has been with Citibank, N.A.
since 1981 serving as a Vice President since 1986.
He has been a Vice President of Citicorp Venture
Capital Ltd., which is an affiliate of the Company,
since 1989. He is also a Director of Airxcel, Inc.,
CLARK Material Handling Corporation, Hancor Holding
Corporation, IKS Corporation, Intersil Holding
Corporation, Palomar Technologies, Inc. and York
International Corporation.
</TABLE>
A-3
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
The names, ages, principal occupations and positions for the past five years
of each Executive Officer of the Company who is not also a Director of the
Company are as follows:
<TABLE>
<S> <C> <C>
Robert Baker............ 44 Mr. Baker has served as Group Vice President--CORT-Instant
of the Company since August 1998. Mr. Baker was the co-
founder and Chairman of Instant Interiors Corporation from
1978 until substantially all of its assets were acquired by
CORT in August 1998.
Anthony J. Bellerdine... 51 Mr. Bellerdine has served as Senior Group Vice President of
the Company since January 1999. Mr Bellerdine has been with
CORT since July 1991 and has previously served as Group Vice
President, Area Vice President, and Senior District Manager.
Michael G. Connors...... 43 Mr. Connors has been Vice President--Real Estate of the
Company since March 1991. Mr. Connors joined CORT in
February 1986, after nearly eight years in Real Estate and
Marketing with Mobil Oil Corporation.
Kenneth W. Hemm......... 45 Mr. Hemm has served as Executive Vice President and Chief
Operating Officer--Division II of the Company since January
1999. Mr. Hemm has been with CORT for 18 years and has
previously served as Group Vice President, Group Manager and
District Manager.
Steven D. Jobes......... 49 Mr. Jobes has served as Executive Vice President and Chief
Marketing Officer of the Company since January 1999. Mr.
Jobes has been with CORT for 28 years and has previously
served as Vice President--Marketing, Merchandising, Sales
and National Accounts and Group Vice President.
Lloyd Lenson............ 48 Mr. Lenson has served as Executive Vice President and Chief
Operating Officer--Division I of the Company since January
1999. Mr Lenson has been with CORT for 21 years and has
previously served as Group Vice President and Vice
President--Marketing, Sales and Acquisitions.
Victoria L. Stiles...... 45 Ms. Stiles has served as Vice President--Human Resources and
Corporate Risk Management of the Company since July 1996.
She served as Director of Human Resources and Regional
Manager of Human Resources of the Company from November 1987
to July 1996.
William Swets........... 45 Mr. Swets has served as Vice President--Business Development
of the Company since August 1998. Mr. Swets was the co-
founder and President of Instant Interiors Corporation from
1978 until substantially all of its assets were acquired by
the Company in August 1998.
Maureen C. Thune........ 33 Ms. Thune has served as Vice President--Corporate Controller
since January 1999 and Assistant Secretary of the Company
since September 1993. Ms. Thune served as Controller from
August 1992 to January 1999.
Frances Ann Ziemniak.... 49 Ms. Ziemniak has served as Executive Vice President, Chief
Financial Officer of the Company since January 1999 and
Secretary of the Company since May 1997. She served as Vice
President--Finance and Chief Financial Officer of the
Company from March 1995 to January 1999. Prior to joining
CORT, Ms. Ziemniak was an independent consultant focusing on
risk-management and retail acquisition analysis from 1992 to
1995. Ms. Ziemniak was previously Vice President, Finance
and Chief Financial Officer for Federated Merchandising, a
division of Federated Department Stores, Inc. from 1987 to
1992.
</TABLE>
A-4
<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS
There were 11 meetings of the Board, four meetings of the Compensation
Committee, one meeting of the Audit Committee and no meetings of the Directors
Stock Option Committee during the fiscal year ended December 31, 1999. Each
director attended at least 75% of the aggregate number of meetings of the
Board and committees on which he served, except Michael A. Delaney.
DIRECTORS' COMPENSATION AND CONSULTING ARRANGEMENTS
Directors who are not employees of the Company or CVC receive a monthly
payment of $1,000, $500 for attendance at each meeting of the Board and $500
for attendance at each meeting of a committee of the Board and are reimbursed
for expenses incurred in connection with attendance at meetings of the Board
or committees thereof. In addition, directors not employed by the Company are
entitled to receive options for Common Stock pursuant to the 1997 Directors
Stock Option Plan (the "Directors Plan"). The Company adopted the Directors
Plan, which provides for the granting of stock options on a non-discretionary
basis to non-employee directors of the Company. An aggregate of 50,000 Shares
have been reserved for issuance under the Directors Plan. The Directors Plan
provides for automatic grants of options to purchase 2,000 Shares to each of
the Company's non-employee directors on the business day immediately following
the Company's annual meeting of stockholders in calendar years 1997, 1998,
1999, 2000 and 2001, which options will become exercisable over a three-year
period. The option exercise price is equal to 100% of the fair market value of
the Shares on the date of grant of the option. Options granted to directors
under the Directors Plan will be treated as nonstatutory stock options under
the Internal Revenue Code, as amended. The Company granted no options in 1999
pursuant to the terms of the Directors Plan, since no annual meeting of
stockholders was held during the calender year of 1999.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board has standing Audit, Compensation and Directors Stock Option
Committees.
The Audit Committee recommends the independent accountants to conduct the
annual audit of the books and accounts of the Company, and reviews the
adequacy of the Company's financial reporting, accounting systems and
controls. The Audit Committee also evaluates the Company's internal and
external auditing procedures. The Audit Committee currently consists of
Messrs. Alessi, Chairman, Bruckmann, and Maffei. The Compensation Committee
reviews and approves salary and other compensation of officers and administers
certain benefit plans. The Compensation Committee also has the authority to
administer, grant and award stock options under the Company's stock option
plans. Current members of the Compensation Committee are Messrs. Urry,
Chairman, Bruckmann, and Delaney. The Directors Stock Option Committee
administers the Directors Plan. Current members of the Directors Stock Option
Committee are Messrs. Arnold and Egan.
The Company does not have a standing nominating committee or other committee
of the Board performing a similar function.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
The Compensation Committee of the Board (the "Committee") establishes,
oversees and directs the Company's executive compensation programs and
policies and administers the Company's stock option plans. The Committee seeks
to align executive compensation with Company objectives and strategies,
management programs, business financial performance and enhanced stockholder
value. The Committee consists of independent outside directors, none of whom
is or was an officer or employee of the Company or CORT Furniture Rental
Corporation.
The Committee's objectives include (i) attracting and retaining exceptional
individuals as executive officers and (ii) providing key executives with
motivation to perform to the full extent of their abilities in an effort to
A-5
<PAGE>
maximize Company performance to deliver enhanced value to the Company's
stockholders. The Committee believes it is important to place a greater
percentage of executive officers' compensation at risk, as compared to non-
executives, by tying compensation directly to the performance of the business
and value of the Common Stock. Executive compensation generally consists of
(i) a base salary, (ii) a cash bonus opportunity that is linked to the
performance of the Company and (iii) long-term equity-based compensation.
Compensation.
The annual salaries and bonuses of the Company's executive officers are set
at levels designed to attract and retain exceptional individuals by rewarding
them for individual and Company achievements. The Committee reviews the annual
salary and bonus of each executive officer in relation to such officer's
performance and previous compensation and general market and industry
conditions or trends and makes appropriate adjustments. The Committee reviews
each executive officer's salary annually to determine if it is appropriate to
adjust such salary based on various factors including each executive officer's
past performance and expected future contributions, the scope and nature of
responsibilities, including changes in such responsibilities, and competitive
compensation data relating to each executive officer.
The Committee believes that a portion of the executives' compensation should
be tied to the financial results of the Company in order to reward individual
performance and overall Company success. Each year, objective targets are
established for each officer. Such targets include the Company's financial
targets, such as revenue, earnings and return on assets, as well as individual
strategic and operating targets. Additionally, a portion of each officer's
bonus is based on subjective criteria particular to each officer's individual
operating responsibilities. In 1999, the Company and the executive officers
met certain goals established by the Committee. Accordingly, Messrs. Arnold,
Hemm, Jobes and Lenson and Ms. Ziemniak earned a portion of their bonuses
which was attributable to their respective targets and objectives. These
bonuses have not yet been calculated or approved by the Board.
The Company has employee stock option plans in order to offer key employees
the opportunity to acquire an equity interest in the Company, thereby aligning
the interests of these employees more closely with the long-term interests of
stockholders. Awards under these employee stock option plans may be in the
form of options, deferred stock, restricted stock or stock appreciation
rights. In 1999, the Company granted no stock options to the Company's
executive officers due to a pending merger transaction that was never
consummated.
2000 Chief Executive Officer Compensation.
The Committee has not yet determined the 2000 compensation of Mr. Arnold,
President and Chief Executive Officer. Such compensation will be determined in
accordance with the above discussion. In addition, the Committee has not yet
calculated Mr. Arnold's bonus.
Deductibility of Compensation.
Section 162(m) of the Internal Revenue Code imposes a $1 million limit on
the deductibility of compensation paid to executive officers of public
companies. The Committee believes that all of the compensation awarded to the
Company's executive officers will be fully deductible in accordance with this
limit.
COMPENSATION COMMITTEE
James A. Urry, Chairman
Bruce C. Bruckmann
Michael A. Delaney
A-6
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the percentage change in cumulative total
stockholder return on the Company's Shares against the cumulative total return
of the Standard & Poor's 500 Index and the Dow Jones Other Industrial and
Commercial Services Index from the initial public offering price on November
17, 1995 to December 31, 1999. Cumulative total return to stockholders is
measured by dividing (x) the sum of (i) total dividends for the period
(assuming dividend reinvestment) plus (ii) per-share price change for the
period by (y) the share price at the beginning of the period. The graph is
based on an investment of $100 at the initial public offering price on
November 17, 1995 in the Shares and in each index.
[CHART]
Cort Business S&P 500 Dow Jones Other
Services Corporation Industrial &
Commercial Services
11/17/95 100 100 100
Dec-95 138 103 101
Dec-96 172 126 111
Dec-97 332 169 127
Dec-98 202 217 150
Dec-99 145 262 176
A-7
<PAGE>
The following compensation information for the period ending December 31,
1999 has not been updated to reflect the effect of subsequent events,
including, but not limited to, the Merger Agreement.
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation of
the Named Executive Officers for the most recent three fiscal years.
<TABLE>
<CAPTION>
Long Term Compensation
----------------------------------------------
Annual Compensation Awards Payouts
------------------------------------ ---------- -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
--- --- --- --- --- --- --- --- ---
Restricted Securities
Name and Principal Other annual Stock Underlying LTIP All Other
Position Year Salary Bonus (1) compensation Award(s) Options Payouts Compensation (3)
------------------ ---- -------- --------- ------------ ---------- ---------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Paul N. Arnold.......... 1999 $293,750 (2) -- -- -- -- $8,301
President and Chief 1998 248,125 $ 74,631 -- -- 83,000 -- 10,577
Executive 1997 233,750 233,750 -- -- 4,500 -- 11,754
Officer
Kenneth W. Hemm......... 1999 158,000 (2) -- -- -- -- 23,372
Executive Vice 1998 148,633 34,857 -- -- 31,000 -- 23,935
President and 1997 148,633 34,857 -- -- 3,500 -- 23,939
Chief Operating
Officer--
Division II
Steven D. Jobes......... 1999 142,900 (2) -- -- -- -- --
Executive Vice 1998 130,665 33,248 -- -- 31,000 -- --
President and 1997 125,140 87,723 -- -- 3,500 -- --
Chief Marketing Officer
Lloyd Lenson............ 1999 152,600 (2) -- -- -- -- 5,495
Executive Vice 1998 142,400 32,500 -- -- 31,000 -- 5,994
President and 1997 136,125 69,301 -- -- 3,500 -- 5,504
Chief Operating
Officer--
Division I
Frances Ann Ziemniak.... 1999 141,321 (2) -- -- -- -- 19,222
Executive Vice 1998 131,286 33,406 -- -- 25,500 -- 19,667
President, Chief 1997 125,268 87,813 -- -- 3,500 -- 18,216
Financial Officer and
Secretary
</TABLE>
- --------
(1) The amounts shown consist of cash bonuses earned in the fiscal year
identified but paid in subsequent years.
(2) Bonuses for 1999 have not yet been calculated and approved by the Board.
(3) The Company maintains an investment and profit-sharing defined
contribution retirement plan. All of the Company's employees are eligible
to participate after one year of service. The Company makes a matching
contribution as a percentage of the employee contributions. The Company
may, at its discretion, make additional contributions based on the
Company's performance. The amounts shown include both the matching
contribution and the Company's discretionary payment on behalf of the
named executives in which all of the above, except Ms. Ziemniak, are fully
vested. In addition, the amounts shown include the amounts allocated to
certain management employees in the defined contribution portion of the
CORT Furniture Rental Supplemental Executive Retirement Plan. The Company
contributes a fixed dollar amount per plan member with the total
contribution allocated among all plan members on the basis of their
responsibility, age and years of service.
OPTION GRANTS DURING LAST FISCAL YEAR
The Company granted no options in 1999 pursuant to the 1995 Stock-Based
Incentive Compensation Plan.
A-8
<PAGE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning stock options
exercised in the fiscal year ended December 31, 1999, including the "value
realized" upon exercise (the difference between the exercise price of the
shares acquired and the market value at the date of exercise), and the value
of the unexercised "in-the-money" options held at December 31, 1999 (the
difference between the exercise price of all such options held and the market
value of the shares covered by such options at December 31, 1999).
<TABLE>
<CAPTION>
Numbers of Shares Value of Unexercised
Underlying Unexercised In-the-Money
Shares Options Held at Options Held at
Acquired December 31, 1999 December 31, 1999 (1)
on Value ------------------------- -------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Paul N. Arnold.......... -- -- 182,973 81,833 $1,670,069 --
Kenneth W. Hemm......... -- -- 65,967 30,166 573,923 --
Steven D. Jobes......... -- -- 76,396 30,166 835,169 --
Lloyd Lenson............ -- -- 75,691 30,166 816,302 --
Frances Ann Ziemniak.... -- -- 50,448 24,832 385,290 --
</TABLE>
- --------
(1) The closing price of a share of common stock on the New York Stock
Exchange for the last trading day of 1999 was $17.4375.
PENSION ARRANGEMENTS
Supplemental Executive Retirement Plan
The CORT Furniture Rental Supplemental Executive Retirement Plan (the "SERP
Plan") provides a supplement to the retirement benefits that certain key
management employees will receive from the Retirement Plan for Salaried and
Sales Employees of Mohasco Corporation (the "Mohasco Plan") and the CORT
Furniture Rental Investment Savings and Profit Sharing Retirement Plan (the
"401(k) Plan"). The SERP Plan consists of a defined benefit plan and a defined
contribution plan.
Certain key management employees of the Company with at least five years of
service (employment) had been selected by the Board as participants in the
defined benefit portion of the SERP Plan. Such officers include Messrs.
Arnold, Lenson and Jobes. The defined SERP Plan benefits are a function of
service with the Company and Final Average Compensation (average monthly
compensation during the 36 consecutive months out of the last 60 months of the
participant's employment that produce the highest average). Compensation
includes salary, bonuses and 401(k) Plan salary deferrals. Benefits are equal
to a targeted percentage as determined by the Board upon selection of the
employee to participate in the SERP Plan--(55% in the case of Mr. Arnold and
50% in the case of Mr. Jobes and Mr. Lenson) of the Final Average Compensation
as of the date of the participant's retirement or termination of employment
multiplied by the ratio of the participant's actual years of service as of the
applicable event to the participant's years of service projected to the
participant's Normal Retirement Date (first day of the month after the date
the participant attains age 65). The benefits are reduced by (i) the annuity
value of Company contributions made on behalf of the participant to the 401(k)
Plan and (ii) the annuity benefit, on a single life basis only, payable to the
participant under the Mohasco Plan.
A-9
<PAGE>
The estimated annual benefits payable upon retirement, expressed as a
straight life annuity, before reduction for the 401(k) Plan or the Mohasco
Plan, are as follows:
Targeted Percentage: 55%
<TABLE>
<CAPTION>
Years of Service
------------------------------------------------------------
Remuneration 15 20 25 30 35
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000 $ 65,528 $ 65,528 $ 65,528 $ 65,528 $ 65,528
150,000 78,634 78,634 78,634 78,634 78,634
175,000 91,739 91,739 91,739 91,739 91,739
200,000 104,845 104,845 104,845 104,845 104,845
225,000 117,951 117,951 117,951 117,951 117,951
250,000 131,056 131,056 131,056 131,056 131,056
300,000 157,268 157,268 157,268 157,268 157,268
400,000 209,690 209,690 209,690 209,690 209,690
450,000 235,901 235,901 235,901 235,901 235,901
500,000 262,113 262,113 262,113 262,113 262,113
Targeted Percentage: 50%
<CAPTION>
Years of Service
------------------------------------------------------------
Remuneration 15 20 25 30 35
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000 $ 59,571 $ 59,571 $ 59,571 $ 59,571 $ 59,571
150,000 71,485 71,485 71,485 71,485 71,485
175,000 83,399 83,399 83,399 83,399 83,399
200,000 95,314 95,314 95,314 95,314 95,314
225,000 107,228 107,228 107,228 107,228 107,228
250,000 119,142 119,142 119,142 119,142 119,142
300,000 142,971 142,971 142,971 142,971 142,971
400,000 190,627 190,627 190,627 190,627 190,627
450,000 214,456 214,456 214,456 214,456 214,456
500,000 238,284 238,284 238,284 238,284 238,284
</TABLE>
As of December 31, 1999, Mr. Arnold was credited with 31 years of service,
Mr. Jobes with 28 years of service and Mr. Lenson with 21 years of service.
Other key management employees have been selected by the Board as
participants in the defined contribution portion of the SERP Plan. Such
officers include Mr. Hemm and Ms. Ziemniak. Defined contribution benefits are
equal to the balance in an executive's SERP Account (the annual contribution
credited to such executive's account, adjusted to reflect gains, losses or
forfeitures incurred), as of the last day of the month in which the executive
is employed.
A participant in either the defined benefit or defined contribution portion
of the SERP Plan whose employment with the Company is terminated without Cause
(i.e., other than as a result of willful gross misconduct materially or
demonstrably injurious to the Company or willful refusal to perform
substantially the duties reasonably assigned to him/her) or who has a
substantial reduction in duties and responsibilities or in compensation will
vest immediately in his SERP Plan benefit. In addition, such a participant
(other than the Chief Executive Officer) will be entitled to receive a lump
sum payment equal to the amount of compensation he/she received during the
final six or 12 months based on length of service (12 months in the case of
Messrs. Arnold, Hemm, Jobes and Lenson and six months in the case of Ms.
Ziemniak) prior to such event. The Chief Executive Officer is entitled to a
severance payment of twice this amount. Amounts paid by the Company under any
employment agreement or other severance arrangement will reduce the severance
payment under the SERP Plan.
A-10
<PAGE>
In addition, the Company and Mr. Arnold have agreed that one-half of such
severance payment will be paid in a lump sum and the remaining half will be
paid in eighteen equal monthly installments commencing one month after the
date of his termination. Each participant in the SERP Plan has agreed not to
compete with the Company for a period of 18 months following the termination
of his/her employment with the Company unless such participant's employment
was terminated without Cause.
CHANGE OF CONTROL AGREEMENTS
CORT has entered into "change of control" agreements with several executive
officers. Under the agreement with Chief Executive Officer, Paul N. Arnold,
Mr. Arnold will receive a cash payment within three days of a "change of
control" of CORT in the amount of $1,200,000. In addition to the payment, if
Mr. Arnold is terminated by CORT within one year of a "change of control"
other than for "cause" or if Mr. Arnold resigns for "good reason," Mr. Arnold
is entitled to a continuation of welfare benefits for three years after his
termination at the same cost and coverage level as in effect on his date of
termination. Other executives are entitled to payments in amounts of either
$150,000 or $400,000 in the event they are terminated by CORT within one year
of a "change of control" other than for "cause," or if they resign for "good
reason." These executives also would receive welfare benefits for three years
after their termination at the same cost and coverage level as in effect on
their dates of termination. These agreements were to terminate one year from
March 25, 1999, the date on which they were entered into. On January 14, 2000,
the Board of Directors approved amending the letter agreements pursuant to
which the letter agreements discussed above will terminate on June 30, 2000
instead of on March 25, 2000.
In addition, under a Change of Control Bonus Plan, additional management
employees are eligible for payments if they are terminated within one year of
a "change of control" by CORT other than for "cause" or by the management
employee for "good reason." The Compensation Committee, in its sole
discretion, will determine the amount of the payment, if any, payable to each
management employee on or before the date of a change of control. The
aggregate amount of all payments under the plan will not exceed $400,000. The
plan was to terminate one year from March 25, 1999, the date on which it was
approved by the Board. On January 14, 2000, the Board of Directors approved
the First Amendment to Change of Control Bonus Plan pursuant to which the plan
will terminate on June 30, 2000 instead of March 25, 2000.
The consummation of the Offer will result in a "change of control" under the
change of control agreements and the plan.
The foregoing is a summary of certain provisions of the change of control
agreements and the plan and is qualified in its entirety by reference to
Exhibits 10 through 23 to the Schedule 14D-9.
SECTION 16A BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that the
Company's executive officers and directors and persons who own more than 10%
of a registered class of the Company's equity securities file reports of
ownership and changes in ownership with the SEC. Officers, directors, and
greater than 10% stockholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file. Based on a review of
the reports, during the fiscal year ended December 31, 1999, all Section 16(a)
filing requirements applicable to its officers, directors, and greater than
10% beneficial owners were complied with.
A-11
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents certain information regarding the beneficial
ownership of common stock at January 19, 2000 provided to the Company by (a)
each stockholder known by the Company to be the beneficial owner of more than
five percent of the outstanding shares of common stock, (b) each director, (c)
each executive officer named in the Summary Compensation Table, and (d) all
directors and executive officers as a group.
<TABLE>
<CAPTION>
Amount and
Nature of Percentage of
Name and Address of Beneficial Owners Beneficial Ownership Ownership
------------------------------------- -------------------- -------------
<S> <C> <C>
Directors:
Paul N. Arnold......................... 210,379(2) 1.6%
Bruce C. Bruckmann..................... 182,506(2) 1.4%
Keith E. Alessi........................ 51,660(2) *
Gregory B. Maffei...................... 42,526(2) *
Charles M. Egan........................ 32,332(2) *
James A. Urry.......................... 13,934(2) *
Michael A. Delaney..................... 10,501(2) *
Certain Executive Officers:
Lloyd Lenson........................... 123,937(2) *
Kenneth W. Hemm........................ 89,866(2) *
Steven D. Jobes........................ 79,746(2) *
Frances Ann Ziemniak................... 72,425(2) *
Five Percent Stockholders:(3)
Citicorp Venture Capital Ltd.(4)
399 Park Avenue, 14th Floor
New York, New York 10043.............. 5,778,518 44.1%
T. Rowe Price Associates, Inc.(5)
100 E. Pratt Street
Baltimore, MD 21202................... 1,401,700 10.7%
All directors and executive officers as
a group (17 persons)................... 1,001,816(2) 7.3%
</TABLE>
- --------
* Represents less than 1% of the outstanding shares of common stock.
(1) Applicable percentage ownership is based on 13,108,569 shares of Company
Common Stock outstanding as of January 19, 2000. The Company has two
authorized classes of common stock; Common Stock (voting) and Class B
Common Stock (nonvoting). There are no shares of Class B Common Stock
issued and outstanding.
(2) Includes shares under option which are exercisable or will become
exercisable within 60 days of January 19, 2000 of 182,973, 8,001, 3,667,
9,001, 17,018, 8,001, 8,001, 75,691, 65,967, 76,396, 50,448 for Messrs.
Arnold, Bruckmann, Alessi, Maffei, Egan, Urry, Delaney, Lenson, Hemm,
Jobes and Ms. Ziemniak, respectively, and 590,752 in total for all
Directors and Executive Officers as a group.
(3) The Board of Directors and Management are not aware of any other person or
entity who holds beneficially more than 5% of the outstanding Company
Common Stock.
(4) 5,778,518 shares of common stock owned by CVC are subject to an Amended
and Restated Voting Trust Agreement dated as of November 15, 1999. The
voting trustee is Robert N. Pokelwaldt. The voting trustee's address is 45
Burning Tree Court, York, Pennsylvania 17404. The voting trustee possesses
all voting rights related to the shares held in trust. The Voting Trust
Agreement shall terminate upon the earlier of the disposition of the
shares held in trust, CVC's election to convert the shares held in trust
into non-voting common stock or the tenth anniversary of the Trust
Agreement.
(5) These securities are owned by various individual and institutional
investors including T. Rowe Price Small Cap Value Fund, Inc. (which owns
670,000 shares, representing 5.1% of the shares outstanding), which T.
Rowe Price Associates, Inc. ("Price Associates") serves as an investment
adviser with power to direct investments and/or sole power to vote the
securities. For the purposes of the reporting requirements of the
Securities Exchange Act of 1934, Price Associates is deemed to be a
beneficial owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, the beneficial owner of such securities.
A-12
<PAGE>
SCHEDULE I
As of the date of this Information Statement, the Purchaser has not
determined who will be the Purchaser Designees. However, such Purchaser
Designees will be selected from the following list of directors and executive
officers of Parent or its affiliates promptly upon the purchase by the
Purchaser of a majority of the outstanding Securities on a fully diluted basis
pursuant to the Offer. The information contained herein concerning Parent and
its directors and executive officers and those of its affiliates has been
furnished by Parent and the Purchaser. The Company assumes no responsibility
for the accuracy or completeness of such information.
The name, present principal occupation or employment and five-year
employment history of each of the persons is set forth below. Except as noted,
none of the persons listed below owns any Securities or has engaged in any
transactions with respect to Securities during the past 60 days. During the
last five years, none of the persons listed below has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) nor
was such person a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction, and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future violations of,
or prohibiting activities subject to, federal or state securities laws or
finding any violation or such laws. None of the persons listed below (i) is
currently a director of, or holds any position with, the Company, (ii) has a
familial relationship with any of the directors or executive officers of the
Company or (iii) based on information provided to the Company by Parent, to
the best of Parent's knowledge, beneficially owns any securities (or rights to
acquire any securities) of the Company. The Company has been advised by Parent
that, to the best of Parent's knowledge, none of the persons listed below has
been involved in any transaction with the Company or any of its directors,
executive officers or affiliates which are required to be disclosed pursuant
to the rules and regulations of the Securities and Exchange Commission (the
"Commission" or "SEC"), except as may be disclosed herein or in the Schedule
l4D-9. All of the individuals listed below are citizens of the United States
of America. The business address of each such person is 1440 Kiewit Plaza,
Omaha, Nebraska 68131, unless otherwise indicated.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment,
Material Positions
Held During Past Five Years, and Business
Name Address
---- -------------------------------------------
<C> <S>
Warren E. Buffett................ Mr. Buffett has been Chairman and Chief
Executive Officer of Berkshire since 1970.
He is also a director of The Coca-Cola
Company, The Gillette Company and The
Washington Post Company.
Charles T. Munger................ Mr. Munger has been a director and Vice
Chairman of Berkshire's Board of Directors
since 1978. He is Chairman of the Board of
Directors and Chief Executive Officer of
Wesco, Chairman of the Board of Directors
of Daily Journal Corporation and a director
of Costco Wholesale Corporation. His
business address is 355 S. Grand Avenue,
34th Floor, Los Angeles, California 90071.
Robert H. Bird................... Mr. Bird has been President of Wesco since
1992. He has also served as President and a
director of MS Property Company, a wholly
owned Wesco subsidiary, since 1993, as
President of Blue Chip Stamps since 1987
and as a director of Blue Chip Stamps since
1978. His business address is 301 East
Colorado Blvd., Suite 300, Pasadena,
California 91101.
Howard G. Buffett................ Mr. Buffett is Chairman of the Board of
Directors of The GSI Group, a company
primarily engaged in the manufacture of
agricultural equipment. From 1992 until
June 5, 1995, Mr. Buffett had been Vice
President, Assistant to the Chairman and a
Director of Archer Daniels Midland Company,
a company engaged principally in the
</TABLE>
S-1
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or Employment,
Material Positions
Held During Past Five Years, and Business
Name Address
---- -------------------------------------------
<C> <S>
business of processing and merchandising
agricultural commodities. He is also a
director of Coca-Cola Enterprises, Inc.,
Lindsay Manufacturing Co. and Mond
Industries Inc. His business address is
1004 East Illinois Street, Assumption,
Illinois 62510.
Susan T. Buffett................. Mrs. Buffett has been a director of
Berkshire since 1991. Mrs. Buffett has not
been employed in the past five years.
Carolyn H. Carlburg.............. Ms. Carlburg has been the Executive
Director of Community Housing Services,
Inc. since 1997. Prior thereto, she
practiced law under the name Carolyn H.
Carlburg & Associates. Her business address
is 1040 North Lincoln Avenue, Second Floor,
Pasadena, California 91103.
Malcolm G. Chace................. In 1996, Mr. Chace was named Chairman of
the Board of Directors of BankRI, a
community bank located in the state of
Rhode Island. Prior to 1996, Mr. Chace had
been a private investor. Mr. Chace's
business address is One Providence
Washington Plaza, Providence, Rhode Island
02903.
James N. Gamble.................. Mr. Gamble has been engaged in the
investment counseling business since 1956,
currently under the name Gamble, Jones,
Morphy & Bent, and has been a director of
MS Property Company since 1993. His
business address is 301 East Colorado
Blvd., Suite 802, Pasadena, California
91101.
Michael A. Goldberg.............. Mr. Goldberg has, for more than the past
five years, served as President of
Berkshire Hathaway Credit Corporation.
Marc D. Hamburg.................. Mr. Hamburg has been the Vice President and
Treasurer of Berkshire for more than the
past five years.
Jeffrey L. Jacobson.............. Mr. Jacobson has served as Vice President
and Chief Financial Officer of Wesco since
1984. He has also served MS Property as
Vice President and Chief Financial Officer
since 1993. He has also served as a
director of Blue Chip Stamps since 1987,
and currently serves as its Vice President
and Chief Financial Officer. His business
address is 301 East Colorado Blvd.,
Suite 300, Pasadena, California 91101.
Forrest N. Krutter............... Mr. Krutter has served as Secretary of
Berkshire for more than the past five
years.
Ronald L. Olson.................. Mr. Olson has, for more than the past five
years, been a partner in the law firm of
Munger, Tolles & Olson LLP. He is also a
director of Edison International, Western
Asset Trust, Inc. and Pacific American
Income Shares Inc. His business address is
355 S. Grand Avenue, 35th Floor, Los
Angeles, California 90071.
Elizabeth Caspers Peters......... Ms. Caspers Peters has been engaged in
personal investments for more than the past
five years. She has also been a director of
MS Property Company since 1993. Her
business address is 301 East Colorado
Blvd., Suite 300, Pasadena, California
91101.
</TABLE>
S-2
<PAGE>
<TABLE>
<CAPTION>
Present Principal Occupation or Employment,
Material Positions
Held During Past Five Years, and Business
Name Address
---- -------------------------------------------
<C> <S>
David K. Robinson................ Mr. Robinson has been of counsel to Hahn &
Hahn, attorneys at law, since January 1999,
and prior thereto, a partner of that firm
for approximately 50 years and legal
counsel for Wesco for more than the past
five years. His business address is 301
East Colorado Blvd., Suite 900, Pasadena,
California 91101.
Robert E. Sahm................... Mr. Sahm has, since 1971, served Wesco as
Vice President in charge of building
management and, ultimately, all real estate
operations. He has also served MS Property
Company as Senior Vice President in charge
of property management, development and
sales, and as a director. His business
address is 301 East Colorado Blvd., Suite
300, Pasadena, California 91101.
Walter Scott, Jr................. Mr. Scott has been Chairman of the Board of
Level 3 Communications, Inc., a
communications and information services
company, since 1979. Level 3 Communications
was formerly known as Peter Kiewit Sons',
Inc., for which, until the spin-off of its
construction operations in March 1998, Mr.
Scott also served as Chief Executive
Officer. Mr. Scott is also a director of
MidAmerican Energy Holdings Company,
Burlington Resources, Inc., ConAgra, Inc.,
Valmont Industries, Inc., Commonwealth
Telephone Enterprises, Inc. and RCN
Corporation.
</TABLE>
Any other officer of Parent or Purchaser listed in Schedule I to the Offer
to Purchase dated January 21, 2000, filed as an exhibit to the Tender Offer
Statement on Schedule 14D-l of Parent and Purchaser may also be designated by
Purchaser as a Purchaser Designee.
S-3
<PAGE>
[Letterhead of SunTrust Equitable Securities Corporation]
January 14, 2000
Board of Directors
CORT Business Services Corporation
11250 Waples Mill Road, Suite 500
Fairfax, VA 22030
Members of the Board:
We understand that CORT Business Services Corporation (the "Company") intends
to enter into an Agreement and Plan of Merger to be dated January 14, 2000 (the
"Agreement"), with Wesco Financial Corporation ("Ultimate Parent"), Wesco
Holdings Midwest, Inc. ("Parent") and C Acquisition Corp. (the "Purchaser") in
substantially the form provided to us in rendering this opinion. The Agreement
provides that Purchaser shall, and Parent shall cause Purchaser to, commence an
offer (the "Offer") to purchase for cash all shares of the issued and
outstanding common stock, par value $0.01 per share, of the Company and all of
the issued and outstanding Class B common stock, par value of $0.01 per share,
of the Company (collectively, the "Company Common Stock") at a price of $28.00
per share (the "Offer Price"). Under the Agreement, the Company has approved
and consented to the Offer. The Agreement also provides that, subject to the
terms and conditions of the Agreement and applicable law, the Company and the
Purchaser shall consummate a merger (the "Merger") pursuant to which (a) the
Purchaser shall be merged with and into the Company and the separate corporate
existence of the Purchaser shall thereupon cease, (b) the Company shall be the
successor or surviving corporation in the Merger (the "Surviving Corporation")
under the name CORT Business Services Corporation and shall continue to be
governed by the laws of the State of Delaware, and (c) the separate corporate
existence of the Company with all its rights, privileges, immunities, powers
and franchises shall continue unaffected by the Merger. In the Merger, each
outstanding share of Company Common Stock, other than Dissenting Shares (as
defined by the Agreement), will be converted into the right to receive the
Offer Price. The terms and conditions of the Offer and the Merger are more
fully set forth in the Agreement.
You have requested our opinion as investment bankers as to the fairness, from
a financial point of view, to the holders of Company Common Stock of the Offer
Price to be received in the Offer or the Merger by shareholders of the Company.
SunTrust Equitable Securities Corporation ("SunTrust Equitable"), as part of
its investment banking business, is regularly engaged in the valuation of
businesses and their securities in connection with mergers and acquisitions,
negotiated underwritings, secondary distributions of listed and unlisted
securities, private placements and valuations for estate, corporate and other
purposes. In consideration for rendering the opinion set forth in this letter,
SunTrust Equitable will receive a fee and reimbursement of its expenses. In
addition, the Company has agreed to indemnify SunTrust Equitable for certain
liabilities arising out of its engagement, including the rendering of this
opinion. In the ordinary course of business, we trade the equity securities of
the Company for our own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in these securities.
B-1
<PAGE>
In connection with our opinion, we have reviewed, among other things, the
Agreement, certain publicly-available information and certain other financial
information, reports, forecasts and other internal information that was
provided to us by or on behalf of the Company for purposes of our analysis. We
held discussions with the management and representatives of the Company
concerning the historical and current operations of the Company, its financial
condition and its prospects. In addition, we conducted such other financial
studies, analyses and investigations and reviewed such other information and
factors as we deemed appropriate for purposes of this opinion.
In rendering this opinion, we have relied, without assuming any
responsibility for independent verification, on the accuracy and completeness
of all financial and other information reviewed by us that was publicly
available or furnished to us by or on behalf of the Company. We have assumed
with your consent that the financial forecasts that we examined were reasonably
prepared on bases reflecting the best currently available estimates and good
faith judgments of the management of the Company. We express no opinion with
respect to such forecasts or the assumptions on which they were based. We have
not made an independent evaluation or appraisal of the assets or liabilities
(contingent or otherwise) of the Company, nor were we furnished with any such
evaluations or appraisals. In connection with the preparation of this opinion
we have not been authorized to solicit nor have we solicited any alternative
transaction with any other party. Our opinion is based upon economic, market
and other conditions as they exist and can be evaluated on the date hereof. Our
opinion does not address the merits of the underlying decision by the Company
to engage in the Merger and does not constitute a recommendation to any
shareholder of the Company as to whether or not that shareholder should tender
their shares pursuant to the Offer or should vote to approve the Merger. The
financial markets in general, and the markets for the securities of the
Company, in particular, are subject to volatility, and this opinion does not
purport to address potential developments in the financial markets or the
markets for the securities of the Company after the date hereof.
This letter may not be reproduced, disseminated, quoted or referred to at any
time without our prior written consent; however, the opinion rendered hereby
may be included in its entirety in the Schedule 14D-9 to be distributed by the
Company to its shareholders and filed with the Securities and Exchange
Commission.
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the Offer Price to be paid by Purchaser in the Offer and the
Merger to the holders of the Company Common Stock is fair, from a financial
point of view, to such holders of the Company Common Stock.
Very truly yours,
/s/ SunTrust Equitable Securities
Corporation
SunTrust Equitable Securities
Corporation
B-2
<PAGE>
EXHIBIT 3
[CORT BUSINESS SERVICES LOGO]
11250 Waples Mill Road
Suite 500
Fairfax, Virginia 22030
January 21, 2000
Dear Stockholder:
I am pleased to inform you that on January 14, 2000, the Company entered
into an Agreement and Plan of Merger (the "Merger Agreement") with Wesco
Financial Corporation, Wesco Holdings Midwest, Inc. ("Parent") and C
Acquisition Corp. ("Purchaser"), a wholly owned subsidiary of Parent. Pursuant
to the Merger Agreement, Purchaser is commencing a tender offer to purchase
all of the outstanding shares of the Company's common stock at a purchase
price of $28.00 per share in cash (the "Offer"). Following the successful
completion of the Offer, Purchaser will merge with and into the Company (the
"Merger") and the Company will become a wholly owned subsidiary of Parent.
Each share of the Company's common stock not purchased in the Offer will be
converted in the Merger into the right to receive $28.00 per share in cash or
such higher price per share as may be paid in the Offer.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT
DETERMINING THAT THE MERGER IS ADVISABLE AND THAT THE TERMS OF THE OFFER AND
THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S
STOCKHOLDERS AND RECOMMENDS THAT YOU ACCEPT THE OFFER, TENDER YOUR SHARES
THEREUNDER TO THE PURCHASER AND APPROVE AND ADOPT THE MERGER AGREEMENT AND THE
MERGER.
In arriving at this recommendation, the Board of Directors gave careful
consideration to a number of factors described in the attached Schedule 14D-9
that has been filed with the Securities and Exchange Commission. Among other
things, the Board of Directors considered the opinion of SunTrust Equitable
Securities Corporation, dated January 14, 2000 (a copy of which is included
with the Schedule 14D-9), to the effect that, as of such date, the
consideration to be received by holders of shares in the Offer and the Merger
is fair from a financial point of view to such holders.
Accompanying this letter and the Schedule 14D-9 is the Offer to Purchase and
related materials, including a Letter of Transmittal to be used for tendering
your shares. These documents describe the terms and conditions of the Offer
and provide instructions regarding how to tender your shares. I urge you to
read the enclosed materials carefully.
Sincerely,
/s/ Paul N. Arnold
Paul N. Arnold
President and Chief Executive
Officer
<PAGE>
Exhibit 16
CHANGE OF CONTROL BONUS PLAN
1. Purpose. The Board of Directors of CORT Business Services Corporation
-------
(the "Company") has established this Change of Control Bonus Plan (the "Plan")
for the purpose of recognizing the significant extra work, time and effort that
the management employees listed on Schedule A to this Plan (the "Eligible
Management Employees") will likely expend in assisting with the successful
completion of a Change of Control (as defined below) and for the purpose of
creating additional incentives for such employees to ensure their continued
commitment to and support of the Company through the successful completion of a
Change of Control.
2. Bonus Payment. Each Eligible Management Employee will have the
-------------
opportunity to receive a bonus (the "Bonus") in the event of a Change of Control
if such Eligible Management Employee's employment with the Company is terminated
within one year of such Change of Control (i) by the Company, other than for
Cause or (ii) by such Eligible Management Employee for Good Reason. The
Committee, in its sole discretion, shall determine the amount of the Bonus, if
any, payable to each Eligible Management Employee on or before the date of a
Change of Control; provided, that the aggregate amount of all Bonuses paid
--------
pursuant to this Plan shall not exceed $400,000. The Bonuses, if any, will be
payable within three business days after termination of employment following a
Change of Control and will be subject to all applicable employment and
withholding taxes.
a. "Cause" shall mean the occurrence or existence of any of the
following with respect to you, as determined in good faith by the Board of
Directors of the Company:
(1) your conviction of a felony involving moral turpitude; or
(2) your willful refusal, after notice and a thirty (30) day
opportunity to cure, to perform such services as may be reasonably
delegated or assigned to you, consistent with your position, by the Board
of Directors.
b. "Change of Control" means and shall be deemed to have occurred
upon:
(1) any person, other than the Company or a Related Party,
acquires directly or indirectly the beneficial ownership of any voting
security of the Company and immediately after such acquisition such person
has, directly or indirectly, the beneficial ownership of voting securities
representing 20% or more of the total voting power of all the
then-outstanding voting securities of the Company, or
(2) those individuals who as of the date hereof constitute the
Board of Directors of the Company (the "Board") or who thereafter are
elected to the
<PAGE>
Board and whose election, or nomination for election, to the
Board was approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors as of the date hereof or
whose election or nomination for election was previously so approved, cease
for any reason to constitute a majority of the members of the Board; or
(3) the consummation of a merger, consolidation, recapitalization
or reorganization of the Company, or an acquisition of securities or assets
by the Company (a "Transaction"), other than a Transaction with Related
Parties, and other than a Transaction which would result in the holders of
voting securities having 100% of the total voting power represented by the
voting securities outstanding immediately prior thereto continuing to hold
voting securities of the Company or voting securities of the surviving
entity having at least a majority of the total voting power represented by
the voting securities of the Company or the voting securities of such
surviving entity outstanding immediately after such Transaction; or
(4) the consummation of a complete liquidation of the Company or
an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets other than any such transaction
which would result in Related Parties owning or acquiring more than 50% of
the assets owned by the Company immediately prior to the transaction.
Notwithstanding the foregoing, no Change of Control shall be deemed to
have occurred for purposes of this Plan with respect to an Eligible
Management Employee who is an equity participant with the acquiror in the
transaction that would otherwise result in a Change of Control.
c. "Good Reason" shall mean the occurrence or existence of any of
the following with respect to you:
(1) your base salary plus bonus at target is reduced from that
currently in effect, or your other employee benefits are in the aggregate
materially reduced from those currently in effect (unless such reduction of
employee benefits applies to employees of the Company generally), or
(2) you are assigned duties that are otherwise materially
inconsistent with the duties currently performed by you;
provided, that (i) you notify the Company in writing of your intention to
terminate for either of the foregoing reasons and (ii) the Company shall
have not remedied such situation within fifteen (15) days after receiving
such written notice.
d. "Related Party" means (A) a majority-owned subsidiary of the
Company; or (B) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any majority-owned subsidiary of
the Company; or (C) a corporation owned directly or indirectly by the
shareholders of the Company in
<PAGE>
substantially the same proportion as their ownership of voting securities
of the Company; or (D) any executive officer or director of the Company or
any affiliate of any executive officer or director of the Company.
3. At-Will Employment. Nothing in this Plan gives Eligible Management
------------------
Employees any right to remain in the employ of the Company and such employees
are and will remain employees-at-will of the Company, terminable with or without
cause.
4. Amendment or Termination. Any amendment or termination of the Plan
------------------------
prior to a Change in Control that (i) was at the request of a third party who
has indicated an intention or taken steps reasonably calculated to effect a
Change in Control or (ii) otherwise arose in connection with or in anticipation
of a Change in Control, shall be null and void and shall have no effect
whatsoever. This Plan shall terminate one year from the date hereof if no Change
of Control has occurred by such date.
5. Committee. The Board of Directors shall establish a committee (the
---------
"Committee") to implement this Plan. In addition to the powers of the Committee
set forth in Sections 2 and 7, the Committee shall have the power to resolve any
dispute or disagreement arising out of this Plan. The interpretation and
construction of any provision of this Plan made by the Committee shall be final
and conclusive.
6. Section 280G Adjustments. If any payment from the Company to any
------------------------
Eligible Management Employee (whether paid or payable or distributed or
distributable pursuant to the terms of this Plan or otherwise) shall be
determined to be an "Excess Parachute Payment" as defined in section 280G(b)(1)
of the Internal Revenue Code of 1986, as amended, the Committee, in its sole
discretion, shall have the power to make any adjustment it sees fit to the
payment or timing of any Bonus made pursuant to this Plan.
Dated: March 25, 1999
<PAGE>
Exhibit 17
CORT Business Services Corporation
4401 Fair Lakes Court
Fairfax, Virginia 22033
January 14, 2000
Paul N. Arnold
Dear Paul:
With respect to the letter agreement dated March 25, 1999 (the
"Agreement") between CORT Business Services Corporation (the "Company") and you
regarding a Change of Control (as defined therein), you and we agree as set
forth below.
1. Paragraph four of the Agreement shall be deleted and replaced as
follows:
This letter agreement shall terminate on June 30, 2000 if no
Change of Control has occurred by such date.
2. All of the other provisions of the Agreement shall remain
unchanged.
If the foregoing accurately sets forth our understanding with respect
to the subject matter set forth above, please sign below and return an executed
copy of this letter to Frances Ann Ziemniak at the Company.
Very truly yours,
CORT BUSINESS SERVICES CORPORATION
By: /s/ Frances Ann Ziemniak
------------------------------
Name: Frances Ann Ziemniak
Title: Executive Vice President
and Chief Financial Officer
Agreed and Accepted
/s/ Paul N. Arnold
- ------------------------
<PAGE>
Exhibit 18
CORT Business Services Corporation
4401 Fair Lakes Court
Fairfax, Virginia 22033
January 14, 2000
Anthony J. Bellerdine
Dear Mr. Bellerdine:
With respect to the letter agreement dated March 25, 1999 (the
"Agreement") between CORT Business Services Corporation (the "Company") and you
regarding a Change of Control (as defined therein), you and we agree as set
forth below.
1. Paragraph five of the Agreement shall be deleted and replaced as
follows:
This letter agreement shall terminate on June 30, 2000 if no
Change of Control has occurred by such date.
2. All of the other provisions of the Agreement shall remain
unchanged.
If the foregoing accurately sets forth our understanding with respect
to the subject matter set forth above, please sign below and return an executed
copy of this letter to Frances Ann Ziemniak at the Company.
Very truly yours,
CORT BUSINESS SERVICES CORPORATION
By: /s/ Frances Ann Ziemniak
------------------------------
Name: Frances Ann Ziemniak
Title: Executive Vice President
and Chief Financial Officer
Agreed and Accepted
/s/ Anthony J. Bellerdine
- -------------------------
<PAGE>
Exhibit 19
CORT Business Services Corporation
4401 Fair Lakes Court
Fairfax, Virginia 22033
January 14, 2000
Steven D. Jobes
Dear Mr. Jobes:
With respect to the letter agreement dated March 25, 1999 (the
"Agreement") between CORT Business Services Corporation (the "Company") and you
regarding a Change of Control (as defined therein), you and we agree as set
forth below.
1. Paragraph five of the Agreement shall be deleted and replaced as
follows:
This letter agreement shall terminate on June 30, 2000 if no
Change of Control has occurred by such date.
2. All of the other provisions of the Agreement shall remain
unchanged.
If the foregoing accurately sets forth our understanding with respect
to the subject matter set forth above, please sign below and return an executed
copy of this letter to Frances Ann Ziemniak at the Company.
Very truly yours,
CORT BUSINESS SERVICES CORPORATION
By: /s/ Frances Ann Ziemniak
------------------------------
Name: Frances Ann Ziemniak
Title: Executive Vice President
and Chief Financial Officer
Agreed and Accepted
/s/ Steven D. Jobes
- ------------------------
<PAGE>
Exhibit 20
CORT Business Services Corporation
4401 Fair Lakes Court
Fairfax, Virginia 22033
January 14, 2000
Lloyd Lenson
Dear Mr. Lenson:
With respect to the letter agreement dated March 25, 1999 (the
"Agreement") between CORT Business Services Corporation (the "Company") and you
regarding a Change of Control (as defined therein), you and we agree as set
forth below.
1. Paragraph five of the Agreement shall be deleted and replaced as
follows:
This letter agreement shall terminate on June 30, 2000 if no
Change of Control has occurred by such date.
2. All of the other provisions of the Agreement shall remain
unchanged.
If the foregoing accurately sets forth our understanding with respect
to the subject matter set forth above, please sign below and return an executed
copy of this letter to Frances Ann Ziemniak at the Company.
Very truly yours,
CORT BUSINESS SERVICES CORPORATION
By: /s/ Frances Ann Ziemniak
------------------------------
Name: Frances Ann Ziemniak
Title: Executive Vice President
and Chief Financial Officer
Agreed and Accepted
/s/ Lloyd Lenson
- ------------------------
<PAGE>
Exhibit 21
CORT Business Services Corporation
4401 Fair Lakes Court
Fairfax, Virginia 22033
January 14, 2000
Kenneth W. Hemm
Dear Mr. Hemm:
With respect to the letter agreement dated March 25, 1999 (the
"Agreement") between CORT Business Services Corporation (the "Company") and you
regarding a Change of Control (as defined therein), you and we agree as set
forth below.
1. Paragraph five of the Agreement shall be deleted and replaced as
follows:
This letter agreement shall terminate on June 30, 2000 if no
Change of Control has occurred by such date.
2. All of the other provisions of the Agreement shall remain
unchanged.
If the foregoing accurately sets forth our understanding with respect
to the subject matter set forth above, please sign below and return an executed
copy of this letter to Frances Ann Ziemniak at the Company.
Very truly yours,
CORT BUSINESS SERVICES CORPORATION
By: /s/ Frances Ann Ziemniak
------------------------------
Name: Frances Ann Ziemniak
Title: Executive Vice President
and Chief Financial Officer
Agreed and Accepted
/s/ Kenneth W. Hemm
- ------------------------
<PAGE>
Exhibit 22
CORT Business Services Corporation
4401 Fair Lakes Court
Fairfax, Virginia 22033
January 14, 2000
Frances Ann Ziemniak
Dear Ms. Ziemniak:
With respect to the letter agreement dated March 25, 1999 (the
"Agreement") between CORT Business Services Corporation (the "Company") and you
regarding a Change of Control (as defined therein), you and we agree as set
forth below.
1. Paragraph five of the Agreement shall be deleted and replaced as
follows:
This letter agreement shall terminate on June 30, 2000 if no
Change of Control has occurred by such date.
2. All of the other provisions of the Agreement shall remain
unchanged.
If the foregoing accurately sets forth our understanding with respect
to the subject matter set forth above, please sign below and return an executed
copy of this letter to Frances Ann Ziemniak at the Company.
Very truly yours,
CORT BUSINESS SERVICES CORPORATION
By: /s/ Paul N. Arnold
------------------------------
Name: Paul N. Arnold
Title: President and Chief
Executive Officer
Agreed and Accepted
/s/ Frances Ann Ziemniak
- ------------------------
<PAGE>
Exhibit 23
First Amendment to Change of Control Bonus Plan
This is a First Amendment to the Change of Control Bonus Plan dated
March 25, 1999 (the "Plan").
1. The last sentence of paragraph four of the Plan shall be deleted
and replaced as follows:
This Plan shall terminate on June 30, 2000 if no Change of
Control has occurred by such date.
2. All of the other provisions of the Plan shall remain unchanged.
Dated: January 14, 2000
