-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GfK9LLW1YyYBXPvoWIugcR2n1YnmxB9P7+CPiJqPfK9SBSw/qelLEQk2cBTpePVO VC+q3zJwRBGCEaJSVzX9yw== /in/edgar/work/20000714/0000889812-00-003147/0000889812-00-003147.txt : 20000920 0000889812-00-003147.hdr.sgml : 20000920 ACCESSION NUMBER: 0000889812-00-003147 CONFORMED SUBMISSION TYPE: SC TO-T PUBLIC DOCUMENT COUNT: 19 FILED AS OF DATE: 20000714 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: BUSINESS RESOURCE GROUP CENTRAL INDEX KEY: 0000945028 STANDARD INDUSTRIAL CLASSIFICATION: [5020 ] IRS NUMBER: 770150337 STATE OF INCORPORATION: CA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: SC TO-T SEC ACT: SEC FILE NUMBER: 005-45031 FILM NUMBER: 673182 BUSINESS ADDRESS: STREET 1: 2150 N FIRST ST STREET 2: STE 101 CITY: SAN JOSE STATE: CA ZIP: 95131 BUSINESS PHONE: 4083253200 MAIL ADDRESS: STREET 1: 2150 NORTH FIRST STREET SUITE 101 CITY: SAN JOSE STATE: CA ZIP: 95131 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: BRG ACQUISITION CORP CENTRAL INDEX KEY: 0001118247 STANDARD INDUSTRIAL CLASSIFICATION: [ ] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-T BUSINESS ADDRESS: STREET 1: C/O THREE CITIES RESEARCH INC. STREET 2: P.O. BOX 650 MADISON AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2128389660 MAIL ADDRESS: STREET 1: C/O THREE CITIES RESEARCH INC. STREET 2: 650 MADISON AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 SC TO-T 1 0001.txt TENDER OFFER STATEMENT - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ SCHEDULE TO (RULE 14D-100) TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1) OR 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------------ BUSINESS RESOURCE GROUP (NAME OF SUBJECT COMPANY (ISSUER)) BRG ACQUISITION CORPORATION BUSINESS RESOURCE HOLDINGS, INC. BR HOLDINGS LLC THREE CITIES FUND III, L.P. (OFFERORS) (NAMES OF FILING PERSONS (IDENTIFYING STATUS AS OFFEROR, ISSUER, OR OTHER PERSON)) ------------------------ COMMON STOCK, $0.01 PAR VALUE (TITLE OF CLASS OF SECURITIES) 12329K 10 4 (CUSIP NUMBER OF CLASS OF SECURITIES) ------------------------ J. WILLIAM UHRIG With copies to: BRG ACQUISITION CORPORATION DAVID W. BERNSTEIN, ESQ. C/O THREE CITIES RESEARCH, INC. CLIFFORD CHANCE ROGERS & WELLS LLP 650 MADISON AVENUE, 200 PARK AVENUE, NEW YORK, NEW YORK 10022 NEW YORK, NEW YORK 10166-0153 (212) 838-9660 (212) 878-8000
(NAME, ADDRESS AND TELEPHONE NO. OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF FILING PERSONS) ------------------------ CALCULATION OF FILING FEE TRANSACTION VALUATION AMOUNT OF FILING FEE $46,061,161(1)(2) $9,212 (1) Calculated in accordance with Rule 0-11(d) under the Securities Exchange Act of 1934 solely for purposes of computing the filing fee; based upon the tender offer price of $9.25 cash per share and 4,979,585 shares of common stock outstanding and not already owned by Offeror group immediately prior to the expiration of the tender offer. (2) Estimated for purposes of calculating the amount of filing fee only. The amount assumes the purchase of 4,979,585 shares of Common Stock, par value $0.01 per share, of Business Resource Group (the "Common Shares") at a price per share of $9.25 in cash. Such number of shares represents all of the shares outstanding as of June 29, 2000, less 319,168 Common Shares to be separately contributed to the Offeror group immediately prior to the expiration of the tender offer. / / Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the offsetting fee with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form of Schedule and the date of its filing. Amount Previously Paid: N/A Filing Parties: N/A Form or Registration No.: N/A Date Filed: N/A
/ / Check the box if the filing relates solely to preliminary communications made before commencement of a tender offer. Check the appropriate boxes below to designate any transactions to which the statement relates: /x/ third-party tender offer subject to Rule 14d-1. / / issuer tender offer subject to Rule 13e-4. /x/ going-private transaction subject to Rule 13e-3. / / amendment to Schedule 13D under Rule 13d-2. Check the following box if the filing is a final amendment reporting the results of the tender offer: / / SCHEDULE TO This Tender Offer Statement on Schedule TO relates to the offer by BRG Acquisition Corporation, a Delaware corporation ("Purchaser"), to purchase all of the outstanding common shares, $0.01 par value per share (each a "Common Share"), of Business Resource Group, a California corporation (the "Company"), which as of July 7, 2000 the Purchaser did not own or have agreements to own at $9.25 per Common Share, net to the seller in cash, without interest (the "Per Share Amount"), upon the terms and subject to the conditions set forth in the Offer to Purchase dated July 14, 2000 (the "Offer to Purchase"), a copy of which is attached hereto as Exhibit (a)(1), and in the related Letter of Transmittal, a copy of which is attached hereto as Exhibit (a)(2) (the "Letter of Transmittal"). The information in the Offer to Purchase and the related Letter of Transmittal is incorporated herein by reference in answer to each of the Items 1 through 13 of Schedule TO (including Schedule 13E-3 filed under the same cover), except that, to the extent that a partial answer is here given to any of those Items, the information contained in the Offer to Purchase and Letter of Transmittal is incorporated herein by reference in partial answer to those Items. In response to Item 13 of Schedule 13E-3, the Company's audited financial statements as of and for the years ended October 31, 1998 and 1999 are incorporated herein by reference to Item 8 of the Company's Annual Report on Form 10-K for the year ended October 31, 1999, as filed with the Securities and Exchange Commission (the "Commission") on January 1, 2000. Also in response to Item 13 of Schedule 13E-3, the Company's unaudited financial statements as of and for the quarter and six months ended April 30, 2000 are incorporated herein by reference to Part I, Item 1 of the Company's Quarterly Report on Form 10-Q for the six months ended April 30, 1999 filed with the Commission on June 14, 2000. ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSONS. (c) Business and Backgrounds of Natural Persons. During the last five years, neither the Purchaser nor, to the best of Purchaser's knowledge, any of the persons listed in Schedule I to the Offer to Purchase (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a party to a 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 further violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws. ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS. (a) Transactions. (2) The Purchaser has agreed to employ four officers and/or directors of the Company (together, the "Managers") if and when the Company is merged with the Purchaser. At that time, the Managers and their annual base salaries (in addition to participation in an incentive stock program and eligibility for bonuses based on operating earnings of the company surviving that merger) are as follows: (i) Jack Peth $375,000; (ii) Brian McNay $525,000; (iii) Jeff Tuttle $300,000; and (iv) John Palmer $160,000. Additional details concerning their compensation arrangements and equity interests are set forth in the Offer to Purchase and the exhibits to this Schedule TO. (b) Significant Corporate Events. None 2 ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a) Securities Ownership. None. (b) Securities Transactions. None. ITEM 11. ADDITIONAL INFORMATION. (a) Agreements, Regulatory Requirements, and Legal Proceedings. Not applicable. (b) Not applicable. ITEM 12. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT NO. DESCRIPTION - ----------- ------------------------------------------------------------------------------------------------- (a)(1) -- Offer to Purchase, dated July 14, 2000. (a)(2) -- Form of Letter of Transmittal. (a)(3) -- Form of Notice of Guaranteed Delivery. (a)(4) -- Form of letter, dated July 14, 2000, to brokers, dealers, commercial banks, trust companies and other nominees. (a)(5) -- Form of letter to be used by brokers, dealers, commercial banks, trust companies and nominees to their clients. (a)(6) -- Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(7) -- Form of Summary Advertisement, dated July 14, 2000. (b) -- Loan Agreement with Comerica Bank--California.* (c) -- Fairness Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated (d)(1) -- Plan and Agreement of Merger, dated July 7, 2000, between the Company and the Purchaser. (d)(2) -- Share Exchange Agreements: (i) Share Exchange Agreement, dated July 7, 2000, between BR Holdings LLC and Brian McNay; (ii) Share Exchange Agreement, dated July 7, 2000, between BR Holdings LLC and Jeff Tuttle; (d)(3) -- Commitment Letter, dated as of July 7, 2000, by John Palmer for benefit of Purchaser. (d)(4) -- Form of Peth Deferred Compensation Agreement, dated as of July 7, 2000. (d)(5) -- Employment Agreement between Jeff Tuttle and the Purchaser dated as of July 7, 2000. (d)(6) -- Employment Agreement between Jack Peth and the Purchaser dated as of July 7, 2000. (d)(7) -- Employment Agreement between John Palmer and the Purchaser dated as of July 7, 2000. (d)(8) -- Employment Agreement between Brian McNay and the Purchaser dated as of July 7, 2000. (e) -- None. (f) -- See Offer to Purchase (filed herewith as Exhibit (a)(1)), including Schedule II and Schedule III thereto. (g) -- See Offer to Purchase (filed herewith as Exhibit (a)(1). (h) -- None requested or provided.
- ------------------ * To be filed by amendment. ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3 Item 4. Terms of the Transaction (1004)(c), (1004)(f) Different Terms; Eligibility for Listing or Trading. Not applicable. (1004)(e) Provisions for Unaffiliated Security Holders. None. Item 5. Past Contacts, Transactions, Negotiations and Agreements (1005c) Negotiations or Contracts. The filing parties are not aware of any matters to be disclosed on this Item (5)(c) other than that disclosed in the Offer to Purchase attached hereto as Exhibit (a)(1). 3 Item 6. Purposes of the Transaction and Plans or Proposals. (1006c8) Upon completion of the tender offer, Purchaser may cause the suspension of the Company's obligation to file reports under section 15(d) of the Exchange Act. Item 7. Purposes, Alternatives, Reasons and Effects. (1013b) Purposes, Alternatives, Reasons and Effects in a Going-Private Transaction. (b) Alternatives: Purchaser has not considered nor rejected alternative means to accomplish its objectives with regard to the Company. Item 8. Fairness of the Transaction. (1014)(c) Approval of Security Holders. The information set forth in the Offer to Purchase is incorporated by reference. (1014)(f) Other Offers. N/A Item 9. Reports, Opinions, Appraisals and Negotiations. (1015)(b) Preparer and Summary of the Report, Opinion, or Appraisal. See Exhibit (c). Item 12. The Solicitation or Recommendation. The information set forth in the Offer to Purchase is incorporated by reference. Item 14. The Solicitation or Recommendation. The information set forth in the Offer to Purchase is incorporated by reference. 4 SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: July 14, 2000 BRG ACQUISITION CORPORATION By: /s/ Jeanette Welsh ---------------------------------- Name: Jeanette Welsh Title: Secretary and Treasurer BUSINESS RESOURCE HOLDINGS, INC. By: /s/ Jeanette Welsh ---------------------------------- Name: Jeanette Welsh Title: Secretary and Treasurer BR HOLDINGS LLC By: /s/ Jeanette Welsh ---------------------------------- Name: Jeanette Welsh Title: Secretary and Treasurer THREE CITIES FUND III, L.P. By: TCR Associates III, L.L.C. its general partner By: /s/ Willem de Vogel ---------------------------------- Name: Willem de Vogel Title: President 5 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION - ----------- ------------------------------------------------------------------------------------------------- (a)(1) -- Offer to Purchase, dated July 14, 2000. (a)(2) -- Form of Letter of Transmittal. (a)(3) -- Form of Notice of Guaranteed Delivery. (a)(4) -- Form of letter, dated July 14, 2000, to brokers, dealers, commercial banks, trust companies and other nominees. (a)(5) -- Form of letter to be used by brokers, dealers, commercial banks, trust companies and nominees to their clients. (a)(6) -- Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(7) -- Form of Summary Advertisement, dated July 14, 2000. (b) -- Loan Agreement with Comerica Bank--California.* (c) -- Fairness Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated (d)(1) -- Plan and Agreement of Merger, dated July 7, 2000, between the Company and the Purchaser. (d)(2) -- Share Exchange Agreements: (i) Share Exchange Agreement, dated July 7, 2000, between BR Holdings LLC and Brian McNay; (ii) Share Exchange Agreement, dated July 7, 2000, between BR Holdings LLC and Jeff Tuttle; (d)(3) -- Commitment Letter, dated as of July 7, 2000, by John Palmer for benefit of Purchaser. (d)(4) -- Form of Peth Deferred Compensation Agreement, dated as of July 7, 2000. (d)(5) -- Employment Agreement between Jeff Tuttle and the Purchaser dated as of July 7, 2000. (d)(6) -- Employment Agreement between Jack Peth and the Purchaser dated as of July 7, 2000. (d)(7) -- Employment Agreement between John Palmer and the Purchaser dated as of July 7, 2000. (d)(8) -- Employment Agreement between Brian McNay and the Purchaser dated as of July 7, 2000. (e) -- None. (f) -- See Offer to Purchase (filed herewith as Exhibit (a)(1)), including Schedule II and Schedule III thereto. (g) -- See Offer to Purchase (filed herewith as Exhibit (a)(1). (h) -- None requested or provided.
- ------------------ * To be filed by amendment. 6 EX-99.(A)(1) 2 0002.txt OFFER TO PURCHASE FOR CASH OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF BUSINESS RESOURCE GROUP BY BRG ACQUISITION CORPORATION AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF BR HOLDINGS LLC WHICH IS MAJORITY-OWNED BY THREE CITIES FUND III, L.P. FOR $9.25 NET PER SHARE THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON FRIDAY, AUGUST 11, 2000, UNLESS THE OFFER IS EXTENDED. THIS OFFER IS BEING MADE IN ACCORDANCE WITH A PLAN AND AGREEMENT OF MERGER (THE "MERGER AGREEMENT"), DATED AS OF JULY 7, 2000, BETWEEN BUSINESS RESOURCE GROUP (THE "COMPANY") AND BRG ACQUISITION CORPORATION (THE "PURCHASER"). THE BOARD OF DIRECTORS OF THE COMPANY, BASED ON A RECOMMENDATION OF A SPECIAL COMMITTEE, (1) HAS UNANIMOUSLY (WITH THE THREE DIRECTORS WHO WILL ACQUIRE INTERESTS IN ONE OR BOTH OF THE PURCHASER'S PARENTS BEING ABSENT OR NOT VOTING) APPROVED THE MERGER AGREEMENT, THE OFFER AND A MERGER OF THE COMPANY AND THE PURCHASER (THE "MERGER") IN WHICH, IF THE MERGER TAKES PLACE, THE STOCKHOLDER OF THE PURCHASER WILL BECOME THE SOLE STOCKHOLDER OF THE MERGED COMPANY AND THE SHAREHOLDERS OF THE COMPANY (OTHER THAN THE PURCHASER AND ITS STOCKHOLDER) WILL RECEIVE THE SAME AMOUNT OF CASH PER COMMON SHARE AS IS PAID FOR SHARES PURCHASED THROUGH THE OFFER, (2) HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S SHAREHOLDERS (OTHER THAN THE PURCHASER, ITS PARENT AND THE EXECUTIVE OFFICERS OF THE COMPANY WHO WILL BE EXCHANGING THEIR SHARES FOR INTERESTS IN THE PURCHASER'S PARENT) AND (3) RECOMMENDS THAT SHAREHOLDERS TENDER THEIR SHARES IN RESPONSE TO THE OFFER. THIS OFFER IS CONDITIONED ON AT LEAST 51% OF THE OUTSTANDING SHARES THE PURCHASER OR ITS PARENT DOES NOT OWN OR HAVE AGREEMENTS TO PURCHASE IMMEDIATELY BEFORE THE TENDER OFFER EXPIRES, OR SUCH GREATER NUMBER OF SHARES AS WILL INCREASE THE OWNERSHIP OF THE PURCHASER AND ITS PARENT TO 53.5% OF THE OUTSTANDING SHARES, BEING PROPERLY TENDERED AND NOT WITHDRAWN. THE PURCHASER MAY NOT, WITHOUT THE COMPANY'S CONSENT, WAIVE THE CONDITION REGARDING TENDER OF AT LEAST 51% OF THE SHARES THE PURCHASER OR ITS PARENT DOES NOT OWN OR HAVE AGREEMENTS TO PURCHASE IMMEDIATELY PRIOR TO THE EXPIRATION OF THIS OFFER. THIS OFFER IS NOT CONDITIONED ON THE ABILITY OF THE PURCHASER TO OBTAIN FINANCING (BUT IT IS SUBJECT TO SOME OTHER CONDITIONS--SEE SECTION 11). TWO EXECUTIVE OFFICERS OF THE COMPANY HAVE AGREED TO TRANSFER APPROXIMATELY 6% OF THE CURRENTLY OUTSTANDING COMMON STOCK TO THE PURCHASER'S PARENT, IMMEDIATELY BEFORE THE PURCHASER ACCEPTS THE TENDERED SHARES IN EXCHANGE FOR INTERESTS IN THE PARENT. THE COMPANY'S DIRECTORS AND EXECUTIVE OFFICERS HAVE AGREED, OR SAID THEY INTEND, TO TENDER IN RESPONSE TO THE TENDER OFFER ALL THE ADDITIONAL SHARES THEY OWN OR WILL ACQUIRE BY EXERCISING OPTIONS (WHICH WILL TOTAL APPROXIMATELY 28.2% OF THE OUTSTANDING COMMON STOCK, ASSUMING NOBODY ELSE EXERCISES OPTIONS). IMPORTANT Any shareholder who wishes to tender shares should (A) complete and sign a Letter of Transmittal (or a facsimile of one) in accordance with the instructions set forth in the Letter of Transmittal and (B) mail or deliver it, together with the certificate(s) representing the tendered shares and any other required documents, to the Depositary named on the back cover of this Offer to Purchase or (C) tender the shares using the procedures for book-entry transfer described in Section 9. A shareholder whose shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact the nominee in order to tender shares. A shareholder who wishes to tender shares but whose certificates are not immediately available, or who cannot comply with the procedures for book-entry transfer on a timely basis, may tender the shares by following the procedures for guaranteed delivery described in Section 9. Questions and requests for assistance, or for additional copies of this Offer to Purchase, the Letter of Transmittal, or other tender offer materials, may be directed to the Information Agent at its address and telephone number set forth on the back cover. Holders of shares may also contact brokers, dealers or banks for additional copies of this Offer to Purchase, the Letter of Transmittal or other tender offer materials. July 14, 2000 SUMMARY TERM SHEET OFFER OF BRG ACQUISITION CORPORATION TO PURCHASE ALL THE OUTSTANDING COMMON STOCK OF BUSINESS RESOURCE GROUP We (BRG Acquisition Corporation) are offering to purchase all the outstanding common stock of Business Resource Group which we or our parent do not already own for $9.25 per share in cash. The following are some questions you, as a shareholder of Business Resource Group, may have, and answers to those questions. WHO IS OFFERING TO BUY MY SECURITIES? Our name is BRG Acquisition Corporation. We were formed for the purpose of making a tender offer for Business Resources Group common shares. We are wholly owned by Business Resource Holdings, Inc., which is wholly owned by BR Holdings LLC. BR Holdings LLC is a limited liability company which was formed by Three Cities Fund III, L.P. Three Cities Fund is an investment fund, which is advised by Three Cities Research, Inc. WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER? We are seeking all the common stock of the Company which we or our parent will not already own. HOW MUCH ARE YOU OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT? We are offering to pay $9.25 per share, net to you, in cash. If you tender your shares to us, you will not have to pay brokerage fees or similar expenses. DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT? The Three Cities Fund and two affiliated funds will provide approximately $46 million to us, through BR Holdings LLC and Business Resource Holdings, Inc., which we can use in connection with the tender offer and the merger which we expect will follow it (as discussed below). We have arranged bank financing for the rest of what we will need to purchase all the shares which are tendered to us and not withdrawn, and to provide funding for the merger. IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION WHETHER TO TENDER IN RESPONSE TO THE OFFER? Because all the funding which will be needed will come from Three Cities Fund and the affiliated funds or from bank financing which has already been arranged, we do not think our financial condition is relevant to your decision whether to tender your shares in response to the offer. DO YOU ALREADY OWN SHARES OF THE COMPANY? No. But two members of the Company's management (one of whom is a director) have agreed that, before the tender offer expires, they will exchange 319,168 shares of the Company's stock for an approximately 6% interest in our parent, BR Holdings LLC. That is approximately 20% of the shares they own. They have agreed to tender the remainder of their shares in response to our tender offer. HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN RESPONSE TO THE OFFER? You will have at least until 5:00 p.m., New York City time, on August 11, 2000 to decide whether to tender your shares in response to the tender offer. Further, if you can't deliver everything that is required by that time, you may be able to use a guaranteed delivery procedure, which is described in the Offer to Purchase booklet relating to our tender offer. ii CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES? We can extend the Initial Expiration Time of the tender offer until August 17, 2000. If, after purchasing all of the shares which are tendered on that date, we and our parent would not own at least 90% of the outstanding common stock, we will be able to extend the initial Expiration Time to not later than September 13, 2000. We cannot extend it beyond that date without the Company's consent. However, after we accept and pay for the shares which have been properly tendered by the initial expiration date, we can extend the offer and you will be able to tender shares you have not previously tendered. However, you will not be able to withdraw shares your tender during the additional period, and we will pay for shares which are tendered during the additional period as we receive them, rather than waiting for the entire additional period to expire. You should not rely on our extending the offer beyond August 11, 2000. There is a good chance we will not do so. HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED? If we extend the offer, we will inform American Stock Transfer and Trust Company which is the Depositary with regard to the tender offer) of that fact, and will make a public announcement of the extension, not later than 9:00 a.m., New York City time, on the day after the day on which the Offer was scheduled to expire. WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER? We will not have to purchase the tendered shares unless at least 51% of the shares we or our parent do not own or have agreements to purchase are properly tendered and not withdrawn, and unless that occurs we will not be able to purchase the tendered shares without the Company's consent. Also, we will not have to purchase the tendered shares if after doing so, we would not own at least 53.5% of the outstanding common stock. Further, we will not have to purchase the tendered shares unless the Company's warranties in the merger agreement (including a warranty that there was no material adverse change in the business or financial condition of the Company and its subsidiaries between January 31, 2000 and the date of the Merger Agreement) are correct in all material respects when the tender offer expires. Finally, we will not have to purchase the tendered shares if there is a material disruption to the financial markets in the United States, a war or a similar event which makes the purchase of the tendered shares impracticable. HOW DO I TENDER MY SHARES? To tender shares, you must deliver the certificates representing the shares, together with a completed Letter of Transmittal, to American Stock Transfer and Trust Company, as Depositary, not later than the time the tender offer expires. If your shares are held in street name, your broker or bank probably can tender the shares through The Depositary Trust Company. If it does, you will not have to deliver a completed Letter of Transmittal to the Depositary, but your broker or bank will commit through DTC that you will be bound by the terms of the Letter of Transmittal. If you cannot get something that it is required to The Depositary by the Expiration Time of the tender offer, you can get a little extra time to do that by getting a broker, a bank or another fiduciary which is a member of the Securities Transfer Agents Medallion Program to guarantee that the missing items will be received by The Depositary within three Nasdaq National Market trading days. However, The Depositary must receive the missing items within that three trading day period. UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES? You can withdraw shares until the Expiration Time of the Offer and, if we have not by August 17, 2000 agreed to accept your shares for payment, you can withdraw them at any time after that until we do accept them for payment. However, if we accept the shares which have been tendered by a date and then extend the offer for an additional period, you will not be able to withdraw shares which you tender during the additional period. iii HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES? To withdraw shares, you must deliver a written notice of withdrawal, or a facsimile of one, to the Depositary while you still have the right to withdraw shares. WHAT DOES THE COMPANY'S BOARD OF DIRECTORS THINK OF THE OFFER? We are making the offer in accordance with a Plan and Agreement of Merger which has been approved by the Company's Board of Directors, on the recommendation of a Special Committee of directors which does not include any members of the management who will own interests in BR Holdings. The Board with those members of the management not voting, unanimously approved the Plan and Agreement of Merger, the tender offer and the proposed merger with us in which our immediate parent would become the sole shareholder of the merged company, and any Business Resource Group shareholders other than our parent or us who do not tender their shares would receive the same amount of cash as is paid to shareholders who do tender their shares. IS THIS THE FIRST STEP IN A GOING-PRIVATE TRANSACTION? Yes. If the merger takes place, the Company no longer will be publicly owned. Even if the merger does not take place, if we purchase all the tendered shares, there may be so few remaining shareholders and publicly held shares that the Company's common stock will no longer be eligible to be traded through a Nasdaq market or on a securities exchange, there may not be a public trading market for the Company's stock, and the Company may cease making filings with the SEC or otherwise being required to comply with the SEC rules relating to publicly held companies. WILL THE TENDER OFFER BE FOLLOWED BY A MERGER IF LESS THAN ALL THE COMPANY'S SHARES ARE TENDERED IN RESPONSE TO THE OFFER? If at least 51% of the shares which we and BR Holdings do not own or have agreements to purchase immediately prior to the expiration of the tender offer are properly tendered and not withdrawn, the Company will be merged into us. If that merger takes place, BR Holdings (through its subsidiary, Business Resource Holdings, Inc.) will own all the shares of the Company, and the other shareholders of the Company will receive $9.25 per share in cash (or any higher amount which is paid in the tender offer, if the tender offer price is changed). WILL CURRENT BUSINESS RESOURCE GROUP DIRECTORS OR OFFICERS HAVE AN INTEREST IN THE COMPANY WHICH SURVIVES THE MERGER? Two officers of Business Resource Group, one of whom is a director, will be exchanging approximately 6% of the outstanding Business Resource Group shares for approximately 6% of the interests in BR Holdings. That is approximately 20% of the shares the two officers own (they have agreed to tender the remainder of their shares in response to the offer). In addition, Business Resource Holdings, Inc., which is wholly owned by BR Holdings and will be the sole stockholder of the company which survives the merger, will offer officers and key employees of the surviving company the right to purchase up to 14.6% of the Business Resource Holdings, Inc. stock under an employee stock incentive program. The four senior executives of Business Resource Group (three of whom are directors) will be entitled to purchase approximately 80% of those shares (approximately 11.7% of the total stock of Business Resource Holdings, Inc.). IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES? If at least 51% of the shares we and our parent do not own or have agreements to purchase are properly tendered and not withdrawn, unless the Company and we agree otherwise (which is very unlikely) the Company and we will be merged. If the merger described above takes place, you will receive as a result of the merger the same cash per share which you would have received if you had tendered your shares. Therefore, if the merger takes place, the only difference to you between tendering your shares and not tendering your shares is that you will be paid earlier if you tender your shares. However, after we purchase the tendered shares, the number of shareholders and of shares of the Company's stock which are still in the hands of the public may be so small that there no longer will be a public trading market (or an active public trading market) for the Company's common iv stock. Also, as is described above, the Company may cease making filings with the SEC or otherwise being required to comply with the SEC rules relating to publicly held companies. WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE? On July 7, 2000, the last trading day before the tender offer and merger were announced, the last sale price of Business Resource Group common stock reported on the Nasdaq National Market was $6.75 per share. On July 10, 2000, after the announcement of the tender offer and merger, the price of the Company's common stock rose to $9.00 per share. Between January 1, 2000 and July 7, 2000, the price of the Company's common stock ranged between $3.1875 and $9.00 per share. WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER? You can call Tom Long at D.F. King (telephone no. 212-269-5550). D.F. King is acting as the Information Agent with regard to our tender offer. HOW LONG WILL IT TAKE BETWEEN THE TIME YOU PURCHASE THE TENDERED SHARES AND THE TIME YOU ARE MERGED WITH THE COMPANY? If we and our parent own at least 90% of the outstanding Company stock after we purchase the tendered shares, it shouldn't take us more than a week or so to complete the merger. If we do not own at least 90% of the Company's stock after we purchase the tendered shares, the Company will probably have to convert itself from a California corporation to a Delaware corporation before the vote on the merger can take place. Under those circumstances, it could take several months for us to complete the merger. v TABLE OF CONTENTS
PAGE ----- INTRODUCTION............................................................................................... 1 SPECIAL FACTORS............................................................................................ 3 1. Background of the Offer; Contacts with the Company................................................... 3 2. Purpose of the Offer and the Proposed Merger; Plans for the Company.................................. 5 3. Certain Federal Income Tax Consequences.............................................................. 6 4. Certain Effects of the Transaction................................................................... 7 5. Fairness of the Transaction.......................................................................... 8 6. Reports, Opinions, Appraisals and Certain Negotiations............................................... 8 THE TENDER OFFER........................................................................................... 9 7. Terms of the Offer................................................................................... 9 8. Acceptance for Payment and Payment for Shares........................................................ 10 9. Procedures for Tendering Shares...................................................................... 11 10. Withdrawal Rights.................................................................................... 13 11. Conditions of the Offer.............................................................................. 14 12. Price Range of Shares................................................................................ 15 13. Certain Information Concerning the Company........................................................... 15 14. Information Concerning the Purchaser, Holdings, Inc., BR Holdings LLC and Three Cities Fund III................................................................................ 17 15. Source and Amount of Funds........................................................................... 18 16. The Merger........................................................................................... 18 17. Dividends and Distributions.......................................................................... 22 18. Certain Legal Matters; Regulatory Approvals.......................................................... 22 19. Fees and Expenses.................................................................................... 22 20. Miscellaneous........................................................................................ 23 SCHEDULE I................................................................................................. I-1 SCHEDULE II................................................................................................ II-1 SCHEDULE III............................................................................................... III-1
TO THE HOLDERS OF COMMON STOCK OF BUSINESS RESOURCE GROUP: INTRODUCTION BRG Acquisition Corporation (the "Purchaser"), a Delaware corporation which, is indirectly wholly-owned by BR Holdings LLC ("BR Holdings"), hereby offers to purchase all the outstanding shares of common stock, par value $0.01 per share ("Shares"), of Business Resource Group (the "Company"), a California corporation, for $9.25 per Common Share, net to the seller in cash (the "Offer Price"), upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which terms and conditions constitute the "Offer"). The Offer will expire at 5:00 p.m., New York City time, on August 11, 2000, unless it is extended. The Offer is being made as contemplated by a Plan and Agreement of Merger (the "Merger Agreement") dated July 7, 2000, between the Company and the Purchaser. The Merger Agreement provides that, if the Purchaser purchases the tendered shares, the Purchaser and BR Holdings will take all steps in their power (including voting their Shares) to cause the Purchaser to be merged with the Company (the "Merger") in a transaction in which Business Resource Holdings, Inc., the sole shareholder of the Purchaser and a wholly-owned subsidiary of BR Holdings) will become the owner of all the stock of the corporation which results from the Merger (essentially, the Company), and the other shareholders of the Company will receive the same amount of cash per Share as is paid for Shares tendered in response to the Offer (unless shareholders have rights to demand appraisal of their Shares and particular shareholders exercise those rights). Because of a provision of the California General Corporation Law which could prevent the Company's shareholders from receiving cash as a result of the Merger, the Company may convert itself into a Delaware corporation before the Merger takes place. If less than 51% of the outstanding Shares that neither the Purchaser nor BR Holdings owns immediately before the Offer expires are properly tendered and not withdrawn, the Purchaser may not purchase the tendered Shares unless the Company consents to its doing so. Also, the Purchaser will not have to purchase the Shares which are tendered unless the Shares which are properly tendered and not withdrawn, together with the Shares which the Purchaser or BRG Holdings own, total at least 53.5% of the outstanding Shares. If the Purchaser does not purchase the tendered Shares, the Merger will not take place. On June 29, 2000, there were 5,298,753 outstanding Shares. Two officers of the Company have agreed that before the Offer expires they will transfer a total of 319,168 shares to BR Holdings in exchange for equity interests in BR Holdings. Therefore, if no additional Shares are issued before the Offer expires, the Purchaser will not be required or permitted (unless the Company consents) to accept the tendered shares unless at least 2,539,588 Shares are properly tendered and not withdrawn. However, the Company has told the Purchaser it expects options to purchase at least 281,859 Shares to be exercised by officers of the Company before the Offer expires. That would increase the number of outstanding Shares to 5,580,612 and would increase to 2,683,336 Shares, the number of Shares which would have to be properly tendered and not withdrawn for the Purchaser to be required or permitted (without the Company's consent) to accept the tendered Shares. The directors and officers of the Company have agreed, or indicated they intend, to tender all their Shares (including the Shares they will acquire through exercise of options) in response to the Offer. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, THE FINANCIAL ADVISOR TO A SPECIAL COMMITTEE ESTABLISHED BY THE COMPANY'S BOARD OF DIRECTORS, HAS DELIVERED TO THAT SPECIAL COMMITTEE ITS WRITTEN OPINION TO THE EFFECT THAT, AS OF JULY 6, 2000, THE $9.25 IN CASH TO BE RECEIVED BY THE COMPANY'S SHAREHOLDERS, OTHER THAN THE MEMBERS OF MANAGEMENT OF THE COMPANY WHO HAVE AGREED TO EXCHANGE THEIR SHARES FOR INTERESTS IN BR HOLDINGS, AS A RESULT OF THE OFFER AND IN THE MERGER IS FAIR TO THOSE SHAREHOLDERS FROM A FINANCIAL POINT OF VIEW. THE FULL TEXT OF THAT WRITTEN OPINION, AND A DESCRIPTION OF THE ASSUMPTIONS MADE, THE MATTERS CONSIDERED AND THE SCOPE OF THE OPINION, WILL BE INCLUDED WITH THE COMPANY'S SOLICITATION/ RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 (THE "SCHEDULE 14D-9"), WHICH WILL BE MAILED TO SHAREHOLDERS WITH OR SHORTLY AFTER THIS OFFER TO PURCHASE. SHAREHOLDERS ARE URGED TO READ THE MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED OPINION IN ITS ENTIRETY. 1 The purpose of the Offer and the Merger is to enable the Purchaser to acquire all the outstanding stock of the Company. Tendering shareholders will not be required to pay brokerage fees or commissions or, except as set forth in Instruction 6 to the Letter of Transmittal, stock transfer taxes as a result of the sale of Shares to the Purchaser in response to the Offer. Any tendering shareholder who fails to complete and sign the Substitute Form W-9 included in the Letter of Transmittal may be subject to a required backup Federal income tax withholding of 31% of the gross proceeds payable for the tendered shares. See Section 3. The Purchaser will pay all charges and expenses of American Stock and Transfer Trust Company, as Depositary (the "Depositary"), and D.F. King & Co., Inc., as Information Agent (the "Information Agent"), incurred in connection with the Offer. See Section 19. THE BOARD OF DIRECTORS OF THE COMPANY (WITH THE THREE DIRECTORS WHO WILL ACQUIRE INTERESTS IN ONE OR BOTH OF THE PURCHASER'S PARENTS BEING ABSENT OR NOT VOTING), BASED ON A RECOMMENDATION OF A SPECIAL COMMITTEE, (1) HAS APPROVED THE OFFER AND THE MERGER WHICH MAY FOLLOW THE OFFER, (2) HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S SHAREHOLDERS, AND (3) RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES IN RESPONSE TO THE OFFER. Conditions to the Offer. The Offer is subject to some conditions. They are described in Section 11. HOWEVER, THE OFFER IS NOT CONDITIONED ON THE PURCHASER'S OBTAINING FINANCING. The Purchaser has the right, in its sole discretion, to waive any of the conditions to the Offer, other than the condition that at least 51% of the Shares which the Purchaser or BR Holdings do not own or have agreements to purchase when the Offer expires be properly tendered and not withdrawn. See Section 11. THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH YOU SHOULD READ CAREFULLY BEFORE YOU MAKE ANY DECISION WITH RESPECT TO THE OFFER. 2 SPECIAL FACTORS 1. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. In early January, a representative of Three Cities Research, Inc. ("TCR") received from John Corwin of Huntington Holdings, unsolicited, a description of the Company and a form of confidentiality agreement. Mr. Corwin explained that they had been retained by the Company to assist in evaluating strategic alternatives to enhance value to its shareholders. On January 21, 2000, John Corwin contacted W. Robert Wright, II of TCR and asked whether funds advised by TCR might be interested in acquiring the Company. On January 31, 2000, TCR signed and returned the confidentiality agreement. On February 16, 2000, Mr. Wright and Willem deVogel of TCR attended a presentation regarding the Company given by Jack Peth, the Company's President and Chief Executive Officer, John Palmer, the Company's Chief Operating Officer and Chief Financial Officer, Brian McNay, the Company's Executive Vice President--Sales, Jeffrey Tuttle, the Company's Executive Vice President--Marketing, and Mr. Corwin at the Company's headquarters in San Jose, California. On March 2 and 3, 2000, representatives of TCR visited the Company's headquarters to discuss the process for TCR to conduct due diligence regarding the Company. Shortly after that, TCR was sent a package of information regarding the Company. That package included a statement that Messrs. Peth, Palmer, McNay and Tuttle all wish to continue with and invest in the recapitalized Company. On March 16, 2000, Messrs. deVogel and Wright met with Mr. Peth and Mr. Corwin at the Company's headquarters in San Jose and discussed the possibility that a company formed by Funds advised by TCR might make a tender offer for the Company for $9.75 per share. The closing price of the Company's stock on that day was $7.94. During the meeting the TCR representatives noted that the members of the management of companies TCR Funds acquired normally received equity interests in the companies. During the following period, the Company's Board appointed a Special Committee consisting of Harold Robbins and George Kelly, to consider strategic opportunities presented to the Company, enter into discussions or negotiations related to such strategies on opportunities and recommend to the Board of Directors what action, if any, should be taken with respect to them. The Special Committee retained Venture Law Group as its counsel and interviewed investment banks it might retain as advisors and which could be asked to render an opinion about the fairness of any transaction which might be agreed upon. The Special Committee subsequently retained Merrill Lynch, Pierce, Fenner & Smith Incorporated for these purposes. On April 12, 2000, Harold Robbins, one of the members of the Special Committee, called Willem deVogel, and told him that the Special Committee would not recommend an offer of $9.75 per share for the Company. On that day, the last reported sale price of the Company's stock was $7.75 per share. Subsequently, J. William Uhrig, another partner in TCR, and Mr. Corwin agreed that discussions should continue. On April 28, 2000, Messrs. Robbins, Kelly and Corwin met at TCR's offices in New York with Messrs. Uhrig and deVogel to discuss the price which a TCR acquisition company might be willing to pay for the Company's shares and to discuss the progress of TCR's review of a possible transaction. During the week of May 1, 2000, there was a series of telephone conversations between Messrs. Uhrig and Corwin regarding the price the TCR acquisition company might be willing to pay. On May 5, 2000, TCR said that, subject to completion of due diligence, it appeared the TCR acquisition company would be willing to pay $11.75 per share for the Company's stock. On May 12, 2000, Mr. Corwin informed Mr. Uhrig that the Special Committee would recommend a transaction at that price. On May 15, 2000, Clifford Chance Rogers & Wells, LLC ("CCR&W"), the attorneys for TCR, sent Orrick, Herrington & Sutcliffe LLC, the attorneys for the Company, a draft of a Plan and Agreement of Merger. Subsequently, on May 20, 2000, an attorney at Venture Law Group told an attorney at CCR&W that The Venture Law Group, as counsel to the Special Committee, would take the principal role in reviewing and negotiating a merger agreement. 3 During the second and third weeks of May, representatives of TCR performed detailed due diligence. regarding the Company. In addition, TCR presented information regarding the Company to potential providers of senior debt financing which would be used in connection with the acquisition and as a source of funds for the Company after the acquisition. On May 22, 2000, a representative of TCR told Mr. Corwin that, because of the nature of the Company's business (particularly the importance to that business of one very large customer and one major supplier), and because of negative reactions of prospective financing sources, TCR would not be willing to proceed with a transaction at $11.75 per share. He said TCR would not be willing to pay more than $9.00 per share for the stock of the Company. On June 1 and 2, 2000, Messrs. Uhrig and deVogel met in New York with Messrs. Robbins and Corwin to discuss TCR's revised proposal. Following these meetings, Mr. Uhrig said that, as a possible alternative to paying $9.00 per share in cash, the TCR acquisition company would be willing to pay $8.00 in cash, and to have the Company issue to its shareholders convertible preferred stock with a liquidation preference of $2.00 per share, which would remain outstanding after the TCR acquisition company acquired the Company's common stock. On June 8, 2000, Mr. Corwin and counsel for the Special Committee told counsel for TCR that the Special Committee would not recommend the $9.00 per share Mr. Uhrig had proposed, but it would consider an offer of $9.75 in cash following a dividend to the Company's shareholders of $2.00 in convertible preferred stock. That was confirmed later in the day to Messrs. deVogel and Wright of TCR. In response, Mr. deVogel sent a letter to Messrs. Corwin, Kelly and Robbins in which he stated that, in view of the fact that the Special Committee would not recommend TCR's offer of $9.00 per share, TCR was terminating all discussions with the Company. On June 9, 2000, Mr. Robbins told Mr. deVogel that the Special Committee and the Board of Directors of the Company would be meeting on June 15 and June 16, 2000, respectively. Mr. Robbins urged that TCR increase the price to $9.75 per share. Eventually Mr. deVogel proposed increasing it to $9.25 per share. On the same day, Mr. deVogel told Mr. Peth on the telephone that TCR might be willing to proceed with a transaction at that price. Mr. Peth said he was not authorized to discuss price, but would convey the information to the Special Committee. Following June 9, 2000 there were discussions of the transaction at $9.25 per share. Among other things, TCR agreed that if the transaction were at that price, the break-up fee it would require, if, after an agreement was signed, the Company accepted what it viewed as a better proposal would be 1% of the enterprise value of the Company, rather than the 5% TCR had previously been seeking. On June 16, 2000, TCR was told that the Special Committee had recommended that the Board of Directors approve, and recommend to its shareholders, a transaction in which a TCR acquisition company would make a tender offer at $9.25 per share which, if successful, would be followed by a merger in which shareholders who had not tendered their shares, other than the TCR acquisition company, would receive the same $9.25 per share, and the Board of Directors had approved a transaction on those terms and determined that it would recommend that transaction to the Company's shareholders. On June 20, 2000, the attorneys for TCR sent Brobeck, Phleger & Harrison, LLP the personal attorneys for Messrs. Peth, Palmer, McNay and Tuttle, drafts of an agreement regarding those members of the Company's management's exchanging shares of the Company for interests in BR Holdings and copies of the Limited Liability Company Agreement of BR Holdings. On June 22, CCRW sent Brobeck drafts of employment agreements under which, if the Purchaser acquired the Company, the four members of the Company's management would be employed by the Purchaser (which, after the Merger, would own and operate the business of the Company). Between June 21 and July 7, 2000, there were discussions of the terms of the Merger Agreement. In addition, there were discussions of which members of the Company's management would exchange shares of the Company for interests in BR Holdings and the terms on which they might do so, of terms of employment agreements between the Company and four members of the Company's management, of how the Purchaser would be able to enforce non-competition provisions, on which TCR was insisting of stock interests in the parent of the merged company which would be provided to key employees and officers of the Company (including 4 Messrs. Peth, Palmer, McNay and Tuttle) after the Merger, and of deferred compensation which would be paid to Mr. Peth in exchange for his cancelling options to purchase shares. Late on July 7, 2000, after the U.S. securities markets had closed, the Merger Agreement was executed. On Monday, July 10, 2000, before the U.S. securities markets opened, the Company and TCR jointly announced the signing of the Merger Agreement and the Purchaser's intention to commence the Offer. 2. PURPOSE OF THE OFFER AND THE PROPOSED MERGER; PLANS FOR THE COMPANY. Purpose. The purpose of the Offer and the Merger is to enable BR Holdings, through Business Resource Holdings, Inc. ("Holding, Inc.") and the Purchaser, to acquire all the outstanding stock of the Company. BR Holdings and Holdings, Inc. were formed to acquire the Company. If at least 51% of the outstanding Shares that neither the Purchaser nor BR Holdings owns or has agreements to purchase when the Offer expires are properly tendered and not withdrawn, after purchasing the tendered Shares the Purchaser and BR Holdings together will own at least 53.5% of the outstanding Shares, and the other conditions set forth in the Merger Agreement are satisfied or waived, the Purchaser is required by the Merger Agreement to take all steps in its power to effect the Merger. The Company may not, and may not authorize or permit its or any of its subsidiaries' officers, directors, employees, agents or representatives (including any investment banker, attorney or accountant retained by it or by any of its subsidiaries) directly or indirectly to initiate, solicit, encourage or otherwise facilitate any inquiry or the making of any proposal or offer with respect to a merger, reorganization, share exchange, consolidation or similar transaction involving the Company, or any purchase of or tender for, all or any significant portion of the Company's equity securities or any significant portion of the assets of the Company and its subsidiaries on a consolidated basis. However, this will not prevent the Company from, in response to an acquisition proposal which the Company receives despite complying with the previous sentence and which the Special Committee of the Company's Board determines, in good faith after consultation with its independent financial advisor, would result (if consummated in accordance with its terms) in a transaction which (i) would result in the Company's shareholders' receiving cash consideration which is greater than the Offer Price and (ii) would be more favorable to the Company's shareholders than the Offer and the Merger, furnishing non-public information (after receipt of an appropriate confidentiality agreement) to the person, entity or group which makes the acquisition proposal and entering into discussions and negotiations with that potential acquiror. If the Company receives an acquisition proposal, or the Company learns that someone other than the Purchaser is contemplating soliciting tenders of Shares or otherwise proposes to acquire the Company or its Shares if the Company's shareholders do not tender their Shares to the Purchaser in response to the Offer or do not approve the Merger, the Company has agreed promptly to notify the Purchaser of that fact and to provide the Purchaser with all information in the Company's possession which the Purchaser reasonably requests regarding the acquisition proposal, solicitation of tenders or other proposed transaction, and the Company will promptly, from time to time, provide the Purchaser with any additional information the Company obtains regarding the acquisition proposal, the solicitation of tenders or the other proposed transaction. The Company may terminate the Merger Agreement if the Company receives a proposal for a cash acquisition of the Company, or somebody commences an all cash tender offer for all of the outstanding Shares, which (x) would result in the Company's shareholders' receiving consideration which is greater than the Offer Price, (y) is not subject to the outcome of due diligence or any other investigation, is not subject to a financing contingency and is from a proposed acquiror which the Special Committee reasonably determines in good faith after consultation with its independent financial advisor has the financial resources necessary to carry out the transaction, and (z) the Special Committee determines in good faith after consultation with its independent financial advisor to be more favorable to the Company's shareholders than the Offer and the Merger. However, the Company may only cancel the Merger Agreement if, after the Company has received the proposal and given the Purchaser at least 10 business days' prior notice that the Merger Agreement will terminate if the Purchaser does not increase the Offer Price to an amount at least as great as the cash consideration the Company's shareholders would receive under the proposal or tender offer by the other person, (A) the Purchaser does not increase the Offer Price to an amount at least as great as the cash per share the Company's shareholders would 5 receive as a result of the proposal or tender offer by the other person, and (B) the Company has (1) paid the Purchaser $750,000 and (2) reimbursed the Purchaser (or agreed in writing to reimburse the Purchaser) for all the expenses (up to $500,000) related to the transactions which are the subject of the Merger Agreement which the Purchaser or its affiliates (including Three Cities Research, Inc., BR Holdings and the Three Cities Fund) incurred in connection with the Merger Agreement and the transactions contemplated by it. If the Company notifies the Purchaser that the Merger Agreement will terminate unless the Purchaser increases the Offer Price, the Company will not be able to revoke that notice without the Purchaser's consent. 3. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following summary is a general discussion of certain of the expected Federal income tax consequences of the Offer. The summary is based on the Internal Revenue Code of 1986, as amended (the "Code"), and published regulations, rulings and judicial decisions in effect at the date of this Offer to Purchase, all of which are subject to change. The summary does not discuss all aspects of Federal income taxation that may be relevant to a particular holder in light of his or her personal circumstances or to certain types of holders subject to special treatment under the Federal income tax laws, such as life insurance companies, financial institutions, tax-exempt organizations and non-U.S. persons. The following summary may not be applicable with respect to Shares acquired through exercise of employee stock options or otherwise as compensation. It also does not discuss any aspects of state or local tax laws or of tax laws of jurisdictions outside the United States of America. THE DESCRIPTION OF FEDERAL INCOME TAX CONSEQUENCES SET FORTH BELOW IS FOR GENERAL INFORMATION ONLY. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE SALE OF THEIR SHARES, INCLUDING THE APPLICATION OF FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS AND POSSIBLE CHANGES IN TAX LAWS. Sales of Shares in response to the Offer will be taxable transactions for Federal income tax purposes, and may also be taxable transactions under applicable state, local, foreign and other tax laws. For Federal income tax purposes, a tendering shareholder will generally recognize gain or loss equal to the difference between the amount of cash received by the shareholder upon sale of the Shares and the shareholder's tax basis in the Shares which are sold. Under present law, gain or loss will be calculated separately for each block of Shares tendered and purchased pursuant to the Offer. If tendered Shares are held by a tendering shareholder as capital assets, gain or loss recognized by the tendering shareholder will be capital gain or loss, which will be long-term or short term depending on whether the tendering shareholder's holding period for the Shares exceeds one year. Long-term capital gains recognized by a shareholder who is an individual will generally be taxed at a maximum Federal marginal tax rate of 20%. Short term capital gains recognized by an individual will generally be taxed at the individual's ordinary income tax rate. Capital gains recognized by a tendering corporate shareholder will be taxed at a maximum Federal marginal tax rate of 35%. A shareholder (other than certain exempt shareholders, including all corporations and certain foreign individuals) who tenders Shares may be subject to 31% backup withholding unless the shareholder provides its taxpayer identification number ("TIN") and certifies that the TIN is correct or properly certifies that it is awaiting a TIN. This should be done by completing and signing the substitute Form W-9 included as part of the Letter of Transmittal. A shareholder that does not furnish its TIN also may be subject to a penalty imposed by the IRS. If backup withholding applies to a shareholder, the Depositary is required to withhold 31% from each payment to that shareholder. Backup withholding is not an additional tax. Rather, the amount of the backup withholding can be credited against the Federal income tax liability of the person subject to the backup withholding, provided that the required information is given to the IRS. If backup withholding results in an overpayment of tax, a refund can be obtained by the shareholder upon filing an income tax return. 6 4. CERTAIN EFFECTS OF THE TRANSACTION. Nasdaq National Market. The purchase of the Shares tendered in response to the Offer will reduce the number of Shares that might otherwise trade publicly and probably will significantly reduce the number of holders of Shares, which could adversely affect the liquidity and market value of the remaining Shares held by the public. Depending upon the number of Shares purchased as a result of the Offer, the Shares may no longer meet the standards of the National Association of Securities Dealers, Inc. (the "NASD") for continued inclusion in the Nasdaq National Market (the top tier market of the Nasdaq Stock Market), which require that an issuer have at least 200,000 publicly held shares with a market value of $1 million held by at least 400 shareholders (or 300 shareholders holding round lots) and have net tangible assets of at least $1 million, $2 million or $4 million depending on profitability levels during the issuer's four most recent fiscal years. If these standards are not met, the Shares might nevertheless continue to be included in the NASD's Nasdaq National Market with quotations published in the Nasdaq "additional list" or in one of the "local lists." However, if the number of holders of Shares falls below 300 or the number of publicly held Shares falls below 100,000, or if there are not at least two market makers for Shares, the Shares would no longer qualify for Nasdaq Stock Market reporting, and the Nasdaq Stock Market would cease to provide any quotations. Shares held directly or indirectly by an officer or director of the Company, or by a beneficial owner of more than 10% of the Shares, ordinarily will not be considered as being publicly held for this purpose. According to the Company, as of June 29, 2000, there were approximately 228 holders of record and approximately 525 beneficial owners of Shares and 5,298,753 Shares were outstanding. If, as a result of the purchase of Shares pursuant to the Offer or otherwise, the Shares no longer meet the NASD requirements for continued inclusion on the Nasdaq National Market or in any other tier of the Nasdaq Stock Market, the ability to sell Shares could be adversely affected. If the Shares no longer meet the requirements for inclusion in any tier of the Nasdaq Stock Market, quotations might or might not still be available from other sources. The extent of the public market, and availability of quotations, for the Shares would depend upon the number of holders of Shares after the purchase of the Shares tendered in response to the Offer, whether securities firms are interested in maintaining a market in the Shares, the possible termination of registration under the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), as described below, and other factors. Exchange Act Registration. The Shares are currently registered under the Exchange Act. That registration may be terminated upon application of the Company to the Securities and Exchange Commission if the Shares are not listed on a national securities exchange or quoted on Nasdaq and there are fewer than 300 record holders of the Shares. The termination of registration of the Shares under the Exchange Act would substantially reduce the information the Company would be required to furnish to holders of Shares and to the SEC and would make certain provisions of the Exchange Act, such as the short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the requirement that the Company furnish a proxy statement or information statement in connection with shareholder actions pursuant to Section 14 of the Exchange Act, and the requirements of Rule 13e-3 under the Exchange Act with respect to "going-private" transactions, no longer applicable to the Company. See Section 18. In addition, "affiliates" of the Company and persons holding "restricted securities" of the Company may be deprived of the ability to dispose of those securities pursuant to Rule 144 under the Securities Act of 1933, as amended. If the Purchaser purchases the Shares which are tendered in response to the Offer, the Company may seek to cause the Company to terminate quotation of the Shares on the Nasdaq Stock Market and, if there are fewer than 300 remaining holders of record of Shares, to apply to terminate the registration of the Shares under the Exchange Act. It might do that before the shareholders are asked to vote to approve the Merger (if shareholder approval is required), in which case the Purchaser could give the necessary approval of the Merger without the Company's sending a proxy statement or an information statement to its shareholders. Even if less than 51% of the outstanding Shares which the Purchaser and BR Holdings did not own or have agreements to purchase on July 11, 2000 are properly tendered and not withdrawn, if the Purchaser purchases the Shares which are properly tendered and not withdrawn (which would require the Company's consent), the Shares may no longer be eligible for inclusion on the Nasdaq Stock Market and the Company may be able to terminate the registration of the Shares under the Exchange Act. If that is the case, the Purchaser will seek to cause the Company to terminate the registration of the Shares under the Exchange Act as soon as practicable after they are no longer quoted on the Nasdaq Stock Market. 7 5. FAIRNESS OF THE TRANSACTION. The Purchaser, BR Holdings, Holdings, Inc. and the Three Cities Fund believe that the Offer and the Merger are fair to holders of Shares who are not affiliated with the Purchaser, BR Holdings, Holdings, Inc. the Three Cities Fund or the Company. An important reason for their belief is the fact that the $9.25 per share which the Purchaser is offering for the Shares in the Offer, and which holders of Shares will receive as a result of the Merger if it occurs, is more than 37% higher than the last sale price of the Shares reported on the Nasdaq National Market on July 7, 2000, the last full day of trading prior to the day on which there was a public announcement of the execution of the Merger Agreement and the transactions contemplated by it (including the Offer). Other factors which contribute to the Purchaser's belief that the Offer and the Merger are fair to holders of Shares who are not affiliated with the Purchaser, BR Holdings, Holdings, Inc. the Three Cities Fund or the Company are (a) in addition to exceeding the last reported sale price of the Shares on July 7, 2000, by more than 37%, the Offer Price exceeds by more than 2.5% the highest price at which the Shares were traded during the twelve months prior to that (which was $9.00 per Share); and exceeds the highest price at which the Shares have traded since 1995, and (b) the Offer Price substantially exceeds the Company's shareholders' equity per share at April 30, 2000 (which was $3.81 per share). Merrill Lynch, Pierce, Fenner & Smith Incorporated gave an opinion to a Special Committee of the Company's Board of Directors regarding the fairness from a financial point of view of the consideration to be paid in the Offer and the Merger. See Item 6. The Purchaser, BR Holdings, Holdings, Inc. and the Three Cities Fund understand that the Special Committee and the entire Board of Directors of the Company (with the three directors who will acquire interests in BR Holdings or participate in the Business Resource Holdings, Inc. stock purchase plan not present or abstaining) unanimously approved the Offer and the Merger Agreement. Therefore, the Merger Agreement was approved by all the directors of the Company who are not employees of the Company. On July 10, 2000, a few hours after the Offer was announced, George Reynolds, who says he is a shareholder of the Company, instituted an action in the Superior Court of California, Santa Clara County, against the Company and Harry S. Robbins, John W. Peth, Brian D. McNay and Jeffrey D. Tuttle, all of whom are directors of the Company. The complaint claims the action is brought as a class action on behalf of the holders of the Company's common stock against the Company and its directors "arising out of the defendants' efforts to complete a management-led buyout ('MBO') of [the Company] at a grossly inadequate and unfair price" and "their efforts to provide certain insiders and directors with preferential treatment at the expense of, and which is unfair to, the public shareholders." The suit alleges that the defendants "are engaging in self-dealing, are not acting in good faith toward plaintiff and the other members of the Class, and have breached and are breaching their fiduciary duties to the members of the Class." The suit seeks, among other things, an injunction against the defendants, and persons acting in concert with them, consummating an offer by John Peth and three of the Company's senior officers to purchase the outstanding shares of the Company for $9.25 per share. 6. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS. None of the Purchaser, BR Holdings, Holdings, Inc. or the Three Cities Fund has received a report, opinion or appraisal from an outside party related to the Offer or the Merger, including, but not limited to, any report, opinion or appraisal relating to the consideration or the fairness of the consideration being offered to holders of Shares or the fairness of the transaction to the Company, to the Purchaser, Holdings, Inc., the Three Cities Fund or its shareholders (including BR Holdings) or to holders of Shares or other securities of the Company who are not affiliates of the Company. The Schedule 14D-9, which will be filed by the Company with the SEC, copies of which will be sent to the Company's shareholders, describes an opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated regarding the fairness of the Offer and the Merger to the Company's shareholders (other than the purchaser, BR Holdings and two executive officers of the Company who will exchange shares for interests in BR Holdings) from a financial point of view. 8 THE TENDER OFFER 7. TERMS OF THE OFFER. On the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of the extension or amendment), the Purchaser will accept for payment and pay for all Shares which are validly tendered prior to the Expiration Time and not withdrawn in accordance with Section 10. The term "Expiration Time" means 5:00 p.m., New York City time, on August 11, 2000, unless the Purchaser extends the period during which the Offer is open, in which event the term "Expiration Time" will mean the time and date at which the Offer, as extended, will expire before the Purchaser accepts or pays for any Shares. The Purchaser may extend the Expiration Time until not later than August 17, 2000 (or, if the number of shares tendered does not increase the Shares owned by the Purchaser and BR Holdings to least 90% of the outstanding Shares, until not later than September 13, 2000). Also, the Purchaser may extend the Offer for a period of up to 20 business days subsequent to the Expiration Time. During that subsequent period, if there is one, the Purchaser will purchase and pay for Shares as they are received rather than waiting for the subsequent period to expire. In the Merger Agreement, the Purchaser has agreed that it will not, without the Company's consent (which must be approved by the Special Committee) (a) accept tendered Shares unless at least 51% of the Shares neither the Company nor BR Holdings owns or has agreements to purchase when the tender offer expires are properly tendered and not withdrawn, (b) decrease the number of Shares it is offering to purchase, (c) reduce the Purchase Price, (d) modify or add to the conditions described in Section 11, (e) change the form of consideration it is offering, or (f) extend the Offer, except as required or permitted by the Merger Agreement (which is described below). The Purchaser reserves the right, at any time and from time to time (except as limited by the Merger Agreement), to extend the period during which the Offer is open, by giving oral or written notice of the extension to the Depositary and by making a public announcement of it as described below. The Merger Agreement permits the Purchaser to extend the Expiration Time until up to 60 days after the date the Purchaser files the Schedule TO with the Securities and Exchange Commission (the "SEC"). During any extension, all Shares previously tendered and not withdrawn will remain tendered in response to the Offer, subject to the rights of a tendering shareholder to withdraw tendered Shares. See Section 10. Subject to the Merger Agreement and the applicable regulations of the SEC, the Purchaser reserves the right, at any time and from time to time, to (i) delay acceptance for payment of, or, regardless of whether Shares were already accepted for payment, payment for, Shares pending receipt of any regulatory or third-party approval described in Section 18 or in order to comply in whole or in part with any other applicable law, (ii) terminate the Offer and not accept for payment any Shares if any of the conditions described to in Section 11 has not been satisfied or upon the occurrence of any of the events described in Section 11 or (iii) waive any condition or otherwise amend the Offer in any respect, in each case, by giving oral or written notice of the delay, termination, waiver or amendment to the Depositary and by making a public announcement of it, as described below. The Purchaser acknowledges that (i) Rule 14e-1(c) under the Exchange Act requires the Purchaser to pay the consideration offered or return the tendered Shares promptly after the termination or withdrawal of the Offer and (ii) the Purchaser may not delay acceptance for payment of, or payment for (except as provided in clause (i) of the first sentence of the preceding paragraph), any Shares upon the occurrence of any of the events described in Section 11 without extending the period of time during which the Offer is open. The Purchaser will make a public announcement of any extension, delay, termination, waiver or amendment as promptly as practicable after it takes place. In the case of an extension, the Purchaser will make a public announcement no later than 9:00 a.m., New York City time, on the business day after the day of the previously scheduled Expiration Time. Subject to applicable law (including Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act, which require that material changes be promptly disseminated to shareholders in a manner reasonably designed to inform them of the changes), the Purchaser will have no obligation to publish, advertise or otherwise communicate any public announcement other than by issuing a press release. If the Purchaser makes a material change in the terms of the Offer or the information concerning the Offer or if it waives a material condition to the Offer, the Purchaser will extend the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. Consummation of the Offer is conditioned upon 9 satisfaction of the conditions set forth in Section 11. The Purchaser reserves the right (but will not be obligated) to waive any or all of those conditions, except that the Purchaser requires the Company's consent to waive the condition that at least 51% of the Shares which neither the Company nor BR Holdings owns or has agreements to purchase when the tender offer expires be properly tendered and not withdrawn. The Company has given the Purchaser a shareholder list and security position listings for the purpose of enabling the Purchaser to disseminate the Offer to holders of Shares. This Offer to Purchase and the related Letter of Transmittal and other relevant materials will be mailed to record holders of Shares and to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the Company's shareholder list, or who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. 8. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. On the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of the extension or amendment), the Purchaser will purchase, by accepting for payment, and will pay for, all Shares which are validly tendered (and not properly withdrawn in accordance with Section 10) prior to the Expiration Time. Shares will be accepted as soon as practicable after the later to occur of (i) the Expiration Time and (ii) the satisfaction or waiver of the conditions set forth in Section 11. Any determination concerning the satisfaction of the terms and conditions of the Offer will be made by the Purchaser. See Section 11. The Purchaser expressly reserves the right, in its sole discretion, to delay acceptance for payment of, or, subject to the applicable SEC rules, payment for, Shares in order to comply in whole or in part with any applicable law. See Section 18. In all cases, payment for Shares which are tendered in response to the Offer and accepted for payment will be made only after timely receipt by the Depositary of (a) the certificate(s) representing the tendered Shares (the "Share Certificates"), or timely confirmation of a book-entry transfer (a "Book-Entry Confirmation") of the Shares into the Depositary's account at The Depositary Trust Company ("DTC"), as described in Section 9, (b) a properly completed and duly executed Letter of Transmittal (or facsimile of one), or an Agent's Message in connection with a book-entry transfer, and (c) any other documents required by the Letter of Transmittal. An "Agent's Message" is a message, transmitted by DTC to, and received by, the Depositary and forming a part of the Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has received an express acknowledgment from a participant in the Book-Entry Transfer Facility which is tendering Shares that the participant has received, and agrees to be bound by the terms of, the Letter of Transmittal and that the Purchaser may enforce that agreement against the participant. For purposes of the Offer, the Purchaser will be deemed to have accepted for payment, and thereby purchased, tendered Shares when the Purchaser gives oral or written notice to the Depositary of the Purchaser's acceptance of the Shares for payment. Payment for Shares which are tendered prior to the Expiration Time and accepted will be made by deposit of the aggregate purchase price for all the Shares which are accepted for payment with the Depositary, which will act as agent for tendering shareholders for the purpose of receiving payment from the Purchaser and transmitting payment to the tendering shareholders. Shares which are tendered during a period subsequent to the Expiration Time, if the Offer is extended for a period subsequent to the Expiration Time, will be made by deposit of the purchase price of particular Shares with the Depositary promptly those Shares are received. UNDER NO CIRCUMSTANCES WILL THE PURCHASER PAY INTEREST ON THE OFFER PRICE BY REASON OF ANY DELAY IN PAYING FOR SHARES. Upon the deposit of funds with the Depositary for the purpose of making payments to tendering shareholders, the Purchaser's obligation to pay for Shares will be satisfied and tendering shareholders must look solely to the Depositary for payment of amounts owed to them by reason of the acceptance of their Shares pursuant to the Offer. If, for any reason, acceptance for payment of or payment for any Shares tendered in response to the Offer is delayed, or the Purchaser is prevented from accepting for payment or paying for Shares which are tendered in response to the Offer, the Depositary may, nevertheless, retain tendered Shares on behalf of the Purchaser and those Shares may not be withdrawn, except to the extent the tendering shareholder exercises withdrawal rights as described in Section 10. The Purchaser will pay any stock transfer taxes incident to the 10 transfer to it of validly tendered Shares, except as otherwise provided in Instruction 6 of the Letter of Transmittal, as well as the charges and expenses of the Depositary and the Information Agent. If any tendered Shares are not accepted for payment for any reason, or if certificates which are submitted evidence more Shares than are tendered, certificates representing Shares which are not tendered or otherwise are not purchased will be returned or sent, without expense to the tendering shareholder (or, in the case of Shares tendered by book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility, Shares which are not purchased will be credited to an account at that Book-Entry Transfer Facility), as promptly as practicable following the expiration or termination of the Offer. The Purchaser reserves the right to transfer or assign, in whole, or in part from time to time, to one or more of its affiliates the right to purchase all or any portion of the Shares which are tendered in response to the Offer, but such a transfer or assignment will not relieve the Purchaser of its obligations under the Offer and will in no way prejudice the rights of tendering shareholders to receive payment for Shares which are validly tendered in response to the Offer and accepted for payment. 9. PROCEDURES FOR TENDERING SHARES. Valid Tender of Shares. Except as set forth below, in order for Shares to be validly tendered in response to the Offer, (a) a Letter of Transmittal or a facsimile of one, properly completed and duly executed, with any required signature guarantees, or an Agent's Message in connection with a book-entry delivery of Shares, and any other required documents, must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Time and (b) either (i) the certificates representing the tendered Shares must be received by the Depositary along with the Letter of Transmittal, (ii) the Shares must be tendered using the procedure for book-entry transfer described below, and the Book-Entry Confirmation must be received by the Depositary prior to the Expiration Time, or (iii) the tendering shareholder must comply with the guaranteed delivery procedures described below. THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL, AND OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH DTC, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER. ITEMS WILL BE DEEMED DELIVERED ONLY WHEN THEY ARE ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. Book-Entry Transfer. The Depositary will establish an account with respect to the Shares at DTC for purposes of the Offer within two business days after the date of this Offer to Purchase, and any financial institution that is a participant in the Book-Entry Transfer Facility's system may make book-entry delivery of Shares by causing DTC to transfer the Shares into the Depositary's account at DTC. Although delivery of Shares may be effected through book-entry transfer at DTC, a Letter of Transmittal or a facsimile of one, with any required signature guarantees, or an Agent's Message in connection with a book-entry delivery of Shares, and any other required documents, as well as the Book Entry Confirmation relating to the Shares, must be transmitted to and received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Time (or the end of any subsequent period during which the Offer remains open) or the guaranteed delivery procedures described below must be followed. REQUIRED DOCUMENTS MUST BE TRANSMITTED TO AND RECEIVED BY THE DEPOSITARY AT ONE OF ITS ADDRESSES SET FORTH ON THE BACK COVER PAGE OF THIS OFFER TO PURCHASE. DELIVERY OF DOCUMENTS TO DTC OR TO THE PURCHASER DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. Signature Guarantees. Signatures on Letters of Transmittal need not be guaranteed, unless, in the case of the Letter of Transmittal, the Shares to which they relate are being tendered by a registered holder of Shares who has completed either the box entitled "Special Delivery Instructions" or the box entitled "Special Payment Instructions" on the Letter of Transmittal. Signatures on Letters of Transmittal on which either of those boxes has been completed must be guaranteed by a firm which is a bank, broker, dealer, credit union, savings association or other entity that is a member in good standing of the Securities Transfer Agents Medallion 11 Program, the Stock Exchange Medallion Program or the New York Stock Exchange Medallion Signature Program (each, an "Eligible Institution"). See Instruction 1 of the Letter of Transmittal. If a Share certificate is registered in the name of a person other than the signer of the Letter of Transmittal, or if payment is to be made, or certificates representing Shares which are not tendered or are not accepted for payment are to be returned, to a person other than the registered holder(s), then the Share certificate must be endorsed or accompanied by appropriate stock powers, in either case, signed exactly as the name(s) of the registered holder(s) appear on the Share certificate, with the signature(s) on the Share certificate or stock powers guaranteed. See Instructions 1 and 5 of the Letter of Transmittal. If Share certificates are delivered to the Depositary at different times, a properly completed and duly executed Letter of Transmittal (or facsimile of one) must accompany each delivery. Guaranteed Delivery. If a shareholder wishes to tender Shares in response to the Offer but the Share certificates are not immediately available or time will not permit all required documents to reach the Depositary prior to the Expiration Time, or the procedure for book-entry transfer cannot be completed on a timely basis, the Shares may nevertheless be tendered as follows: (i) the tender must be made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided with this Offer to Purchase, must be received by the Depositary before the Expiration Time; and (iii) the Share certificates representing all the tendered Shares, in proper form for transfer, or the Book-Entry Confirmation, together with a properly completed and duly executed Letter of Transmittal (or facsimile of one), with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message) and any other documents required by the Letter of Transmittal must be received by the Depositary within three Nasdaq National Market trading days after the date of execution of the Notice of Guaranteed Delivery. A Notice of Guaranteed Delivery may be delivered by hand or transmitted by telegram, facsimile transmission or mail to the Depositary, but must include a guarantee by an Eligible Institution in the form set forth in the Notice of Guaranteed Delivery distributed with this Offer to Purchase. Payment for Shares which are accepted for payment will be made only after (i) timely receipt by the Depositary of Share certificates for, or of Book-Entry Confirmation with respect to, the Shares, (ii) a properly completed and duly executed Letter of Transmittal (or facsimile of one), together with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message) and (iii) any other documents required by the Letter of Transmittal. Accordingly, it is possible that payment will not be made to all tendering shareholdersat the same time. Backup United States Federal Withholding Tax. Under the United States Federal income tax laws, the Depositary may be required to withhold 31% of the amount of any payments made to certain shareholders.To prevent backup Federal income tax withholding, each tendering shareholder must provide the Depositary with the shareholder's correct taxpayer identification number, or certify that the shareholder is exempt from backup Federal income tax withholding, by completing the Substitute Form W-9 included in the Letter of Transmittal. See Instruction 10 of the Letter of Transmittal. Appointment as Proxy. By executing a Letter of Transmittal, a tendering shareholder irrevocably appoints designees of the Purchaser as the tendering shareholder's attorneys-in-fact and proxies, in the manner set forth in the Letter of Transmittal, each with full power of substitution, to the full extent of the shareholder's rights with respect to the Shares tendered by the shareholder and accepted for payment by the Purchaser (and with respect to any other securities issued in respect of those Shares on or after the date of this Offer to Purchase). That proxy is considered coupled with an interest in the tendered Shares. This appointment will be effective if, when and to the extent that the Purchaser accepts the tendered Shares for payment pursuant to the Offer. When tendered Shares are accepted for payment, all prior proxies given by the shareholder with respect to the tendered Shares and any other securities issued in respect of them will, without further action, be revoked, and no subsequent proxies may be given. The designees of the Purchaser will, with respect to the tendered Shares and any other securities for which the appointment is effective, be empowered to exercise all voting and other rights of the tendering 12 shareholder as they, in their sole discretion, deem proper at any annual, special, adjourned or postponed meeting of the Company's shareholders, and the Purchaser reserves the right to require that in order for Shares or other securities to be deemed validly tendered, immediately upon the Purchaser's acceptance for payment of the Shares, the Purchaser will be able to exercise full voting rights with respect to the Shares. Proxies are effective only as to Shares accepted for payment pursuant to the Offer. The Offer does not constitute a solicitation of proxies, absent a purchase of Shares, for any meeting of the Company's shareholders. Any solicitation of proxies will be made only with separate proxy soliciting materials which comply with the Exchange Act, if it is applicable. Determinations Regarding Tenders. All questions as to the validity, form, eligibility (including time of receipt) and acceptance for payment of Shares using any of the procedures described above will be determined by the Purchaser, and the Purchaser's determination will be final and binding on all parties. The Purchaser reserves the absolute right to reject any or all tenders of Shares which it determines were not in proper form or if the acceptance for payment of, or payment for, the Shares may, in the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute right, in its sole discretion, to waive any of the conditions of the Offer (except to the extent it has agreed in the Merger Agreement not to do so) or any defect or irregularity in any tender with respect to Shares of any particular shareholder, whether or not similar defects or irregularities are waived in the case of other shareholders. No tender of Shares will be deemed to have been validly made until all defects and irregularities have been cured or waived. The Purchaser's interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and the instructions to it) will be final and binding. None of the Purchaser, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in tenders or will incur any liability for failure to give any such notification. Binding Agreement. The Purchaser's acceptance for payment of Shares tendered in response to the Offer will constitute a binding agreement by the tendering shareholder to sell, and by the Purchaser to purchase, the tendered Shares on the terms and subject to the conditions of the Offer. 10. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 10, tenders of Shares made in response to the Offer are irrevocable. Shares tendered in response to the Offer may be withdrawn at any time prior to the Expiration Time and, unless they have been accepted for payment by the Purchaser, may also be withdrawn at any time after August 17, 2000. If the Offer is extended for a period following the Expiration Time, Shares tendered during the subsequent period may not be withdrawn and will be accepted for payment promptly after they are received. If the Purchaser extends the Offer, is delayed in accepting Shares for payment or is unable to accept Shares for payment for any reason, the Depositary may, nevertheless, retain tendered Shares on behalf of the Purchaser, and those Shares may not be withdrawn except to the extent that tendering shareholders are entitled to withdraw them as described in this Section 10. Any such delay will be accompanied by an extension of the Offer to the extent required by law. For a withdrawal to be effective, a written or facsimile transmission of a notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase. A notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and (if Share certificates have been tendered) the name of the registered holder, if different from that of the person who tendered the Shares. If Share certificates evidencing Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then prior to the release of those Share certificates, the serial numbers shown on the particular Share certificates to be withdrawn must be submitted to the Depositary, and the signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution, unless the Shares have been tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedure for book-entry transfer, any notice of withdrawal must also specify the name and number of the account at DTC to be credited with the withdrawn Shares. Withdrawals of Shares may not be rescinded. After Shares are properly withdrawn, they will be deemed not to have been validly tendered for purposes of the Offer. However, withdrawn Shares may be retendered at any time prior to the Expiration Time (or the expiration of a subsequent period during which the Offer is open) using one of the procedures described in Section 9. 13 All questions as to the form and validity (including, without limitation, time of receipt) of notices of withdrawal will be determined by the Purchaser, in its sole discretion, and its determination will be final and binding. None of the Purchaser, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or will incur any liability for failure to give any such notification. 11. CONDITIONS OF THE OFFER. The Purchaser will not be required to accept for payment or, subject to any applicable SEC rules, including Rule 14e-1(c) under the Exchange Act (relating to the Purchaser's obligation to pay for or return tendered Shares promptly after termination or withdrawal of the Offer), pay for, the Shares which are tendered in response to the Offer if: (a) The Shares which are properly tendered and not withdrawn are less than 51% of the outstanding Shares which the Purchaser or BR Holdings do not own or have agreements to purchase when the Offer expires. (b) The number of Shares which are properly tendered and not withdrawn, together with the number of Shares owned by the Purchaser or BR Holdings immediately before the Offer expires, totals less than 53.5% of the outstanding Shares. (c) Any statute, rule, regulation, order or injunction has been enacted, promulgated, entered or enforced by any national or state government or governmental authority or by any United States court of competent jurisdiction, that would make the acquisition of the Shares by the Purchaser illegal or otherwise prohibit consummation of the Offer or the Merger; or (d) There has been (i) a general suspension of trading in, or limitation on prices for, securities on the New York Stock Exchange or Nasdaq National Market which continued for at least three business days, (ii) the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States (whether or not mandatory) which continued for at least three business days, (iii) the commencement of a war or armed hostilities or any other international or national calamity directly or indirectly involving the United States, which has a significant adverse effect on the functioning of financial markets in the United States, (iv) any limitation (whether or not mandatory) by any United States governmental authority or agency on the extension of credit by banks or other financial institutions which would have a material adverse effect on the Purchaser's ability to pay for all the Shares which are tendered in response to the Offer and to carry out the Merger on the terms contemplated by the Merger Agreement or (v) there is a material acceleration or worsening of any of the conditions described in clauses (i) through (iv) which exists at the date of the commencement of the Offer. (e) Any of the representations and warranties of the Company set forth in the Merger Agreement is not true and correct as of the date of the Merger Agreement, except failures to be true and correct which would not, in the aggregate, have a material adverse effect upon the Company or adversely affect the Purchaser's legal ownership of the Shares, the Purchaser's legal ability to consummate the Merger as contemplated by the Merger Agreement, or the ownership of the surviving corporation after the Merger by the persons which own the stock of the Purchaser immediately before the Merger; (f) The Purchaser, BR Holdings, Holdings, Inc. or the Three Cities Fund learn that the Company's Annual Report on Form 10-K for the year ended October 31, 1999, or Quarterly Report on Form 10-Q for the three months ended January 31, 2000, was misleading in a material respect or omitted to state a material fact required to be stated therein (other than with regard to matters which are the subject of the Shareholder Suits); (g) The Company has not performed all the obligations it is required to have performed under the Merger Agreement by the Expiration Time, except failures which (i) would, in the aggregate, not materially impair or delay the ability of the Purchaser to consummate the purchase of the Shares which are tendered in response to the Offer or the ability of the Purchaser and the Company to effect the Merger, (ii) have been caused by or result from a breach of the Merger Agreement by the Purchaser; or (iii) do not, and are not reasonably expected to, have a material adverse effect on the Company; 14 (h) The Merger Agreement has been terminated in accordance with its terms; or (i) The Board of Directors of the Company withdraws or modifies in a manner adverse to the Purchaser the Board's approval or recommendation of the Offer or the Merger. The conditions set forth above are for the sole benefit of the Purchaser, and may be waived by the Purchaser, in whole or in part, except that the Purchaser cannot waive the condition in paragraph (a) regarding at least 51% of the shares not owned by the Purchaser or BR Holdings without the consent of the Company. Any delay by the Purchaser in exercising the right to terminate the Offer because any of the conditions are not fulfilled will not be deemed a waiver of its right to do so. 12. PRICE RANGE OF SHARES. The Shares trade on the Nasdaq National Market under the symbol "BRGP." The following table sets forth, for the periods indicated, the high and low sales prices per Share on the Nasdaq National Market as reported by the Nasdaq National Market and the Dow Jones News Retrieval Service:
SALES PRICE ------------------- HIGH LOW ------ ------- FISCAL YEAR ENDED OCTOBER 31, 1998 First Quarter.................................................................. $3.75 $3 Second Quarter................................................................. 3.75 3.0625 Third Quarter.................................................................. 3.375 2.1875 Fourth Quarter................................................................. 3.25 1.125 FISCAL YEAR ENDED OCTOBER 31, 1999 First Quarter.................................................................. $3.75 $2.25 Second Quarter................................................................. 3.75 2.5 Third Quarter.................................................................. 3.875 2.6875 Fourth Quarter................................................................. 4.25 3 FISCAL YEAR ENDED OCTOBER 31, 2000 First Quarter.................................................................. $6.5 $3.1875 Second Quarter................................................................. 9 5.125 Third Quarter, through July 7, 2000............................................ 8.5 5.5
On July 7, 2000, the last full day of trading before the day on which the Offer and the Merger were publicly announced, and the Offer was commenced the last sale price of the Shares reported on the Nasdaq National Market was $6.75 per Share. SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES. 13. CERTAIN INFORMATION CONCERNING THE COMPANY. The information concerning the Company contained in this Offer to Purchase, including financial information, has been taken from or is based upon publicly available documents and records on file with the Securities and Exchange Commission and other public sources. None of the Purchaser, BR Holdings, Holdings, Inc. or the Three Cities Fund assumes any responsibility for the accuracy or completeness of the information concerning the Company contained in those documents and records or for any failure by the Company to disclose events which may have occurred or may affect the significance or accuracy of that information of which none of the Purchaser, BR Holdings, Holdings, Inc. or the Three Cities Fund is aware. The Company is a California corporation with its principal executive offices located at 2150 North First Street, Suite 101, San Jose, California 95131. According to the Company's Annual Report on Form 10-K for the year ended October 31, 1999 (the "Company 10-K"), the Company is a provider of workspace products and services to businesses. At October 31, 1999, the Company had locations in five states, primarily in the southern United States. The following selected consolidated financial data relating to the Company and its subsidiaries has been taken or derived from the audited financial statements contained in the Company 10-K and the unaudited financial statements contained in the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended 15 April 30, 2000 and April 30, 1999 (the "Company 10-Q's"). More comprehensive financial information is included in the Company 10-K and the Company 10-Q's and the other documents filed by the Company with the SEC, and the financial data set forth below is qualified in its entirety by reference to those reports and other documents. They may be examined and copies may be obtained from the SEC's offices in the manner set forth below. BUSINESS RESOURCE GROUP SELECTED CONSOLIDATED FINANCIAL DATA
SIX MONTHS ENDED FISCAL YEARS ENDED OCTOBER 31, APRIL 30, ------------------------------------------------ ----------------- 1995 1996 1997 1998 1999 1999 2000 ------- ------- ------- ------- -------- ------- ------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) INCOME STATEMENT DATA: Total net revenues................................ $40,628 $78,280 $72,701 $93,565 $124,974 $55,387 $88,388 Total cost of net revenues........................ 30,784 62,371 57,430 73,234 97,302 43,163 68,098 ------- ------- ------- ------- -------- ------- ------- Gross Profit...................................... 9,844 15,909 15,271 20,331 27,672 12,224 20,290 Selling, general and administrative expenses...... 8,143 12,870 16,622 17,498 22,449 10,297 15,811 ------- ------- ------- ------- -------- ------- ------- Operating income (loss)........................... 1,701 3,039 (1,351) 2,833 5,223 1,927 4,479 Other Income (expense)............................ 17 124 66 (264) (663) (350) (528) ------- ------- ------- ------- -------- ------- ------- Income (loss) before income taxes................. 1,708 3,163 (1,285) 2,569 4,560 1,577 3,951 Income taxes...................................... 122 1,309 (523) 1,066 1,885 653 1,634 ------- ------- ------- ------- -------- ------- ------- Net income (loss)................................. 1,586 1,854 (762) 1,503 2,675 924 2,317 ======= ======= ======= ======= ======== ======= ======= Net income (loss) per common share: Basic........................................... 0.26(2) 0.38 (.16) 0.30 0.52 0.18 0.44 Diluted......................................... 0.26(2) 0.38 (.16) 0.30 0.52 0.18 0.40 BALANCE SHEET DATA: Current assets.................................... 9,470 10,063 9,279 9,075 10,187 41,836 45,792 Total assets...................................... 16,053 22,560 20,760 27,978 50,813 50,813 56,785 Total long-term debt (excluding current portion)........................................ 120 -- -- 733 1,552 1,552 2,616 Total shareholders' equity........................ 11,020 13,002 12,452 14,396 17,455 17,445 20,163 Shareholders' equity per share(1)................. -- -- -- -- 3.38 -- 3.81
- ------------------ (1) Based on 5,170,524 and 5,295,079 Shares issued and outstanding as of October 31, 1999 and April 30, 2000, respectively, as reported in the Company's Report on Form 10-K for the year ended October 31, 1999 and its Report on Form 10-Q for the six months ended April 30, 2000. (2) Pro Forma Net Income and Net Income Per Basic and Diluted Shares--Through June 1995, the Company was not subject to federal and most state income taxes since its shareholders elected that the Company be taxed as an S Corporation pursuant to the Internal Revenue Code. Therefore, no provision for federal income taxes has been included in the summary financial data for fiscal 1994 and the portion of fiscal 1995 during which the Company was an S Corporation. Although the S Corporation election is recognized for California income tax purposes, the State of California requires S Corporations to pay a tax of 1.5% of taxable income. Effective June 1995, in conjunction with the Company's initial public offering of its common stock, the Company's status as an S Corporation was terminated and the Company became subject to federal and state income taxes. The Company is subject to the informational and reporting requirements of the Exchange Act and is required to file reports and other information with the Commission relating to its business, financial condition and other matters. Information, as of particular dates, concerning the Company's directors and officers, their remuneration, stock options granted to them, the principal holders of the Company's securities, any material interests of those persons in transactions with the Company and other matters is required to be disclosed in proxy statements distributed to the Company's shareholders and filed with the Commission. These reports, proxy statements and other information can be inspected and copied at the public reference facilities of the Commission located at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following regional offices of the Commission: Seven World Trade Center, 3rd Floor, New York, New York 10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of this material may be 16 obtained by mail, upon payment of the Commission's customary fees, from the Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains an Internet site on the world wide web at http://www.sec.gov that contains reports, proxy statements and other information. Reports, proxy statements and other information concerning the Company should also be available for inspection at the offices of NASDAQ, 1735 K Street, N.W., Washington, D.C. 20006. All of the information with respect to the Company and its affiliates set forth in this Offer to Purchase has been derived from publicly available information. In connection with its efforts to evaluate a possible acquisition of the Company, TCR was provided with materials about the Company which included (a) pro forma information about what the results of the Company and its subsidiaries would have been if three companies the Company acquired during fiscal 1999 had been owned by the Company during the entire fiscal year, and (b) projections of the Company's operating results during 2000, 2001 and 2002. The projections assumed the Company would make at least three acquisitions during those fiscal years. The projections showed that between fiscal 1999 and fiscal 2002 (i) revenues would grow at a compound annual rate of 22.8% (from pro forma 1999 revenues of $145.7 million to projected 2002 revenues of $270.0 million) and earnings before interest, taxes, depreciation and amortization would grow at a compound annual rate of $50.3% (from pro forma 1999 EBITDA of $7.6 million to projected 2002 EBITDA of $26.7 million). In addition to resulting in part from anticipated benefits of acquisitions during the next three years, the projected increases resulted in part from an assumption that the Company would increase its gross profit margin from 22.5% in 1999 to 26.7% in 2002. The materials also projected that during the third quarter of fiscal 2000 (ending July 31, 2000), the Company would have revenues of $39.7 million and EBITDA of $2.1 million. 14. INFORMATION CONCERNING THE PURCHASER, HOLDINGS, INC., BR HOLDINGS AND THREE CITIES FUND III. The Purchaser. The Purchaser is a Delaware corporation organized in order to enter into the transactions which are the subject of the Merger Agreement (including the Offer). The principal executive offices of the Purchaser are located at the offices of Three Cities Research, Inc., 650 Madison Avenue, New York, New York 10022. The Purchaser is wholly owned by Holdings, Inc., which is wholly owned by BR Holdings. The Purchaser does not have any significant assets or liabilities and has not engaged in activities other than those incidental to its formation and capitalization, its execution of the Merger Agreement and preparation for the Offer and the Merger. Because the Purchaser is newly formed and has minimal assets and capitalization, no meaningful financial information regarding the Purchaser is available. Holdings, Inc. Holdings, Inc. is a Delaware corporation organized in order to enter into the transactions which are the subject of the Merger Agreement (including the Offer). Holdings Inc. is wholly owned by BR Holdings. The principal executive offices of Holdings, Inc. are located at the offices of Three Cities Research, Inc., 650 Madison Avenue, New York, New York 10022. Holdings, Inc. does not have any significant assets or liabilities and has not engaged in activities other than those incidental to its formation and capitalization and preparation for the Offer and the Merger. Because Holdings, Inc. is newly formed and has minimal assets and capitalization, no meaningful financial information regarding Holdings, Inc. is available. BR Holdings. BR Holdings is a Delaware limited liability company organized in order to acquire Shares from two members of the management of the Company [(both of whom are directors)] and then, through a subsidiary (the Purchaser) enter into the transactions which are the subject of the Merger Agreement (including the Offer). The principal executive offices of Holdings are located at the offices of Three Cities Research, Inc., 650 Madison Avenue, New York, New York 10022. Immediately before the Purchaser accept the Shares which are tendered in response to the Offer, BR Holdings will acquire from two members of the management of the Company approximately 6% of the outstanding Shares in exchange for interests in BR Holdings. In addition, it issued interests to the Three Cities Funds, primarily for notes evidencing obligations to provide funds to be used in connection with the Offer and the Merger. BR Holdings will transfer all Shares it acquires prior to the expiration of the Offer and the notes to the Purchaser. Because BR Holdings is newly formed, no meaningful financial information regarding BR Holdings, is available. The Three Cities Fund. Three Cities Fund III, L.P. and two affiliated investment funds own 100% of BR Holdings. Three Cities Fund III, L.P. is a Delaware limited partnership. It is principally engaged in investing in securities selected by its investment committee. The principal executive offices of Three Cities Fund III are located at the offices of Three Cities Research, Inc., 650 Madison Avenue, New York, New York 10022. 17 During the last 5 years none of the Purchaser's, Holdings, Inc., BR Holdings' or any of Three Cities Fund III's officers, directors or general partners was (1) convicted in a criminal proceeding or (2) party to a civil proceeding of a judicial or administrative body and as a result of the proceeding was or is subject to a judgment enjoining future violations of or prohibiting activities subject to, Federal or state securities laws or finding any violation of such laws. None of the Purchaser, Holdings, Inc., BR Holdings or Three Cities Fund III is subject to the informational and reporting requirements of the Exchange Act. Therefore, none of them files reports or other information with the Commission relating to its businesses, financial condition or other matters. The name, citizenship, business address, principal occupation or employment and five-year employment history for each of the directors and executive officers of the Purchaser, Holdings, Inc., BR Holdings and Three Cities Fund III are set forth in Schedule I. Except for the 319,168 Shares BR Holdings expects to acquire immediately prior to the expiration of the Offer and transferred by it, through Holdings, Inc., to the Purchaser, none of the Purchaser, Holdings, Inc., BR Holdings, Three Cities Fund III or, to the best of their knowledge, any of the persons listed on Schedule I or any associate or majority owned subsidiary of any of those persons beneficially owns any equity security of the Company, and none of the Purchaser, Holdings, Inc., BR Holdings, Three Cities Fund III or, to the best of their knowledge, any of the other persons referred to above, or any of their respective directors, executive officers or subsidiaries, has effected any transaction in any equity security of the Company during the past 60 days. Except as described in this Offer to Purchase, none of the Purchaser, Holdings, Inc., BR Holdings, Three Cities Fund III or, to the best of their knowledge, any of the persons listed on Schedule I has any contract, arrangement, understanding or relationship with any other person with respect to any securities of the Company, including, without limitation, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any securities of the Company, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or the giving or withholding of proxies. Except as described in this Offer to Purchase, none of the Purchaser, Holdings, Inc., BR Holdings, Three Cities Fund III or, to the best of their knowledge, any of the persons listed on Schedule I has had any transactions with the Company or any of its executive officers, directors or affiliates that would require reporting under the rules of the Commission. Except as described in this Offer to Purchase, there have been no contacts, negotiations or transactions between the Purchaser, Holdings, Inc., BR Holdings, Three Cities Fund III, or their respective subsidiaries, or, to the best of their knowledge, any of the persons listed in Schedule I, on the one hand, and the Company or its executive officers, directors or affiliates, on the other hand, concerning a merger, consolidation or acquisition, tender offer or other acquisition of securities, election of directors or a sale or other transfer of a material amount of assets. 15. SOURCE AND AMOUNT OF FUNDS. If all the outstanding Shares not owned by the Purchaser, Holdings, Inc., BR Holdings or the Three Cities Fund were tendered in response to the Offer, the Purchaser would be required to pay a total of approximately $46,000,000 to purchase the tendered Shares and pay the fees and other expenses related to the Offer. See Section 19. The Purchaser expects to obtain the funds required to consummate the Offer through payments by Three Cities Fund III and other owners of interests in BR Holdings and through payments of notes given in payment for interests in BR Holdings which will be transferred by BR Holdings, through Holdings, Inc., to the Purchaser in exchange for common stock, preferred stock and subordinated notes of the Purchaser. Additional funds will be obtained from borrowings from Comerica Bank-California which are the subject of a commitment dated July 7, 2000. 16. THE MERGER. The Merger Agreement. The Merger Agreement requires that if the Purchaser accepts the Shares which are tendered in response to the Offer and not withdrawn, following the satisfaction or waiver of the conditions described below under "Conditions to the Merger" (which, with one exception, will be within the Purchaser's control), the Company will be merged into the Purchaser, which will be the surviving corporation of the Merger (the "Surviving Corporation"). As a result of the Merger (i) BR Holdings (the indirect sole shareholder of the 18 Purchaser) will become the indirect sole shareholder of the Company, and (ii) all the pre-Merger shareholders of the Company, other than the Purchaser and BR Holdings, will receive cash equal to the Offer Price (i.e., $9.25 per share). Under the California General Corporation Law, a company may not merge with an entity which (directly or through affiliates) owns more than 50% but less than 90% of the outstanding shares of the company, unless holders of nonredeemable stock of the company receive in the merger nonredeemable common shares of the surviving corporation or its parent. This would prevent the Purchaser from paying cash in the Merger unless following completion of the Offer, the Purchaser owned at least 90% of the outstanding Shares, or the Purchaser subsequently increased its ownership to that level. In order to be sure the Company's shareholders can receive cash as a result of the Merger, if the Purchaser does not own at least 90% of the outstanding Shares after the Offer is completed, the Purchaser will vote in favor of the Company's changing its state of incorporation to Delaware, and therefore to cause the Merger to take place entirely under Delaware law (which permits cash to be issued in a merger regardless of the number of shares one party may own of the other). The Company would change its state of incorporation to Delaware by forming a wholly owned Delaware corporation and merging into that Delaware corporation in a transaction in which each share of stock of the Company would become an identical share of stock of the Delaware corporation. The Purchaser would be required to vote for, and otherwise support, that reincorporation merger to the same extent it is required to vote for and otherwise support the Merger. Because the reincorporation would not have any effect on the Merger other than requiring an extra step to cause it to take place (which could delay it), the discussion below assumes the Merger will take place without the need for the Company to reincorporate in Delaware. Recommendation. The Merger Agreement states that the Special Committee of the Company's Board of Directors has determined that the Merger Agreement and the transactions contemplated by it are fair to and in the best interests of the Company and its shareholders and that based upon the recommendation of the Special Committee, the Board of Directors has resolved to recommend that the Company's shareholders accept the Offer, tender their Shares in response to the Offer and, if required to permit the Merger to take place, adopt and approve the Merger Agreement and the Merger. The Board may, upon recommendation of the Special Committee, withdraw, modify or amend its recommendation if it determines, based upon advice of the Company's legal counsel, that its failure to do so could reasonably be expected to be a breach of the directors' fiduciary duties under applicable law. Each of the directors and executive officers of the Company has agreed to tender and sell his or her shares in response to the Offer, except that directors and executive officers whose sales might result in liability under Section 16(b) of the Exchange Act have agreed that if they do not tender and sell their Shares in response to the Offer, they will vote their Shares in favor of the Merger. Stock of the Company. AT THE EFFECTIVE TIME, (A) EACH COMMON SHARE WHICH IS NOT OWNED BY THE PURCHASER WILL BECOME THE RIGHT TO RECEIVE $9.25 IN CASH, OR ANY OTHER PRICE PER SHARE PAID WITH REGARD TO THE SHARES TENDERED IN RESPONSE TO THE OFFER (WHICH MAY NOT BE LESS THAN $9.25 PER SHARE) AND (B) EACH SHARE OWNED BY THE PURCHASER OR ITS SHAREHOLDERS, INCLUDING BR HOLDINGS, OR BY THE COMPANY OR ITS SUBSIDIARIES, WILL BE CANCELLED AND NO PAYMENT WILL BE MADE WITH RESPECT TO THOSE SHARES. Stock of the Purchaser. At the Effective Time, each share of stock of the Purchaser which is outstanding immediately before the Effective Time will be converted into and become one share of the same class of stock of the Surviving Corporation. Therefore, BR Holdings, which is the sole shareholder of the Purchaser, will become the sole shareholder of the Company. Company Options and Warrants. At the Effective Time, each outstanding option or warrant issued by the Company will become the right to receive (i) the amount, if any, by which the Offer Price exceeds the exercise price of the option or warrant, times (ii) the number of Shares issuable upon exercise of the option or warrant in full. Shareholder Vote Required to Approve Merger. Under the California General Corporate Law (the "CGCL"), the affirmative vote of holders of a majority of the outstanding Shares (including any Shares owned by the Purchaser) is required to approve the Merger. Immediately before the Purchaser accept the Shares which are tendered in response to the Offer, the Purchaser expects to own approximately 6% of the outstanding Shares and the Merger will not be presented to the shareholders unless the Purchaser has acquired through the Offer at least 51% of the remaining Shares. Therefore, if the Merger is presented to the shareholders for approval, the 19 Purchaser and its affiliates will be able to cause the Merger to be approved, even if no other shareholders vote for it. If the Purchaser acquires at least 90% of the outstanding shares, under Section 1110 of the CGCL, shareholder approval will not be required. Shareholders Meeting. If approval by the Company's shareholders is required in order to consummate the Merger, and if the Purchaser purchases the Shares which are properly tendered in response to the Offer, the Company will hold a special meeting of its shareholders as soon as practicable after the Expiration Time for the purpose of adopting the Merger Agreement and approving the Merger. Conditions to the Merger. If the Purchaser acquires the Shares which are properly tendered in response to the Offer and not withdrawn, the Purchaser and BR Holdings will be contractually obligated to vote in favor of the Merger. The obligations of the Company to carry out the Merger will be conditioned on the Merger's being approved by the holders of a majority of the outstanding Shares. In addition, the obligations of the Company and of the Purchaser to complete the Merger each are subject to the conditions that: (a) either of them will have fulfilled in all material respects all its obligations under the Merger Agreement required to have been fulfilled on or before the Merger Date; (b) no order will have been entered by any court or governmental authority and be in force which invalidates the Merger Agreement or restrains the Company or the Purchaser from completing the transactions contemplated by the Merger Agreement; and (c) if shareholder approval of the Merger is required by applicable law or by the rules of the Nasdaq National Market (if they are applicable), the Merger will have been approved by the holders of at least a majority of the outstanding Shares. Termination of the Merger Agreement. The Merger Agreement may be terminated at any time prior to the Effective Time of the Merger, whether before or after approval of the terms of the Merger Agreement by the shareholders of the Company: (1) by mutual consent of the Company and the Purchaser; (2) by the Company if (i) any of the representations and warranties of the Purchaser contained in the Merger Agreement was not complete and accurate in all material respects on the date of the Merger Agreement or (ii) any of the conditions to the Company's obligations to complete the Merger are not satisfied or waived by the Company prior to or on the date of the Merger; (3) by the Purchaser if (i) any of the representations or warranties of the Company contained in the Merger Agreement was not complete and accurate in all material respects on the date of the Merger Agreement, or (ii) any of the conditions to the Purchaser's obligations to complete the Merger are not satisfied or waived by the Purchaser prior to or on the date of the Merger; (4) by the Company if after the date of the Merger Agreement and before the Purchaser accepts the Shares which are properly tendered and not withdrawn, (A) it receives an Acquisition Proposal or a potential acquiror commences a cash tender offer for all the Company's outstanding stock (other than that already owned by potential acquiror), (B) within 10 business days after the Company receives a Firm Proposal or the tender offer is commenced, the Company's Board of Directors determines the Firm Proposal or the tender offer is a Superior Proposal and resolves to accept the Superior Proposal unless the Purchaser will increase the Tender Offer Price to an amount at least as great as that offered in the Superior Proposal or to recommend that shareholders tender their shares in response to the Superior Proposal, and (C) the Company has given the Purchaser at least 10 business days' prior notice (i) of the terms of the Superior Proposal (including the consideration per Share, valuing non-cash consideration as provided in the Merger Agreement, the Company's shareholders would receive as a result of the Superior Proposal), and (ii) that unless the Purchaser increases the Tender Offer Price to an amount per share at least as great as the consideration per share the Company's shareholders would receive as a result of the Superior Proposal, the Merger Agreement will terminate as set forth in the notice and (E) the Company has paid the Purchaser $750,000, and reimbursed or agreed to reimburse the Purchaser for its out of pocket expenses (up to $500,000) incurred in connection with the Merger Agreement and the transactions contemplated by it. A "Superior Proposal" is an Acquisition Proposal which (A) would result in the Company's shareholders receiving consideration which is at least 10% greater than the Offer Price, (B) is not subject to the outcome of due diligence or any other form of investigation, (C) is not subject to a financing contingency and is from a proposed acquiror which the Board determines in good faith, after consultation with its independent 20 financial advisor, has the financial resources necessary to carry out the transaction and (D) the Board determines in good faith after consultation with its independent financial advisor, to be more favorable to the Company's shareholders than the Offer and the Merger. The Company will not be able to withdraw a notice that it will terminate the Merger Agreement which it gives as described in condition (4) unless the Purchaser consents to the withdrawal. Effect of Termination of the Merger Agreement. If the Merger Agreement is terminated, neither the Company nor the Purchaser will be required to complete the Merger. Termination of the Merger Agreement will not relieve either party of liability for any breach of the Merger Agreement which occurs before the Merger Agreement is terminated. If the Merger Agreement is terminated after the Purchaser has accepted Shares tendered in response to the Offer, the termination will not affect the Purchaser's purchase of the Shares it has accepted or its obligation to pay for those Shares. Acquisition Proposals. The Merger Agreement contains prohibitions against the Company's soliciting, or authorizing its officers, directors, employees or agents to solicit, acquisition proposals, and regarding what the Company may do if it receives unsolicited acquisition proposals. It permits the Company to furnish non-public information (after receiving a Confidentiality Agreement) to, and to enter into discussions and negotiations with, a person who submits an unsolicited proposal which the Special Committee determines, after consultation with its financial advisor would, if consummated, result in the shareholders' receiving consideration which is greater than the Offer Price and would be more favorable to the shareholders than the Offer. Board of Directors. The members of the Board of Directors of the Purchaser immediately before the Effective Time will be the members of the Board of Directors of the Surviving Corporation after the Effective Time and will hold office in accordance with the by-laws of the Surviving Corporation. Representations and Warranties. The Merger Agreement contains various customary representations and warranties. Other Provisions. The Merger Agreement also contains provisions (i) requiring the Company to operate its business in the ordinary course, including maintaining the goodwill of its business and maintaining its assets in good condition, limiting the Company's borrowings and commitments for capital expenditures, precluding the Company from amending or entering into employment or severance agreements, and precluding the Company from paying dividends (other than payments by subsidiaries of the Company to the Company or to other wholly owned subsidiaries of the Company) or taking other steps regarding its stock, until the Effective Time and (ii) requiring the Purchaser (and the Surviving Corporation) to indemnify present and former directors, officers or employees of the Company and its subsidiaries against liability rising out of their service as directors, officers or employees of the Company or its subsidiaries. Appraisal Rights. If immediately before the Merger is consummated, the Shares are traded on the Nasdaq National Market (as they currently are), holders of Shares will not have dissenters' appraisal rights as a result of the Merger Shares unless holders of 5% or more of the outstanding Shares dissent from the Merger and notify the Company before the vote on the Merger of their intention to seek appraisal of their shares. If trading of the Shares on the Nasdaq National Market is terminated before the Effective Time of the Merger, holders of Shares at the Effective Time of the Merger who follow the procedures set forth in Chapter 13 of the CGCL will be entitled to receive the appraised value of their Shares, which may be more or less than what they would receive as a result of the Merger, regardless of how many Shares are held by persons who seek appraisal of their shares. The text of Sections 1301--1305 of the CGCL, which contain the requirements and procedures for seeking the appraised value of shares in connection with a merger, is attached as Schedule II to this Offer to Purchase. If the Company changes its state of incorporation to Delaware, the availability of, and procedures for asserting, dissenters' appraisal rights as a result of the Merger will be governed by Section 262 of the DGCL instead of Chapter 13 of the CGCL. There are differences between the Delaware provisions and the California provisions. Among other things, under the Delaware provisions, if the Shares are traded on the Nasdaq National Market System immediately before the Merger is consummated, holders of Shares will not have dissenters' appraisal rights no matter how many shares are owned by holders who dissent from the Merger. Also, if dissenters' appraisal rights are available, there are some differences between the procedures under the DGCL and those under the CGCL. The text of Section 262 of the DGCL is attached as Schedule III to this Offer to Purchase. 21 THE REQUIREMENTS FOR SEEKING THE APPRAISED VALUE OF SHARES AS A RESULT OF A MERGER ARE COMPLICATED AND MUST BE FOLLOWED CAREFULLY. WE URGE YOU TO READ THE ATTACHED TEXT OF THE RELEVANT PORTIONS OF THE CGCL AND THE DGCL IF YOU ARE CONSIDERING DISSENTING AND SEEKING THE APPRAISED VALUE OF YOUR SHARES. 17. DIVIDENDS AND DISTRIBUTIONS. The Merger Agreement prohibits the Company from paying any dividends or making other distributions with regard to its stock or from issuing any Shares, until the Effective Time of the Merger. 18. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS. General. Except as otherwise disclosed in this Offer to Purchase, based on the Company's representations and warranties in the Merger Agreement and a review of publicly available filings by the Company with the Commission, the Purchaser is not aware of (i) any license or regulatory permit that appears to be material to the business of the Company and its subsidiaries, taken as a whole, that might be adversely affected by the acquisition of Shares by the Purchaser pursuant to the Offer or by the Merger or (ii) any approval or other action by any governmental, administrative or regulatory agency or authority, domestic or foreign, that would be required for the Purchaser to acquire and own Shares. Going Private Transactions. The Commission has adopted Rule 13e-3 under the Exchange Act, which is applicable to certain "going private" transactions. This Offer to Purchase contains information required by Rule 13e-3. Also, the Purchaser, BR Holdings and Three Cities Fund III have filed with the Commission a Transaction Statement on Schedule TO. The Schedule TO and any exhibits or amendments to it may be inspected at, and copies obtained from, the places described in Section 13 (except that they will not be available at the regional offices of the Commission). Antitrust Compliance. The Company and Three Cities Fund III will make a filing with the United States Federal Trade Commission (the "FTC") under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"). The HSR Act requires that, before an acquisition involving companies which exceed specified sizes can take place, information must be provided to the FTC and to the Antitrust Division of the United States Department of Justice, and specified waiting periods must expire or be terminated by the FTC or the Antitrust Division. The waiting period with regard to a tender offer is ten days, but if during the ten day period, either of those agencies requests further information, the waiting period will be extended until ten days after the additional information is provided. State Takeover Statutes. A number of other states have adopted laws and regulations applicable to attempts to acquire securities of corporations which are incorporated, or have substantial assets, shareholders, principal executive offices or principal places of business, or whose business operations otherwise have substantial economic effects, in such states. In 1982, in Edgar v. MITE Corp., the Supreme Court of the United States invalidated on constitutional grounds the Illinois Business Takeover Statute, which, as a matter of state securities law, made takeovers of corporations meeting certain requirements more difficult. However, in 1987, in CTS Corp. 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 acquiror from voting on the affairs of a target corporation without the prior approval of the remaining shareholders. The state law before the Supreme Court was by its terms applicable only to corporations that had a substantial number of shareholders in the state and were incorporated there. 19. FEES AND EXPENSES. Except as set forth below, none of the Purchaser, Holdings, Inc., BR Holdings or the Three Cities Fund will pay any fees or commissions to any broker, dealer or other person for soliciting tenders of Shares pursuant to the Offer. The Purchaser has retained D.F. King & Co., Inc. to act as the Information Agent in connection with the Offer. The Information Agent may contact holders of Shares by mail, telephone, facsimile, telegraph and personal interviews and may request brokers, dealers and other nominee shareholders to forward materials relating to the Offer to beneficial owners of Shares. The Information Agent will receive reasonable and customary compensation together with reimbursement for its reasonable out-of-pocket expenses and will be indemnified against certain liabilities and expenses, including certain liabilities under the federal securities laws. 22 In addition, the Purchaser has retained American Stock Transfer and Trust Company as the Depositary. The Depositary has not been asked to make solicitations or recommendations in its role as Depositary. The Depositary will receive reasonable and customary compensation for its services, will be reimbursed for certain reasonable out-of-pocket expenses and will be indemnified against certain liabilities and expenses. Brokers, dealers, commercial banks and trust companies will be reimbursed by the Purchaser for customary mailing and handling expenses incurred by them in forwarding offering material to their customers. 20. MISCELLANEOUS. The Purchaser is not aware of any jurisdiction where the making of the Offer is prohibited by any administrative or judicial action or pursuant to any state statute. If the Purchaser becomes aware of any state statute prohibiting the making of the Offer or the acceptance of the Shares which are tendered in response to the Offer, the Purchaser will make a good faith effort to comply with that state statute. If, after a good faith effort the Purchaser cannot comply with any state statute, the Offer will not be made to (nor will tenders be accepted from or on behalf of) the holders of Shares in that state. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF THE PURCHASER WHICH IS NOT CONTAINED IN THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL. IF ANYONE GIVES ANY INFORMATION OR MAKES ANY REPRESENTATION WHICH DIFFERS FROM WHAT IS SAID IN THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE, THAT INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE PURCHASER. The Purchaser, Holdings, Inc., BR Holdings and Three Cities Fund III have filed with the Commission a Tender Offer Statement on Schedule TO (the "Schedule TO"), together with exhibits, pursuant to Rule 14d-3 of the Rules under the Exchange Act, containing information with respect to the Offer in addition to what is contained in this Offer to Purchase, and they may file amendments to the Schedule TO. The Schedule TO and any amendments to it, including exhibits, may be inspected at, and copies may be obtained from, the places described in Section 13 (except that they will not be available at the regional offices of the Commission). BRG ACQUISITION CORPORATION July 14, 2000 23 SCHEDULE I CERTAIN INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF THE THREE CITIES FUND, BR HOLDINGS AND THE PURCHASER 1. Directors and Executive Officers of the Three Cities Fund. Set forth below is the name, current business address, citizenship and the present principal occupation or employment and material occupations, positions, offices or employments for the past five years of each managing director of Three Cities Research, Inc., the advisor to the Three Cities Fund. The principal address of the Three Cities Fund and, unless otherwise indicated below, the current business address for each individual listed below is c/o Three Cities Research, Inc., 650 Madison Avenue, New York, New York 10022. Unless otherwise indicated, each such person is a citizen of the United States.
PRINCIPAL OCCUPATION OR EMPLOYMENT DURING PAST FIVE YEARS, POSITIONS NAME WITH THE THREE CITIES FUND AND CERTAIN DIRECTORSHIPS - ------------------------------------------ --------------------------------------------------------------------- J. William Uhrig.......................... Mr. Uhrig is a Director and is the Secretary of Three Cities Research, Inc. Mr. Uhrig has been Director of Three Cities Research, Inc. since 1991. Mr. Uhrig joined Three Cities Research, Inc. in 1984. From January 1993 to January 1998, Mr. Uhrig served on the Board of Directors of MLX Corp., a holding company which was a predecessor of Morton Industrial Group. From January 1997 to October 1998, Mr. Uhrig served on the Board of Directors of Family Bargain Corporation. Willem F.P. de Vogel...................... Mr. de Vogel is a Director and is the President of Three Cities Research, Inc. Mr. de Vogel has been the President of Three Cities Research, Inc. since 1982. Mr. de Vogel is a Director of Computer Associates International and Morton Industrial Group. Mr. de Vogel is a citizen of The Netherlands. Thomas G. Weld............................ Mr. Weld is a Director and is the Treasurer of Three Cities Research, Inc. which he joined in 1993. From 1988 until 1993, Mr. Weld was an associate with McKinsey and Company, a management consulting firm. Mr. Weld was a director of Family Bargain Corporation from January 1997 to December 1998.
2. Directors and Executive Officers of BR Holdings. Set forth below is the name, current business address, citizenship and the present principal occupation or employment and material occupations, positions, offices or employments for the past five years of each director and executive officer of BR Holdings. The principal address of BR Holdings and, unless otherwise indicated below, the current business address for each individual listed below is c/o Three Cities Research, Inc., 650 Madison Avenue, New York, New York 10022. Unless otherwise indicated, each such person is a citizen of the United States.
PRINCIPAL OCCUPATION OR EMPLOYMENT DURING PAST FIVE YEARS, POSITIONS NAME WITH THE THREE CITIES FUND AND CERTAIN DIRECTORSHIPS - ------------------------------------------ --------------------------------------------------------------------- W. Robert Wright II....................... Mr. Wright is a Director and is the Secretary of the Purchaser. Mr. Wright has been employed by Three Cities Research, Inc. since 1992, except for a period from July 1993 to August 1995 when he was in a graduate program at Harvard University. He has been a Principal of Three Cities Research, Inc. since 1998. Before joining Three Cities Research, Inc., Mr. Wright worked for Marriott International in its strategic planning department. He is a Director of Family Bargain Corporation.
I-1 J. William Uhrig.......................... Mr. Uhrig is a Director and is the Vice-President of the Purchaser. Mr. Uhrig's biographical information is set forth above. Jeanette Welsh............................ Ms. Welsh is a Director and is the Secretary of the Purchaser. Ms. Welsh has been employed by Three Cities Research, Inc. since October 1999. From April 1998 to October 1999, Ms. Welsh practiced law at the law firm of Epstein, Becker & Green, P.C. Ms. Welsh was the Administrative Officer at Societe Generale Securities Corporation from November 1992 to March 1998.
3. Directors and Executive Officers of Holdings, Inc. Set forth below is the name, current business address, citizenship and the present principal occupation or employment and material occupations, positions, offices or employments for the past five years of each director and executive officer of Purchaser. The principal address of Purchaser and, unless otherwise indicated below, the current business address for each individual listed below is c/o Three Cities Research, Inc., 650 Madison Avenue, New York, New York 10022. Unless otherwise indicated, each such person is a citizen of the United States.
PRINCIPAL OCCUPATION OR EMPLOYMENT DURING PAST FIVE YEARS, POSITIONS NAME WITH THE THREE CITIES FUND AND CERTAIN DIRECTORSHIPS - ------------------------------------------ --------------------------------------------------------------------- W. Robert Wright II....................... Mr. Wright is a Director and is the President of the Purchaser. Mr. Wright's biographical information is set forth above. J. William Uhrig.......................... Mr. Uhrig is a Director and is the Vice-President of the Purchaser. Mr. Uhrig's biographical information is set forth above. Jeanette Welsh............................ Ms. Welsh is a Director and is the Secretary and Treasurer of the Purchaser. Ms. Welsh's biographical information is set forth above
4. Directors and Executive Officers of Purchaser. Set forth below is the name, current business address, citizenship and the present principal occupation or employment and material occupations, positions, offices or employments for the past five years of each director and executive officer of Purchaser. The principal address of Purchaser and, unless otherwise indicated below, the current business address for each individual listed below is c/o Three Cities Research, Inc., 650 Madison Avenue, New York, New York 10022. Unless otherwise indicated, each such person is a citizen of the United States.
PRINCIPAL OCCUPATION OR EMPLOYMENT DURING PAST FIVE YEARS, POSITIONS NAME WITH THE THREE CITIES FUND AND CERTAIN DIRECTORSHIPS - ------------------------------------------ --------------------------------------------------------------------- W. Robert Wright II....................... Mr. Wright is a Director and is the President of the Purchaser. Mr. Wright's biographical information is set forth above. J. William Uhrig.......................... Mr. Uhrig is a Director and is the Vice-President of the Purchaser. Mr. Uhrig's biographical information is set forth above. Jeanette Welsh............................ Ms. Welsh is a Director and is the Secretary and Treasurer of the Purchaser. Ms. Welsh's biographical information is set forth above
I-2 SCHEDULE II California General Corporation Law, ss.ss.1301-1305 ss. 1301. Notice to holder of dissenting shares of reorganization approval; Demand for purchase of shares; Contents of demand (a) If, in the case of a reorganization, any stockholders of a corporation have a right under Section 1300, subject to compliance with paragraphs (3) and (4) of subdivision (b) thereof, to require the corporation to purchase their shares for cash, such corporation shall mail to each such stockholder a notice of the approval of the reorganization by its outstanding shares (Section 152) within 10 days after the date of such approval, accompanied by a copy of Sections 1300, 1302, 1303, 1304 and this section, a statement of the price determined by the corporation to represent the fair market value of the dissenting shares, and a brief description of the procedure to be followed if the stockholder desires to exercise the stockholder's right under such sections. The statement of price constitutes an offer by the corporation to purchase at the price stated any dissenting shares as defined in subdivision (b) of Section 1300, unless they lose their status as dissenting shares under Section 1309. (b) Any stockholder who has a right to require the corporation to purchase the stockholder's shares for cash under Section 1300, subject to compliance with paragraphs (3) and (4) of subdivision (b) thereof, and who desires the corporation to purchase such shares shall make written demand upon the corporation for the purchase of such shares and payment to the stockholder in cash of their fair market value. The demand is not effective for any purpose unless it is received by the corporation or any transfer agent thereof (1) in the case of shares described in clause (i) or (ii) of paragraph (1) of subdivision (b) of Section 1300 (without regard to the provisos in that paragraph), not later than the date of the stockholder's meeting to vote upon the reorganization, or (2) in any other case within 30 days after the date on which the notice of the approval by the outstanding shares pursuant to subdivision (a) or the notice pursuant to subdivision (i) of Section 1110 was mailed to the stockholder. (c) The demand shall state the number and class of the shares held of record by the stockholder which the stockholder demands that the corporation purchase and shall contain a statement of what such stockholder claims to be the fair market value of those shares as of the day before the announcement of the proposed reorganization or short-form merger. The statement of fair market value constitutes an offer by the stockholder to sell the shares at such price. ss. 1302. Stamping or endorsing dissenting shares Within 30 days after the date on which notice of the approval by the outstanding shares or the notice pursuant to subdivision (i) of Section 1110 was mailed to the stockholder, the stockholder shall submit to the corporation at its principal office or at the office of any transfer agent thereof, (a) if the shares are certificated securities, the stockholder's certificates representing any shares which the stockholder demands that the corporation purchase, to be stamped or endorsed with a statement that the shares are dissenting shares or to be exchanged for certificates of appropriate denomination so stamped or endorsed or (b) if the shares are uncertificated securities, written notice of the number of shares which the stockholder demands that the corporation purchase. Upon subsequent transfers of the dissenting shares on the books of the corporation, the new certificates, initial transaction statement, and other written statements issued therefor shall bear a like statement, together with the name of the original dissenting holder of the shares. ss. 1303. Dissenting stockholder entitled to agreed price with interest thereon; When price to be paid (a) If the corporation and the stockholder agree that the shares are dissenting shares and agree upon the price of the shares, the dissenting stockholder is entitled to the agreed price with interest thereon at the legal rate on judgments from the date of the agreement. Any agreements fixing the fair market value of any dissenting shares as between the corporation and the holders thereof shall be filed with the secretary of the corporation. (b) Subject to the provisions of Section 1306, payment of the fair market value of dissenting shares shall be made within 30 days after the amount thereof has been agreed or within 30 days after any statutory or contractual conditions to the reorganization are satisfied, whichever is later, and in the case of certificated securities, subject to surrender of the certificates therefor, unless provided otherwise by agreement. II-1 ss. 1304. Action by dissenters to determine whether shares are dissenting shares or fair market value of dissenting shares or both; Joinder of stockholders; Consolidation of actions; Determination of issues; Appointment of appraisers (a) If the corporation denies that the shares are dissenting shares, or the corporation and the stockholder fail to agree upon the fair market value of the shares, then the stockholder demanding purchase of such shares as dissenting shares or any interested corporation, within six months after the date on which notice of the approval by the outstanding shares (Section 152) or notice pursuant to subdivision (i) of Section 1110 was mailed to the stockholder, but not thereafter, may file a complaint in the superior court of the proper county praying the court to determine whether the shares are dissenting shares or the fair market value of the dissenting shares or both or may intervene in any action pending on such a complaint. (b) Two or more dissenting stockholders may join as plaintiffs or be joined as defendants in any such action and two or more such actions may be consolidated. (c) On the trial of the action, the court shall determine the issues. If the status of the shares as dissenting shares is in issue, the court shall first determine that issue. If the fair market value of the dissenting shares is in issue, the court shall determine, or shall appoint one or more impartial appraisers to determine, the fair market value of the shares. ss. 1305. Duty and report of appraisers; Court's confirmation of report; Determination of fair market value by court; Judgment, and payment; Appeal; Costs of action (a) If the court appoints an appraiser or appraisers, they shall proceed forthwith to determine the fair market value per share. Within the time fixed by the court, the appraisers, or a majority of them, shall make and file a report in the office of the clerk of the court. Thereupon, on the motion of any party, the report shall be submitted to the court and considered on such evidence as the court considers relevant. If the court finds the report reasonable, the court may confirm it. (b) If a majority of the appraisers appointed fail to make and file a report within 10 days from the date of their appointment or within such further time as may be allowed by the court or the report is not confirmed by the court, the court shall determine the fair market value of the dissenting shares. (c) Subject to the provisions of Section 1306, judgment shall be rendered against the corporation for payment of an amount equal to the fair market value of each dissenting share multiplied by the number of dissenting shares which any dissenting stockholder who is a party, or who has intervened, is entitled to require the corporation to purchase, with interest thereon at the legal rate from the date on which judgment was entered. (d) Any such judgment shall be payable forthwith with respect to uncertificated securities and, with respect to certificated securities, only upon the endorsement and delivery to the corporation of the certificates for the shares described in the judgment. Any party may appeal from the judgment. (e) The costs of the action, including reasonable compensation to the appraisers to be fixed by the court, shall be assessed or apportioned as the court considers equitable, but, if the appraisal exceeds the price offered by the corporation, the corporation shall pay the costs (including in the discretion of the court attorneys' fees, fees of expert witnesses and interest at the legal rate on judgments from the date of compliance with Sections 1300, 1301 and 1302 if the value awarded by the court for the shares is more than 125 percent of the price offered by the corporation under subdivision (a) of Section 1301). II-2 SCHEDULE III Delaware General Corporation Law ss. 262. Appraisal rights (a) Any stockholder of a corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with respect to such shares, who continuously holds such shares through the effective date of the merger or consolidation, who has otherwise complied with subsection (d) of this section and who has neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to ss. 228 of this title shall be entitled to an appraisal by the Court of Chancery of the fair value of the stockholder's shares of stock under the circumstances described in subsections (b) and (c) of this section. As used in this section, the word "stockholder" means a holder of record of stock in a stock corporation and also a member of record of a nonstock corporation; the words "stock" and "share" mean and include what is ordinarily meant by those words and also membership or membership interest of a member of a nonstock corporation; and the words "depository receipt" mean a receipt or other instrument issued by a depository representing an interest in one or more shares, or fractions thereof, solely of stock of a corporation, which stock is deposited with the depository. (b) Appraisal rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be effected pursuant to ss. 251 (other than a merger effected pursuant to ss. 251(g) of this title), ss. 252, ss. 254, ss. 257, ss. 258, ss. 263 or ss. 264 of this title: (1) Provided, however, that no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting of stockholders to act upon the agreement of merger or consolidation, were either (i) listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in subsection (f) of ss. 251 of this title. (2) Notwithstanding paragraph (1) of this subsection, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to ss. ss. 251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock anything except: a. Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof; b. Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or held of record by more than 2,000 holders; c. Cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a. and b. of this paragraph; or d. Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a., b. and c. of this paragraph. (3) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under ss. 253 of this title is not owned by the parent corporation immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation. (c) Any corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or series of its stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all or substantially all of the assets of the corporation. If the certificate of incorporation contains such a provision, III-1 the procedures of this section, including those set forth in subsections (d) and (e) of this section, shall apply as nearly as is practicable. (d) Appraisal rights shall be perfected as follows: (1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for such meeting with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) hereof that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section. Each stockholder electing to demand the appraisal of such stockholder's shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholder's shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder's shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or (2) If the merger or consolidation was approved pursuant to ss. 228 or ss. 253 of this title, each consitutent corporation, either before the effective date of the merger or consolidation or within ten days thereafter, shall notify each of the holders of any class or series of stock of such constitutent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section; provided that, if the notice is given on or after the effective date of the merger or consolidation, such notice shall be given by the surviving or resulting corporation to all such holders of any class or series of stock of a constituent corporation that are entitled to appraisal rights. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder's shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holder's shares. If such notice did not notify stockholders of the effective date of the merger or consolidation, either (i) each such constitutent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any class or series of stock of such constitutent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such holder's shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either notice, each constitutent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is given on or after the effective date of the merger or consolidation, the record date shall be such effective date. If no record date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given. (e) Within 120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder who has complied with subsections (a) and (d) hereof and who is otherwise entitled to appraisal rights, may file a petition in the Court of Chancery demanding a determination of the value of the stock of all such stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation, any stockholder shall have the right to withdraw such stockholder's demand III-2 for appraisal and to accept the terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who has complied with the requirements of subsections (a) and (d) hereof, upon written request, shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation a statement setting forth the aggregate number of shares not voted in favor of the merger or consolidation and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. Such written statement shall be mailed to the stockholder within 10 days after such stockholder's written request for such a statement is received by the surviving or resulting corporation or within 10 days after expiration of the period for delivery of demands for appraisal under subsection (d) hereof, whichever is later. (f) Upon the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within 20 days after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the surviving or resulting corporation. If the petition shall be filed by the surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the Court, shall give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the surviving or resulting corporation and to the stockholders shown on the list at the addresses therein stated. Such notice shall also be given by 1 or more publications at least 1 week before the day of the hearing, in a newspaper of general circulation published in the City of Wilmington, Delaware or such publication as the Court deems advisable. The forms of the notices by mail and by publication shall be approved by the Court, and the costs thereof shall be borne by the surviving or resulting corporation. (g) At the hearing on such petition, the Court shall determine the stockholders who have complied with this section and who have become entitled to appraisal rights. The Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder. (h) After determining the stockholders entitled to an appraisal, the Court shall appraise the shares, determining their fair value exclusive of any element of value arising from the accomplishment or expectation of the merger or consolidation, together with a fair rate of interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court shall take into account all relevant factors. In determining the fair rate of interest, the Court may consider all relevant factors, including the rate of interest which the surviving or resulting corporation would have had to pay to borrow money during the pendency of the proceeding. Upon application by the surviving or resulting corporation or by any stockholder entitled to participate in the appraisal proceeding, the Court may, in its discretion, permit discovery or other pretrial proceedings and may proceed to trial upon the appraisal prior to the final determination of the stockholder entitled to an appraisal. Any stockholder whose name appears on the list filed by the surviving or resulting corporation pursuant to subsection (f) of this section and who has submitted such stockholder's certificates of stock to the Register in Chancery, if such is required, may participate fully in all proceedings until it is finally determined that such stockholder is not entitled to appraisal rights under this section. (i) The Court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders entitled thereto. Interest may be simple or compound, as the Court may direct. Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock forthwith, and the case of holders of shares represented by certificates upon the surrender to the corporation of the certificates representing such stock. The Court's decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such surviving or resulting corporation be a corporation of this State or of any state. (j) The costs of the proceeding may be determined by the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorney's fees and the fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal. III-3 (k) From and after the effective date of the merger or consolidation, no stockholder who has demanded appraisal rights as provided in subsection (d) of this section shall be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger or consolidation); provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e) of this section, or if such stockholder shall deliver to the surviving or resulting corporation a written withdrawal of such stockholder's within 60 days after the effective date of the merger or consolidation as provided in subsection (e) of this section or thereafter with the written approval of the corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed as to any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just. (l) The shares of the surviving or resulting corporation to which the shares of such objecting stockholders would have been converted had they assented to the merger or consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation. III-4 Facsimile copies of the Letter of Transmittal, properly completed and duly signed, will be accepted. The Letter of Transmittal, certificates for Shares and any other required documents should be sent by each shareholder of the Company or the shareholder's broker, dealer, commercial bank, trust company or other nominee to the Depositary as follows: The Depositary for the Offer is: AMERICAN STOCK TRANSFER AND TRUST COMPANY
By Registered or Facsimile Certified Mail: Transmission: By Hand: By Overnight Courier: - ---------------------- --------------------------- --------------------------- --------------------------- American Stock Transfer (for Eligible American Stock Transfer American Stock Transfer and Trust Company Institutions Only) and Trust Company and Trust Company 40 Wall Street (718) 234-5001 40 Wall Street 40 Wall Street 46th Floor 46th Floor 46th Floor 46th Floor New York, NY 10005 New York, NY 10005 New York, NY 10005
For Confirmation Telephone: --------------------------- (718) 921-8200 Any questions or requests for assistance or additional copies of the Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may be directed to the Information Agent at the telephone numbers and location listed below. You may also contact your broker, dealer, commercial bank or trust company or other nominee for assistance concerning the Offer. The Information Agent for the Offer is: D.F. KING & CO., INC. 77 Water Street New York, New York 10005-4495 Banks and Brokerage Firms Call Collect: (212) 269-5550 All Others Call Toll Free: (800) 628-8528 EX-99.(A)(2) 3 0003.txt LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON STOCK LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON STOCK OF BUSINESS RESOURCE GROUP AT $9.25 NET PER SHARE IN RESPONSE TO THE OFFER TO PURCHASE DATED JULY 14, 2000 OF BRG ACQUISITION CORPORATION THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON FRIDAY, AUGUST 11, 2000 UNLESS THE OFFER IS EXTENDED. The Depositary: AMERICAN STOCK TRANSFER AND TRUST COMPANY By Facsimile Transaction: (For Eligible Institutions Only) (718) 234-5001 For Confirmation Telephone (718) 921-8200 By Mail: By Overnight: By Hand: American Stock Transfer American Stock Transfer Ameircan Stock Transfer and Trust Company and Trust Company and Trust Company 40 Wall Street 40 Wall Street 40 Wall Street 46th Floor 46th Floor 46th Floor New York, NY 10005 New York, NY 10005 New York, NY 10005
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A TELEX OR FACSIMILE NUMBER OTHER THAN THE ONES LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. This Letter of Transmittal is to be used to tender shares of common stock ("Shares") of Business Resource Group (the "Company") in response to a solicitation of tenders by BRG Acquisition Corporation (the "Purchaser"). It must be used whether certificates evidencing Shares are to be forwarded with this Letter of Transmittal or whether delivery of Shares is to be made by book-entry transfer to the account maintained by the Depositary at The Depository Trust Company (the "Book-Entry Facility") as described in Section 9 of the Offer to Purchase. Shareholders whose certificates are not immediately available or who cannot deliver their confirmation of the book-entry transfer of their Shares into the Depositary's account at the Book-Entry Facility ("Book-Entry Confirmation") on or before the Expiration Time may use the guaranteed delivery procedure described in Section 9 of the Offer to Purchase to tender their shares. See Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. DESCRIPTION OF SHARES TENDERED
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE(S) TENDERED (PLEASE FILL IN, IF BLANK) (ATTACH ADDITIONAL LIST IF NECESSARY) TOTAL NUMBER OF SHARES NUMBER CERTIFICATE REPRESENTED BY OF SHARES NUMBER(S)* CERTIFICATE(S)* TENDERED** TOTAL SHARES:
* NEED NOT BE COMPLETED BY SHAREHOLDERS TENDERING BY BOOK-ENTRY TRANSFER. ** UNLESS OTHERWISE INDICATED IT WILL BE ASSUMED THAT ALL SHARES DESCRIBED ABOVE ARE BEING TENDERED. SEE INSTRUCTION 4. / / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY AT THE BOOK-ENTRY FACILITY AND COMPLETE THE FOLLOWING: Name of Tendering Institution:_____________________________________________ Account Number: ___________________________________________________________ Transaction Code Number: __________________________________________________ / / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of Registered Owner(s): ___________________________________________ Date of Execution of Notice of Guaranteed Delivery: _______________________ Name of Institution which Guaranteed Delivery: ____________________________ NOTE: SIGNATURE MUST BE PROVIDED BELOW. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY. Gentlemen: The undersigned hereby tenders to BRG Acquisition Corporation (the "Purchaser"), a Delaware corporation, the shares of common stock (the "Shares"), of Business Resource Group (the "Company"), a California corporation, listed above, in response to the Purchaser's offer to purchase all outstanding Shares at a price of $9.25 per Share, net to the sellers in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated July 14, 2000 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and in this Letter of Transmittal (which, together with the Offer to Purchase, constitutes the "Offer"). Subject to, and effective upon, acceptance of the Shares tendered with this Letter of Transmittal for payment in accordance with the Offer, the undersigned hereby sells, assigns, and transfers to, or upon the order of, the Purchaser all right, title and interest in and to all the Shares that are being tendered with this Letter of Transmittal (and any other Shares or other securities issued or issuable in respect of those Shares after July 14, 2000 and irrevocably constitutes and appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to those Shares (and any such other Shares or securities) with full power of substitution, (that power of attorney being an irrevocable power coupled with an interest) to (a) deliver certificates for the Shares (and any such other Shares or securities) or transfer ownership of the Shares (and any such other Shares or securities) on the account books maintained by the Book-Entry Facility, together in either case with all accompanying evidences of transfer and authenticity, to or upon the order of the Purchaser upon receipt by the Depositary, as the undersigned's agent, of the purchase price (adjusted, if appropriate, as provided in the Offer to Purchase), (b) present those Shares (and any such other Shares or securities) for transfer on the books of the Company and (c) otherwise exercise all rights of beneficial ownership of the Shares (and any such other Shares or securities), all in accordance with the terms of the Offer. The undersigned irrevocably appoints the Purchaser, its officers and its designees, and each of them, the attorneys-in-fact and proxies of the undersigned, each with full power of substitution, to vote in such manner as each such attorney-in-fact and proxy or his or its substitute, in his or its sole discretion deems proper, and otherwise act (including acting by written consent without a meeting) with respect to, all the Shares tendered by this Letter of Transmittal which have been accepted for payment by the Purchaser prior to the time of the vote or action (and any other Shares or securities issued in respect of those Shares after July 11, 2000). This proxy is irrevocable and is granted in consideration of, and is effective upon, the deposit by the Purchaser with the Depositary of the purchase price for the Shares to which it relates, and acceptance of those Shares for payment, in accordance with the Offer. That acceptance for payment will revoke all prior proxies granted by the undersigned with regard to those Shares (and any such other Shares or other securities) and the undersigned will not give any subsequent proxies with respect to those Shares. The undersigned represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Shares tendered by this Letter of Transmittal (and any other Shares or other securities issued in respect of those Shares after July 14, 2000) and that, when those Shares are accepted for payment by the Purchaser, the Purchaser will acquire good and unencumbered titled to the Shares (and any such other Shares or securities), free and clear of all liens, restrictions, charges, 2 encumbrances or adverse claims. The undersigned, upon request, will execute and deliver any additional documents deemed by the Depositary or the Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered by this Letter of Transmittal (and any such other Shares or other securities) to the Purchaser. The authority conferred in this Letter of Transmittal will not be affected by, and will survive, the death or incapacity of the undersigned, and any obligation of the undersigned under this Letter of Transmittal or otherwise resulting from the tender of the Shares to which this Letter of Transmittal relates will be binding upon the successors, assigns, heirs, executors, administrators and legal representatives of the undersigned. Except as stated in the Offer to Purchase, the tender made by this Letter of Transmittal is irrevocable. The undersigned understands that tenders of Shares pursuant to any one of the procedures described in Section 9 of the Offer to Purchase and in the instructions to this Letter of Transmittal will constitute a binding agreement between the undersigned and the Purchaser upon the terms and subject to the conditions of the Offer. Unless otherwise indicated in the box below captioned "Special Payment Instructions," please issue the check for the purchase price of the Shares tendered by this Letter of Transmittal, and cause any Shares represented by certificates accompanying this Letter of Transmittal which are not being tendered, or are not accepted for payment, in the name(s) of the undersigned. Similarly, unless otherwise indicated in the box below captioned "Special Delivery Instructions," please mail the check for the purchase price and deliver certificates representing any Shares which are not being tendered or are not accepted for payment (and accompanying documents, as appropriate) to the undersigned at the address shown below the undersigned's signature. If both the Special Delivery Instructions and the Special Payment Instructions are completed, please issue the check for the purchase price and certificates for any Shares which are not being tendered, or are not accepted for payment, in the name of, and deliver the check and certificates, or confirmation of transfer of the Shares at the Book-Entry Facility, to the person or persons indicated. If the Shares are being delivered by book-entry transfer and the appropriate entry is made under "Special Payment Instructions," please return any Shares which are not accepted for payment by crediting the indicated account at the Book-Entry Facility. The undersigned recognizes that the Purchaser has no obligation pursuant to the Special Payment Instructions or otherwise to transfer any tendered Shares which are not accepted for payment from the name of the registered holder of the Shares to the name of another person. 3
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 5, 6 AND 7) (SEE INSTRUCTIONS 5, 6 AND 7) To be completed ONLY if certificates for Shares which are not To be completed ONLY if certificates for Shares which are not tendered or are not purchased and the check for the purchase tendered or are not purchased and the check for the purchase price of Shares which are purchased are to be issued in the price of Shares which are purchased are to be sent to someone name of someone other than the undersigned, or if Shares other than the undersigned, or to the undersigned at an delivered by book-entry which are not purchased are to be address other than that shown after the undersigned's returned by credit to an account maintained at the Book-Entry signature below. Facility other than that designated above. Issue: / / Check / / Certificates to: Mail: / / Check / / Certificates to: Name: Name: ----------------------------------------------------- ------------------------------------------------------ (PLEASE PRINT) (PLEASE PRINT) Address: Address: -------------------------------------------------- ---------------------------------------------------- - ----------------------------------------------------------- ---------------------------------------------------- (INCLUDE ZIP CODE) (INCLUDE ZIP CODE) - ----------------------------------------------------------- (TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER) / / Credit unpurchased Shares delivered by book-entry transfer to the Book-Entry Facility account set forth below: - ----------------------------------------------------------- (ACCOUNT NUMBER)
SIGN HERE (COMPLETE SUBSTITUTE FORM W-9 ON REVERSE) SIGNATURE(S) OF OWNER(S) Dated: , 2000 ------------------------------------------------------------------- (Must be signed by registered holder(s) exactly as name(s) appear(s) on stock certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted with this Letter of Transmittal. If signature is by trustees, executors, administrators, guardians, attorneys-at-fact, agents, officers of corporations or others acting in a fiduciary or representative capacity, please provide the information described in Instruction 5.) Name(s) ------------------------------------------------------------------------ (PLEASE PRINT) Capacity (full title) ----------------------------------------------------------- Address ----------------------------------------------------------------------- (INCLUDE ZIP CODE) Area Code and Telephone Number ------------------------------------------------- Tax Identification or Social Security No. --------------------------------------- (COMPLETE SUBSTITUTE FORM W-9 ON REVERSE) GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 5) Authorized Signature ----------------------------------------------------------- Name --------------------------------------------------------------------------- Title -------------------------------------------------------------------------- Name of Firm ------------------------------------------------------------------- Address ------------------------------------------------------------------------ Area Code and Telephone Number ------------------------------------------------- Dated: , 2000 ------------------------------------------------------------------- 4 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. Guarantee of Signatures. No signature guarantee is required on this Letter of Transmittal (i) if this Letter of Transmittal is signed by the registered holder of the Shares tendered by it (which, for purposes of this document, includes any participant in the Book-Entry Facility whose name appears on a security position listing as the owner of Shares) unless the holder has completed either the box entitled "Special Delivery Instructions" or the box entitled "Special Payment Instructions" on the reverse of this Letter of Transmittal or (ii) if those Shares are tendered for the account of a firm which is a bank, broker, dealer, credit union, savings association or other entity that is a member in good standing of the Securities Transfer Agents Medallion Program (collectively, "Eligible Institutions"). In all other cases, all signatures on this Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 5. 2. Delivery of Letter of Transmittal and Certificates. This Letter of Transmittal is to be completed by shareholders either if certificates are being forwarded with it or if tenders of Shares are to be made in accordance with the procedures for delivery by book-entry transfer set forth in Section 9 of the Offer to Purchase. Certificates for all physically tendered Shares, or a Book-Entry Confirmation confirming book-entry transfer of Shares to an account of the Depositary, as the case may be, together with a properly completed and duly executed Letter of Transmittal (or facsimile of one) and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth above on or prior to the Expiration Time (as defined in Section 7 of the Offer to Purchase). Shareholders whose certificates for Shares are not immediately available, or who cannot deliver Book-Entry Confirmation of book entry transfer of the Shares to the Depositary on or prior to the Expiration Date may tender their Shares by properly completing and executing a Notice of Guaranteed Delivery in accordance with the guaranteed delivery procedure described in Section 9 of the Offer to Purchase. Pursuant to that procedure, (i) the tender must be made by or through an Eligible Institution, (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by with the Offer to Purchase, must be received by the Depositary prior to the Expiration Time and (iii) the certificates for all physically tendered Shares, or Book-Entry Confirmation of Shares tendered by book-entry transfer, as the case may be, together with a properly completed and duly executed Letter of Transmittal (or facsimile of one) and any other documents required by this Letter of Transmittal, must be received by the Depositary within three Nasdaq National Market trading days after the date of execution of the Notice of Guaranteed Delivery, all as provided in Section 9 of the Offer to Purchase. The method of delivery of this Letter of Transmittal, the certificates for Shares and all other required documents, including delivery through the Book-Entry Facility, is at the option and risk of the tendering shareholder and, except as otherwise provided in this Instruction 2, the delivery will be deemed made only when actually received by the Depositary. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. No alternative, conditional or contingent tenders will be accepted and no fractional Shares will be purchased. All tendering shareholders, by execution of this Letter of Transmittal (or a facsimile of it), waive any right to receive any notice of the acceptance of their Shares for payment. 3. Inadequate Space. If the space provided in this Letter of Transmittal is inadequate, the certificate numbers and numbers of Shares being tendered should be listed on a separate signed schedule which should be attached to this Letter of Transmittal. 4. Partial Tenders. (Not applicable to shareholders who tender by book-entry transfer). If fewer than all the Shares evidenced by a certificate are to be tendered, fill in the number of Shares which are to be tendered in the box entitled "Number of Shares Tendered." In such case, new certificate(s) for the remainder of the Shares that were evidenced by your old certificate(s) will be sent to you, unless otherwise provided in the appropriate box on this Letter of Transmittal, as soon as practicable after the Expiration Time. All Shares represented by certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If this Letter of Transmittal is signed by the registered holder(s) of the Shares being tendered, the signature(s) must correspond exactly with the name(s) as written on the face of the certificate(s), without any alteration, enlargement or change. If any of the tendered Shares are owned of record by two or more joint owners, all the owners must sign this Letter of Transmittal. IF TENDERED SHARES ARE REGISTERED IN DIFFERENT NAMES ON DIFFERENT CERTIFICATES, IT WILL BE NECESSARY TO COMPLETE, SIGN AND SUBMIT AS MANY SEPARATE LETTERS OF TRANSMITTAL AS THERE ARE DIFFERENT REGISTRATIONS ON CERTIFICATES. If this Letter of Transmittal or any certificates or stock powers are signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, that person should so indicate when signing, and submit evidence satisfactory to the Purchaser of the person's authority so to act. When this Letter of Transmittal is signed by the registered owner(s) of the Shares being tendered, no endorsements of certificates or separate stock powers are required, unless payment or certificates for Shares which are not tendered or purchased are to be issued to a person other than the registered owner(s), in which case, endorsements of certificates or separate stock powers are required and signatures on those certificates or stock powers must be guaranteed by an Eligible Institution. 5 If this Letter of Transmittal is signed by a person other than the registered owner(s) of the Shares being tendered, the certificates must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered owner(s) appear on the certificates. Signatures on the certificates or stock powers must be guaranteed by an Eligible Institution. 6. Stock Transfer Taxes. Except as set forth in this Instruction 6, the Purchaser will pay or cause to be paid any stock transfer taxes with respect to the transfer and sale to it of Shares it purchases pursuant to the Offer. If payment of the purchase price is to be made to, or if certificates for Shares which are not tendered or are not purchased are to be registered in the name of, any person other than the registered holder, or if tendered certificates are registered in the name of anyone other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes payable on account of the transfer to another person (whether imposed on the registered holder or on the other person) will be deducted from the purchase price unless satisfactory evidence of the payment of, or an exemption from the need to pay, stock transfer taxes is submitted. Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the certificates submitted with this Letter of Transmittal. 7. Special Payment and Delivery Instructions. If a check or certificates for unpurchased Shares are to be issued in the name of a person other than the signer of this Letter of Transmittal, or if a check is to be sent or certificates are to be returned to someone other than the signer of this Letter of Transmittal or to an address other than the signer's address shown above, the appropriate boxes on this Letter of Transmittal must be completed. Shareholders tendering Shares by book-entry transfer may request that any Shares which are not purchased be credited to an account maintained at the Book-Entry Facility which the shareholder designates. If no instructions are given, Shares tendered by book-entry transfer which are not purchased will be returned by crediting the account at the Book-Entry Facility designated above. 8. Requests for Assistance or Additional Copies. Requests for assistance may be directed to, or additional copies of the Offer to Purchase and this Letter of Transmittal may be obtained from, the Information Agent or the Dealer Managers at their respective addresses set forth below or from your broker, dealer, commercial bank or trust company. 9. Waiver of Conditions. The conditions to the Offer may be waived by the Purchaser, in whole or in part, at any time and from time to time in the Purchaser's sole discretion, as to any Shares which are tendered. 10. Substitute Form W-9. The tendering shareholder is required to provide the Depositary with a correct Taxpayer Identification Number ("TIN") on the Substitute Form W-9 which is provided under "Important Tax Information" below, and to indicate that the shareholder is not subject to backup withholding by checking the box in Part 2 of the Substitute Form W-9. Failure to provide the information on the Substitute Form W-9 may subject the tendering shareholder to 31% Federal income tax withholding from the payment of the purchase price. The box in Part 3 of the Substitute Form W-9 may be checked if the tendering shareholder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future. If the box in Part 3 is checked and the Depositary is not provided with a TIN within 60 days, the Depositary will withhold 31% from all payments of the purchase price to be made after expiration of that 60 day period until a TIN is provided to the Depositary. Important: This Letter of Transmittal (or a facsimile of it), together with certificates or confirmation of book-entry transfer and all other required documents, or a Notice of Guaranteed Delivery, must be received by the Depositary on or prior to the Expiration Time.
(DO NOT WRITE IN THE SPACES BELOW) Date Received Accepted by Checked by ----------------- ----------------- --------------- CERTIFICATES SHARES SHARES CHECK AMOUNT SHARES CERTIFICATE BLOCK SURRENDERED TENDERED ACCEPTED NO. OF CHECK RETURNED NO. NO. Delivery Prepared by Checked by Date --------------- ------------------------ ----------------------
IMPORTANT TAX INFORMATION Under Federal income tax law, a shareholder whose tendered Shares are accepted for payment is required to provide the Depositary with the shareholder's correct TIN on Substitute Form W-9 below. If the shareholder is an individual, the TIN is his or her social security number. If the Depositary is not provided with the correct TIN, the shareholder may be subject, among other things, to penalties imposed by the Internal Revenue Service. In addition, payments that are made to the shareholder with respect to Shares purchased pursuant to the Offer may be subject to backup withholding. 6 Certain shareholders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, that individual must submit a statement, signed under penalties of perjury, attesting to the individual's exempt status. A form of statement may be obtained from the Depositary. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. If backup withholding applies, the Depositary is required to withhold 31% of any payments made to the shareholder. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained. PURPOSE OF SUBSTITUTE FORM W-9 To prevent backup withholding on payments that are made to a shareholder with respect to Shares purchased pursuant to the Offer, the shareholder is required to notify the Depositary of the shareholder's correct TIN by completing the form below certifying that the TIN provided on the Substitute Form W-9 is correct (or that the shareholder is awaiting a TIN). WHAT NUMBER TO GIVE THE DEPOSITARY The shareholder is required to give the Depositary the social security number or employer identification number of the record owner of the Shares. If the Shares being tendered are in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidelines on which number to report.
PAYER'S NAME: AMERICAN STOCK TRANSFER AND TRUST COMPANY SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX ------------------------------ AT RIGHT AND CERTIFY BY SIGNING AND DATING Social Security Number or FORM W-9 BELOW. Employer Identification Number DEPARTMENT OF THE TREASURY INTERNAL REVENUE SERVICE PAYER'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER ("TIN")
PART 2--Check the box if you are NOT subject to backup withholding under the Internal Revenue Service provisions of Section 3406(a)(1)(C) of the Internal Revenue Code because (1) you are exempt from backup withholding, or (2) you have not been notified that you are subject to backup withholding as a result of failure to report all interest or dividends or (3) the Internal Revenue Service has notified you that you are no longer subject to backup withholding. / / CERTIFICATION--Under the penalties of perjury, I certify that the information provided on this form is true, correct and complete. SIGNATURE DATE PART 3--Awaiting TIN / / -------------------------- ------------ NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. The Information Agent for the Offer is: D.F. KING & CO., INC. 77 WATER STREET NEW YORK, NEW YORK 10005-4495 Banks and Brokerage Firms please call: (212) 269-5550 All others Call Toll Free: (800) 628-8528 EX-99.(A)(3) 4 0004.txt NOTICE OF GUARANTEED DELIVERY THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the action to be taken, you should seek your own financial advice immediately from your own appropriately authorized independent financial advisor. If you have sold or transferred all of your registered holdings of Common Stock of Business Resource Group, please forward this document and all accompanying documents to the stockbroker, bank or other agent through whom the sale or transfer was effected, for submission to the purchaser or transferee. NOTICE OF GUARANTEED DELIVERY FOR TENDER OF SHARES OF COMMON STOCK OF BUSINESS RESOURCE GROUP PURSUANT TO THE OFFER TO PURCHASE DATED JULY 14, 2000 BY BRG ACQUISITION CORPORATION AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF BR HOLDINGS LLC WHICH IS MAJORITY-OWNED BY THREE CITIES FUND III, L.P. (NOT TO BE USED FOR SIGNATURE GUARANTEES) This Notice of Guaranteed Delivery, or one substantially in the form hereof, must be used to accept the Offer (as defined below) (i) if certificates ("Share Certificates") evidencing shares of common stock, par value $0.01 per share (the "Shares"), of Business Resource Group, a California corporation (the "Company"), are not immediately available, (ii) if Share Certificates and all other required documents cannot be delivered to American Stock Transfer and Trust Company, as Depositary (the "Depositary"), prior to the Expiration Time (as defined in Section 7 of the Offer to Purchase (as defined below)) or (iii) if the procedure for delivery by book-entry transfer cannot be completed on a timely basis. This Notice of Guaranteed Delivery may be delivered by hand or mail or transmitted by telegram or facsimile transmission to the Depositary. See Section 9 of the Offer to Purchase. The Depositary for the Offer is: AMERICAN STOCK TRANSFER AND TRUST COMPANY BY FACSIMILE TRANSMISSION: (For Eligible Institutions Only) (718) 234-5001 BY MAIL: BY OVERNIGHT: BY HAND: American Stock Transfer American Stock Transfer American Stock Transfer and Trust Company and Trust Company and Trust Company 40 Wall Street-46th Floor 40 Wall Street-46th Floor 40 Wall Street-46th Floor New York, NY 10005 New York, NY 10005 New York, NY 10005 FOR CONFIRMATION TELEPHONE: (718) 921-8200
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL. SHARES MAY NOT BE TENDERED PURSUANT TO THE GUARANTEED DELIVERY PROCEDURES. LADIES AND GENTLEMEN: The undersigned hereby tenders to BRG Acquisition Corporation, a Delaware corporation, an indirect wholly-owned subsidiary of BR Holdings LLC, a Delaware limited liability company, which is majority-owned by Three Cities Fund III, L.P. a Delaware limited partnership, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated July 14, 2000 (the "Offer to Purchase"), and the related Letter of Transmittal (the terms and conditions of which, as amended or supplemented from time to time, together constitute the "Offer"), receipt of each of which is hereby acknowledged, the number of Shares specified below pursuant to the guarantee delivery procedures described in Section 9 of the Offer to Purchase. Number of Shares: Name(s) of Record Holder(s): ---------------------------------------------------- (PLEASE PRINT) Address(es): ------------------------------------------------------------------- (ZIP CODE) Area Code and Tel. No: -------------------------------------------------------- Certificate Nos. (if available): ------------------------------------------------ Check box if Shares will be tendered by book-entry transfer: / / The Depository Trust Company Signature(s): ------------------------------------------------------------------- Account Number: ----------------------------------------------------------------- Dated: , 2000 ------------------------------------------------------------------ THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED 2 GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a participant in the Security Transfer Agents Medallion Program, hereby guarantees to deliver to the Depositary, at one of its addresses set forth above, either the certificates representing the Shares tendered hereby, in proper form for transfer, or a Book-Entry Confirmation (as defined in Section 8 of the Offer to Purchase) of a transfer of such Shares into the Depositary's account at The Depository Trust Company, in any such case together with a properly completed and duly executed Letter of Transmittal, or a manually signed facsimile thereof, with any required signature guarantees, or, in the case of a book-entry transfer, an Agent's Message (as defined in Section 8 of the Offer to Purchase), and any other documents required by the Letter of Transmittal within three Nasdaq trading days after the date of execution of this Notice of Guaranteed Delivery. The Eligible Institution that completes this form must communicate the guarantee to the Depositary and must deliver the Letter of Transmittal and certificates for Shares to the Depositary within the time period shown herein. Failure to do so could result in financial loss to such Eligible Institution. Name of Firm: ------------------------------------------------------------------ (AUTHORIZED SIGNATURE) Address: ------------------------------------------------------------------------ (ZIP CODE) Area Code and Tel. No.: -------------------------------------------------------- Name: -------------------------------------------------------------------------- Title: ------------------------------------------------------------------------- Date: , 2000 --------------------------------------------------------------------- NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL 3 EX-99.(A)(4) 5 0005.txt FORM OF LETTER, DATED JULY 13, 2000 OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF BUSINESS RESOURCE GROUP AT $9.25 NET PER SHARE BY BRG ACQUISITION CORPORATION AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF BR HOLDINGS LLC WHICH IS MAJORITY-OWNED BY THREE CITIES FUND III, L.P. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 PM, NEW YORK CITY TIME, ON FRIDAY, AUGUST 11, 2000, UNLESS THE OFFER IS EXTENDED. To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We have been appointed by BRG Acquisition Corporation, a Delaware corporation (the "Purchaser"), which is currently owned by BR Holdings LLC (the "Parent"), to act as Information Agent in connection with the Purchaser's offer to purchase all outstanding shares of common stock, par value $0.01 per share (the "Shares"), of Business Resource Group, a California corporation (the "Company"), at a price of $9.25 per Share, net to the seller in cash, upon the terms and subject to the condition set forth in the Offer to Purchase dated July 14, 2000 (the "Offer to Purchase"), and the related Letter of Transmittal (the "Letter of Transmittal," the terms and conditions of which, as amended or supplemented from time to time, together with the Offer to Purchase, constitute the "Offer") enclosed herewith. Please furnish copies of the enclosed materials to those of your clients for whose accounts you hold Shares registered in your name or in the name of your nominee. The Offer is conditioned on at least 51% of the Shares which the Purchaser or its Parent did not already own or have agreements to purchase as of July 13, 2000 being validly tendered. The Offer is not conditioned on the ability of the Purchaser to obtain financing and the Offer is subject to other terms and conditions contained in the Offer to Purchase. Enclosed for your information and use are copies of the following documents: 1. Letter of Transmittal to be used by holders of Shares in accepting the Offer and tendering Shares; 2. A letter which may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer; 3. Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9; and 4. Return envelope addressed to the Depositary. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON AUGUST 11, 2000, UNLESS THE OFFER IS EXTENDED. As soon as practicable after the consummation of the Offer, the Purchaser and its shareholders will take all steps in their power to cause the Purchaser to be merged with the Company in a transaction (the "Merger") after which the shareholders of the Purchaser will own all the stock of the corporation which results from the Merger (essentially, the Company), and the other shareholders of the Company will receive the same amount of cash per Share as is paid for Shares tendered in response to the Offer (unless particular shareholders elect to exercise statutory rights to demand appraisal of their Shares under applicable law); immediately before the Merger, the Company may be reincorporated into Delaware. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of the certificates evidencing such Shares or timely confirmation of a book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility (as defined in the Offer to Purchase) in connection with the book- entry transfer, and any other documents required by the Letter of Transmittal. If a holder of Shares wishes to tender Shares but cannot deliver such holder's certificate or other required documents, or cannot comply with the procedure for book-entry transfer, prior to the expiration of the Offer, a tender of Shares may be effected by following the guaranteed delivery procedure described in Section 9 of the Offer to Purchase. The Purchaser will not pay any fees or commissions to any broker, dealer or other person (other than the Information Agent as described in the Offer to Purchase) in connection with the solicitation of tenders of Shares pursuant to the Offer. However, the Purchaser will reimburse you for customary mailing and handing expenses incurred by you in forwarding any of the enclosed materials to your clients. The Purchaser will pay or cause to be paid any stock transfer taxes payable with respect to the transfer of Shares to it, except as otherwise provided in Instruction 6 of the Letter of Transmittal. Any questions or requests for assistance may be directed to the Information Agent at its telephone numbers and addresses set forth on the back cover of the Offer to Purchase. Additional copies of the enclosed material may be obtained from the Information Agent at its address and telephone numbers set forth on the back cover of the Offer to Purchase. Very truly yours, D.F. King & Co., Inc. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON THE AGENT OF THE THREE CITIES FUNDS, THE PURCHASER, THE COMPANY, THE INFORMATION AGENT OR THE DEPOSITARY, OR OF ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR TO MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN. 2 EX-99.(A)(5) 6 0006.txt FORM OF LETTER, TO CLIENTS OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF BUSINESS RESOURCE GROUP AT $9.25 NET PER SHARE BY BRG ACQUISITION CORPORATION WHICH IS OWNED BY BR HOLDINGS LLC A SUBSIDIARY OF THREE CITIES FUND III, L.P. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON FRIDAY, AUGUST 11, 2000, UNLESS THE OFFER IS EXTENDED. To Our Clients: Enclosed for your consideration is an Offer to Purchase, dated July 14, 2000 (the "Offer to Purchase"), and a related Letter of Transmittal (which terms and conditions constitute the "Offer Documents") relating to the offer by BRG Acquisition Corporation, a Delaware corporation (the "Purchaser") which is owned by BR Holdings LLC, a subsidiary of Three Cities Fund III, L.P., to purchase all outstanding shares of common stock, par value $.01 per share (the "Shares"), of Business Resource Group, a California corporation (the "Company"), at a price of $9.25 per Share net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related Letter of Transmittal. WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER OF THOSE SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT. Accordingly, we request instructions as to whether you wish to have us tender, on your behalf, any or all other Shares held by us for your account pursuant to the terms and conditions set forth in the Offer. Please note the following: 1. The Offer Price is $9.25 per Share, net to you in cash, upon the terms and subject to the conditions set forth in the Offer. 2. The Board of Directors of the Company (with the three directors who will acquire interests in one or both of the purchaser's parents being absent or not voting), based on a recommendation of a special committee (1) has approved the Offer and the Merger (as defined below), (2) has determined that the terms of the Offer and the Merger are fair to, and in the best interests of, the Company's shareholders and (3) recommends that the Company's shareholders accept the Offer and tender their Shares in response to the Offer. 3. The Offer is being made for all outstanding Shares. 4. If at least 51% of the outstanding Common that the Purchaser and BR Holdings LLC did not own or have agreements to purchase as of July 13, 2000 are properly tendered and not withdrawn, and the Purchaser purchases the tendered Shares, the Purchaser and its shareholder will take all steps in their power (including voting their Shares) to cause the Purchaser to be merged with the Company in a transaction (the "Merger") in which the shareholder of the Purchaser will own all the stock of the corporation which results from the Merger (essentially, the Company), and the other shareholders of the Company will receive the same amount of cash per Share as is paid for Shares tendered in response to the Offer; the Merger may be immediately preceded by the reincorporation of the Company into Delaware. If the Shares which are properly tendered and not withdrawn are less than 51% of the outstanding Shares that the Purchaser and BR Holdings LLC did not own or have agreements to purchase as of July 13, 2000, the Purchaser may not proceed with the purchase of the tendered securities without consent of the Company. 5. The Offer is conditioned upon, among other things, (1) the expiration or termination of all waiting periods imposed by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and (2) the satisfaction or waiver of certain conditions to the obligations of the Purchaser and the Company to consummate the Offer and the transactions contemplated by the Merger Agreement. The Offer is conditioned on, among other things, at least 51% of the Shares not owned by BR Holdings LLC being properly tendered and not withdrawn, and the absence of a material adverse chance since July 7, 2000. The Offer is not conditioned on the Purchaser's obtaining financing. 6. Tendering shareholders will not be obligated to pay brokerage fees or commissions or, except as otherwise provided in Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser pursuant to the Offer. 7. The Offer and withdrawal rights will expire at 5:00 P.M., New York City time, on August 11, 2000, unless the Offer is extended in accordance with the terms of the Merger Agreement. The Merger Agreement permits the Purchaser to extend the Offer until up to 60 days after the date of the Offer to Purchase, and after that with the consent of the Company. If you wish to have us tender any or all of the Shares held by us for your account, please so instruct us by completing, executing, detaching and returning to us the instruction form set forth below. If you authorize the tender of such Shares which we hold, all your Shares which we hold will be tendered unless otherwise specified below. An envelope to return your instructions to us is enclosed. Your instructions should be forwarded to us in ample time to permit us to submit a tender on your behalf prior to the expiration of the Offer. For purposes of the Offer, the Purchaser will be deemed to have accepted for payment, and thereby purchased, tendered Shares, if and when the Purchaser gives oral or written notice to the Depositary of the Purchaser's acceptance of the tendered Shares for payment. Payment for Shares purchased pursuant to the Offer will not be made until American Stock Transfer and Trust Company (the "Depositary") receives (a) Share Certificates (or a timely Book-Entry Confirmation (as defined in the Offer to Purchase) after transfer of the Shares into the account maintained by the Depositary at the Depository Trust Company), pursuant to the procedures set forth in Section 9 of the Offer to Purchase, (b) the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees or an Agent's Message (as defined in the Offer to Purchase), in connection with a book-entry delivery, and (c) any other documents required by the Letter of Transmittal. Accordingly, payment may not be made to all tendering shareholders at the same time, depending upon when certificates for or Book Entry Confirmations of transfers into the Depositary's account at the Depositary Trust Company are actually received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT. The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares residing in any jurisdiction in which the making of the Offer or the acceptance of tendered shares would not be in compliance with the laws of that jurisdiction. In any jurisdiction where securities, blue-sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of the Purchaser by one or more registered brokers or dealers that are licensed under the laws of such jurisdiction. 2 INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF BUSINESS RESOURCE GROUP The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated July 14, 2000, and the related Letter of Transmittal, in connection with the offer by BRG Acquisition Corporation, a Delaware corporation (the "Purchaser") which is owned by BR Holdings LLC, a Delaware limited liability company (the "Parent"), a subsidiary of Three Cities Fund III, L.P., a Delaware limited liability company, to purchase all outstanding shares of common stock, par value $.01 per share (the "Shares"), of Business Resource Group, a California corporation, which are not already owned by the Purchaser or the Parent. This will instruct you to tender to the Purchaser the number of Shares indicated below (or if no number is indicated below, all the Shares) which you are holding for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer. Number of Shares to Be Tendered: _______________________________________ Date: _________________________________ SIGN HERE ______________________________________________ Signature(s) ______________________________________________ Print Name(s) ______________________________________________ Print Address(es) ______________________________________________ Area Code and Telephone Numbers ______________________________________________ Taxpayer Identification or Social Security Number(s) 3 EX-99.(A)(6) 7 0007.txt GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER--Social Security numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e., 000-000000. The table below will help determine the number to give the payer.
- ------------------------------------------------------------------ GIVE THE SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT: NUMBER OF-- - ------------------------------------------------------------------ 1. An individual's account The individual 2. Two or more individuals The actual owner of the (joint account) account or, if combined funds, the first individual on the account (1) 3. Husband and wife The actual owner of the (joint account) account or, if joint funds, either person (1) 4. Custodian account of a minor The minor (2) (Uniform Gift to Minors Act) 5. Adult and minor The adult or, if the minor is (joint account) the only contributor, the minor (1) 6. Account in the name of The ward, minor or guardian or committee for a incompetent person (3) designated ward, minor or incompetent person 7. a. The usual revocable The grantor-trustee (1) savings trust account (grantor is also trustee) b. So-called trust account The actual owner (1) that is not a legal or valid trust under state law 8. Sole proprietorship account The owner (4) - ------------------------------------------------------------------ - ------------------------------------------------------------------ GIVE THE SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT: NUMBER OF-- - ------------------------------------------------------------------ 9. A valid, estate, or pension The legal entity (do not trust furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.) (5) 10. Corporate account The corporation 11. Religious, charitable or The organization educational organization account 12. Partnership account held in The partnership the name of the partnership 13. Association, club, or other The organization tax-exempt organization 14. A broker or registered The broker or nominee nominee 15. Account with the Department The public entity of Agriculture in the name of a public entity (such as a state or local government, school district or prison) that receives agricultural program payments - ------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number. (4) Show the name of the owner, or the business or "doing business as" name. Either the social security number or the employer identification number of the owner may be used. (5) List first and circle the name of the legal trust, estate or pension trust. NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 OBTAINING A NUMBER If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from backup withholding on ALL payments include the following: 1. A corporation. 2. A financial institution. 3. An organization exempt from tax under section 501(a), or an individual retirement plan. 4. The United States or any agency or instrumentality thereof. 5. A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. 6. A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. 7. An international organization or any agency or instrumentality thereof. 8. A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S. 9. A real estate investment trust. 10. A common trust fund operated by a bank under section 584(a). 11. An exempt charitable remainder trust, or a non-exempt trust described in section 4947(a)(1). 12. An entity registered at all times under the Investment Company Act of 1940. 13. A foreign central bank of issue. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: o Payments to nonresident aliens subject to withholding under section 1441. o Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner. o Payments of patronage dividends where the amount received is not paid in money. o Payments made by certain foreign organizations. o Payments made to a nominee. Payments of interest not generally subject to backup withholding include the following: o Payments of interest on obligations issued by individuals. NOTE: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. o Payments of tax-exempt interest (including exempt-interest dividends under section 852). o Payments described in section 6049(b)(5) to nonresident aliens. o Payments on tax-free covenants bonds under section 1451. o Payments made by certain foreign organizations. o Payments made to a nominee. EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE FORM W-9 TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER, IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. Certain payments other than interest, dividends, and patronage dividends that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under sections 6041, 6041A(a), 6045, and 6050A. PRIVACY ACT NOTICES--Section 6109 requires most recipients of dividend interest, or other payments to give taxpayer identification numbers to payers who must report the payments to IRS. IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBERS.--If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION, CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. EX-99.(A)(7) 8 0008.txt FORM OF SUMMARY ADVERTISEMENT DATED JULY 12, 2000 This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares. The Offer is made solely by the Offer to Purchase dated July 14, 2000, and their related Letter of Transmittal and is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares in any jurisdiction in which the making or acceptance of the Offer would not be in compliance with the laws of such jurisdiction. Notice of Offer to Purchase for Cash All Outstanding Shares of Common Stock of Business Resource Group at $9.25 Net Per Share by BRG Acquisition Corporation which is indirectly owned by BR Holdings LLC BRG Acquisition Corporation, a Delaware corporation (the "Purchaser"), which is indirectly owned by BR Holdings LLC, a Delaware limited liability company, is offering to purchase for cash all outstanding shares of common stock, par value $0.01 per share (the "Common Shares"), of Business Resource Group, a Delaware corporation (the "Company"), at a price (the "Offer Price") of $9.25 per Share, net to the seller in cash without interest, on the terms and subject to the conditions set forth in an Offer to Purchase, dated July 11, 2000 (the "Offer to Purchase") and in the related Letter of Transmittal (which terms and conditions constitute the "Offer Documents"). ---------------------------------------------------------------------- THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON FRIDAY, AUGUST 11, 2000, UNLESS THE OFFER IS EXTENDED. ---------------------------------------------------------------------- The Offer is conditioned on, among other things, at least 51% of the outstanding Common Shares the Purchaser and its parent do not own or have agreements to purchase being properly tendered and not withdrawn. The Purchaser may not waive this condition without the Company's consent. The Offer is also conditioned on a sufficient number of shares being properly tendered and not withdrawn so that, when those shares are accepted, the Purchaser and its parent will own at least 53.5% of the outstanding common stock. The Offer is not conditioned on the ability of the Purchaser to obtain financing (but it is subject to some other conditions). The Offer is being made pursuant to a Plan and Agreement Merger, dated July 7, 2000 (the "Merger Agreement"), pursuant to which, the Purchaser will be merged into the Company in a transaction (the "Merger") (which Merger may be preceded by the re-incorporation of the Company in the State of Delaware), in which the Company will become wholly owned by the Purchaser's stockholders, and the Shares not owned by the Purchaser will be converted into the right to receive cash equal to the per share amount which is paid for Shares tendered in response to the Offer (which will be at least $9.25 per share). THE BOARD OF DIRECTORS OF THE COMPANY, BASED ON A RECOMMENDATION OF A SPECIAL COMMITTEE, (1) HAS APPROVED THE OFFER AND THE MERGER WHICH MAY FOLLOW THE OFFER, (2) HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S SHAREHOLDERS, AND (3) RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES IN RESPONSE TO THE OFFER. The Offer will expire at 5:00 p.m. on August 11, 2000, unless it is extended. The Purchaser has the right to extend the Offer to not later than September 8, 2000. It will require the Company's consent to extend the Offer beyond that date. Shares tendered in response to the Offer may be withdrawn at any time prior to the Expiration Time and, unless they have been accepted for payment by the Purchaser, may also be withdrawn at any time after August 8, 2000. If the Offer is extended for a period following the Expiration Time, Shares tendered the subsequent period may not be withdrawn and will be accepted for payment promptly after they are received. For purposes of the Offer, the Purchaser will be deemed to accept for payment, and thereby purchase, all the Shares which are properly tendered and not withdrawn when and if the Purchaser gives oral or written notice to American Stock Transfer and Trust Company (the "Depositary") that the Purchaser is accepting those Shares for payment. Payment for Shares purchased pursuant to the Offer will be made by deposit of the purchase price with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving the payment from the Purchaser and transmitting payment to tendering stockholders whose Shares have been accepted for payment. In all cases, payment for Shares purchased pursuant to the Offer will be made only after timely receipt by the Depositary of (a) certificates representing shares (or a timely Book-Entry Confirmation of transfer of Shares into an account maintained by the Depositary at The Depository Trust Company, pursuant to the procedures set forth in Section 9 of the Offer to Purchase, (b) a Letter of Transmittal (or a facsimile of one), properly completed and duly executed, with any required signature guarantees or an Agent's Message (as defined in the Offer to Purchase), in connection with a book-entry delivery, and (c) any other documents required by the Letter of Transmittal. Accordingly, payment may not be made to all tendering stockholders at the same time, depending upon when certificates or Book-Entry Confirmations are actually received by the Depositary. Under no circumstances will interest be paid on the purchase price of the Shares, regardless of any extension of the Offer or any delay in paying for Shares. Questions and requests for assistance may be directed to the Information Agent as named below. Requests for copies of the Offer to Purchase and the related Letter of Transmittal and all other tender offer materials may be directed to the Information Agent, and copies will be furnished promptly at the Purchaser's expense. The Purchaser will not pay any fees or commissions to any broker or dealer or any other person (other than the Information Agent) for soliciting tenders of Shares pursuant to the Offer. The Information Agent for the Offer is: D.F. King & Co., Inc. 77 Water Street New York, New York 10005-4495 Banks and Brokers Call Collect: (212) 269-5550 All Others Call Toll Free: (800) 758-5378 July 12, 2000 EX-99.(C)(7) 9 0009.txt FAIRNESS OPINION Private Client Group Business Advisory Services Sears Tower 233 South Wacker Drive [GRAPHIC OMITTED] Suite 5620 Chicago, IL 60606 (312) 928-8800 FAX (312) 928-1987 FAX (312) 928-8844 July 6, 2000 Special Committee of the Board of Directors (the "Special Committee") Business Resource Group 2150 North First Street, Suite 101 San Jose, CA 95131 Members of the Special Committee: Business Resource Group (the "Company") and BRG Acquisition Corporation (the "Acquiror"), a subsidiary of BR Holdings LLC, which is a subsidiary of Three Cities Research Corp. ("Three Cities"), propose to enter into a Plan and Agreement of Merger (the "Merger Agreement") pursuant to which (i) the Acquiror would commence a tender offer (the "Tender Offer") for all outstanding shares of the Company's common stock, par value $0.01 per share (the "Common Shares"), for $9.25 per share, net to the seller in cash (the "Consideration") and (ii) the Company, or the Company's successor, would be merged into the Acquiror in a merger (the "Merger"), in which any Common Share not acquired in the Tender Offer, other than certain Common Shares held by management, held in treasury, held by the Acquiror or held by any direct or indirect subsidiary of the Company or as to which dissenter's rights have been perfected, would be converted into the right to receive the Consideration. The Tender Offer and the Merger, taken together, are referred to as the "Transaction." You have asked us whether, in our opinion, the Consideration to be received by the holders of the Common Shares, other than members of the management of the Company who are participating in the Transaction with Three Cities (the "Participating Holders"), pursuant to the Merger Agreement is fair from a financial point of view to such holders, other than the Participating Holders. In arriving at the opinion set forth below, we have, among other things: (1) Reviewed certain publicly available business and financial information relating to the Company that we deemed to be relevant; (2) Reviewed certain information, including financial forecasts, relating to the business, earnings, cash flow, assets, liabilities and prospects of the Company furnished to us by the Company; (3) Conducted discussions with members of the senior management and representatives of the Company concerning the matters described in clauses 1 and 2 above; MERRILL LYNCH BUSINESS ADVISORY SERVICES Business Resource Group 07/06/00 Page 2 (4) Reviewed the market prices and valuation multiples of certain publicly traded companies that we deemed to be relevant; (5) Reviewed the results of operations of the Company and compared them with those of certain publicly traded companies that we deemed to be relevant; (6) Compared the proposed financial terms of the Transaction with the financial terms of certain other transactions that we deemed to be relevant; (7) Reviewed a draft dated July 5, 2000 of the Merger Agreement; and (8) Reviewed such other financial studies and analyses and took into account such other matters as we deemed necessary, including our assessment of general economic, market and monetary conditions. In preparing our opinion, we have assumed and relied on the accuracy and completeness of all information supplied or otherwise made available to us, discussed with or reviewed by or for us, or publicly available, and we have not assumed any responsibility for independently verifying such information or undertaken an independent evaluation or appraisal of any of the assets or liabilities of the Company or been furnished with any such evaluation or appraisal. In addition, we have not assumed any obligation to conduct any physical inspection of the properties or facilities of the Company. With respect to the financial forecast information furnished to or discussed with us by the Company, we have assumed that such information has been reasonably prepared and reflects the best currently available estimates and judgment of Company's management as to the expected future financial performance of the Company. We have also assumed that the final form of the Merger Agreement will be substantially similar to the last draft reviewed by us. Our opinion is necessarily based upon market, economic and other conditions as they exist and can be evaluated on, and on the information made available to us as of, the date hereof. In connection with the preparation of this opinion, we have not been authorized by the Company or the Special Committee to solicit, nor have we solicted, third-party indications of interest for the acquisition of all or any part of the Company. In addition, the Company has agreed to indemnify us for certain liabilities arising out of our engagement. We have also in the past, and may continue in the future, provide financial advisor services to Three Cities. In the ordinary course of our business, we may actively trade the Common Shares and other 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 such securities. This opinion is for the sole use and benefit of the Special Committee. Our opinion does not address the merits of the underlying decision by the Company to engage in the Transaction and does not constitute a recommendation to any holder of the Common Shares as to whether to tender such Common Shares in the Tender Offer or as to how such holder should vote on the proposed Merger or any matter related thereto. We are not expressing any opinion herein as to the prices at which the Common Shares will trade following the announcement of the Transaction. MERRILL LYNCH BUSINESS ADVISORY SERVICES Business Resource Group 07/06/00 Page 3 On the basis of, and subject to the foregoing, we are of the opinion that, as of the date hereof, the Consideration to be received by the holders of the Common Shares in the Transaction, other than the Participating Holders, is fair from a financial point of view to the holders of Common Shares, other than the Participating Holders. Very truly yours, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: ------------------------------------ Kit A. Kamholz Vice President Merrill Lynch Business Advisory Services EX-99.(D)(1) 10 0010.txt PLAN AND AGREEMENT OF MERGER PLAN AND AGREEMENT OF MERGER DATED JULY 7, 2000 BETWEEN BUSINESS RESOURCE GROUP AND BRG ACQUISITION CORPORATION PLAN AND AGREEMENT OF MERGER This is a Plan and Agreement of Merger (the "Agreement") dated as of July 7, 2000 between Business Resource Group (the "Company"), a California corporation, and BRG Acquisition Corporation ("Acquisition"), a Delaware corporation. ARTICLE 1 THE TENDER OFFER 1.1 The Tender Offer. (a) On the date of this Agreement, BR Holdings LLC ("Holdings"), the indirect sole stockholder of Acquisition, is entering into an agreement to acquire 319,168 shares of common stock of the Company ("Common Stock"). Not later than the first business day after the date of this Agreement, Acquisition will make a public announcement of an offer (the "Tender Offer") to purchase any and all of the outstanding Common Stock, other than these 319,168 shares, at a price (the "Tender Offer Price") of $9.25 per share, net to the sellers in cash. (b) Within five business days after the public announcement of the Tender Offer, Acquisition will file with the Securities and Exchange Commission ("SEC") a Tender Offer Statement on Schedule TO with respect to the Tender Offer (together with any amendments or supplements, the "Schedule TO"), including forms of an offer to purchase, a letter of transmittal and a summary advertisement (the Schedule TO and the documents included in it by which the Tender Offer will be made, as they may be supplemented or amended, being the "Offer Documents"). Promptly after that, Acquisition will communicate the Tender Offer to the record holders and beneficial owners of the Common Stock. Each of Acquisition and the Company will promptly correct any information provided by it for use in the Offer Documents if and to the extent that information becomes incomplete or inaccurate in any material respect, and Acquisition will supplement or amend the Offer Documents to the extent required by the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the rules under it, file 1 the amended or supplemented Offer Documents with the SEC and, if required, disseminate the amended Offer Documents to the Company's stockholders. The Company and its counsel, and a special committee (the "Special Committee") of the Company's Board of Directors none of the members of which has a direct or indirect ownership interest in Acquisition or Holdings or is a shareholder in, employee of, or otherwise an affiliate of Three Cities Research, Inc. (or any investment fund managed by it) and counsel for the Special Committee will be given a reasonable opportunity to review the Offer Documents and any amendments or supplements to them before they are filed with the SEC or disseminated to the Company's stockholders. (c) The day on which the Tender Offer expires (the "Expiration Date") will not be earlier than 20 business days, and will not be later than 25 business days, after the day on which the Schedule TO is filed with the SEC, except that if the number of shares tendered in response to the Tender Offer by the scheduled Expiration Date plus the number of shares Acquisition or Holdings owns or has agreements to acquire by that date is less than 90% of the shares of Common Stock which are outstanding on that date, Acquisition may extend the Expiration Date to a later date which is not more than 60 days after the Schedule TO is filed with the SEC. (d) Subject to the conditions to the Tender Offer set forth on Exhibit 1.1-D (the "Offer Conditions") and the other conditions set forth in this Agreement, Acquisition will, as promptly as practicable after the Expiration Date (and in any event in compliance with Rule 14e-1(c) under the Exchange Act), accept for payment and pay for all the shares of Common Stock which are properly tendered in response to the Tender Offer and not withdrawn on or before the Expiration Date. The obligation of Acquisition to accept for payment and pay for shares which are properly tendered and not withdrawn on or before the Expiration Date will not be subject to any conditions other than those set forth on Exhibit 1.1-D. Acquisition may extend the Tender Offer for a subsequent offer period, after the Expiration Date, as permitted by Rule 14d-11 2 under the Exchange Act. Acquisition will not, without the prior consent of the Company, (i) waive the condition in paragraph (a) on Exhibit 1.1-D (the "Minimum Condition"), (ii) decrease the Tender Offer Price below that described in subparagraph (a), (iii) decrease the number of shares being solicited in the Tender Offer, (iv) change the form of consideration payable in the Tender Offer, (v) modify or add to the conditions set forth on Exhibit 1.1-D or (vi) extend the Expiration Date to a day which is more than 60 days after the day on which the Schedule TO is filed with the SEC, except that (A) if the waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act") have not expired or been terminated at least three days before the Expiration Date, the Expiration Date may be extended until 10 business days after the day on which the waiting periods under the HSR Act expire or are terminated, (B) if the Tender Offer is modified to increase the Tender Offer Price or in any other manner permitted by this Agreement, the Expiration Date may be extended until 10 business days after the day on which Acquisition makes a public announcement of the modification, (C) if anyone other than Acquisition makes a tender offer for Common Stock before the Tender Offer expires, Acquisition may extend the Expiration Date until not more than 10 business days after the other tender offer expires, and (D) if Acquisition is prevented by an order of a court or other governmental agency from accepting shares which are tendered in response to the Tender Offer, Acquisition may extend the Expiration Date until 10 business days after Acquisition is able to accept shares without violating any order of any court or other governmental agency. 1.2 Company Action. (a) The Company approves of and consents to the Tender Offer and represents and warrants that its Board of Directors (the "Board"), acting on the recommendation of the Special Committee, has (i) determined that this Agreement and the transactions contemplated by it are fair to and in the best interests of the Company and its stockholders (other than Acquisition and Holdings), (ii) approved this Agreement and the transactions contemplated by it, including Acquisition's acquiring 319,168 shares of Common 3 Stock as described in Paragraph 1.1(a), the Tender Offer and the Merger (described in Article 2), and (iii) resolved to recommend that the Company's stockholders accept the Tender Offer, tender their shares in response to the Tender Offer, and, if approval of the Company's stockholders is required by applicable law in order to consummate the Merger, adopt and approve this Agreement and the Merger. Simultaneously with the execution of this Agreement, each of the directors and executive officers of the Company has agreed to tender and sell his or her shares of Common Stock in response to the Tender Offer, except that directors and executive officers whose sales of their shares in response to the Tender Offer might result in liability under Section 16(b) of the Exchange Act have agreed that if they do not tender and sell their shares in response to the Tender Offer, they will vote their shares in favor of the Merger. Notwithstanding anything contained in this subparagraph (a) or elsewhere in this Agreement, if the Board or the Special Committee, based upon written advice from its respective counsel, determines in good faith to withdraw, modify or amend the recommendation, because the failure to do so could reasonably be expected to be a breach of the directors' fiduciary duties under applicable law, neither that withdrawal, modification or amendment, nor any announcement of it (or of an Acquisition Proposal, as that term is defined below), will constitute a breach of this Agreement. (b) The Company will file with the SEC, promptly after Acquisition files the Schedule TO, a Solicitation/Recommendation Statement on Schedule 14D-9 (together with any amendments or supplements, the "Schedule 14D-9") containing the recommendations described in subparagraph (a) (except to the extent that recommendation may be withdrawn, modified or amended under the circumstances described in subparagraph (a)) and will disseminate the Schedule 14D-9 as required by Rule 14d-9 under the Exchange Act. The Company and Acquisition each agrees to correct promptly any information provided by it for use in the Schedule 14D-9 if and to the extent that information is or becomes incomplete or 4 inaccurate in any material respect and the Company will file any corrected Schedule 14D-9 with the SEC and disseminate the corrected Schedule 14D-9 to the Company's stockholders to the extent required by the Exchange Act or the rules under it. (c) In connection with the Tender Offer, the Company will (or will cause its transfer agent to) promptly furnish Acquisition with mailing labels, security position listings and any other available listing or computer files containing the names and addresses of the record holders or beneficial owners of shares of Common Stock as of a recent date and the Company will furnish Acquisition with such additional information and assistance (including, without limitation, updated lists of stockholders, mailing labels and lists of securities positions) as Acquisition or its representatives may reasonably request in order to communicate the Tender Offer to the record holders and beneficial owners of the Common Stock. Subject to the requirements of applicable law, Acquisition will hold in confidence the information contained in any such labels, listings or files, and will use that information only in connection with the Tender Offer and the Merger. If this Agreement is terminated, Acquisition will return to the Company the originals and all copies of that information which are in Acquisition's possession. ARTICLE 2 THE MERGER 2.1 Agreement to Effect Merger. If (a) Acquisition purchases the shares of Common Stock which are properly tendered in response to the Tender Offer and not withdrawn, and (b) the conditions to the merger of the Company into Acquisition (the "Merger") set forth in Paragraph 6.1 are satisfied or waived, Acquisition will take all steps in its power to cause the Company or the Reincorporated Company to be merged into Acquisition on the terms, and with the effects, set forth in Paragraphs 2.2 through 2.11, including voting, and causing its affiliates to vote, all the Common Stock beneficially owned by any of them (i) in favor of approving the principal terms of the Merger or (ii) under the circumstances described in Paragraph 2.12, in 5 favor of approving the principal terms of the Reincorporation Merger (described in Paragraph 2.12) set forth in Paragraph 2.12, and in favor of adoption of this Agreement and approval of the merger of the Reincorporated Company (described in Paragraph 2.12) into Acquisition. 2.2 The Merger. If the Merger becomes effective, at the Effective Time (described in Paragraph 3.3), the Company will be merged into Acquisition, which will be the surviving corporation of the Merger (the "Surviving Corporation"). Except as specifically provided in this Agreement, when the Merger becomes effective, (i) the real and personal property, other assets, rights, privileges, immunities, powers, purposes and franchises Acquisition will continue unaffected and unimpaired by the Merger, (ii) the separate existence of the Company will terminate, and the Company's real and personal property, other assets, rights, privileges, immunities, powers, purposes and franchises will be merged into the Surviving Corporation, and (iii) the Merger will have the other effects specified in Section 259 of the Delaware General Corporation Law (the "DGCL") and (unless the Merger is of the Reincorporated Company into Acquisition) Section 1107 of the California General Corporation Law (the "CGCL"). 2.3 Certificate of Incorporation. From the Effective Time until subsequently amended, the Certificate of Incorporation of Acquisition immediately before the Effective Time will be the Certificate of Incorporation of the Surviving Corporation, except that it will provide that (i) the name of the Surviving Corporation will be "Business Products Group, Inc.". 2.4 By-Laws. At the Effective Time, the By-Laws of Acquisition immediately before the Effective Time will be the By-Laws of the Surviving Corporation, until they are altered, amended or repealed. 2.5 Directors. The directors of Acquisition immediately before the Effective Time will be the directors of the Surviving Corporation after the Effective Time and will hold office in accordance with the By-Laws of the Surviving Corporation. 6 2.6 Officers. The officers of the Company immediately before the Effective Time will be the officers of the Surviving Corporation after the Effective Time and will hold office at the pleasure of the Board of Directors of the Surviving Corporation. 2.7 Stock of the Company. 1. Except as provided in subparagraph (b), at the Effective Time each share of Common Stock which is outstanding immediately before the Effective Time will be converted into and become the right to receive a sum in cash equal to the Tender Offer Price (the "Merger Price"). (b) Each share of Common Stock held in the treasury of the Company, and each share of Common Stock held by Acquisition, or by any direct or indirect subsidiary of the Company, immediately before the Effective Time will, at the Effective Time, be cancelled and cease to exist and no payment will be made with respect to any of those shares. 2.8 Stock of Acquisition. At the Effective Time, each share of common stock, par value $1.00 per share, of Acquisition ("Acquisition common stock") which is outstanding immediately before the Effective Time will be converted into and become one share of common stock of the Surviving Corporation ("Surviving Corporation Common Stock"). At the Effective Time, a certificate which represented Acquisition common stock will automatically become and be a certificate representing the number of shares of Surviving Corporation Common Stock into which the Acquisition common stock represented by the certificate was converted. 2.9 Dissenting Shares. (a) Notwithstanding any provision of this Agreement to the contrary, if holders of Common Stock are entitled under Section 1300 of the CGCL to demand payment of the fair value of their shares of Common Stock, the Common Stock that is outstanding immediately prior to the Effective Time which is held by stockholders who have complied with Chapter 13 of the CGCL (including making a timely demand for appraisal and not voting in favor of or consenting to the Merger) will not be converted into the right to receive the Merger Price. Instead, if the Merger takes place, the Surviving Corporation will pay the holders of those shares the fair value of the shares determined as provided in Chapter 13 of the CGCL. Shares held by stockholders who fail to perfect, or who otherwise properly withdraw or lose, their rights to receive the fair value of their shares determined under Chapter 13 of the CGCL will be deemed to have been converted, at the later of the Effective Time or the time they withdraw or lose their rights to receive the 7 fair value of their shares, into the right to receive the Merger Price, without any interest. (b) The Company will promptly give Acquisition (i) notice of any demands for appraisal received by the Company, any withdrawals of any such demands, and any other communications required by, or relating to, Chapter 13 of the CGCL which the Company receives and (ii) the opportunity to direct all negotiations and proceedings with respect to demands for appraisal under Chapter 13 of the CGCL. The Company will not, except with the prior written consent of Acquisition, make any payment with respect to any demand for payment of the fair value of shares or offer to settle or settle any such demand. 2.10 Payment for Shares. (a) Prior to the Effective Time, Acquisition will designate a bank or trust company to act as Paying Agent in connection with the Merger (the "Paying Agent"). At, or immediately before, the Effective Time, Acquisition will provide the Paying Agent with the funds necessary to make the payments contemplated by Paragraph 2.7. Until used for that purpose, the funds will be invested by the Paying Agent, as directed by the Surviving Corporation, in obligations of or guaranteed by the United States of America or obligations of an agency of the United States of America which are backed by the full faith and credit of the United States of America, in commercial paper obligations rated A-1 or P-1 or better by Moody's Investors Services Inc. or Standard & Poors' Corporation, or in deposit accounts, certificates of deposit or banker's acceptances of, repurchase or reverse repurchase agreements with, or Eurodollar time deposits purchased from, commercial banks with capital, surplus and undivided 8 profits aggregating more than $200 million (based on the most recent financial statements of the banks which are then publicly available at the SEC or otherwise). (b) Promptly after the Effective Time, the Surviving Corporation will cause the Paying Agent to mail to each person who was a record holder of Common Stock at the Effective Time, a form of letter of transmittal for use in effecting the surrender of stock certificates representing Common Stock ("Certificates") in order to receive payment of the Merger Price. When the Paying Agent receives a Certificate, together with a properly completed and executed letter of transmittal and any other required documents, the Paying Agent will pay to the holder of the shares represented by the Certificate, or as otherwise directed in the letter of transmittal, the Merger Price with regard to those shares, and the Certificate will be cancelled. No interest will be paid or accrued on the cash payable upon the surrender of Certificates. If payment is to be made to a person other than the person in whose name a surrendered Certificate is registered, the surrendered Certificate must be properly endorsed or otherwise be in proper form for transfer, and the person who surrenders the Certificate must provide funds for payment of any transfer or other taxes required by reason of the payment to a person other than the registered holder of the surrendered Certificate or establish to the satisfaction of the Surviving Corporation that the tax has been paid. After the Effective Time, a Certificate which has not been surrendered will represent only the right to receive the Merger Price, without any interest. (c) If a Certificate has been lost, stolen or destroyed, the Surviving Corporation will accept an affidavit and indemnification reasonably satisfactory to it instead of the Certificate. (d) At any time which is more than six months after the Effective Time, the Surviving Corporation may require the Paying Agent to deliver to it any funds which had been made available to the Paying Agent and have not been disbursed to holders of shares of Common Stock (including, without limitation, interest and other income received by the Paying 9 Agent in respect of the funds made available to it), and after the funds have been delivered to the Surviving Corporation, former stockholders of the Company must look to the Surviving Corporation for payment of the Merger Price upon surrender of the Certificates held by them. Neither the Surviving Corporation nor the Paying Agent will be liable to any former stockholder of the Company for any Merger consideration which is delivered to a public official pursuant to any abandoned property, escheat or similar law. (e) After the Effective Time, the Surviving Corporation will not record any transfers of shares of Common Stock on the stock transfer books of the Company or the Surviving Corporation, and the stock ledger of the Company will be closed. If, after the Effective Time, Certificates are presented for transfer, they will be cancelled and treated as having been surrendered for the Merger Price. 2.11 Options and Warrants. At the Effective Time, each option or warrant issued by the Company which is outstanding at that time will become the right to receive a sum in cash equal to (a) the amount, if any, by which the Merger Price exceeds the per share exercise price of the option or warrant, times (b) the number of shares of Common Stock issuable upon exercise of the option or warrant in full. In order to receive the amount to which a holder of an option or warrant is entitled under this Paragraph, the holder must deliver to the Company (i) any certificate or option agreement relating to the option or warrant and (ii) a document in which the holder acknowledges that the payment the holder is receiving is in full satisfaction of any rights the holder may have under or with regard to the option or warrant. 2.12 Reincorporation in Delaware. 1. If (i) Acquisition purchases all the shares of Common Stock which are properly tendered in response to the Tender Offer and not withdrawn, (ii) the conditions to the Merger set forth in Paragraph 6.1 are satisfied or waived, but (iii) the number of shares of Common Stock owned by Acquisition or Holdings following the purchase of 10 all the shares of Common Stock which are properly tendered in response to the Tender Offer and not withdrawn (including shares purchased during any subsequent offer period after the Expiration Date) is more than 53.5%, but not more than 90%, of the total number of shares of Common Stock which are outstanding when the purchase of the tendered shares is completed, instead of the Company's being merged into Acquisition, (x) the Company will cause a corporation to be formed under the DGCL (the "Delaware Company"), which will be a wholly owned subsidiary of the Company until the Company is merged into it, and (y) the Company will cause its stockholders to vote upon a proposal that the Company be merged into the Delaware Company (the "Reincorporation Merger") on the terms and with the effects set forth in subparagraphs (b) through (g). (b) If the Reincorporation Merger becomes effective, at the effective time of the Reincorporation Merger, the Company will be merged into the Delaware Company, which will be the surviving corporation of the Reincorporation Merger (the "Reincorporated Company"). When the Reincorporation Merger becomes effective, (i) the real and personal property, other assets, rights, privileges, immunities, powers, purposes and franchises of the Delaware Company will continue unaffected and unimpaired by the Reincorporation Merger, (ii) the separate existence of the Company will terminate, and the Company's real and personal property, other assets, rights, privileges, immunities, powers, purposes and franchises will be merged into the Reincorporated Company, and (iii) the Reincorporation Merger will have the other effects, specified in Section 259 of the DGCL and Section 1107 of the CGCL. (c) At the effective time of the Reincorporation Merger, the Certificate of Incorporation of the Delaware Company immediately before that effective time (which will be identical in all respects with the Certificate of Incorporation 11 of the Company, except to the extent of differences required in order to conform with the DGCL) will be the Certificate of Incorporation of the Reincorporated Company, except that it will provide that the name of the Reincorporated Company will be "Business Resource Group, Inc." (d) The directors of the Delaware Company immediately before the effective time of the Reincorporation Merger (a majority of whom will be persons designated by Acquisition, and which will include all the members of the Special Committee) will be the directors of the Reincorporated Company after the effective time of the Reincorporation Merger and will hold office in accordance with the By-Laws of the Company until the Effective Time. (e) The officers of the Company immediately before the effective time of the Reincorporation Merger will be the officers of the Reincorporated Company after the effective time of the Reincorporation Merger and will hold office at the pleasure of the Board of Directors of the Reincorporated Company or until the Effective Time. (f) At the effective time of the Reincorporation Merger, each share of Common Stock which is outstanding immediately before the effective time of the Reincorporation Merger (including shares of Common Stock held in the treasury of the Company, held by Acquisition or held by direct or indirect subsidiaries of the Company) will be converted into and become one share of common stock of the Reincorporated Company, and, at the effective time of the Reincorporation Merger, a certificate which represents a specified number of shares of Common Stock immediately before the Reincorporation Merger will automatically become a certificate which represents the same number of shares of common stock of the Reincorporated Company. (g) At the effective time of the Reincorporation Merger, each option or warrant issued by the Company which is outstanding at that time will become an option or warrant entitling the holder to purchase the same number of shares of stock of the Reincorporated Company, for the same price, and on the same other terms, as those provided in the option or 12 warrant with regard to the stock of the Company to which it related immediately before the effective time of the Reincorporation Merger. (h) If the Reincorporation Merger takes place, all the provisions of Paragraphs 2.2 through 2.11 will apply to the merger of the Reincorporated Company into Acquisition to the same extent, and with the same effect, as they would apply to the merger of the Company into Acquisition if the Reincorporation Merger did not take place, and after the Reincorporation Merger (i) all references in Paragraphs 2.2 through 2.11 to the Company will be deemed to refer to the Reincorporated Company, (ii) all references in Paragraphs 2.2 through 2.11 and in Article 3 to Common Stock will be deemed to refer to common stock of the Reincorporated Company, (iii) the term "Merger" as used in Paragraphs 2.2 through 2.11 and elsewhere in this Agreement will (unless the context requires otherwise) refer to the merger of the Reorganized Company into Acquisition and (iv) all references in Paragraph 2.9 to Section 1300 or Chapter 13 of the CGCL will be deemed to refer to Section 262 of the DGCL. 2.13 Stockholders Meeting. (a) If the conditions described in Paragraph 2.1 are satisfied, and if approval by the Company's stockholders is required by applicable law in order to consummate the Merger (or, if applicable, the Reincorporation Merger and then the Merger), the Company will: (i) hold a special meeting of its stockholders (the "Stockholders Meeting") as soon as practicable following the Expiration Date for the purpose of approving the principal terms of the Merger (or, if applicable, approving the principal terms of the Reincorporation Merger and then adopting this Agreement and approving the Merger); (ii) as promptly as practicable after the Expiration Date, (w) file with the SEC a proxy statement (the "Proxy Statement") and other proxy soliciting materials relating to the Stockholders Meeting, (x) respond promptly to any comments made by the staff 13 of the SEC with respect to the Proxy Statement or other proxy soliciting materials, (y) cause the Proxy Statement to be mailed to its stockholders at the earliest practicable time following the Expiration Date, and (z) in all other respects, use its best efforts to cause its stockholders to approve the principal terms of the Merger (or, if applicable, to approve the principal terms of the Reincorporation Merger and then to adopt this Agreement and approve the Merger); (iii) include in the Proxy Statement the recommendation of the Board that the stockholders of the Company vote in favor of approval of the principal terms of the Merger (or, if applicable, approval of the principal terms of the Reincorporation Merger and then adoption of this Agreement and approval of the Merger), unless the Board, based upon written advice from its counsel, determines in good faith that the failure to amend or withdraw that recommendation could reasonably be expected to be a breach of the directors' fiduciary duties under applicable law. (b) If, under the circumstances described in Paragraph 2.12, (i) the Reincorporation Merger is required to take place before the Merger, (ii) approval by the Company's stockholders is required by applicable law in order to consummate each of the Reincorporation Merger and the Merger, and, because of requirements of applicable law, the approval of the Merger by the stockholders of the Reincorporated Company cannot take place at the same meeting as the approval of the Reincorporation Merger by the stockholders of the Company, (x) the Stockholders Meeting will be held for the purpose of voting on approval of the principal terms of the Reincorporation Merger, and then either (y) Acquisition will execute a stockholders consent in which it adopts this Agreement and approves the Merger, or (z) a meeting of the stockholders of the Reincorporated Company's stockholders will be held for the purpose of their adopting this Agreement and approving the Merger. If adoption of this Agreement and approval of the Merger by the stockholders of the Reincorporated Company is to be effected by a stockholder's consent, the provisions of subparagraph (b) will apply to an 14 information statement relating to the stockholders consent (if one is required) to the same extent they apply to the Proxy Statement. If adoption of this Agreement and approval of the Merger by the stockholders of the Reincorporated Company is to be effected by a vote at a stockholders meeting, the provisions of subparagraph (b) will apply to a proxy statement and other proxy soliciting materials relating to that stockholders meeting to the same extent they relate to the proxy statement and other proxy soliciting materials relating to the Stockholders Meeting. ARTICLE 3 EFFECTIVE TIME OF MERGER 3.1 Date of the Merger. The day on which the Merger is to take place (the "Merger Date") will be (a) the day on which the Merger is approved by the holders of a majority of the outstanding shares of Common Stock or (b) if stockholder approval of neither the Reincorporation Merger nor the Merger is required by applicable law or by the rules of the Nasdaq National Market (if they are applicable), a day designated by Acquisition which will be not later than 10 days after the Expiration Date. The Merger Date may be changed with the consent of the Company (approved by the Special Committee) and Acquisition. 3.2 Certificates to Effect the Merger. Not later than 3:00 P.M., New York City time, on the day before the Merger Date, (a) Acquisition and the Company will each execute a certificate of merger (the "Certificate of Merger") which complies with applicable provisions of Delaware law and (unless the Merger is of the Reincorporated Company into Acquisition) a certified copy of this Agreement and deliver them to Clifford Chance Rogers & Wells LLP for filing with the Secretary of State of Delaware and (unless the Merger is of the Reincorporated Company into Acquisition) the Secretary of State of California. Clifford Chance Rogers & Wells LLP will be instructed that, if it is notified on the Merger Date that all the conditions in Article 6 have been fulfilled or waived, it is to cause the Certificate of Merger to be filed with the Secretary of State of Delaware and (unless the Merger is of the Reincorporated Company into 15 Acquisition) to cause the certified copy of this agreement to be filed with the Secretary of State of California on the Merger Date or as soon after that date as is practicable. 3.3 Effective Time of the Merger. The Merger will become effective at 11:59 P.M., Wilmington, Delaware time, on the later of the day when the Certificate of Merger is filed with the Secretary of State of Delaware and (unless the Merger is of the Reincorporated Company into Acquisition) the day when the certified copy of this Agreement is filed with the Secretary of State of California (that being the "Effective Time"). ARTICLE 4 REPRESENTATIONS AND WARRANTIES 4.1 Representations and Warranties of Acquisition. Acquisition represents and warrants to the Company as follows: (a) Acquisition is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. (b) Acquisition has all corporate power and authority necessary to enable it to enter into this Agreement and carry out the transactions contemplated by this Agreement. All corporate actions necessary to authorize Acquisition to enter into this Agreement and carry out the transactions contemplated by it have been taken. This Agreement has been duly executed by Acquisition and is a valid and binding agreement of Acquisition, enforceable against Acquisition in accordance with its terms. (c) Neither the execution or delivery of this Agreement or of any document to be delivered in accordance with this Agreement nor the consummation of the transactions contemplated by this Agreement or by any document to be delivered in accordance with this Agreement will violate, result in a breach of, or constitute a default (or an event which, with notice or lapse of time or both would constitute a default) under, the Certificate of Incorporation 16 or by-laws of Acquisition, any agreement or instrument to which Acquisition or any subsidiary of Acquisition is a party or by which any of them is bound, any law, or any order, rule or regulation of any court or governmental agency or other regulatory organization having jurisdiction over Acquisition or any of its subsidiaries, except violations or breaches of, or defaults under, agreements or instruments which would not have a Material Adverse Effect on Acquisition. As used in this Agreement, the term "Material Adverse Effect" upon a company means a material adverse effect upon (i) the consolidated financial position of that company and its subsidiaries taken as a whole, or (ii) the consolidated results of operations of that company and its subsidiaries taken as a whole compared with the consolidated results of their operations during the same period of the prior year. (d) No governmental filings, authorizations, approvals or consents, or other governmental action, other than the filings described Paragraph 3.2 and the termination or expiration of waiting periods under the HSR Act, if any, are required to permit Acquisition to fulfill all its obligations under this Agreement. (e) Acquisition was formed solely for the purpose of engaging in the transactions contemplated by this Agreement. Acquisition has not, and on the Effective Date will not have, engaged in any activities or incurred, directly or indirectly, any obligations or liabilities, except the activities relating to or contemplated by this Agreement and obligations or liabilities incurred in connection with those activities and with the transactions contemplated by this Agreement. (f) Neither the Offer Documents nor any information supplied by Acquisition for inclusion in the Schedule 14D-9 will, at the respective times the Schedule TO and the Schedule 14D-9 are filed with the SEC and first published, sent or given to the Company's stockholders, contain a false or misleading statement with respect to any material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, 17 in light of the circumstances under which they are made, not misleading. On the date the Proxy Statement is mailed to the Company's stockholders and on the date of the Stockholders Meeting, none of the information supplied by Acquisition for inclusion in the Proxy Statement will be false or misleading with respect to any material fact or will omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading or necessary to correct any statement in any earlier communication with respect to the Stockholders Meeting or the solicitation of proxies to be used at the Stockholders Meeting. However, Acquisition does not make any representations or warranties with respect to information supplied by the Company or any of its affiliates or representatives for inclusion in the Offering Documents, or with respect to the Schedule 14D-9 or the Proxy Statement (except to the extent of information supplied by Acquisition for inclusion in the Schedule 14D-9 or the Proxy Statement). The Offering Documents will comply as to form in all material respects with the requirements of the Exchange Act and the rules under it. (g) At the date of this Agreement, (i) Acquisition is directly or indirectly wholly owned by Holdings, (ii) Acquisition holds a demand note in the principal amount of at least $31,000,000 from Three Cities Fund III, which was given to Holdings in part payment for equity interests in Holdings and transferred by Holdings to Acquisition in payment for stock of Acquisition, (iii) Acquisition has a commitment from Holdings for $15,000,000 of subordinated debt financing which can be used to pay for shares tendered in response to the Tender Offer or to pay the Merger Price as contemplated by Paragraph 2.7 and (iv) Acquisition has a commitment from Comerica Bank-California ("Comerica"), subject to the conditions in the letter containing that commitment, for $45,000,000 of financing, which may be used to pay the Merger Price as contemplated by Paragraph 2.7. Copies of the demand notes and of the letter containing the commitment from Comerica have been delivered to the Company. At the date of 18 this Agreement, neither Acquisition nor any of its affiliates owns, directly or indirectly, any shares of Common Stock or has any contractual right or understanding with any third party under which any of them would be entitled to any shares of Common Stock, except that (i) two officers of the Company have agreed to exchange 319,168 shares of Common Stock for interests in Holdings and (ii) directors and officers of the Company have agreed or expressed their intention to tender their shares in response to the Tender Offer. (h) Neither Acquisition nor Holdings is the subject of any suit or governmental proceeding which seeks to prevent Acquisition from completing the transactions which are the subject of this Agreement, nor, to the best of Acquisition's knowledge, has any such suit or proceeding been threatened. (i) After giving effect to Acquisition's purchase of shares which are tendered in response to the Tender Offer, the Merger, the transactions described in subparagraph (g), and any other transactions contemplated by this Agreement, the Surviving Corporation will not (i) be insolvent, (ii) have unreasonably small capital with which to engage in its business, or (iii) have incurred debts which it does not expect to be able to pay as they mature or which will impair the capital of the Surviving Corporation (based upon the financial condition of the Company reflected in the April 10-Q, described below). Distributions to the shareholders of the Company as a result of the Merger, as that term is defined for purposes of Section 166 of the CGCL, will not violate Chapter 5 of the CGCL or Section 160 or 173 of the Delaware General Corporation Law. 4.2 Representations and Warranties of the Company. The Company represents and warrants to Acquisition as follows: (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of California. 19 (b) The Company has all corporate power and authority necessary to enable it to enter into this Agreement and carry out the transactions contemplated by this Agreement. All corporate actions necessary to authorize the Company to enter into this Agreement and carry out the transactions contemplated by it, other than adoption of this Agreement, and approval of its principal terms, by the stockholders of the Company, have been taken. This Agreement has been duly executed by the Company and is a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms. (c) Neither the execution and delivery of this Agreement or of any document to be delivered in accordance with this Agreement nor the consummation of the transactions contemplated by this Agreement or by any document to be delivered in accordance with this Agreement will violate, result in a breach of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, the Certificate of Incorporation or By-Laws of the Company, any agreement or instrument to which the Company or any subsidiary of the Company is a party or by which any of them is bound, any law, or any order, rule or regulation of any court or governmental agency or other regulatory organization having jurisdiction over the Company or any of its subsidiaries except violations or breaches of, or defaults under, agreements or instruments which would not have a Material Adverse Effect on the Company, Acquisition or any stockholder of Acquisition. (d) No governmental filings, authorizations, approvals, or consents, or other governmental action, other than the filings described in Section 3.2 and the expiration or termination of waiting periods under the HSR Act, if any, are required to permit the Company to fulfill all its obligations under this Agreement. 20 (e) The Company and each of its subsidiaries is qualified to do business as a foreign corporation in each state in which it is required to be qualified, except states in which the failure to qualify, in the aggregate, would not have a Material Adverse Effect upon the Company. (f) The only authorized stock of the Company is 50,000,000 shares of Common Stock, par value $.01 per share. At the date of this Agreement, the only outstanding stock of the Company is not more than 5,350,000 shares of Common Stock. All those shares have been duly authorized and issued and are fully paid and non-assessable. Except as shown on Exhibit 4.2-F, the Company has not issued any options, warrants or convertible or exchangeable securities which are outstanding, and is not a party to any other agreements, which require, or upon the passage of time, the payment of money or the occurrence of any other event may require, the Company to issue or sell any of its stock. (g) (i) Each of the corporations and other entities of which the Company owns directly or indirectly 50% or more of the equity (each corporation or other entity of which a company owns directly or indirectly 50% or more of the equity being a "subsidiary" of that company) has been duly organized, and is validly existing and in good standing under the laws of its state of incorporation or formation, (ii) all the shares of stock or other equity interests of each of the Company's subsidiaries which are owned by the Company or any of its subsidiaries are duly authorized and validly issued, and, with regard to stock of corporations, fully paid and non-assessable and are not subject to any preemptive rights, and (iii) neither the Company nor any of its subsidiaries has issued any options, warrants or convertible or exchangeable securities, or is a party to any other agreements, which require, or upon the passage of time, the payment of money or the occurrence of any other event may require, the Company or any subsidiary to issue or sell any stock or other equity interests in any of the Company's subsidiaries and, there are no registration covenants or transfer or voting restrictions with respect to outstanding securities of any of the Company's subsidiaries. 21 (h) Since November 1, 1996, the Company has filed with the SEC all forms, statements, reports and documents it has been required to file under the Securities Act of 1933, as amended, the Exchange Act or the rules under either of them. (i) The Company's Annual Report on Form 10-K for the year ended October 31, 1999 (the "1999 10-K") and its Report on Form 10-Q for the period ended April 30, 2000 (the "April 10-Q") which were filed with the SEC, including the documents incorporated by reference in each of them, each contained all the information required to be included in it by the rules and regulations of the SEC and, when it was filed, did not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made in it, in light of the circumstances under which they were made, not misleading. Without limiting what is said in the preceding sentence, the financial statements included in the 1999 10-K all were prepared, and the financial information included in the April 10-Q was derived from financial statements which were prepared, in accordance with United States generally accepted accounting principles ("GAAP") applied on a consistent basis (except that financial information included in the April 10-Q does not contain notes and is subject to normal year end adjustments) and present fairly the consolidated financial condition and the consolidated results of operations of the Company and its subsidiaries at the dates, and for the periods, to which they relate. Prior to the date of this Agreement, the Company has not filed any reports with the Securities and Exchange Commission with regard to any period which ended, or any event which occurred, after April 31, 2000. (j) Since April 30, 2000, (i) the Company and its subsidiaries have conducted their businesses in the ordinary course and in the same manner in which they were conducted prior to April 30, 2000, and (ii) nothing has occurred which, individually or in aggregate, has had a Material Adverse Effect on the Company. 22 (k) The assets of the Company and its subsidiaries constitute, in the aggregate, all the assets (including, but not limited to, intellectual property rights) used in or necessary to the conduct of their businesses as they currently are being conducted. (l) The Company and its subsidiaries have at all times complied, and currently are complying, with all applicable Federal, state, local and foreign laws and regulations, except failures to comply which would not reasonably be expected, in the aggregate, to have a Material Adverse Effect on the Company. (m) The Company and its subsidiaries have all licenses and permits which are required at the date of this Agreement to enable them to conduct their businesses as they currently are being conducted, except licenses or permits the lack of which would not reasonably be expected, in the aggregate, to have a Material Adverse Effect on the Company. (n) The Company and each of its subsidiaries has filed when due all Tax Returns which it has been required to file and has paid all Taxes shown on those returns to be due, except failures to file Tax Returns or to pay Taxes which are not reasonably expected, in the aggregate, to have a Material Adverse Effect upon the Company. Those Tax Returns accurately reflect all Taxes required to have been paid, except to the extent of items which may be disputed by applicable taxing authorities but for which there is substantial authority to support the position taken by the Company or the subsidiary and which have been adequately reserved against in accordance with GAAP on the balance sheet at April 30, 2000 included in the April 10-Q. (i) No extension of time given by the Company or any of its subsidiaries for completion of the audit of any of its Tax Returns is in effect, (ii) no tax lien has been filed by any taxing authority against the Company or any of its subsidiaries or any of their assets, (iii) to the best of the Company's knowledge, no Federal, state or local audits or other administrative proceedings or court proceedings with regard to Taxes are presently pending with regard to the Company or 23 any of its subsidiaries, (iv) neither the Company nor any subsidiary is a party to any agreement providing for the allocation or sharing of Taxes, (v) neither the Company nor any subsidiary has participated in or cooperated with an international boycott as that term is used in Section 999 of the Internal Revenue Code of 1986, as amended (the "Code") and (vi) neither the Company nor any subsidiary has filed a consent pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply to any disposition of a Subsection (f) asset (as that term is defined in Section 341(f)(4) of the Code) owned by the Company or any subsidiary. For the purposes of this Agreement, the term "Taxes" means all taxes (including, but not limited to, withholding taxes), assessments, fees, levies and other similar governmental charges, and any related interest or penalties. For the purposes of this Agreement, the term "Tax Return" means any report, return or other information required to be supplied to a taxing authority in connection with Taxes. (o) Except to the extent of items or conditions which, in aggregate, would not have a Material Adverse Effect on the Company, (i) the Company and its subsidiaries have all environmental permits which are necessary to enable them to conduct their businesses as they currently are being conducted without violating any Environmental Laws, (ii) neither the Company nor any subsidiary has received any notice of noncompliance or liability under any Environmental Law, (iii) neither the Company nor any subsidiary has performed any acts, including but not limited to releasing, storing or disposing of hazardous materials, there is no condition on any property owned or leased by the Company or a subsidiary, and there was no condition on any property formerly owned or leased by the Company or a subsidiary while the Company or a subsidiary owned or leased that property, that could result in liability by the Company or a subsidiary under any Environmental Law and (iv) neither the Company nor any subsidiary is subject to any order of court or governmental agency requiring the Company or any subsidiary to take, or refrain from taking, any actions in order to comply with any 24 Environmental Law and no action or proceeding seeking such an order is pending or, insofar as any officer of the Company is aware, threatened against the Company. As used in this Agreement, the term "Environmental Law" means any Federal, state or local law, rule, regulation, guideline or other legally enforceable requirement of a governmental authority relating to protection of the environment or to environmental conditions which affect human health or safety. (p) Failures of equipment used or sold by the Company to be Y2K Compliant (i.e., to be able to recognize that dates in the Year 2000 are subsequent to December 31, 1999 and that the Year 2000 is a leap year) did not, and are not expected to, result in liabilities or costs to the Company which, in aggregate, had or are expected to have a Material Adverse Effect on the Company. (q) There are no contracts, agreements or other arrangements which could result in the payment by the Company or by any of its subsidiaries of an "Excess Parachute Payment" as that term is used in Section 280G of the Code. (r) Neither the Schedule 14D-9 nor any information supplied by the Company for inclusion in the Offering Documents will, at the respective times the Schedule 14D-9 and the Schedule TO are filed with the SEC and first published, sent or given to the Company's stockholders, contain a false or misleading statement with respect to any material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. On the day the Proxy Statement is mailed to the Company's stockholders and on the day of the Stockholders Meeting, the Proxy Statement will not contain a false or misleading statement with respect to any material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which 25 they are made, not misleading or necessary to correct any statement in any earlier communication with respect to the Stockholders Meeting or the solicitation of proxies to be used at the Stockholders Meeting. However, the Company does not make any representations or warranties with respect to information supplied by Acquisition or any of its affiliates or representatives for inclusion in the Schedule 14D-9 or the Proxy Statement, or with respect to the Offering Documents (except to the extent of information supplied by the Company for inclusion in the Offering Documents). The Schedule 14D-9 and the Proxy Statement each will comply as to form in all material respects with the requirements of the Exchange Act and the rules under it. 4.3 Termination of Representations and Warranties. The representations and warranties in Paragraphs 4.1, 4.2 and 8.1 will terminate at the Expiration Date, and neither the Company nor Acquisition, nor any of their respective stockholders, will have any rights or claims as a result of any of those representations or warranties after the Expiration Date. ARTICLE 5 ACTIONS PRIOR TO THE MERGER 5.1 Activities of the Company and its Subsidiaries Until Effective Time. From the date of this Agreement to the earlier of the Effective Time or the termination of this Agreement in accordance with Article 7, the Company will, and will cause each of its subsidiaries to, except with the written consent of Acquisition: (a) Operate its business in the ordinary course and in a manner consistent with the manner in which it is being operated at the date of this Agreement. (b) Take all reasonable steps available to it to maintain the goodwill of its business and the continued employment of its executives and other employees. 26 (c) At its expense, maintain all its assets in good repair and condition, except to the extent of reasonable wear and use and damage by fire or other unavoidable casualty. (d) Not make any borrowings other than borrowings in the ordinary course of business under working capital lines which are disclosed in the notes to the consolidated balance sheet at October 31, 1999 included in the 1999 10-K or the consolidated balance sheet at April 30, 2000 included in the April 10-Q. (e) Not enter into any contractual commitments involving capital expenditures, loans or advances, and not voluntarily incur any contingent liabilities, except in each case in the ordinary course of business. (f) Not redeem or purchase any of its stock and not declare or pay any dividends, or make any other distributions or repayments of debt to its stockholders (other than payments by subsidiaries of the Company to the Company or to other wholly owned subsidiaries of the Company). (g) Not make any loans or advances (other than advances in the ordinary course for travel and other normal business expenses) to stockholders, directors, officers or employees. (h) Maintain its books of account and records in the usual manner, in accordance with GAAP applied on a consistent basis, subject to normal year-end adjustments and accruals. (i) Comply in all material respects with all applicable laws and regulations of governmental agencies. (j) Not sell, dispose of or encumber any property or assets, or engage in any activities or transactions, except in each case in the ordinary course of business. 27 (k) Not enter into or amend any employment, severance or similar agreements or arrangements, or increase the salaries of any employees, other than through normal annual merit increases averaging not more than 5%. (l) Not adopt, become an employer with regard to, or amend any employee compensation, employee benefit or post-employment benefit plan. (m) Not amend its certificate of incorporation or by-laws. (n) Not (i) issue or sell any of its stock (except upon exercise of options or warrants which are outstanding on the date of this Agreement) or any options, warrants or convertible or exchangeable securities or (ii) split, combine, or reclassify its outstanding stock. (o) Not authorize or enter into any agreement to take any of the actions referred to in subparagraphs (a ) through (n) above. 5.2 HSR Act Filings. The Company and Acquisition will each make as promptly as practicable the filing it is required to make under the HSR Act with regard to the transactions which are the subject of this Agreement and each of them will take all reasonable steps within its control (including providing information to the Federal Trade Commission and the Department of Justice) to cause the waiting periods required by the HSR Act to be terminated or to expire as promptly as practicable. The Company and Acquisition will each provide information and cooperate in all other respects to assist the other of them in making its filing under the HSR Act. 5.3 Activities of Acquisition Until Effective Time. From the date of this Agreement until the earlier of the Effective Time or the termination of this Agreement in accordance with Article 7, Acquisition will not (a) engage in any activities or incur, directly or indirectly, any obligations or liabilities, except activities relating to or contemplated by this Agreement and 28 obligations or liabilities incurred in connection with those activities or with the transactions contemplated by this Agreement, or (b) make any distributions to its stockholders or redeem or repurchase any of its outstanding stock. 5.4 No Solicitation of Offers; Notice of Proposals from Others. (a) The Company will not, and will not authorize or permit its or any of its subsidiaries' officers, directors, employees, agents or representatives (including any investment banker, attorney or accountant retained by it or by any of its subsidiaries) directly or indirectly to initiate, solicit, encourage or otherwise facilitate any inquiry or the making of any proposal or offer with respect to a merger, reorganization, share exchange, consolidation or similar transaction involving the Company, or any purchase of, or tender offer for, all or any significant portion of the Company's equity securities or any significant portion of the assets of the Company and its subsidiaries on a consolidated basis (each of these being an "Acquisition Proposal"). (b) Subparagraph (a) will not prevent the Company from, in response to an Acquisition Proposal which the Company receives despite complying with subparagraph (a) and which the Company's Board determines, in good faith after consultation with its independent financial advisor, would result (if consummated in accordance with its terms) in a transaction which (i) would result in the Company's stockholders' receiving consideration with a value which is greater than the Tender Offer Price and (ii) would be more favorable to the Company's stockholders than the Tender Offer and the Merger, furnishing non-public information (after receipt of an appropriate Confidentiality Agreement) to the person, entity or group (the "Potential Acquiror") which makes the Acquisition Proposal and entering into discussions and negotiations with that Potential Acquiror. (c) If the Company receives an Acquisition Proposal, or the Company receives a bona fide communication from a person other than Acquisition indicating that that other person 29 is contemplating soliciting tenders of Common Stock or otherwise proposes to acquire the Company or its Common Stock or assets if the Company's stockholders do not tender their Common Stock to Acquisition or do not approve the Merger, the Company will promptly notify Acquisition of that fact and provide Acquisition with all information in the Company's possession which Acquisition reasonably requests regarding the Acquisition Proposal, solicitation of tenders or other proposed transaction, and the Company will promptly, from time to time, provide Acquisition with any additional information the Company obtains regarding the Acquisition Proposal, the solicitation of tenders or the other proposed transaction. 5.5 Acquisition's Efforts to Fulfill Conditions. Acquisition will use its best efforts to cause all the conditions set forth in Paragraph 6.1 to be fulfilled on or before the Merger Date. 5.6 Company's Efforts to Fulfill Conditions. The Company will use its best efforts to cause all the conditions set forth in Paragraph 6.2 to be fulfilled on or before the Merger Date. ARTICLE 6 CONDITIONS PRECEDENT TO MERGER 6.1 Conditions to Parties' Obligations. The respective obligations of Acquisition and the Company to complete the Merger are subject to satisfaction of the following conditions (any or all of which may be waived by either of them): (a) Acquisition will have accepted for payment and paid for all the shares of Common Stock which are properly tendered in response to the Tender Offer and not withdrawn, except that this will not be a condition to the obligations of Acquisition if the failure to accept for payment or pay for the shares which are properly tendered in response to the Tender Offer and not withdrawn constituted, or was the result of, a breach by Acquisition of its obligations under this Agreement. 30 (b) The other party will have fulfilled in all material respects all its obligations under this Agreement required to have been fulfilled on or before the Merger Date. (c) No order will have been entered by any court or governmental authority and be in force which invalidates this Agreement or restrains either Acquisition or the Company from completing the transactions which are the subject of this Agreement. (d) If stockholder approval of the Merger is required by applicable law or by the rules of the Nasdaq National Market (if they are applicable), the Merger will have been approved by the holders of a majority of the outstanding shares of Common Stock. ARTICLE 7 TERMINATION 7.1 Right to Terminate. This Agreement may be terminated at any time prior to the Effective Time (whether or not the Company's stockholders have approved the Merger): (a) By mutual consent of the Company (with the approval of the Special Committee) and Acquisition. (b) By the Company (with the approval of the Special Committee) if (i) it is determined that any of the representations or warranties of Acquisition contained in this Agreement was not complete and accurate in all material respects on the date of this Agreement or (ii) any of the conditions in Paragraph 6.1 is not satisfied or waived by the Company on or before the Merger Date. (c) By Acquisition if (i) it is determined that any of the representations or warranties of the Company contained in this Agreement was not complete and accurate in all material respects on the date of this Agreement or (ii) any of the conditions in Paragraph 6.1 is not satisfied or waived by Acquisition on or before the Merger Date. 31 (d) By the Company (with the approval of the Special Committee) if (i) on or before the Expiration Date, the Company receives an Acquisition Proposal in which a Potential Acquirer makes a specific proposal to acquire the Company or substantially all its assets on specific terms (a "Firm Proposal"), or a Potential Acquiror commences a cash tender offer for all the Company's outstanding stock (other than any already owned by the Potential Acquiror), (ii) within 10 business days after the Company receives the Firm Proposal or the tender offer is commenced, the Special Committee determines that the Firm Proposal or the tender offer is a Superior Proposal and resolves to accept the Superior Proposal, or to recommend that stockholders tender their shares in response to the Superior Proposal, unless Acquisition will increase the Tender Offer price to an amount per share of Common Stock at least as great as the value per share of Common Stock of the consideration the Company's stockholders would receive as a result of the Superior Proposal or the tender offer, (iii) the Company has given Acquisition at least 10 business days' prior notice (A) of the terms of the Superior Proposal (including the consideration per share, valuing non-cash consideration as described below, which the Company's stockholders would receive as a result of the Superior Proposal), and (B) that unless Acquisition increases the Tender Offer Price to an amount per share at least as great as the value per share of Common Stock of the consideration the Company's stockholders would receive as a result of the Superior Proposal, as set forth in the notice, this Agreement will terminate, and (iv) the Company has (x) paid Acquisition $750,000, (y) reimbursed Acquisition for all the expenses related to the transactions which are the subject of this Agreement which Acquisition or its affiliates (including BR Holdings LLC, the Fund and Three Cities Research, Inc.) incurred in connection with this Agreement and the transactions contemplated by it (including reasonable fees and expenses of professionals and other consultants, commitment fees and other financing related costs, and out of pocket costs incurred by employees in investigating the business and financial condition of the Company and in connection with the negotiation of this Agreement and efforts to carry out the transactions which are the subject of 32 this Agreement) regarding which Acquisition has presented reasonable documentation, and (z) agreed in writing to reimburse Acquisition for all expenses of the type described in clause (y) for which Acquisition subsequently presents reasonable documentation to the Company (up to a total reimbursement of expenses under clauses (y) and (z) not exceeding $500,000). A "Superior Proposal" is an Acquisition Proposal which (A) would result in the Company's stockholders' receiving consideration which is greater than the Tender Offer Price (valuing non-cash consideration at its fair market value as determined in good faith by the Special Committee after consultation with its independent financial advisor), (B) is not subject to the outcome of due diligence or any other form of investigation, (C) is not subject to a financing contingency and is from a Proposed Acquiror which the Special Committee reasonably determines in good faith after consultation with its independent financial advisor has the financial resources necessary to carry out the transaction and (D) the Special Committee determines in good faith after consultation with its independent financial advisor to be more favorable to the Company's stockholders than the Tender Offer and the Merger. A notice that this Agreement will terminate given pursuant to clause (iii) of the first sentence of this subparagraph will be irrevocable (unless Acquisition consents in writing to its being withdrawn by the Company) and will result in this Agreement's terminating on the later of the date specified in the notice or the date the Company makes the payments and provides the agreement described in clause (iv) of the first sentence of this subparagraph. When the Company delivers a notice pursuant to clause (iii) of the first sentence of this subparagraph, Acquisition's obligations under Paragraphs 5.2, 5.3 and 5.5 will terminate. 7.2 Manner of Terminating Agreement If at any time the Company or Acquisition has the right under Paragraph 7.1 to terminate this Agreement, it can terminate this Agreement by a notice to the other of them that it is terminating this Agreement. 33 7.3 Effect of Termination. If this Agreement is terminated pursuant to Paragraph 7.1, after this Agreement is terminated, neither party will have any further rights or obligations under this Agreement other than the Company's obligations under the agreement to reimburse expenses described in Paragraph 7.1(e). Nothing contained in this Paragraph will, however, relieve either party of liability for any breach of this Agreement which occurs before this Agreement is terminated. ARTICLE 8 ABSENCE OF BROKERS 8.1 Representations and Warranties Regarding Brokers and Others. The Company and Acquisition each represents and warrants to the other of them that, except as shown on Exhibit 8.1, nobody acted as a broker, a finder or in any similar capacity in connection with the transactions which are the subject of this Agreement. The Company and Acquisition each indemnifies the other of them against, and agrees to hold the other of them harmless from, all losses, liabilities and expenses (including, but not limited to, reasonable fees and expenses of counsel and costs of investigation) incurred because of any claim by anyone for compensation as a broker, a finder or in any similar capacity by reason of services allegedly rendered to the indemnifying party in connection with the transactions which are the subject of this Agreement. ARTICLE 9 OTHER AGREEMENT 9.1 Indemnification for Prior Acts. 1. The Surviving Corporation will honor, and will not amend or modify for a period of not less than six years after the date of this Agreement, any obligations of the Company or its subsidiaries to indemnify current or former directors, officers or employees of the Company or its subsidiaries (each an "Indemnified Party") with respect to matters which occur prior to the Effective Time. The Surviving Corporation will, maintain in effect for not less than six years after Effective Time with respect to occurrences prior to the Effective Time the Company's policies of directors and officers' liability insurance which are in effect on 34 the date of this Agreement and are listed on Exhibit 9.1-A(2) (notwithstanding any provisions of those policies that they will terminate as a result of the Merger) to the extent that such insurance (or substantially similar insurance) is available at a cost not exceeding $115,000. (b) The provisions of this Paragraph 9.1 are intended to be for the benefit of, and will be enforceable by, the respective current or former directors, officers and employees of the Company or its subsidiaries to which it relates and their heirs and representatives and will be binding upon the Surviving Corporation. ARTICLE 10 GENERAL 10.1 Expenses. Except as provided in Paragraph 7.1(e), the Company and Acquisition will each pay its own expenses in connection with the transactions which are the subject of this Agreement, including legal fees. 10.2 Access to Properties, Books and Records. From the date of this Agreement until the earlier of the Effective Time or the time this Agreement is terminated in accordance with Article 7, the Company will, and will cause each of its subsidiaries to, give representatives of Acquisition, and representatives of any lenders from which Acquisition is obtaining financing for the transactions which are the subject of this Agreement or financing for the Surviving Corporation after the Merger, full access during normal business hours to all of their respective properties, books and records. Acquisition will, and will cause its representatives to, hold all information it receives as a result of its access to the properties, books and records of the Company or its subsidiaries in confidence, except to the extent that information (i) is or becomes available to the public (other than through a breach of this Agreement), (ii) becomes available to Acquisition from a third party which, insofar as Acquisition is aware, is not under an obligation to the Company, or to a subsidiary of the Company, to keep the information confidential, (iii) was known to Acquisition or its affiliates (which includes the Three Cities Funds 35 and Three Cities Research, Inc.) before it was made available to Acquisition or its representative by the Company or a subsidiary, (iv) otherwise is independently developed by Acquisition or its affiliates, or (v) Acquisition reasonably believes (after consultation with the Company and its counsel) is required to be included in the Offering Documents, the Schedule 14D-9 or the Proxy Statement. If this Agreement is terminated prior to the Effective Time, Acquisition will, at the request of the Company, deliver to the Company all documents and other material obtained by Acquisition from the Company or a subsidiary in connection with the transactions which are the subject of this Agreement or evidence that that material has been destroyed by Acquisition. 10.3 Press Releases. The Company and Acquisition will consult with each other before issuing any press releases or otherwise making any public statements with respect to this Agreement, except that nothing in this Paragraph will prevent either party from making any statement when and as required by law or by the rules of any securities exchange or securities quotation or trading system on which securities of that party or an affiliate are listed, quoted or traded. 10.4 Entire Agreement. This Agreement and the documents to be delivered in accordance with this Agreement contain the entire agreement between the Company and Acquisition relating to the transactions which are the subject of this Agreement and those other documents, all prior negotiations, understandings and agreements between the Company and Acquisition are superseded by this Agreement and those other documents, and there are no representations, warranties, understandings or agreements concerning the transactions which are the subject of this Agreement or those other documents other than those expressly set forth in this Agreement or those other documents. 36 10.5 Effect of Disclosures. Any information disclosed by a party in any representation or warranty contained in this Agreement (including exhibits to this Agreement) will be treated as having been disclosed in connection with each representation and warranty made by that party in this Agreement. 10.6 Captions. The captions of the articles and paragraphs of this Agreement are for reference only, and do not affect the meaning or interpretation of this Agreement. 10.7 Prohibition Against Assignment. Neither this Agreement nor any right of any party under it may be assigned, except that Acquisition may assign its rights under this Agreement to a corporation or other entity a majority of the equity of which is owned by persons who, at the time of the assignment, own a majority of the equity of Acquisition, provided that no such assignment will relieve Acquisition of any of its obligations under this Agreement. 10.8 Notices and Other Communications. Any notice or other communication under this Agreement must be in writing and will be deemed given when it is delivered in person or sent by facsimile (with proof of receipt at the number to which it is required to be sent), on the business day after the day on which it is sent by a major nationwide overnight delivery service, or on the third business day after the day on which it is mailed by first class mail from within the United States of America, to the following addresses (or such other address as may be specified after the date of this Agreement by the party to which the notice or communication is sent): If to Acquisition: BRG Acquisition Corporation c/o Three Cities Research, Inc. 650 Madison Avenue New York, New York 10022 Attention: W. Robert Wright II Facsimile: 212-980-1142 with a copy to: 37 David W. Bernstein Clifford Chance Rogers & Wells LLP 200 Park Avenue New York, New York 10166 Facsimile: 212-878-8375 If to the Company.: Business Resource Group 2150 North First Street Suite 101 San Jose, CA 95131 Attention: President Facsimile: 408-325-3202 with a copy to: Peter Cohn Orrick, Herrington & Sutcliffe LLP 1020 Marsh Road Menlo Park, CA 94025 Facsimile: 650-233-8386 and to: Steven Tonsfeldt Venture Law Group 2800 San Hill Road Menlo Park, CA 94015 Facsimile: 650-233-8386 10.9 Governing Law. This Agreement will be governed by, and construed under, the substantive laws of the State of Delaware. 10.10 Amendments. This Agreement may be amended only by a document in writing signed by both the Company (with the approval of the Special Committee) and Acquisition. No waiver of any provision of this Agreement will be effective unless it is in writing, and signed by the party giving the waiver. If the waiver is by the Company, it will only be effective if the Company certifies that it has been approved by the Special Committee. 10.11 Counterparts. This Agreement may be executed in two or more counterparts, some of which may be signed by fewer than all the parties or may contain facsimile copies of 38 pages signed by some of the parties. Each of those counterparts will be deemed to be an original copy of this Agreement, but all of them together will constitute one and the same agreement. IN WITNESS WHEREOF, the Company and Acquisition have executed this Agreement, intending to be legally bound by it, on the day shown on the first page of this Agreement. BUSINESS RESOURCE GROUP By: --------------------------- Title: President BRG ACQUISITION CORPORATION By: --------------------------- Title: President 39 ARTICLE 1 THE TENDER OFFER..............................................1 1.1 The Tender Offer.................................................1 1.2 Company Action...................................................3 ARTICLE 2 THE MERGER....................................................5 2.1 Agreement to Effect Merger.......................................5 2.2 The Merger.......................................................5 2.3 Certificate of Incorporation.....................................5 2.4 By-Laws..........................................................6 2.5 Directors........................................................6 2.6 Officers.........................................................6 2.7 Stock of the Company.............................................6 2.8 Stock of Acquisition.............................................6 2.9 Stockholders Meeting.............................................7 2.10 Dissenting Shares................................................7 2.11 Payment for Shares...............................................8 2.12 Options and Warrants............................................10 ARTICLE 3 EFFECTIVE TIME OF MERGER.....................................10 3.1 Date of the Merger..............................................11 3.2 Execution of Certificate of Merger..............................11 3.3 Effective Time of the Merger....................................11 ARTICLE 4 REPRESENTATIONS AND WARRANTIES...............................11 4.1 Representations and Warranties of Acquisition...................11 4.2 Representations and Warranties of the Company...................14 4.3 Termination of Representations and Warranties...................20 ARTICLE 5 ACTIONS PRIOR TO THE MERGER..................................20 5.1 Activities Until Effective Time.................................21 (p) HSR Act Filings........................................23 5.2 No Solicitation of Offers; Notice of Proposals from Others......23 5.3 Acquisition's Efforts to Fulfill Conditions.....................24 5.4 Company's Efforts to Fulfill Conditions.........................24 ARTICLE 6 CONDITIONS PRECEDENT TO MERGER...............................24 6.1 Conditions to the Company's Obligations.........................24 6.2 Conditions to Acquisition's Obligations.........................25 ARTICLE 7 TERMINATION..................................................26 7.1 Right to Terminate..............................................26 7.2 Manner of Terminating Agreement.................................28 7.3 Effect of Termination...........................................28 ARTICLE 8 ABSENCE OF BROKERS...........................................29 8.1 Representations and Warranties Regarding Brokers and Others.....29 ARTICLE 9 OTHER AGREEMENT..............................................29 9.1 Indemnification for Prior Acts..................................29 ARTICLE 10 GENERAL......................................................30 10.1 Expenses........................................................30 10.2 Access to Properties, Books and Records.........................30 10.3 Press Releases..................................................31 10.4 Entire Agreement................................................31 10.5 Effect of Disclosures...........................................31 10.6 Captions........................................................32 10.7 Prohibition Against Assignment..................................32 10.8 Notices and Other Communications................................32 GOVERNING LAW...............................................................33 10.9 Amendments......................................................33 10.10 Counterparts....................................................33 2 Exhibit 1.1-E Acquisition will not be required to accept for payment or pay for any Common Stock tendered in response to the Tender Offer if: (a) The number of shares of Common Stock which are properly tendered and not withdrawn on or before the Expiration Date is less than 51% of the outstanding shares of Common Stock which Acquisition or Holdings do not own or have binding agreements to purchase on the Expiration Date; (b) The number of shares of Common Stock which are properly tendered and not withdrawn on or before the Expiration Date is less than the number which, together with all the shares owned by Acquisition or Holdings (or which they have binding agreements to purchase, other than through the Tender Offer) on the Expiration Date, is 53.5% of the shares of Common Stock which are outstanding on the Expiration Date; (c) Any statute, rule, regulation, order or injunction has been enacted, promulgated, entered or enforced by any national or state government or governmental authority or by any United States court of competent jurisdiction, that would make the acquisition of the tendered Common Stock by Acquisition illegal or otherwise prohibit consummation of the Tender Offer or the Merger; (d) There has been (i) a general suspension of trading in, or limitation on prices for, securities on the New York Stock Exchange or the Nasdaq National Market System which continued for at least three business days, (ii) the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States (whether or not mandatory) which continued for at least three business days, (iii) the commencement of a war or armed hostilities or any other international or national calamity directly or indirectly involving the United States, which has a significant adverse effect on the functioning of financial markets in the United States, (iv) any limitation (whether or not mandatory) by any United States governmental authority or agency on the extension of credit by banks or other financial institutions which would have a material adverse effect on Acquisition's ability to purchase and pay for all the Common Stock which is tendered in response to the Tender Offers and to carry out the Merger on the terms contemplated by the Agreement or (v) there is a material acceleration or worsening of any of the conditions described in clauses (i) through (iv) which exists at the date of the commencement of the Tender Offer; (e) Any of the representations or warranties of the Company in the Agreement is not true and correct as of the date of the Agreement, except failures to be true and correct which would not, in the aggregate, have a Material Adverse Effect upon the Company or adversely affect Acquisition's legal ownership of the tendered Common Stock, Acquisition's legal ability to consummate the Merger as contemplated by the Agreement, or the ownership of the Surviving Corporation after the Merger by the persons which own the stock of Acquisition immediately before the Merger; (f) Without limiting the condition in subparagraph (d), Acquisition learns that the 1999 10-K or the January 10-Q contained a false or misleading statement with respect to a material fact or omitted to state a material fact required to be stated therein or which may be necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; 3 (g) The Company has not performed all the obligations it is required to have performed under the Agreement by the Expiration Date, except failures which (i) would, in the aggregate, not materially impair or delay the ability of Acquisition to consummate the purchase of the Common Stock which is tendered in response to the Tender Offer or the ability of Acquisition and the Company to effect the Merger, (ii) have been caused by or result from a breach of the Agreement by Acquisition; or (iii) do not, and are not reasonably expected to, have a Material Adverse Effect on the Company; (h) The Agreement has been terminated in accordance with its terms; or (i) The Company's Board of Directors withdraws or modifies in a manner adverse to Acquisition the Board's approval or recommendation of the Tender Offer or the Merger. The conditions set forth above are for the sole benefit of Acquisition, and may be waived by Acquisition, in whole or in part, except that Acquisition may not waive the condition in paragraph (a) without the consent of the Company (approved by the Special Committee). Any delay by Acquisition in exercising the right to terminate the Tender Offer because any of the conditions are not fulfilled will not be deemed a waiver of its right to do so. 4 EX-99.(D)(2)(I) 11 0011.txt SHARE EXCHANGE AGREEMENT BETWEEN BR HOLDINGS AND BRIAN MCNAY SHARE EXCHANGE AGREEMENT July 7, 2000 BR Holdings LLC c/o Three Cities Research, Inc. 650 Madison Avenue New York, N.Y. 10022 Dear Sirs: This is to confirm that I agree to exchange 114,680 shares of Business Resource Group common stock for interests (referred to as "Units") in BR Holdings LLC, at the rate of one Unit for each 100 shares of Business Resource Group common stock. I am aware that BR Holdings expects to cause a wholly owned subsidiary ("Acquisition") to enter into a Plan and Agreement of Merger (the "Merger Agreement") with Business Resource Group in which Acquisition agrees to make a tender offer (the "Tender Offer") for the all the Business Resource Group common stock neither BR Holdings nor Acquisition owns, and if that tender offer is successful, to cause Acquisition to engage in a merger (the "Merger") which will result in BR Holdings' becoming the indirect sole shareholder of Business Resource Group. The exchange of my Business Resource Group common stock for BR Holdings Units will take place immediately before Acquisition accepts shares which are tendered in response to the Tender Offer. Upon the request of BR Holdings given not more than three business days before the scheduled Expiration Date of the Tender Offer, I will deliver the certificates representing my Business Resource Group common stock to BR Holdings in proper form for transfer, and will sign a copy of the BR Holdings Limited Liability Company Agreement (of which I have received a copy), in each case effective immediately before Acquisition's initial acceptance of shares which are tendered in response to the Tender Offer. If Acquisition does not accept tendered shares within 10 days after I deliver certificates to BR Holdings, BR Holdings will return the certificates to me, subject to the right again to request delivery of the certificates not more than three business days before any rescheduled Expiration Date. I represent and warrant to BR Holdings that (a) I own the Business Resource Group common stock which I will be exchanging for Units as described above, and I have the right to exchange that Business Resource Group common stock for Units without needing further authorization from anybody or any governmental entity, and (b) neither my executing this Agreement nor my completing the transactions which are the subject of this Agreement will violate any agreement to which I am a party, any law, any rule or regulation of a governmental agency, or any order of a court or governmental agency which is applicable to me. By signing this Agreement, BR Holdings will be representing and warranting to me that (a) BR Holdings has been properly formed as a limited liability company under Delaware law, (b) the only ownership interests in BR Holdings are Units of the type I will be receiving, (c) BR Holdings has the power, and has been authorized, to issue Units to me in exchange for Business Resource Group common stock as contemplated by this Agreement, (d) when Acquisition accepts shares which are tendered in response to the Tender Offer, the ownership of BR Holdings Units (giving effect to the exchanges of all Business Resource Group shares for Units which are contemplated by this Agreement or similar Share Exchange Agreements) will be as shown on Exhibit 1, and (e) neither BR Holdings' executing this Agreement nor its completing the transactions which are the subject of this Agreement will violate any agreement to which BR Holdings is a party, any law, any rule or regulation of a governmental agency, or any order of a court or governmental agency which is applicable to BR Holdings. - ------------- * The words "I", "my" and similar words refer to the person who signs this Agreement, even if that person is not an individual. I am aware that the Units which will be issued to me will not be registered under the Securities Act of 1933, as amended. In order to enable BR Holdings to issue those Units to me without registration under the Securities Act, I represent that I will be acquiring those Units for investment and not with a view to distributing them. I am aware that the certificates representing the Units will bear a legend regarding the fact that the Units were not registered under the Securities Act and the resulting restrictions on transfers of those Units. I am also aware that (a) because the Units which will be issued to me will not be registered under the Securities Act, there are very significant limitations on my ability to re-sell them and (b) BR Holdings' Limited Liability Company Agreement imposes restrictions on my sale or transfer of Units and has other provisions which will affect my ownership of Units. In order to induce BR Holdings to enter into this Agreement, and in order to protect BR Holdings and Acquisition against loss of goodwill of Business Resource Group, I agree as follows: (a) I will tender in response to the Tender Offer all the shares of Business Resource Group which I own, other than the shares I will be exchanging for Units as provided in this Agreement. (b) During the Non-Competition Period, I will not directly or indirectly (i) own, manage, control, participate in, consult with, render services for, or in any other manner engage in, any business that directly competes with Acquisition (as successor to Business Resource Group) or any of its subsidiaries (which were subsidiaries of Business Resource Group), in any states or counties where Business Resource Group is actually providing services or products to customers as of the date of the Merger (including, but not limited to, Alameda, Contra Costa, Santa Clara or San Francisco County in California), except that I may control or own up to two percent of a publicly traded company with which I have no relationship other than as a passive shareholder, or (ii) solicit, influence or attempt to influence any customer or client of Acquisition (as successor to Business Resource Group) or any of its subsidiaries to use or buy products or services of a company in competition with Acquisition (as successor to Business Resource Group) or any of its subsidiaries. The Non-Competition Period will begin at the effective time of the Merger and end on the earlier of (A) the fifth anniversary of the effective time of the Merger, or (B) the third anniversary of the date that I cease to be an employee of Acquisition (as successor to Business Resource Group) or a subsidiary because my employment is terminated for Cause (other than continued unsatisfactory performance) or because I terminate my employment without Good Reason. If, however, I cease to be an employee of Acquisition (as successor to Business Resource Group) or a subsidiary because my employment is terminated Without Cause or because of continued unsatisfactory performance or because I terminate my employment with Good Reason, the Non-Competition Agreement will terminate not later than one year after the day I cease to be an employee of Acquisition (as successor to Business Resource Group), except that Acquisition (as successor to Business Resource Group) may extend the Non-Competition Period until the third anniversary of that day (but not later than the fifth anniversary of the effective time of the Merger) by agreeing to pay me my Base Salary per year for up to an additional two years, on the payment schedule applicable to payments of Base Salary by Acquisition (as successor to Business Resource Group) to its senior executives. As used in this Paragraph, the terms "Cause," "Good Reason," "Without Cause" and "Base Salary" have the meanings given to those terms in and Employment Agreement dated July 7, 2000 between Acquisition and me, and the term "continued unsatisfactory performance" refers to the cause described in Section 3(f)(i)(b)(v) of that Employment Agreement. I understand that, when this Agreement is signed by BR Holdings, I will be legally bound by it. Very truly yours, /s/ Brian McNay -------------------------------- Signature Brian McNay -------------------------------- Name (Print) -------------------------------- Social Security No. Accepted and Agreed To: BR HOLDINGS LLC By: /s/ W. Robert Wright II ----------------------------- W. Robert Wright II - ------------- * The words "I", "my" and similar words refer to the person who signs this Agreement, even if that person is not an individual. EX-99.(D)(2)(II) 12 0012.txt SHARE EXCHANGE AGREEMENT BETWEEN BR HOLDINGS AND JEFF TUTTLE SHARE EXCHANGE AGREEMENT July 7, 2000 BR Holdings LLC c/o Three Cities Research, Inc. 650 Madison Avenue New York, N.Y. 10022 Dear Sirs: This is to confirm that I agree to exchange 204,488 shares of Business Resource Group common stock for interests (referred to as "Units") in BR Holdings LLC, at the rate of one Unit for each 100 shares of Business Resource Group common stock. I am aware that BR Holdings expects to cause a wholly owned subsidiary ("Acquisition") to enter into a Plan and Agreement of Merger (the "Merger Agreement") with Business Resource Group in which Acquisition agrees to make a tender offer (the "Tender Offer") for the all the Business Resource Group common stock neither BR Holdings nor Acquisition owns, and if that tender offer is successful, to cause Acquisition to engage in a merger (the "Merger") which will result in BR Holdings' becoming the indirect sole shareholder of Business Resource Group. The exchange of my Business Resource Group common stock for BR Holdings Units will take place immediately before Acquisition accepts shares which are tendered in response to the Tender Offer. Upon the request of BR Holdings given not more than three business days before the scheduled Expiration Date of the Tender Offer, I will deliver the certificates representing my Business Resource Group common stock to BR Holdings in proper form for transfer, and will sign a copy of the BR Holdings Limited Liability Company Agreement (of which I have received a copy), in each case effective immediately before Acquisition's initial acceptance of shares which are tendered in response to the Tender Offer. If Acquisition does not accept tendered shares within 10 days after I deliver certificates to BR Holdings, BR Holdings will return the certificates to me, subject to the right again to request delivery of the certificates not more than three business days before any rescheduled Expiration Date. I represent and warrant to BR Holdings that (a) I own the Business Resource Group common stock which I will be exchanging for Units as described above, and I have the right to exchange that Business Resource Group common stock for Units without needing further authorization from anybody or any governmental entity, and (b) neither my executing this Agreement nor my completing the transactions which are the subject of this Agreement will violate any agreement to which I am a party, any law, any rule or regulation of a governmental agency, or any order of a court or governmental agency which is applicable to me. By signing this Agreement, BR Holdings will be representing and warranting to me that (a) BR Holdings has been properly formed as a limited liability company under Delaware law, (b) the only ownership interests in BR Holdings are Units of the type I will be receiving, (c) BR Holdings has the power, and has been authorized, to issue Units to me in exchange for Business Resource Group common stock as contemplated by this Agreement, (d) when Acquisition accepts shares which are tendered in response to the Tender Offer, the ownership of BR Holdings Units (giving effect to the exchanges of all Business Resource Group shares for Units which are contemplated by this Agreement or similar Share Exchange Agreements) will be as shown on Exhibit 1, and (e) neither BR Holdings' executing this Agreement nor its completing the transactions which are the subject of this Agreement will violate any agreement to which BR Holdings is a party, any law, any rule or regulation of a governmental agency, or any order of a court or governmental agency which is applicable to BR Holdings. - ------------- * The words "I", "my" and similar words refer to the person who signs this Agreement, even if that person is not an individual. I am aware that the Units which will be issued to me will not be registered under the Securities Act of 1933, as amended. In order to enable BR Holdings to issue those Units to me without registration under the Securities Act, I represent that I will be acquiring those Units for investment and not with a view to distributing them. I am aware that the certificates representing the Units will bear a legend regarding the fact that the Units were not registered under the Securities Act and the resulting restrictions on transfers of those Units. I am also aware that (a) because the Units which will be issued to me will not be registered under the Securities Act, there are very significant limitations on my ability to re-sell them and (b) BR Holdings' Limited Liability Company Agreement imposes restrictions on my sale or transfer of Units and has other provisions which will affect my ownership of Units. In order to induce BR Holdings to enter into this Agreement, and in order to protect BR Holdings and Acquisition against loss of goodwill of Business Resource Group, I agree as follows: (a) I will tender in response to the Tender Offer all the shares of Business Resource Group which I own, other than the shares I will be exchanging for Units as provided in this Agreement. (b) During the Non-Competition Period, I will not directly or indirectly (i) own, manage, control, participate in, consult with, render services for, or in any other manner engage in, any business that directly competes with Acquisition (as successor to Business Resource Group) or any of its subsidiaries (which were subsidiaries of Business Resource Group), in any states or counties where Business Resource Group is actually providing services or products to customers as of the date of the Merger (including, but not limited to, Alameda, Contra Costa, Santa Clara or San Francisco County in California), except that I may control or own up to two percent of a publicly traded company with which I have no relationship other than as a passive shareholder, or (ii) solicit, influence or attempt to influence any customer or client of Acquisition (as successor to Business Resource Group) or any of its subsidiaries to use or buy products or services of a company in competition with Acquisition (as successor to Business Resource Group) or any of its subsidiaries. The Non-Competition Period will begin at the effective time of the Merger and end on the earlier of (A) the fifth anniversary of the effective time of the Merger, or (B) the third anniversary of the date that I cease to be an employee of Acquisition (as successor to Business Resource Group) or a subsidiary because my employment is terminated for Cause (other than continued unsatisfactory performance) or because I terminate my employment without Good Reason. If, however, I cease to be an employee of Acquisition (as successor to Business Resource Group) or a subsidiary because my employment is terminated Without Cause or because of continued unsatisfactory performance or because I terminate my employment with Good Reason, the Non-Competition Agreement will terminate not later than one year after the day I cease to be an employee of Acquisition (as successor to Business Resource Group), except that Acquisition (as successor to Business Resource Group) may extend the Non-Competition Period until the third anniversary of that day (but not later than the fifth anniversary of the effective time of the Merger) by agreeing to pay me my Base Salary per year for up to an additional two years, on the payment schedule applicable to payments of Base Salary by Acquisition (as successor to Business Resource Group) to its senior executives. As used in this Paragraph, the terms "Cause," "Good Reason," "Without Cause" and "Base Salary" have the meanings given to those terms in and Employment Agreement dated July 7, 2000 between Acquisition and me, and the term "continued unsatisfactory performance" refers to the cause described in Section 3(f)(i)(b)(v) of that Employment Agreement. I understand that, when this Agreement is signed by BR Holdings, I will be legally bound by it. Very truly yours, /s/ Jeff Tuttle -------------------------------- Signature Jeff Tuttle -------------------------------- Name (Print) -------------------------------- Social Security No. Accepted and Agreed To: BR HOLDINGS LLC By: /s/ W. Robert Wright II ----------------------------- W. Robert Wright II - ------------- * The words "I", "my" and similar words refer to the person who signs this Agreement, even if that person is not an individual. EX-99.(D)(3) 13 0013.txt COMMITMENT LETTER COMMITMENT July 10, 2000 BRG Acquisition Corporation c/o Three Cities Research, Inc. 650 Madison Avenue New York, NY 10022 Dear Sirs: This is to confirm that I, John M. Palmer, agree to tender all the shares of Business Resource Group common stock which I own in response to the tender offer which BRG Acquisition Corporation will make in accordance with a Plan and Agreement of Merger between it and Business Resource Group in which it will offer to purchase the outstanding shares of common stock of Business Resource Group for $9.25 in cash, per share. In order to induce BRG Acquisition to make the tender offer, and to protect BRG Acquisition Corporation against loss of goodwill of Business Resource Group, I agree that: During the Non-Competition Period, I will not directly or indirectly (i) own, manage, control, participate in, consult with, render services for, or in any other manner engage in, any business that directly competes with Acquisition (as successor to Business Resource Group) or any of its subsidiaries (which were subsidiaries of Business Resource Group), in any states or counties where Business Resource Group is actually providing services or products to customers as of the date of the Merger (including, but not limited to, Alameda, Contra Costa, Santa Clara or San Francisco County in California), except that I may control or own up to two percent of a publicly traded company with which I have no relationship other than as a passive shareholder, or (ii) solicit, influence or attempt to influence any customer or client of Acquisition (as successor to Business Resource Group) or any of its subsidiaries to use or buy products or services of a company in competition with Acquisition (as successor to Business Resource Group) or any of its subsidiaries. The Non-Competition Period will begin at the effective time of the Merger and end on the earlier of (A) the fifth anniversary of the effective time of the Merger, or (B) the third anniversary of the date that I cease to be an employee of Acquisition (as successor to Business Resource Group) or a subsidiary because my employment is terminated for Cause (other than continued unsatisfactory performance) or because I terminate my employment without Good Reason. If, however, I cease to be an employee of Acquisition (as successor to Business Resource Group) or a subsidiary because my employment is terminated Without Cause or because of continued unsatisfactory performance or because I terminate my employment with Good Reason, the Non-Competition Agreement will terminate not later than one year after the day I cease to be an employee of Acquisition (as successor to Business Resource Group), except that Acquisition (as successor to Business Resource Group) may extend the Non-Competition Period until the third anniversary of that day (but not later than the fifth anniversary of the effective time of the Merger) by agreeing to pay me my Base Salary per year for up to an additional two years, on the payment schedule applicable to payments of Base Salary by Acquisition (as successor to Business Resource Group) to its senior executives. As used in this Paragraph, the terms "Cause," "Good Reason," "Without Cause" and "Base Salary" have the meanings given to those terms in and Employment Agreement dated July 7, 2000 between Acquisition and me, and the term "continued unsatisfactory performance" refers to the cause described in Section 3(f)(i)(b)(v) of that Employment Agreement. I understand that, when this Agreement is signed by BRG Acquisition Corporation, I will be legally bound by it. Date: July 10, 2000 Very truly yours, /s/ John M. Palmer ------------------------------ Signature John M. Palmer ------------------------------ Name: (Print) ------------------------------ Social Security No. Accepted and Agreed To: BRG Acquisition Corporation By: /s/ Jeanette Welsh ------------------------- Jeanette Welsh EX-99.(D)(4) 14 0014.txt LETTER TO JACK PATH July 7, 2000 Mr. Jack Peth Business Resource Group 2150 North First Street Suite 101 San Jose, CA 95131 Dear Mr. Peth: Upon the cancellation of options you currently hold (the "Options") which entitle you to purchase a total of 166,000 shares of common stock of Business Resource Group (together with BRG Acquisition Corporation, "BRG"), you will become entitled to deferred compensation from BR Holdings LLC ("Holdings") as follows: 1. Whenever Holdings receives a payment of principal or interest with regard to Subordinated Notes of BRG ("BRG Notes") Holdings will promptly pay you an amount equal to the principal or interest payment you would have received had you actually held $330,000 principal amount of BRG Notes. 2. Whenever Holdings receives a payment of principal or interest with regard to Junior Subordinated Notes of Business Resource Holdings, Inc. ("Business Resource Notes"), Holdings will promptly pay you an amount equal to the principal or interest payment you would have received had you actually held $330,000 principal amount of Business Resource Notes. 3. Whenever Holdings receives a dividend or a liquidating distribution with regard to Preferred Stock of Business Resource Holdings, Inc. ("Preferred Stock"), Holdings will promptly pay you an amount equal to the dividend or liquidating distribution you would have received had you actually held 344 shares of Preferred Stock (with a liquidation preference of $344,000). 4. Whenever Holdings sells BRG Notes or Business Resource Notes, or BRG Notes or Business Resource Notes are redeemed from Holdings by BRG, (a) Holdings will promptly pay you an amount equal to (i) the price per $1 principal amount of Notes which Holdings receives in the sale or redemption (net of any commissions or other selling costs), times (ii) a principal amount of BRG Notes or Business Resource Notes (whichever is applicable) equal to the product obtained by multiplying the principal amount of BRG Notes or Business Resource Notes (whichever is applicable) described in the applicable one of Paragraph 1 or Paragraph 2 (as reduced for all prior reductions as provided in clause (b) of this Paragraph) by a fraction the numerator of which is the principal amount of BRG Notes or Business Resource Notes sold by, or redeemed from, Holdings and the denominator of which is the total principal amount of BRG Notes or Business Resource Notes (whichever is applicable) held by Holdings immediately before the sale or redemption, and (b) immediately following the sale or reduction, the principal amount of BRG Notes or Business Resource Notes (whichever is applicable) described in Paragraph 1 or Paragraph 2 will be reduced by the principal amount of BRG Notes or Business Resource Notes calculated in clause (ii) of this Paragraph. 5. Whenever Holdings sells Preferred Stock, or Preferred Stock is redeemed from Holdings by Business Resource Holdings, Inc., (a) Holdings will promptly pay you an amount equal to (i) the price per share of Preferred Stock Holdings receives in the sale or redemption (net of any commissions or other selling costs), times (ii) a number of shares of Preferred Stock equal to product obtained by multiplying the number of shares of Preferred Stock described in Paragraph 3 (as reduced for all prior reductions as provided in clause (b) of this Paragraph) by a fraction the numerator of which is the number of shares of Preferred Stock sold by, or redeemed from, Holdings and the denominator of which is the total number of shares of Preferred Stock held by Holdings immediately before the sale or redemption, and (b) immediately following the sale or redemption, the number of shares of Preferred Stock described in Paragraph 2 will be reduced by the number of shares of Preferred Stock calculated in clause (ii) of this Paragraph. 6. Your right to receive deferred compensation from Holdings as set forth above is subject to your delivering to BRG, not later than the effective time of the merger of BRG (or a successor) into an indirect wholly owned subsidiary of Holdings (the "Merger"), for common stock of BRG your written acknowledgement that the Options are cancelled, subject to the Merger's taking place, accompanied by any documents you have received evidencing the Options. The Options will remain in effect until the effective time of the Merger. Holdings will have no obligations under this Agreement unless the Options are cancelled at the effective time of the Merger. 7. Except for transfers by will or the laws of inheritance following your death, you will have no right to assign, transfer or encumber your rights to receive the deferred compensation payments described in this Agreement. You will be a general creditor of Holdings with respect to all deferred compensation payments to which you become entitled under this Agreement, and no trust fund, escrow account or security arrangement will be established for the amounts which may become due and payable under this Agreement. 8. As an inducement to Holdings to pay you deferred compensation upon your cancellation of the Options, and in order to protect Holdings and its subsidiaries against loss of goodwill of BRG and its subsidiaries, you agree that during the Non-Competition Period, you will not directly or indirectly (i) own, manage, control, participate in, consult with, render services for, or in any other manner engage in, any business that directly competes with BRG or any of its subsidiaries (which were subsidiaries of Business Resource Group), in any states or counties where BRG is actually providing services or products to customers as of the date of the Merger (including, but not limited to, Alameda, Contra Costa, Santa Clara or San Francisco County in California), except that you may control or own up to two percent of a publicly traded company with which you have no relationship other than as a passive shareholder, or (ii) solicit, influence or attempt to influence any customer or client of BRG or any of its subsidiaries to use or buy products or services of a company in competition with BRG or any of its subsidiaries. The Non-Competition Period will begin at the effective time of the Merger and end on the earlier of (A) the fifth anniversary of the effective time of the Merger, or (B) the third anniversary of the date that you cease to be an employee of BRG or a subsidiary because your employment is terminated for Cause (other than continued unsatisfactory performance) or because you terminate your employment without Good Reason. If, however, you cease to be an employee of BRG or a subsidiary because your employment is terminated Without Cause or because of continued unsatisfactory performance or because you terminate your employment with Good Reason, the Non-Competition Agreement will terminate not later than one year after the day you cease to be an employee of BRG, except that BRG may extend the Non-Competition Period until the third anniversary of that day (but not later than the fifth anniversary of the effective time of the Merger) by agreeing to pay you your Base Salary per year for up to an additional two years, on the payment schedule applicable to payments of Base Salary by BRG to its senior executives. As used in this Paragraph, the terms "Cause," "Good Reason," "Without Cause" and "Base Salary" have the meanings given to those terms in an Employment Agreement dated July 7, 2000 between Acquisition and you, and the term "continued unsatisfactory performance" refers to the cause described in Section 3(f)(i)(b)(v) of that Employment Agreement. Please execute a copy of this document to indicate that you agree with what it says and that you agree to cancel your options as described above. Very truly yours, BR Holdings LLC By: -------------------------------- AGREED TO: - -------------------------- Jack Peth EX-99.(D)(5) 15 0015.txt EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT This AGREEMENT is entered into as of July 7, 2000, by and between Jeff Tuttle ("Executive") and BRG Acquisition Corporation, a Delaware corporation (together with any successor by merger or otherwise the "Company"). 1. Duties and Scope of Employment. (a) Position. For the term of his employment under this Agreement, the Company agrees to employ Executive in the position of Executive Vice President of Marketing ("EVP of Marketing"). Executive shall report to the Chief Executive Officer of the Company. (b) Obligations to the Company. During the term of his employment, Executive shall devote his full business efforts and time to the Company. Executive shall comply with the Company's policies and rules, as they may be in effect from time to time during the term of his employment. (c) No Conflicting Obligations. Executive represents and warrants to the Company that he is under no obligations or commitments, whether contractual or otherwise, that are inconsistent with his obligations under this Agreement. Executive represents and warrants that he will not use or disclose, in connection with his employment by the Company, any trade secrets or other proprietary information or intellectual property in which Executive or any other person has any right, title or interest and that his employment by the Company as contemplated by this Agreement will not infringe or violate the rights of any other person or entity. Executive represents and warrants to the Company that he has returned all property and confidential information belonging to any prior employers. (d) Commencement Date. Executive shall commence his position as "EVP of Marketing" under this Agreement subject to the consummation of the merger of the Company with and into Business Resources Group, Inc. ("BRG") as contemplated by the Plan and Agreement of Merger dated July 7, 2000, between BRG and the Company (the "Merger Agreement"), upon the "Effective Time" of such merger (as such term is defined in the Merger Agreement) (the "Commencement Date"). 2. Term of Employment. (a) Basic Rule. The Company agrees to continue Executive's employment, and Executive agrees to remain in employment with the Company, from the Commencement Date set forth in Section 1(d) until the date when Executive's employment terminates pursuant to Section 2(b) below (the "Employment Period"). Executive's employment with the Company shall be "at will," which means that either Executive or the Company may terminate Executive's employment at any time for any reason, with or without Cause. This Agreement shall constitute the full and complete agreement between Executive and the Company on the "at will" nature of Executive's employment, which may only be changed in an express written agreement signed by Executive and the Chief Executive Officer. (b) Termination. The Company or Executive may terminate Executive's employment at any time for any reason (or no reason) by one party giving the other party thirty (30) days' notice in writing. Executive's employment shall terminate automatically in the event of his death. 3. Cash and Incentive Compensation. (a) Salary. The Company shall pay Executive as compensation for his services an annual base salary of $300,000.00, payable in accordance with the Company's standard payroll schedule for U.S. employees. (The compensation specified in Section 3(a), together with any increases in such compensation that the Company may grant from time to time, are referred to in this Agreement as "Base Salary.") (b) Earnings Bonus. Executive will earn an annual bonus (the "Bonus"). The Bonus for fiscal year 2000 will be based on the current BRG Fiscal Year 2000 Executive Bonus Program adopted by the Board of Directors of BRG. The fiscal year 2000 Bonus, however, will be based on achieving earnings targets before taxes and management bonuses (encompassing approximately ten (10) executives) above $6,248,200 and as follows: Operating Earnings Executive Bonus Amount ------------------ ---------------------- $6,248,200 60,000 $7,019,100 $120,000 $7,507,500 $130,000 $8,010,900 $140,000 $8,514,300 $150,000 etc. Executive's annual bonus for future years shall be based on a pool (the "Bonus Pool"). The Bonus Pool for fiscal years after fiscal year 2000 will equal twenty percent (20%) of Excess Earnings; provided that the Compensation Committee of the Company's Board of Directors shall have the right to limit the aggregate Bonus Pool available to be divided among all participants to $1,360,000. Subject to the provisions of Section 3(e) of this Agreement, the Bonus Pool will be divided equally among Executive and the three (3) individuals serving as Chief Executive Officer, Executive Vice President of Sales and the Chief Financial/Operating Officer of the Company as of the Commencement Date. If any portion of the Bonus Pool for any year is not paid as a result of the termination or resignation of any such individual, the unpaid amount may, in the discretion of the Compensation Committee of the Company's Board of Directors, be reallocated and paid, in whole or in part, to Executive. The Bonus will be paid no later than the second business day following the later of completion of the audit of the Company's annual financial statement or sixty-five (65) days after the end of the Company's fiscal year. 2 (i) Definitions For Bonus: The following definitions apply to the Bonus Sections of this Agreement and not for any other purpose. (a) "Net Assets": The Company's total assets minus non-interest bearing debt. (b) Operating Earnings": Earnings before interest, taxes, and amortization of goodwill and, for purposes of Section 3(b), before the payment of the Bonus (if any) paid or payable under Section 3(b). (c) "Excess Earnings": Operating Earnings above a fifteen percent (15%) return on average Net Assets during each of the twelve months in the fiscal year of the Company. (c) Stock Incentive Plan. Executive will be allowed to purchase 1.75% of the issued and outstanding shares of BRG's Common Stock as of the Commencement Date (but not less than 350,000) ("Incentive Stock") at $.05 per share, which will be the fair market value of the Incentive Stock. As soon as possible after the Commencement Date, Executive may purchase such Incentive Stock by check made payable BRG. BRG and the Company represent and warrant that immediately following the completion of the tender offer and the merger and the changes in the capitalization of BRG contemplated by the Merger Agreement, the Common Stock of BRG will consist of 25,000,000 shares of Common Stock (of which 20,000,000 shares will be outstanding or issueable). The number of shares of Incentive Stock shall be adjusted to reflect proportionately and equitably the effect of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into the BRG Common Stock), reorganization, recapitalization, reclassification or other like change in the capitalization of the BRG occurring on or after the date hereof and prior to the Commencement Date. Upon termination of Executive's employment, the BRG may repurchase the Incentive Stock or other shares not vested before or simultaneously with termination. Unvested shares may be repurchased by BRG at the price paid by the Executive if his employment terminates before the shares vest. The shares of Incentive Stock will vest as follows: Thirty percent (30%) of the shares of Incentive Stock will vest on the Commencement Date. The remaining shares of Incentive Stock will vest in equal monthly amounts on the last day of each month during the forty-eight (48) months immediately following the Commencement Date. (d) Effect of Termination of Employment. If the Company terminates Executive's employment "Without Cause" (other than within one year following a "Change of Control") or Executive quits for "Good Reason", then Executive shall receive: (A) payment of his Base Salary and any accrued but unused vacation earned through Executive's last date of employment; (B) a severance payment equal to his annual Base Salary, to be paid out in accordance with Company policy; (C) his full Bonus for the year in which termination occurs, to 3 be paid no later than the second business day following the later of completion of the audit of the Company's annual financial statement or sixty-five (65) days after the end of the Company's fiscal year; (D) continuation of medical insurance benefits at Company expense for the twelve (12) months following Executive's last day of employment; and (E) accelerated vesting of all shares Incentive Stock issued to Executive pursuant to Section 3(c) above and also of any of Executive's outstanding stock options. (e) Termination for Cause: If the Company terminates Executive's employment for "Cause" or Executive resigns without "Good Reason," he will receive his Base Salary and earned and unused vacation through the last day worked but no severance unless terminated under Section 3(f)(i)(b)(iv) or 3(f))(i)(b)(v)below, in which case he will receive a severance payment equal to his annual Base Salary, proportional and equitable share of the Bonus and nothing else. Such severance will be paid out in accordance with Company policy, and the Bonus will be paid no later than the second business day following the later of completion of the audit of the Company's annual financial statement or sixty-five (65) days after the end of the Company's fiscal year. Upon termination for "Cause", Executive's unvested Incentive Stock will not accelerate in vesting. (f) Termination Following Change of Control. If, within one year following a "Change of Control," the Company terminates Executive's employment "Without Cause" or Executive quits for "Good Reason," then Executive shall receive compensation and benefits as if terminated "Without Cause" under Section 3(d) of this Agreement. (i) Definitions. (a) "Change of Control." For all purposes under this Agreement, "Change of Control" shall mean (i) a sale or transfer of securities possessing at least fifty percent (50%) of the total combined voting power of the Company's outstanding securities to a person or persons different from the persons holding those securities immediately prior to such transaction, (ii) a merger, consolidation, recapitalization, reorganization, share exchange, or other business combination or transaction in which securities possessing at least fifty percent (50%) of the total combined voting power of the resulting, surviving or acquiring entity are held by a person or persons or its or their controlled affiliates different from the person, persons or affiliates who held such securities immediately before such combination or transaction, (iii) the sale, transfer or other disposition of all or substantially all of the Company's assets, or (iv) liquidation or dissolution of the Company. (b) Termination for "Cause." For all purposes under this Agreement, a termination for "Cause" shall mean a good faith determination by the Company's Board of Directors that Executive's employment be terminated for any of the following reasons: (i) willful misconduct that is materially injurious to the Company; (ii) misappropriation of assets of the Company; (iii) indictment (if not dismissed within 90 days), conviction, or a plea of "guilty" or "no contest" to a felony under the laws of the United States or any state thereof; (iv) Executive's continued material neglect of his duties with demonstrable adverse effect on the Company following written notice and a sixty (60)-day opportunity to cure; or (v) continued unsatisfactory performance after receipt of a written warning and at least sixty (60) days to improve. However, Section 3(f))(i)(b)(v) will be inapplicable and will 4 not constitute "Cause" after the occurrence of any event constituting a "Change of Control" as defined above. A termination of Executive's employment by the Company in any other circumstance or for any other reason, other than death or Disability, will be a termination "Without Cause." (c) "Good Reason": For purposes of Sections 3(d) and (e) above, "Good Reason" includes: Executive terminates his employment within sixty (60) days of the occurrence of (i) material diminution of the duties or responsibilities of Executive, or (ii) moving the current location where Executive performs his principal duties twenty-five (25) or more miles, without Executive's advance, written and personal consent. (ii) Termination Due to Death or Disability. If Executive's employment terminates due to death or Disability, Executive or his estate shall receive payment for Executive's Base Salary and any accrued but unused vacation earned through Executive's last date of employment, and a proportional and equitable share of the annual Bonus, but nothing else. Such Bonus will be paid no later than the second business day following the later of completion of the audit of the Company's annual financial statement or sixty-five (65) days after the end of the Company's fiscal year. For purposes of this Agreement, Disability shall mean Executive's inability to work due to a disability for four (4) consecutive months or more and the Board terminates Executive's employment for that reason. (g) Accelerated Vesting Upon a "Change of Control". Upon a "Change of Control" as defined in Section 3(f)(i)(a) above, Executive's unvested shares of Incentive Stock will be accelerated as if he had worked for the Company until the end of the vesting period specified in Section 3(c) above. 4. Vacation and Executive Benefits. During the term of his employment, Executive shall be eligible for paid vacation in accordance with the Company's standard policy for officers of the Company, as it may be amended from time to time. During the term of his employment, Executive shall receive the standard automobile allowances currently in effect for his position, and be eligible to participate in any employee benefit plans maintained by the Company for similarly situated U.S. employees, subject in each case to the generally applicable terms and conditions of the plan in question and to the determinations of any person or committee administering such plan. 5. Business Expenses. During the term of his employment, Executive shall be authorized to incur necessary and reasonable travel, entertainment and other business expenses in connection with his duties hereunder. The Company shall reimburse Executive for such expenses upon presentation of an itemized account and appropriate supporting documentation, all in accordance with the Company's generally applicable policies. 6. Non-Solicitation and Non-Compete. (a) Non-Solicitation. Following the Commencement Date and continuing until the third anniversary of the date when Executive's employment terminates for any reason, Executive shall not directly or indirectly, personally or through others, solicit or 5 attempt to solicit (on Executive's own behalf or on behalf of any other person or entity) for hire or hire any employee of the Company or any of the Company's affiliates. (a) Non-Solicitation. Following the Commencement Date and continuing until the third anniversary of the date when Executive's employment terminates for any reason, Executive shall not directly or indirectly, personally or through others, solicit or attempt to solicit (on Executive's own behalf or on behalf of any other person or entity) for hire or hire any employee of the Company or any of the Company's affiliates. (b) Non-Disclosure. As a condition of employment, Executive will execute the Company's standard Proprietary Information Agreement, a copy of which is attached. (c) Enforcement. Because Executive's services are unique and because Executive has access to confidential information, the parties hereto agree that money damages would be an inadequate remedy for any breach of this Agreement. Therefore, in the event a breach or threatened breach of this Agreement, the Company or its successors or assigns may, in addition to other rights and remedies existing in their favor, apply to any court of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce, or prevent any violations of, the provisions hereof. 7. Change in Control Benefit Limit. (a) Benefit Limit. The aggregate Present Value (measured as of the Change of Control) of the benefits to which Executive becomes entitled under this Agreement either at the time of a Change of Control or at the time of his subsequent termination of employment following a Change of Control and which constitute "parachute payments" under federal tax law shall be limited to the greater of the following dollar amounts (the "Benefit Limit"): (i) 2.99 times Executive's Average Compensation, less the Present Value (measured as of the Change of Control) of any Other Parachute Payments to which Executive is entitled other than pursuant to the provisions this Agreement, or (ii) the amount which yields Executive the greatest after-tax amount payable to him under this Agreement after taking into account the excise tax (if any) imposed under Code Section 4999) on the Vesting Parachute Payment and any Other Parachute Payments which are provided Executive under this Agreement or otherwise. (b) Definitions. For purposes of applying Code Sections 280(G) and 4999 and the Treasury Regulations thereunder to determine the Benefit Limit in effect under Section 7(a), the following definitions shall be in effect: Average Compensation means the average of Executive's W-2 wages or other compensation from the Company (or any predecessor corporation) for the five (5) calendar years (or such fewer number of calendar years of employment with the Company or such predecessor corporation) completed immediately prior to the calendar year in which the Change of Control is effected. Any W-2 wages or other compensation for a partial year of employment will be annualized, in accordance with the frequency which such wages or compensation is paid during such partial year, before inclusion in Average Compensation. 6 Code means the Internal Revenue Code of 1984, as amended from time to time. Vesting Parachute Payment means, with respect to any of Executive's Incentive Stock or outstanding stock options accelerated pursuant to the provisions of this Agreement, the portion of that acceleration benefit deemed to be a parachute payment under Code Section 280G and the Treasury Regulations issued thereunder. The portion of the acceleration benefit which is categorized as a Vesting Parachute Payment shall be calculated in accordance with the valuation provisions established under Code Section 280G and the applicable Treasury Regulations and shall include an appropriate dollar adjustment to reflect the lapse of Executive's obligation to remain in the Company's employ as a condition to the vesting of the accelerated Incentive Stock or stock options. In no event, however, will the Vesting Parachute Payment attributable to the accelerated vesting of any Incentive Stock or stock option exceed the spread (the excess of the fair market value of the accelerated Incentive Stock or option shares over the purchase price paid for the Incentive Stock or the option exercise price payable for the accelerated option shares) existing at the time of the vesting acceleration. Other Parachute Payment means any payments in the nature of compensation (other than the Vesting Parachute Payment) which are made to Executive, whether under this Agreement or any other arrangement, in connection with the Change of Control and which accordingly qualify as parachute payments within the meaning of Code Section 280G(b)(2) and the Treasury Regulations issued thereunder. Present Value means the value, determined as of the date of the Change of Control, of any payment in the nature of compensation to which Executive becomes entitled in connection with the Change of Control or the subsequent termination of his employment, including (without limitation) the Vesting Parachute Payment attributable to the accelerated vesting of his Incentive Stock and outstanding stock options and any Other Parachute Payments to which Executive becomes entitled. The Present Value of each such payment shall be determined in accordance with the provisions of Code Section 280G(d)(4), utilizing a discount rate equal to one hundred twenty percent (120%) of the applicable Federal rate in effect at the time of such determination, compounded semi-annually to the effective date of the Change of Control. (c) Resolution Procedure. In the event there is any disagreement between Executive and the Company as to whether one or more payments to which Executive becomes entitled in connection with either the Change of Control or his subsequent termination of employment constitute Vesting Parachute Payments or Other Parachute Payments or as to the determination of the Present Value thereof, such dispute will be resolved as follows: (i) In the event temporary, proposed or final Treasury Regulations in effect at the time under Code Section 280G (or applicable judicial decisions) specifically address the status of any such payment or the method of valuation therefor, the 7 characterization afforded to such payment by the Regulations (or such decisions) will, together with the applicable valuation methodology, be controlling. (ii) In the event Treasury Regulations (or applicable judicial decisions) do not address the status of any payment in dispute, the matter will be submitted for resolution to independent tax counsel ("Independent Counsel") mutually acceptable to the Company and Executive. The resolution reached by such Independent Counsel shall will be final and controlling. and all expenses incurred in connection with the retention of Independent Counsel to resolve the dispute shall be shared equally by the Company and Executive. (iii) In the event Treasury Regulations (or applicable judicial decisions) do not address the appropriate valuation methodology for any payment in dispute, the Present Value thereof will be submitted to the Company's independent auditors for determination, and the expenses incurred in obtaining such valuation shall be paid by the Company. (iv) A portion of the benefits provided under this Agreement to Executive at the time of his termination of employment following a Change of Control shall be allocated as compensation for his non-compete covenant appearing in the Share Exchange Agreement between Executive and the Company dated July 7, 2000, and to the extent the allocated benefits do not exceed the value of the non-compete covenant to the Company, those benefits shall not be considered to be parachute payments under Code Section 280G. The value of the non-compete covenant shall be determined by independent appraisal obtained at the sole cost of the Company. 8. Successors. (a) Company's Successors. This Agreement shall be binding upon any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company's business and/or assets. For all purposes under this Agreement, the term "Company" shall include any successor to the Company's business and/or assets which becomes bound by this Agreement. (b) Executive's Successors. This Agreement and all rights of Executive hereunder shall inure to the benefit of, and be enforceable by, Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. 9. Miscellaneous Provisions. (a) Notice. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally 8 delivered or when deposited with a nationally recognized overnight courier for next-day delivery or mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. Mailed notices shall be addressed to Executive at the home address which he most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary. (b) Modifications and Waivers. No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by Executive and the Chief Executive Officer. No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time. (c) Whole Agreement. No other agreements, representations or understandings (whether oral or written) which are not expressly set forth in this Agreement have been made or entered into by either party with respect to the subject matter of this Agreement. This Agreement, the Proprietary Information Agreement, and applicable stock option agreements and stock plans, contain the entire understanding of the parties with respect to the subject matter hereof. (d) Taxes. All payments made under this Agreement shall be subject to reduction to reflect taxes or other charges required to be withheld by law. (e) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California (except provisions governing the choice of law). (f) Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect. (g) No Assignment. This Agreement and all rights and obligations of Executive hereunder are personal to Executive and may not be transferred or assigned by Executive at any time. The Company may assign its rights under this Agreement to any entity that assumes the Company's obligations hereunder in connection with any sale or transfer of all or a substantial portion of the Company's assets to such entity. (h) Forum. Any dispute or claim arising out of or in connection with this Agreement shall be resolved by a court of competent jurisdiction in Santa Clara County, California. (i) Headings. The headings of the paragraphs contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of any provision of this Agreement. 9 (j) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written. EXECUTIVE s/s ------------------------------------ Jeff Tuttle BRG Acquisition Corporation By: s/s ------------------------------------ Robert Wright, II President And solely with respect to the obligations under Section 3 of the Agreement, BRG has executed this Agreement as of the day and year first above written. Business Resources Group, Inc. By: s/s ------------------------------------ Robert Wright, II President 10 EX-99.(D)(6) 16 0016.txt EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT This AGREEMENT is entered into as of July 7, 2000, by and between John W. Peth ("Executive") and BRG Acquisition Corporation, a Delaware corporation (together with any successor by merger or otherwise the "Company"). 1. Duties and Scope of Employment. (a) Position. For the term of his employment under this Agreement, the Company agrees to employ Executive in the position of President and Chief Executive Officer ("CEO"). Executive shall report to the Company's Board of Directors. Executive will also be a member of the Board of Directors of the Company. (b) Obligations to the Company. During the term of his employment, Executive shall devote his full business efforts and time to the Company. Executive shall comply with the Company's policies and rules, as they may be in effect from time to time during the term of his employment. (c) No Conflicting Obligations. Executive represents and warrants to the Company that he is under no obligations or commitments, whether contractual or otherwise, that are inconsistent with his obligations under this Agreement. Executive represents and warrants that he will not use or disclose, in connection with his employment by the Company, any trade secrets or other proprietary information or intellectual property in which Executive or any other person has any right, title or interest and that his employment by the Company as contemplated by this Agreement will not infringe or violate the rights of any other person or entity. Executive represents and warrants to the Company that he has returned all property and confidential information belonging to any prior employers. (d) Commencement Date. Executive shall commence his position as ("EVP of Sales")under this Agreement subject to the consummation of the merger of the Company with and into Business Resources Group, Inc. ("BRG") as contemplated by the Plan and Agreement of Merger dated July 7, 2000, between BRG and the Company (the "Merger Agreement"), upon the "Effective Time" of such merger (as such term is defined in the Merger Agreement) (the "Commencement Date"). (2) Term of Employment. (a) Basic Rule. The Company agrees to continue Executive's employment, and Executive agrees to remain in employment with the Company, from the Commencement Date set forth in Section 1(d) until the date when Executive's employment terminates pursuant to Section 2(b) below (the "Employment Period"). Executive's employment with the Company shall be "at will," which means that either Executive or the Company may terminate Executive's employment at any time for any reason, with or without Cause. This Agreement shall constitute the full and complete agreement between Executive and the Company on the "at will" nature of Executive's employment, which may only be changed in an express written agreement signed by Executive and a duly authorized officer of the Company (other than Executive). (b) Termination. The Company or Executive may terminate Executive's employment at any time for any reason (or no reason) by one party giving the other party thirty (30) days' notice in writing. Executive's employment shall terminate automatically in the event of his death. (3) Cash and Incentive Compensation. (a) Salary. The Company shall pay Executive as compensation for his services an annual base salary of $375,000.00, payable in accordance with the Company's standard payroll schedule for U.S. employees. (The compensation specified in Section 3(a), together with any increases in such compensation that the Company may grant from time to time, are referred to in this Agreement as "Base Salary.") (b) Earnings Bonus. Executive will earn an annual bonus (the "Bonus"). The Bonus for fiscal year 2000 will be based on the current BRG Fiscal Year 2000 Executive Bonus Program adopted by the Board of Directors of BRG. The fiscal year 2000 Bonus, however, will be based on achieving earnings targets before taxes and management bonuses (encompassing approximately ten (10) executives) above $6,248,200 and as follows: Operating Earnings Executive Bonus Amount ------------------ ---------------------- $6,248,200 $60,000 $7,019,100 $120,000 $7,507,500 $130,000 $8,010,900 $140,000 $8,514,300 $150,000 etc. Executive's annual bonus for future years shall be based on a pool (the "Bonus Pool"). The Bonus Pool for fiscal years after fiscal year 2000 will equal twenty percent (20%) of Excess Earnings; provided that the Compensation Committee of the Company's Board of Directors shall have the right to limit the aggregate Bonus Pool available to be divided among all participants to $1,360,000. Subject to the provisions of Section 3(e) of this Agreement, the Bonus Pool will be divided equally among Executive and the three (3) individuals serving as Executive Vice President of Marketing, Vice President of Sales and the Chief Financial/Operating Officer of the Company as of the Commencement Date. If any portion of the Bonus Pool for any year is not paid as a result of the termination of resignation of any such individual, the unpaid amount may, in the discretion of the Compensation Committee of the Company's Board of Directors, be reallocated and paid, in whole or in part, to Executive. The Bonus will be paid no later than the second business day following the later of completion of the audit of the Company's annual financial statement or sixty-five (65) days after the end of the Company's fiscal year. 2 (i) Definitions For Bonus: The following definitions apply to the Bonus Sections of this Agreement and not for any other purpose. (a) "Net Assets": The Company's total assets minus non-interest bearing debt. (a) "Operating Earnings": Earnings before interest, taxes, and amortization of goodwill and, for purposes of Section 3(b), before the payment of the Bonus (if any) paid or payable under Section 3(b). (c) "Excess Earnings": Operating Earnings above fifteen percent (15%) return on average Net Assets during each of the twelve months in the fiscal year of the Company. (c) Stock Incentive Plan. Executive will be allowed to purchase 6.5% of the issued and outstanding shares of BRG's Common Stock as of the Commencement Date (but not less than 1,300,000) ("Incentive Stock") at $.05 per share, which will be the fair market value of the Incentive Stock. As soon as possible after the Commencement Date, Executive may purchase such Incentive Stock by check made payable BRG. BRG and the Company represent and warrant that immediately following the completion of the tender offer and the merger and the changes in the capitalization of BRG contemplated by the Merger Agreement, the Common Stock of BRG will consist of 25,000,000 shares of Common Stock (of which 20,000,000 shares will be outstanding or issueable). The number of shares of Incentive Stock shall be adjusted to reflect proportionately and equitably the effect of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into the BRG Common Stock), reorganization, recapitalization, reclassification or other like change in the capitalization of the BRG occurring on or after the date hereof and prior to the Commencement Date. Upon termination of Executive's employment, the BRG may repurchase the Incentive Stock or other shares not vested before or simultaneously with termination. Unvested shares may be repurchased by BRG at the price paid by the Executive if his employment terminates before the shares vest. The shares of Incentive Stock will vest as follows: Thirty percent (30%) of the shares of Incentive Stock will vest on the Commencement Date. The remaining shares of Incentive Stock will vest in equal monthly amounts on the last day of each month during the forty-eight (48) months immediately following the Commencement Date. (d) Effect of Termination of Employment. If the Company terminates Executive's employment "Without Cause" (other than within one year following a "Change of Control") or Executive quits for "Good Reason", then Executive shall receive: (A) payment of his Base Salary and any accrued but unused vacation earned through Executive's last date of employment; (B) a severance payment equal to his annual Base Salary, to be paid out in accordance with Company policy; (C) his full Bonus for the year in which termination occurs, to be paid no later than the second business day following the later of completion of the audit of the 3 Company's annual financial statement or sixty-five (65) days after the end of the Company's fiscal year; (D) continuation of medical insurance benefits at Company expense for the twelve (12) months following Executive's last day of employment; and (E) accelerated vesting of all shares Incentive Stock issued to Executive pursuant to Section 3(c) above and also of any of Executive's outstanding stock options. (e) Termination for Cause: If the Company terminates Executive's employment for "Cause" or Executive resigns without "Good Reason," he will receive his Base Salary and earned and unused vacation through the last day worked but no severance unless terminated under Section 3(f)(i)(b)(iv) or 3(f))(i)(b)(v)below, in which case he will receive a severance payment equal to his annual Base Salary, proportional and equitable share of the Bonus and nothing else. Such severance will be paid out in accordance with Company policy, and the Bonus will be paid no later than the second business day following the later of completion of the audit of the Company's annual financial statement or sixty-five (65) days after the end of the Company's fiscal year. Upon termination for "Cause", Executive's unvested Incentive Stock will not accelerate in vesting. (f) Termination Following Change of Control. If, within one year following a "Change of Control," the Company terminates Executive's employment "Without Cause" or Executive quits for "Good Reason," then Executive shall receive compensation and benefits as if terminated "Without Cause" under Section 3(d) of this Agreement. (i) Definitions. (a) "Change of Control." For all purposes under this Agreement, "Change of Control" shall mean (i) a sale or transfer of securities possessing at least fifty percent (50%) of the total combined voting power of the Company's outstanding securities to a person or persons different from the persons holding those securities immediately prior to such transaction, (ii) a merger, consolidation, recapitalization, reorganization, share exchange, or other business combination or transaction in which securities possessing at least fifty percent (50%) of the total combined voting power of the resulting, surviving or acquiring entity are held by a person or persons or its or their controlled affiliates different from the person, persons or affiliates who held such securities immediately before such combination or transaction, (iii) the sale, transfer or other disposition of all or substantially all of the Company's assets, or (iv) liquidation or dissolution of the Company. (b) Termination for "Cause." For all purposes under this Agreement, a termination for "Cause" shall mean a good faith determination by the Company's Board of Directors that Executive's employment be terminated for any of the following reasons: (i) willful misconduct that is materially injurious to the Company; (ii) misappropriation of assets of the Company; (iii) indictment (if not dismissed within 90 days), conviction, or a plea of "guilty" or "no contest" to a felony under the laws of the United States or any state thereof; (iv) Executive's continued material neglect of his duties with demonstrable adverse effect on the Company following written notice and a sixty (60)-day opportunity to cure; or (v) continued unsatisfactory performance after receipt of a written warning and at least sixty (60) days to improve However, Section 3(f))(i)(b)(v) will be inapplicable and will not constitute "Cause" after the occurrence of any event constituting a "Change of Control" as 4 defined above. A termination of Executive's employment by the Company in any other circumstance or for any other reason, other than death or Disability, will be a termination "Without Cause." (c) "Good Reason": For purposes of Sections 3(d) and (e) above, "Good Reason" includes: Executive terminates his employment within sixty (60) days of the occurrence of (i) material diminution of the duties or responsibilities of Executive, or (ii) moving the current location where Executive performs his principal duties twenty-five (25) or more miles, without Executive's advance, written and personal consent. (ii) Termination Due to Death or Disability. If Executive's employment terminates due to death or Disability, Executive or his estate shall receive payment for Executive's Base Salary and any accrued but unused vacation earned through Executive's last date of employment, and a proportional and equitable share of the annual Bonus, but nothing else. Such Bonus will be paid no later than the second business day following the later of completion of the audit of the Company's annual financial statement or sixty-five (65) days after the end of the Company's fiscal year. For purposes of this Agreement, Disability shall mean Executive's inability to work due to a disability for four (4) consecutive months or more and the Board terminates Executive's employment for that reason. (g) Accelerated Vesting Upon a "Change of Control". Upon a "Change of Control" as defined in Section 3(f)(i)(a) above, Executive's unvested shares of Incentive Stock will be accelerated as if he had worked for the Company until the end of the vesting period specified in Section 3(c) above. 4. Vacation, Executive Benefits and Additional Equity. (a) During the term of his employment, Executive shall be eligible for paid vacation in accordance with the Company's standard policy for officers of the Company, as it may be amended from time to time. During the term of his employment, Executive shall receive the standard automobile allowances currently in effect for his position, and be eligible to participate in any employee benefit plans maintained by the Company for similarly situated U.S. employees, subject in each case to the generally applicable terms and conditions of the plan in question and to the determinations of any person or committee administering such plan. (b) On the Commencement Date, Executive shall purchase from the BRG, and BRG shall sell to Executive an additional 360,000 shares of BRG's Common Stock at the purchase price of $0.05 per share for a total purchase price of $18,000 payable in cash by Executive. The purchased shares shall be fully vested upon purchase and shall not be subject to forfeiture or repurchase by BRG or the Company upon Executive's termination of employment. 5. Business Expenses. During the term of his employment, Executive shall be authorized to incur necessary and reasonable travel, entertainment and other business expenses in connection with his duties hereunder. The Company shall reimburse Executive for such expenses upon presentation of an itemized account and appropriate supporting documentation, all in accordance with the Company's generally applicable policies. 5 6. Non-Solicitation and Non-Disclosure. (a) Non-Solicitation. Following the Commencement Date and continuing until the third anniversary of the date when Executive's employment terminates for any reason, Executive shall not directly or indirectly, personally or through others, solicit or attempt to solicit (on Executive's own behalf or on behalf of any other person or entity) for hire or hire any employee of the Company or any of the Company's affiliates. (b) Non-Disclosure. As a condition of employment, Executive will execute the Company's standard Proprietary Information Agreement, a copy of which is attached. (c) Enforcement. Because Executive's services are unique and because Executive has access to confidential information, the parties hereto agree that money damages would be an inadequate remedy for any breach of this Agreement. Therefore, in the event a breach or threatened breach of this Agreement, the Company or its successors or assigns may, in addition to other rights and remedies existing in their favor, apply to any court of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce, or prevent any violations of, the provisions hereof. 7. Change in Control Benefit Limit. (a) Benefit Limit. The aggregate Present Value (measured as of the Change of Control) of the benefits to which Executive becomes entitled under this Agreement either at the time of a Change of Control or at the time of his subsequent termination of employment following a Change of Control and which constitute "parachute payments" under federal tax law shall be limited to the greater of the following dollar amounts (the "Benefit Limit"): (i) 2.99 times Executive's Average Compensation, less the Present Value (measured as of the Change of Control) of any Other Parachute Payments to which Executive is entitled other than pursuant to the provisions this Agreement, or (ii) the amount which yields Executive the greatest after-tax amount payable to him under this Agreement after taking into account the excise tax (if any) imposed under Code Section 4999) on the Vesting Parachute Payment and any Other Parachute Payments which are provided Executive under this Agreement or otherwise. (b) Definitions. For purposes of applying Code Sections 280(G) and 4999 and the Treasury Regulations thereunder to determine the Benefit Limit in effect under Section 7(a), the following definitions shall be in effect: Average Compensation means the average of Executive's W-2 wages or other compensation from the Company (or any predecessor corporation) for the five (5) calendar years (or such fewer number of calendar years of employment with the Company or such predecessor corporation) completed immediately prior to the calendar year in which the Change of Control is effected. Any W-2 wages 6 or other compensation for a partial year of employment will be annualized, in accordance with the frequency which such wages or compensation is paid during such partial year, before inclusion in Average Compensation. Code means the Internal Revenue Code of 1984, as amended from time to time. Vesting Parachute Payment means, with respect to any of Executive's Incentive Stock or outstanding stock options accelerated pursuant to the provisions of this Agreement, the portion of that acceleration benefit deemed to be a parachute payment under Code Section 280G and the Treasury Regulations issued thereunder. The portion of the acceleration benefit which is categorized as a Vesting Parachute Payment shall be calculated in accordance with the valuation provisions established under Code Section 280G and the applicable Treasury Regulations and shall include an appropriate dollar adjustment to reflect the lapse of Executive's obligation to remain in the Company's employ as a condition to the vesting of the accelerated Incentive Stock or stock options. In no event, however, will the Vesting Parachute Payment attributable to the accelerated vesting of any Incentive Stock or stock option exceed the spread (the excess of the fair market value of the accelerated Incentive Stock or option shares over the purchase price paid for the Incentive Stock or the option exercise price payable for the accelerated option shares) existing at the time of the vesting acceleration. Other Parachute Payment means any payments in the nature of compensation (other than the Vesting Parachute Payment) which are made to Executive, whether under this Agreement or any other arrangement, in connection with the Change of Control and which accordingly qualify as parachute payments within the meaning of Code Section 280G(b)(2) and the Treasury Regulations issued thereunder. Present Value means the value, determined as of the date of the Change of Control, of any payment in the nature of compensation to which Executive becomes entitled in connection with the Change of Control or the subsequent termination of his employment, including (without limitation) the Vesting Parachute Payment attributable to the accelerated vesting of his Incentive Stock and outstanding stock options and any Other Parachute Payments to which Executive becomes entitled. The Present Value of each such payment shall be determined in accordance with the provisions of Code Section 280G(d)(4), utilizing a discount rate equal to one hundred twenty percent (120%) of the applicable Federal rate in effect at the time of such determination, compounded semi-annually to the effective date of the Change of Control. (c) Resolution Procedure. In the event there is any disagreement between Executive and the Company as to whether one or more payments to which Executive becomes entitled in connection with either the Change of Control or his subsequent termination of employment constitute Vesting Parachute Payments or Other Parachute Payments or as to the determination of the Present Value thereof, such dispute will be resolved as follows: 7 (i) In the event temporary, proposed or final Treasury Regulations in effect at the time under Code Section 280G (or applicable judicial decisions) specifically address the status of any such payment or the method of valuation therefor, the characterization afforded to such payment by the Regulations (or such decisions) will, together with the applicable valuation methodology, be controlling. (ii) In the event Treasury Regulations (or applicable judicial decisions) do not address the status of any payment in dispute, the matter will be submitted for resolution to independent tax counsel ("Independent Counsel") mutually acceptable to the Company and Executive. The resolution reached by such Independent Counsel shall will be final and controlling. and all expenses incurred in connection with the retention of Independent Counsel to resolve the dispute shall be shared equally by the Company and Executive. (iii) In the event Treasury Regulations (or applicable judicial decisions) do not address the appropriate valuation methodology for any payment in dispute, the Present Value thereof will be submitted to the Company's independent auditors for determination, and the expenses incurred in obtaining such valuation shall be paid by the Company. (iv) A portion of the benefits provided under this Agreement to Executive at the time of his termination of employment following a Change of Control shall be allocated as compensation for his non-compete covenant appearing in an Employee Stock Program which will be implemented before the Commencement Date, and to the extent the allocated benefits do not exceed the value of the non-compete covenant to the Company, those benefits shall not be considered to be parachute payments under Code Section 280G. The value of the non-compete covenant shall be determined by independent appraisal obtained at the sole cost of the Company. 8. Successors (a) Company's Successors. This Agreement shall be binding upon any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company's business and/or assets. For all purposes under this Agreement, the term "Company" shall include any successor to the Company's business and/or assets which becomes bound by this Agreement. (b) Executive's Successors. This Agreement and all rights of Executive hereunder shall inure to the benefit of, and be enforceable by, Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. 9. Miscellaneous Provisions 8 (a) Notice. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when deposited with a nationally recognized overnight courier for next-day delivery or mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. Mailed notices shall be addressed to Executive at the home address which he most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary. (b) Modifications and Waivers. No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by Executive and by an authorized officer of the Company (other than Executive). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time. (c) Whole Agreement. No other agreements, representations or understandings (whether oral or written) which are not expressly set forth in this Agreement have been made or entered into by either party with respect to the subject matter of this Agreement. This Agreement, the Proprietary Information Agreement, and applicable stock option agreements and stock plans, contain the entire understanding of the parties with respect to the subject matter hereof. (d) Taxes. All payments made under this Agreement shall be subject to reduction to reflect taxes or other charges required to be withheld by law. (e) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California (except provisions governing the choice of law). (f) Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect. (g) No Assignment. This Agreement and all rights and obligations of Executive hereunder are personal to Executive and may not be transferred or assigned by Executive at any time. The Company may assign its rights under this Agreement to any entity that assumes the Company's obligations hereunder in connection with any sale or transfer of all or a substantial portion of the Company's assets to such entity. (h) Forum. Any dispute or claim arising out of or in connection with this Agreement shall be resolved by a court of competent jurisdiction in Santa Clara County, California. (i) Headings. The headings of the paragraphs contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of any provision of this Agreement. 9 (j) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written. EXECUTIVE s/s____________________________________ John W. Peth BRG Acquisition Corporation By: s/s________________________________ Robert Wright, II President And solely with respect to the obligations under Sections 3 and 4 of the Agreement, BRG has executed this Agreement as of the day and year first above written. Business Resources Group, Inc. By: s/s_________________________________ Robert Wright, II President 10 EX-99.(D)(7) 17 0017.txt EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT This AGREEMENT is entered into as of July 7, 2000, by and between John Palmer ("Executive") and BRG Acquisition Corporation, a Delaware corporation (together with any successor by merger or otherwise the "Company"). 1. Duties and Scope of Employment. (a) Position. For the term of his employment under this Agreement, the Company agrees to employ Executive in the position of Chief Operating Officer and Chief Financial Officer ("COO/CFO"). Executive shall report to the Chief Executive Officer of the Company. (b) Obligations to the Company. During the term of his employment, Executive shall devote his full business efforts and time to the Company. Executive shall comply with the Company's policies and rules, as they may be in effect from time to time during the term of his employment. (c) No Conflicting Obligations. Executive represents and warrants to the Company that he is under no obligations or commitments, whether contractual or otherwise, that are inconsistent with his obligations under this Agreement. Executive represents and warrants that he will not use or disclose, in connection with his employment by the Company, any trade secrets or other proprietary information or intellectual property in which Executive or any other person has any right, title or interest and that his employment by the Company as contemplated by this Agreement will not infringe or violate the rights of any other person or entity. Executive represents and warrants to the Company that he has returned all property and confidential information belonging to any prior employers. (d) Commencement Date. Executive shall commence his position as COO/CFO under this Agreement subject to the consummation of the merger of the Company with and into Business Resources Group, Inc. ("BRG") as contemplated by the Plan and Agreement of Merger dated July 7, 2000, between BRG and the Company (the "Merger Agreement"), upon the "Effective Time" of such merger (as such term is defined in the Merger Agreement) (the "Commencement Date"). 2. Term of Employment. (a) Basic Rule. The Company agrees to continue Executive's employment, and Executive agrees to remain in employment with the Company, from the Commencement Date set forth in Section 1(d) until the date when Executive's employment terminates pursuant to Section 2(b) below (the "Employment Period"). Executive's employment with the Company shall be "at will," which means that either Executive or the Company may terminate Executive's employment at any time for any reason, with or without Cause. This Agreement shall constitute the full and complete agreement between Executive and the Company on the "at will" nature of Executive's employment, which may only be changed in an express written agreement signed by Executive and the Chief Executive Officer. (b) Termination. The Company or Executive may terminate Executive's employment at any time for any reason (or no reason) by one party giving the other party thirty (30) days' notice in writing. Executive's employment shall terminate automatically in the event of his death. 3. Cash and Incentive Compensation. (a) Salary. The Company shall pay Executive as compensation for his services an annual base salary of $160,000.00, payable in accordance with the Company's standard payroll schedule for U.S. employees. (The compensation specified in Section 3(a), together with any increases in such compensation that the Company may grant from time to time, are referred to in this Agreement as "Base Salary.") (b) Earnings Bonus. Executive will earn an annual bonus (the "Bonus"). The Bonus for fiscal year 2000 will be based on the current BRG Fiscal Year 2000 Executive Bonus Program adopted by the Board of Directors of BRG. The fiscal year 2000 Bonus, however, will be based on achieving earnings targets before taxes and management bonuses (encompassing approximately ten (10) executives) above $6,248,200 and as follows: Operating Earnings Executive Bonus Amount ------------------ ---------------------- $ 6,248,200 $60,000 $7,019,100 $120,000 $7,507,500 $130,000 $8,010,900 $140,000 $8,514,300 $150,000 etc. Executive's annual bonus for future years shall be based on a pool (the "Bonus Pool"). The Bonus Pool for fiscal years after fiscal year 2000 will equal twenty percent (20%) of Excess Earnings; provided that the Compensation Committee of the Company's Board of Directors shall have the right to limit the aggregate Bonus Pool available to be divided among all participants to $1,360,000. Subject to the provisions of Section 3(e) of this Agreement, the Bonus Pool will be divided equally among Executive and the three (3) individuals serving as Chief Executive Officer, Executive Vice President of Sales and the Executive Vice President of Marketing of the Company as of the Commencement Date. If any portion of the Bonus Pool for any year is not paid as a result of the termination or resignation of any such individual, the unpaid amount may, in the discretion of the Compensation Committee of the Company's Board of Directors, be reallocated and paid, in whole or in part, to Executive. The Bonus will be paid no later than the second business day following the later of completion of the audit of the Company's annual financial statement or sixty-five (65) days after the end of the Company's fiscal year. 2 (i) Definitions For Bonus: The following definitions apply to the Bonus Sections of this Agreement and not for any other purpose. (a) "Net Assets": The Company's total assets minus non-interest bearing debt. (b) "Operating Earnings": Earnings before interest, taxes, and amortization of goodwill and, for purposes of Section 3(b), before the payment of the Bonus (if any) paid or payable under Section 3(b). (c) "Excess Earnings": Operating Earnings above a fifteen percent (15%) return on average Net Assets during each of the twelve months in the fiscal year of the Company. (c) Stock Incentive Plan. Executive will be allowed to purchase 2.0% of the issued and outstanding shares of BRG's Common Stock as of the Commencement Date (but not less than 400,000) at $.05 per share, which will be the fair market value of the Incentive Stock. As soon as possible after the Commencement Date, Executive may purchase such Incentive Stock by check made payable BRG. BRG and the Company represent and warrant that immediately following the completion of the tender offer and the merger and the changes in the capitalization of BRG contemplated by the Merger Agreement, the Common Stock capital stock of BRG will consist of 25,000,000 shares of Common Stock (of which 20,000,000 shares will be outstanding or issueable). The number of shares of Incentive Stock shall be adjusted to reflect proportionately and equitably the effect of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into the BRG Common Stock), reorganization, recapitalization, reclassification or other like change in the capitalization of the BRG occurring on or after the date hereof and prior to the Commencement Date. Upon termination of Executive's employment, the BRG may repurchase the Incentive Stock or other shares not vested before or simultaneously with termination. Unvested shares may be repurchased by BRG at the price paid by the Executive if his employment terminates before the shares vest. The shares of Incentive Stock will vest as follows: Thirty percent (30%) of the shares of Incentive Stock will vest on the Commencement Date. The remaining shares of Incentive Stock will vest in equal monthly amounts on the last day of each month during the forty-eight (48) months immediately following the Commencement Date. (d) Effect of Termination of Employment. If the Company terminates Executive's employment "Without Cause" (other than within one year following a "Change of Control") or Executive quits for "Good Reason", then Executive shall receive: (A) payment of his Base Salary and any accrued but unused vacation earned through Executive's last date of employment; (B) a severance payment equal to his annual Base Salary, to be paid out in accordance with Company policy; (C) his full Bonus for the year in which termination occurs, to be paid no later than the second business day following the later of completion of the audit of the 3 Company's annual financial statement or sixty-five (65) days after the end of the Company's fiscal year; (D) continuation of medical insurance benefits at Company expense for the twelve (12) months following Executive's last day of employment; and (E) accelerated vesting of all shares Incentive Stock issued to Executive pursuant to Section 3(c) above and also of any of Executive's outstanding stock options. (e) Termination for Cause: If the Company terminates Executive's employment for "Cause" or Executive resigns without "Good Reason," he will receive his Base Salary and earned and unused vacation through the last day worked but no severance unless terminated under Section 3(f)(i)(b)(iv) or 3(f))(i)(b)(v)below, in which case he will receive a severance payment equal to his annual Base Salary, proportional and equitable share of the Bonus and nothing else. Such severance will be paid out in accordance with Company policy, and the Bonus will be paid no later than the second business day following the later of completion of the audit of the Company's annual financial statement or sixty-five (65) days after the end of the Company's fiscal year. Upon termination for "Cause", Executive's unvested Incentive Stock will not accelerate in vesting. (f) Termination Following Change of Control. If, within one year following a "Change of Control," the Company terminates Executive's employment "Without Cause" or Executive quits for "Good Reason," then Executive shall receive compensation and benefits as if terminated "Without Cause" under Section 3(d) of this Agreement. (i) Definitions. (a) "Change of Control." For all purposes under this Agreement, "Change of Control" shall mean (i) a sale or transfer of securities possessing at least fifty percent (50%) of the total combined voting power of the Company's outstanding securities to a person or persons different from the persons holding those securities immediately prior to such transaction, (ii) a merger, consolidation, recapitalization, reorganization, share exchange, or other business combination or transaction in which securities possessing at least fifty percent (50%) of the total combined voting power of the resulting, surviving or acquiring entity are held by a person or persons or its or their controlled affiliates different from the person, persons or affiliates who held such securities immediately before such combination or transaction, (iii) the sale, transfer or other disposition of all or substantially all of the Company's assets, or (iv) liquidation or dissolution of the Company. (b) Termination for "Cause." For all purposes under this Agreement, a termination for "Cause" shall mean a good faith determination by the Company's Board of Directors that Executive's employment be terminated for any of the following reasons: (i) willful misconduct that is materially injurious to the Company; (ii) misappropriation of assets of the Company; (iii) indictment (if not dismissed within 90 days), conviction, or a plea of "guilty" or "no contest" to a felony under the laws of the United States or any state thereof; (iv) Executive's continued material neglect of his duties with demonstrable adverse effect on the Company following written notice and a sixty (60)-day opportunity to cure; or (v) continued unsatisfactory performance after receipt of a written warning and at least sixty (60) days to improve However, Section 3(f))(i)(b)(v) will be inapplicable and will not constitute "Cause" after the occurrence of any event constituting a "Change of Control" as 4 defined above. A termination of Executive's employment by the Company in any other circumstance or for any other reason, other than death or Disability, will be a termination "Without Cause." (c) "Good Reason": For purposes of Sections 3(d) and (e) above, "Good Reason" includes: Executive terminates his employment within sixty (60) days of the occurrence of (i) material diminution of the duties or responsibilities of Executive, or (ii) moving the current location where Executive performs his principal duties twenty-five (25) or more miles, without Executive's advance, written and personal consent. (ii) Termination Due to Death or Disability. If Executive's employment terminates due to death or Disability, Executive or his estate shall receive payment for Executive's Base Salary and any accrued but unused vacation earned through Executive's last date of employment, and a proportional and equitable share of the annual Bonus, but nothing else. Such Bonus will be paid no later than the second business day following the later of completion of the audit of the Company's annual financial statement or sixty-five (65) days after the end of the Company's fiscal year. For purposes of this Agreement, Disability shall mean Executive's inability to work due to a disability for four (4) consecutive months or more and the Board terminates Executive's employment for that reason. (g) Accelerated Vesting Upon a "Change of Control". Upon a "Change of Control" as defined in Section 3(f)(i)(a) above, Executive's unvested shares of Incentive Stock will be accelerated as if he had worked for the Company until the end of the vesting period specified in Section 3(c) above. 4. Vacation and Executive Benefits. During the term of his employment, Executive shall be eligible for paid vacation in accordance with the Company's standard policy for officers of the Company, as it may be amended from time to time. During the term of his employment, Executive shall receive the standard automobile allowances currently in effect for his position, and be eligible to participate in any employee benefit plans maintained by the Company for similarly situated U.S. employees, subject in each case to the generally applicable terms and conditions of the plan in question and to the determinations of any person or committee administering such plan. 5. Business Expenses. During the term of his employment, Executive shall be authorized to incur necessary and reasonable travel, entertainment and other business expenses in connection with his duties hereunder. The Company shall reimburse Executive for such expenses upon presentation of an itemized account and appropriate supporting documentation, all in accordance with the Company's generally applicable policies. 6. Non-Solicitation and Non-Disclosure. (a) Non-Solicitation. Following the Commencement Date and continuing until the third anniversary of the date when Executive's employment terminates for any reason, Executive shall not directly or indirectly, personally or through others, solicit or attempt to solicit (on Executive's own behalf or on behalf of any other person or entity) for hire or hire any employee of the Company or any of the Company's affiliates. 5 (b) Non-Disclosure. As a condition of employment, Executive will execute the Company's standard Proprietary Information Agreement, a copy of which is attached. (c) Enforcement. Because Executive's services are unique and because Executive has access to confidential information, the parties hereto agree that money damages would be an inadequate remedy for any breach of this Agreement. Therefore, in the event a breach or threatened breach of this Agreement, the Company or its successors or assigns may, in addition to other rights and remedies existing in their favor, apply to any court of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce, or prevent any violations of, the provisions hereof. 7. Change in Control Benefit Limit. (a) Benefit Limit. The aggregate Present Value (measured as of the Change of Control) of the benefits to which Executive becomes entitled under this Agreement either at the time of a Change of Control or at the time of his subsequent termination of employment following a Change of Control and which constitute "parachute payments" under federal tax law shall be limited to the greater of the following dollar amounts (the "Benefit Limit"): (i) 2.99 times Executive's Average Compensation, less the Present Value (measured as of the Change of Control) of any Other Parachute Payments to which Executive is entitled other than pursuant to the provisions this Agreement, or (ii) the amount which yields Executive the greatest after-tax amount payable to him under this Agreement after taking into account the excise tax (if any) imposed under Code Section 4999) on the Vesting Parachute Payment and any Other Parachute Payments which are provided Executive under this Agreement or otherwise. (b) Definitions. For purposes of applying Code Sections 280(G) and 4999 and the Treasury Regulations thereunder to determine the Benefit Limit in effect under Section 7(a), the following definitions shall be in effect: Average Compensation means the average of Executive's W-2 wages or other compensation from the Company (or any predecessor corporation) for the five (5) calendar years (or such fewer number of calendar years of employment with the Company or such predecessor corporation) completed immediately prior to the calendar year in which the Change of Control is effected. Any W-2 wages or other compensation for a partial year of employment will be annualized, in accordance with the frequency which such wages or compensation is paid during such partial year, before inclusion in Average Compensation. Code means the Internal Revenue Code of 1984, as amended from time to time. 6 Vesting Parachute Payment means, with respect to any of Executive's Incentive Stock or outstanding stock options accelerated pursuant to the provisions of this Agreement, the portion of that acceleration benefit deemed to be a parachute payment under Code Section 280G and the Treasury Regulations issued thereunder. The portion of the acceleration benefit which is categorized as a Vesting Parachute Payment shall be calculated in accordance with the valuation provisions established under Code Section 280G and the applicable Treasury Regulations and shall include an appropriate dollar adjustment to reflect the lapse of Executive's obligation to remain in the Company's employ as a condition to the vesting of the accelerated Incentive Stock or stock options. In no event, however, will the Vesting Parachute Payment attributable to the accelerated vesting of any Incentive Stock or stock option exceed the spread (the excess of the fair market value of the accelerated Incentive Stock or option shares over the purchase price paid for the Incentive Stock or the option exercise price payable for the accelerated option shares) existing at the time of the vesting acceleration. Other Parachute Payment means any payments in the nature of compensation (other than the Vesting Parachute Payment) which are made to Executive, whether under this Agreement or any other arrangement, in connection with the Change of Control and which accordingly qualify as parachute payments within the meaning of Code Section 280G(b)(2) and the Treasury Regulations issued thereunder. Present Value means the value, determined as of the date of the Change of Control, of any payment in the nature of compensation to which Executive becomes entitled in connection with the Change of Control or the subsequent termination of his employment, including (without limitation) the Vesting Parachute Payment attributable to the accelerated vesting of his Incentive Stock and outstanding stock options and any Other Parachute Payments to which Executive becomes entitled. The Present Value of each such payment shall be determined in accordance with the provisions of Code Section 280G(d)(4), utilizing a discount rate equal to one hundred twenty percent (120%) of the applicable Federal rate in effect at the time of such determination, compounded semi-annually to the effective date of the Change of Control. (c) Resolution Procedure. In the event there is any disagreement between Executive and the Company as to whether one or more payments to which Executive becomes entitled in connection with either the Change of Control or his subsequent termination of employment constitute Vesting Parachute Payments or Other Parachute Payments or as to the determination of the Present Value thereof, such dispute will be resolved as follows: (i) In the event temporary, proposed or final Treasury Regulations in effect at the time under Code Section 280G (or applicable judicial decisions) specifically address the status of any such payment or the method of valuation therefor, the characterization afforded to such payment by the Regulations (or such decisions) will, together with the applicable valuation methodology, be controlling. 7 (ii) In the event Treasury Regulations (or applicable judicial decisions) do not address the status of any payment in dispute, the matter will be submitted for resolution to independent tax counsel ("Independent Counsel") mutually acceptable to the Company and Executive. The resolution reached by such Independent Counsel shall will be final and controlling. and all expenses incurred in connection with the retention of Independent Counsel to resolve the dispute shall be shared equally by the Company and Executive. (iii) In the event Treasury Regulations (or applicable judicial decisions) do not address the appropriate valuation methodology for any payment in dispute, the Present Value thereof will be submitted to the Company's independent auditors for determination, and the expenses incurred in obtaining such valuation shall be paid by the Company. (iv) A portion of the benefits provided under this Agreement to Executive at the time of his termination of employment following a Change of Control shall be allocated as compensation for his non-compete covenant appearing in the Tender Agreement between Executive and the Company which will be consummated by the Commencement Date. To the extent the allocated benefits do not exceed the value of the non-compete covenant to the Company, those benefits shall not be considered to be parachute payments under Code Section 280G. The value of the non-compete covenant shall be determined by independent appraisal obtained at the sole cost of the Company. 8. Successors (a) Company's Successors. This Agreement shall be binding upon any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company's business and/or assets. For all purposes under this Agreement, the term "Company" shall include any successor to the Company's business and/or assets which becomes bound by this Agreement. (b) Executive's Successors. This Agreement and all rights of Executive hereunder shall inure to the benefit of, and be enforceable by, Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. 9. Miscellaneous Provisions (a) Notice. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when deposited with a nationally recognized overnight courier for next-day delivery or mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. Mailed notices shall be addressed to Executive at the home address which he most recently 8 communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary. (b) Modifications and Waivers. No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by Executive and the Chief Executive Officer. No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time. (c) Whole Agreement. No other agreements, representations or understandings (whether oral or written) which are not expressly set forth in this Agreement have been made or entered into by either party with respect to the subject matter of this Agreement. This Agreement, the Proprietary Information Agreement, and applicable stock option agreements and stock plans, contain the entire understanding of the parties with respect to the subject matter hereof. (d) Taxes. All payments made under this Agreement shall be subject to reduction to reflect taxes or other charges required to be withheld by law. (e) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California (except provisions governing the choice of law). (f) Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect. (g) No Assignment. This Agreement and all rights and obligations of Executive hereunder are personal to Executive and may not be transferred or assigned by Executive at any time. The Company may assign its rights under this Agreement to any entity that assumes the Company's obligations hereunder in connection with any sale or transfer of all or a substantial portion of the Company's assets to such entity. (h) Forum. Any dispute or claim arising out of or in connection with this Agreement shall be resolved by a court of competent jurisdiction in Santa Clara County, California. (i) Headings. The headings of the paragraphs contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of any provision of this Agreement. (j) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 9 IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written. EXECUTIVE s/s --------------------------------- John Palmer BRG Acquisition Corporation By: s/s --------------------------------- Robert Wright, II President And solely with respect to the obligations under Section 3 of the Agreement, BRG has executed this Agreement as of the day and year first above written. Business Resources Group, Inc. By: s/s --------------------------------- Robert Wright, II President 10 EX-99.(D)(8) 18 0018.txt EMPLOYMENT AGREEMENT - MCNAY EMPLOYMENT AGREEMENT This AGREEMENT is entered into as of July 7, 2000, by and between Brian McNay ("Executive") and BRG Acquisition Corporation, a Delaware corporation (together with any successor by merger or otherwise the "Company"). 1. Duties and Scope of Employment. (a) Position. For the term of his employment under this Agreement, the Company agrees to employ Executive in the position of Executive Vice President of Sales ("EVP of Sales"). Executive shall report to the Chief Executive Officer of the Company. (b) Obligations to the Company. During the term of his employment, Executive shall devote his full business efforts and time to the Company. Executive shall comply with the Company's policies and rules, as they may be in effect from time to time during the term of his employment. (c) No Conflicting Obligations. Executive represents and warrants to the Company that he is under no obligations or commitments, whether contractual or otherwise, that are inconsistent with his obligations under this Agreement. Executive represents and warrants that he will not use or disclose, in connection with his employment by the Company, any trade secrets or other proprietary information or intellectual property in which Executive or any other person has any right, title or interest and that his employment by the Company as contemplated by this Agreement will not infringe or violate the rights of any other person or entity. Executive represents and warrants to the Company that he has returned all property and confidential information belonging to any prior employers. (d) Commencement Date. Executive shall commence his position as ("EVP of Sales") under this Agreement subject to the consummation of the merger of the Company with and into Business Resources Group, Inc. ("BRG") as contemplated by the Plan and Agreement of Merger dated July 7, 2000, between BRG and the Company (the "Merger Agreement"), upon the "Effective Time" of such merger (as such term is defined in the Merger Agreement) (the "Commencement Date"). 2. Term of Employment. (a) Basic Rule. The Company agrees to continue Executive's employment, and Executive agrees to remain in employment with the Company, from the Commencement Date set forth in Section 1(d) until the date when Executive's employment terminates pursuant to Section 2(b) below (the "Employment Period"). Executive's employment with the Company shall be "at will," which means that either Executive or the Company may terminate Executive's employment at any time for any reason, with or without Cause. This Agreement shall constitute the full and complete agreement between Executive and the Company on the "at will" nature of Executive's employment, which may only be changed in an express written agreement signed by Executive and the Chief Executive Officer. (b) Termination. The Company or Executive may terminate Executive's employment at any time for any reason (or no reason) by one party giving the other party thirty (30) days' notice in writing. Executive's employment shall terminate automatically in the event of his death. 3. Cash and Incentive Compensation. (a) Salary. The Company shall pay Executive as compensation for his services an annual base salary of $525,000.00, payable in accordance with the Company's standard payroll schedule for U.S. employees. (The compensation specified in Section 3(a), together with any increases in such compensation that the Company may grant from time to time, are referred to in this Agreement as "Base Salary.") (b) Earnings Bonus. Executive will earn an annual bonus (the "Bonus"). The Bonus for fiscal year 2000 will be based on the current BRG Fiscal Year 2000 Executive Bonus Program adopted by the Board of Directors of BRG. The fiscal year 2000 Bonus, however, will be based on achieving earnings targets before taxes and management bonuses (encompassing approximately ten (10) executives) above $6,248,200 and as follows: Operating Earnings Executive Bonus Amount ------------------ ---------------------- $6,248,200 $ 60,000 $7,019,100 $120,000 $7,507,500 $130,000 $8,010,900 $140,000 $8,514,300 $150,000 etc. Executive's annual bonus for future years shall be based on a pool (the "Bonus Pool"). The Bonus Pool for fiscal years after fiscal year 2000 will equal twenty percent (20%) of Excess Earnings; provided that the Compensation Committee of the Company's Board of Directors shall have the right to limit the aggregate Bonus Pool available to be divided among all participants to $1,360,000. Subject to the provisions of Section 3(e) of this Agreement, the Bonus Pool will be divided equally among Executive and the three (3) individuals serving as Chief Executive Officer, Executive Vice President of Marketing and the Chief Financial/Operating Officer of the Company as of the Commencement Date. If any portion of the Bonus Pool for any year is not paid as a result of the termination or resignation of any such individual, the unpaid amount may, in the discretion of the Compensation Committee of the Company's Board of Directors, be reallocated and paid, in whole or in part, to Executive. The Bonus will be paid no later than the second business day following the later of completion of the audit of the Company's annual financial statement or sixty-five (65) days after the end of the Company's fiscal year. 2 (i) Definitions For Bonus: The following definitions apply to the Bonus Sections of this Agreement and not for any other purpose. (a) "Net Assets": The Company's total assets minus non-interest bearing debt. (b) "Operating Earnings": Earnings before interest, taxes, and amortization of goodwill and, for purposes of Section 3(b), before the payment of the Bonus (if any) paid or payable under Section 3(b). (c) "Excess Earnings": Operating Earnings above a fifteen percent (15%) return on average Net Assets during each of the twelve months in the fiscal year of the Company. (c) Stock Incentive Plan. Executive will be allowed to purchase 1.75% of the issued and outstanding shares of the Company's Common Stock as of the Commencement Date (but not less than 350,000) ("Incentive Stock") at $.05 per share, which will be the fair market value of the Incentive Stock. As soon as possible after the Commencement Date, Executive may purchase such Incentive Stock by check made payable BRG. BRG and the Company represent and warrant that immediately following the completion of the tender offer and the merger and the changes in the capitalization of BRG contemplated by the Merger Agreement, the Common Stock of BRG will consist of 25,000,000 shares of Common Stock (of which 20,000,000 shares will be outstanding or issueable). The number of shares of Incentive Stock shall be adjusted to reflect proportionately and equitably the effect of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into the BRG Common Stock), reorganization, recapitalization, reclassification or other like change in the capitalization of the BRG occurring on or after the date hereof and prior to the Commencement Date. Upon termination of Executive's employment, the BRG may repurchase the Incentive Stock or other shares not vested before or simultaneously with termination. Unvested shares may be repurchased by BRG at the price paid by the Executive if his employment terminates before the shares vest. The shares of Incentive Stock will vest as follows: Thirty percent (30%) of the shares of Incentive Stock will vest on the Commencement Date. The remaining shares of Incentive Stock will vest in equal monthly amounts on the last day of each month during the forty-eight (48) months immediately following the Commencement Date. (d) Effect of Termination of Employment. If the Company terminates Executive's employment "Without Cause" (other than within one year following a "Change of Control") or Executive quits for "Good Reason", then Executive shall receive: (A) payment of his Base Salary and any accrued but unused vacation earned through Executive's last date of employment; (B) a severance payment equal to his annual Base Salary, to be paid out in accordance with Company policy; (C) his full Bonus for the year in which termination occurs, to 3 be paid no later than the second business day following the later of completion of the audit of the Company's annual financial statement or sixty-five (65) days after the end of the Company's fiscal year; (D) continuation of medical insurance benefits at Company expense for the twelve (12) months following Executive's last day of employment; and (E) accelerated vesting of all shares Incentive Stock issued to Executive pursuant to Section 3(c) above and also of any of Executive's outstanding stock options. (e) Termination for Cause: If the Company terminates Executive's employment for "Cause" or Executive resigns without "Good Reason," he will receive his Base Salary and earned and unused vacation through the last day worked but no severance unless terminated under Section 3(f)(i)(b)(iv) or 3(f))(i)(b)(v)below, in which case he will receive a severance payment equal to his annual Base Salary, proportional and equitable share of the Bonus and nothing else. Such severance will be paid out in accordance with Company policy, and the Bonus will be paid no later than the second business day following the later of completion of the audit of the Company's annual financial statement or sixty-five (65) days after the end of the Company's fiscal year. Upon termination for "Cause", Executive's unvested Incentive Stock will not accelerate in vesting. (f) Termination Following Change of Control. If, within one year following a "Change of Control," the Company terminates Executive's employment "Without Cause" or Executive quits for "Good Reason," then Executive shall receive compensation and benefits as if terminated "Without Cause" under Section 3(d) of this Agreement. (i) Definitions. (a) "Change of Control." For all purposes under this Agreement, "Change of Control" shall mean (i) a sale or transfer of securities possessing at least fifty percent (50%) of the total combined voting power of the Company's outstanding securities to a person or persons different from the persons holding those securities immediately prior to such transaction, (ii) a merger, consolidation, recapitalization, reorganization, share exchange, or other business combination or transaction in which securities possessing at least fifty percent (50%) of the total combined voting power of the resulting, surviving or acquiring entity are held by a person or persons or its or their controlled affiliates different from the person, persons or affiliates who held such securities immediately before such combination or transaction, (iii) the sale, transfer or other disposition of all or substantially all of the Company's assets, or (iv) liquidation or dissolution of the Company. (b) Termination for "Cause." For all purposes under this Agreement, a termination for "Cause" shall mean a good faith determination by the Company's Board of Directors that Executive's employment be terminated for any of the following reasons: (i) willful misconduct that is materially injurious to the Company; (ii) misappropriation of assets of the Company; (iii) indictment (if not dismissed within 90 days), conviction, or a plea of "guilty" or "no contest" to a felony under the laws of the United States or any state thereof; (iv) Executive's continued material neglect of his duties with demonstrable adverse effect on the Company following written notice and a sixty (60)-day opportunity to cure; or (v) continued unsatisfactory performance after receipt of a written warning and at least sixty (60) days to improve. However, Section 3(f))(i)(b)(v) will be inapplicable and will 4 not constitute "Cause" after the occurrence of any event constituting a "Change of Control" as defined above. A termination of Executive's employment by the Company in any other circumstance or for any other reason, other than death or Disability, will be a termination "Without Cause." (c) "Good Reason": For purposes of Sections 3(d) and (e) above, "Good Reason" includes: Executive terminates his employment within sixty (60) days of the occurrence of (i) material diminution of the duties or responsibilities of Executive, or (ii) moving the current location where Executive performs his principal duties twenty-five (25) or more miles, without Executive's advance, written and personal consent. (ii) Termination Due to Death or Disability. If Executive's employment terminates due to death or Disability, Executive or his estate shall receive payment for Executive's Base Salary and any accrued but unused vacation earned through Executive's last date of employment, and a proportional and equitable share of the annual Bonus, but nothing else. Such Bonus will be paid no later than the second business day following the later of completion of the audit of the Company's annual financial statement or sixty-five (65) days after the end of the Company's fiscal year. For purposes of this Agreement, Disability shall mean Executive's inability to work due to a disability for four (4) consecutive months or more and the Board terminates Executive's employment for that reason. (g) Accelerated Vesting Upon a "Change of Control". Upon a "Change of Control" as defined in Section 3(f)(i)(a) above, Executive's unvested shares of Incentive Stock will be accelerated as if he had worked for the Company until the end of the vesting period specified in Section 3(c) above. 4. Vacation and Executive Benefits. During the term of his employment, Executive shall be eligible for paid vacation in accordance with the Company's standard policy for officers of the Company, as it may be amended from time to time. During the term of his employment, Executive shall receive the standard automobile allowances currently in effect for his position, and be eligible to participate in any employee benefit plans maintained by the Company for similarly situated U.S. employees, subject in each case to the generally applicable terms and conditions of the plan in question and to the determinations of any person or committee administering such plan. 5. Business Expenses. During the term of his employment, Executive shall be authorized to incur necessary and reasonable travel, entertainment and other business expenses in connection with his duties hereunder. The Company shall reimburse Executive for such expenses upon presentation of an itemized account and appropriate supporting documentation, all in accordance with the Company's generally applicable policies. 6. Non-Solicitation and Non-Disclosure. (a) Non-Solicitation. Following the Commencement Date and continuing until the third anniversary of the date when Executive's employment terminates for any reason, Executive shall not directly or indirectly, personally or through others, solicit or 5 attempt to solicit (on Executive's own behalf or on behalf of any other person or entity) for hire or hire any employee of the Company or any of the Company's affiliates. (b) Non-Disclosure. As a condition of employment, Executive will execute the Company's standard Proprietary Information Agreement, a copy of which is attached. (c) Enforcement. Because Executive's services are unique and because Executive has access to confidential information, the parties hereto agree that money damages would be an inadequate remedy for any breach of this Agreement. Therefore, in the event a breach or threatened breach of this Agreement, the Company or its successors or assigns may, in addition to other rights and remedies existing in their favor, apply to any court of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce, or prevent any violations of, the provisions hereof. 7. Change in Control Benefit Limit. (a) Benefit Limit. The aggregate Present Value (measured as of the Change of Control) of the benefits to which Executive becomes entitled under this Agreement either at the time of a Change of Control or at the time of his subsequent termination of employment following a Change of Control and which constitute "parachute payments" under federal tax law shall be limited to the greater of the following dollar amounts (the "Benefit Limit"): (i) 2.99 times Executive's Average Compensation, less the Present Value (measured as of the Change of Control) of any Other Parachute Payments to which Executive is entitled other than pursuant to the provisions this Agreement, or (ii) the amount which yields Executive the greatest after-tax amount payable to him under this Agreement after taking into account the excise tax (if any) imposed under Code Section 4999) on the Vesting Parachute Payment and any Other Parachute Payments which are provided Executive under this Agreement or otherwise. (b) Definitions. For purposes of applying Code Sections 280(G) and 4999 and the Treasury Regulations thereunder to determine the Benefit Limit in effect under Section 7(a), the following definitions shall be in effect: Average Compensation means the average of Executive's W-2 wages or other compensation from the Company (or any predecessor corporation) for the five (5) calendar years (or such fewer number of calendar years of employment with the Company or such predecessor corporation) completed immediately prior to the calendar year in which the Change of Control is effected. Any W-2 wages or other compensation for a partial year of employment will be annualized, in accordance with the frequency which such wages or compensation is paid during such partial year, before inclusion in Average Compensation. 6 Code means the Internal Revenue Code of 1984, as amended from time to time. Vesting Parachute Payment means, with respect to any of Executive's Incentive Stock or outstanding stock options accelerated pursuant to the provisions of this Agreement, the portion of that acceleration benefit deemed to be a parachute payment under Code Section 280G and the Treasury Regulations issued thereunder. The portion of the acceleration benefit which is categorized as a Vesting Parachute Payment shall be calculated in accordance with the valuation provisions established under Code Section 280G and the applicable Treasury Regulations and shall include an appropriate dollar adjustment to reflect the lapse of Executive's obligation to remain in the Company's employ as a condition to the vesting of the accelerated Incentive Stock or stock options. In no event, however, will the Vesting Parachute Payment attributable to the accelerated vesting of any Incentive Stock or stock option exceed the spread (the excess of the fair market value of the accelerated Incentive Stock or option shares over the purchase price paid for the Incentive Stock or the option exercise price payable for the accelerated option shares) existing at the time of the vesting acceleration. Other Parachute Payment means any payments in the nature of compensation (other than the Vesting Parachute Payment) which are made to Executive, whether under this Agreement or any other arrangement, in connection with the Change of Control and which accordingly qualify as parachute payments within the meaning of Code Section 280G(b)(2) and the Treasury Regulations issued thereunder. Present Value means the value, determined as of the date of the Change of Control, of any payment in the nature of compensation to which Executive becomes entitled in connection with the Change of Control or the subsequent termination of his employment, including (without limitation) the Vesting Parachute Payment attributable to the accelerated vesting of his Incentive Stock and outstanding stock options and any Other Parachute Payments to which Executive becomes entitled. The Present Value of each such payment shall be determined in accordance with the provisions of Code Section 280G(d)(4), utilizing a discount rate equal to one hundred twenty percent (120%) of the applicable Federal rate in effect at the time of such determination, compounded semi-annually to the effective date of the Change of Control. (c) Resolution Procedure. In the event there is any disagreement between Executive and the Company as to whether one or more payments to which Executive becomes entitled in connection with either the Change of Control or his subsequent termination of employment constitute Vesting Parachute Payments or Other Parachute Payments or as to the determination of the Present Value thereof, such dispute will be resolved as follows: (i) In the event temporary, proposed or final Treasury Regulations in effect at the time under Code Section 280G (or applicable judicial decisions) specifically address the status of any such payment or the method of valuation therefor, the 7 characterization afforded to such payment by the Regulations (or such decisions) will, together with the applicable valuation methodology, be controlling. (ii) In the event Treasury Regulations (or applicable judicial decisions) do not address the status of any payment in dispute, the matter will be submitted for resolution to independent tax counsel ("Independent Counsel") mutually acceptable to the Company and Executive. The resolution reached by such Independent Counsel shall will be final and controlling. and all expenses incurred in connection with the retention of Independent Counsel to resolve the dispute shall be shared equally by the Company and Executive. (iii) In the event Treasury Regulations (or applicable judicial decisions) do not address the appropriate valuation methodology for any payment in dispute, the Present Value thereof will be submitted to the Company's independent auditors for determination, and the expenses incurred in obtaining such valuation shall be paid by the Company. (iv) A portion of the benefits provided under this Agreement to Executive at the time of his termination of employment following a Change of Control shall be allocated as compensation for his non-compete covenant appearing in the Share Exchange Agreement between Executive and the Company dated July 7, 2000, and to the extent the allocated benefits do not exceed the value of the non-compete covenant to the Company, those benefits shall not be considered to be parachute payments under Code Section 280G. The value of the non-compete covenant shall be determined by independent appraisal obtained at the sole cost of the Company. 8. Successors (a) Company's Successors. This Agreement shall be binding upon any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company's business and/or assets. For all purposes under this Agreement, the term "Company" shall include any successor to the Company's business and/or assets which becomes bound by this Agreement. (b) Executive's Successors. This Agreement and all rights of Executive hereunder shall inure to the benefit of, and be enforceable by, Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. 9. Miscellaneous Provisions (a) Notice. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally 8 delivered or when deposited with a nationally recognized overnight courier for next-day delivery or mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. Mailed notices shall be addressed to Executive at the home address which he most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary. (b) Modifications and Waivers. No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by Executive and the Chief Executive Officer. No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time. (c) Whole Agreement. No other agreements, representations or understandings (whether oral or written) which are not expressly set forth in this Agreement have been made or entered into by either party with respect to the subject matter of this Agreement. This Agreement, the Proprietary Information Agreement, and applicable stock option agreements and stock plans, contain the entire understanding of the parties with respect to the subject matter hereof. (d) Taxes. All payments made under this Agreement shall be subject to reduction to reflect taxes or other charges required to be withheld by law. (e) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California (except provisions governing the choice of law). (f) Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect. (g) No Assignment. This Agreement and all rights and obligations of Executive hereunder are personal to Executive and may not be transferred or assigned by Executive at any time. The Company may assign its rights under this Agreement to any entity that assumes the Company's obligations hereunder in connection with any sale or transfer of all or a substantial portion of the Company's assets to such entity. (h) Forum. Any dispute or claim arising out of or in connection with this Agreement shall be resolved by a court of competent jurisdiction in Santa Clara County, California. (i) Headings. The headings of the paragraphs contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of any provision of this Agreement. 9 (j) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written. EXECUTIVE s/s____________________________________ Brian McNay BRG Acquisition Corporation By: s/s_________________________________ Robert Wright, II President And solely with respect to the obligations under Section 3 of the Agreement, BRG has executed this Agreement as of the day and year first above written. Business Resources Group, Inc. By: s/s_________________________________ Robert Wright, II President 10 EX-99.(C) 19 0019.txt FAIRNESS LETTER [LETTERHEAD OF MERRILL LYNCH] July 6, 2000 Special Committee of the Board of Directors (the "Special Committee") Business Resource Group 2150 North First Street, Suite 101 San Jose, CA 95131 Members of the Special Committee: Business Resource Group (the "Company") and BRG Acquisition Corporation (the "Acquiror"), a subsidiary of BR Holdings LLC, which is a subsidiary of Three Cities Research Corp. ("Three Cities"), propose to enter into a Plan and Agreement of Merger (the "Merger Agreement") pursuant to which (i) the Acquiror would commence a tender offer (the "Tender Offer") for all outstanding shares of the Company's common stock, par value $0.01 per share (the "Common Shares"), for $9.25 per share, net to the seller in cash (the "Consideration") and (ii) the Company, or the Company's successor, would be merged into the Acquiror in a merger (the "Merger"), in which any Common Share not acquired in the Tender Offer, other than certain Common Shares held by management, held in treasury, held by the Acquiror or held by any direct or indirect subsidiary of the Company or as to which dissenter's rights have been perfected, would be converted into the right to receive the Consideration. The Tender Offer and the Merger, taken together, are referred to as the "Transaction." You have asked us whether, in our opinion, the Consideration to be received by the holders of the Common Shares, other than members of the management of the Company who are participating in the Transaction with Three Cities (the "Participating Holders"), pursuant to the Merger Agreement is fair from a financial point of view to such holders, other than the Participating Holders. In arriving at the opinion set forth below, we have, among other things: (1) Reviewed certain publicly available business and financial information relating to the Company that we deemed to be relevant; (2) Reviewed certain information, including financial forecasts, relating to the business, earnings, cash flow, assets, liabilities and prospects of the Company furnished to us by the Company; (3) Conducted discussions with members of the senior management and representatives of the Company concerning the matters described in clauses 1 and 2 above; Business Resource Group 07/06/00 Page 2 (4) Reviewed the market prices and valuation multiples of certain publicly traded companies that we deemed to be relevant; (5) Reviewed the results of operations of the Company and compared them with those of certain publicly traded companies that we deemed to be relevant; (6) Compared the proposed financial terms of the Transaction with the financial terms of certain other transactions that we deemed to be relevant; (7) Reviewed a draft dated July 5, 2000 of the Merger Agreement; and (8) Reviewed such other financial studies and analyses and took into account such other matters as we deemed necessary, including our assessment of general economic, market and monetary conditions. In preparing our opinion, we have assumed and relied on the accuracy and completeness of all information supplied or otherwise made available to us, discussed with or reviewed by or for us, or publicly available, and we have not assumed any responsibility for independently verifying such information or undertaken an independent evaluation or appraisal of any of the assets or liabilities of the Company or been furnished with any such evaluation or appraisal. In addition, we have not assumed any obligation to conduct any physical inspection of the properties or facilities of the Company. With respect to the financial forecast information furnished to or discussed with us by the Company, we have assumed that such information has been reasonably prepared and reflects the best currently available estimates and judgment of Company's management as to the expected future financial performance of the Company. We have also assumed that the final form of the Merger Agreement will be substantially similar to the last draft reviewed by us. Our opinion is necessarily based upon market, economic and other conditions as they exist and can be evaluated on, and on the information made available to us as of, the date hereof. In connection with the preparation of this opinion, we have not been authorized by the Company or the Special Committee to solicit, nor have we solicted, third-party indications of interest for the acquisition of all or any part of the Company. In addition, the Company has agreed to indemnify us for certain liabilities arising out of our engagement. We have also in the past, and may continue in the future, provide financial advisor services to Three Cities. In the ordinary course of our business, we may actively trade the Common Shares and other 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 such securities. This opinion is for the sole use and benefit of the Special Committee. Our opinion does not address the merits of the underlying decision by the Company to engage in the Transaction and does not constitute a recommendation to any holder of the Common Shares as to whether to tender such Common Shares in the Tender Offer or as to how such holder should vote on the proposed Merger or any matter related thereto. We are not expressing any opinion herein as to the prices at which the Common Shares will trade following the announcement of the Transaction. Business Resource Group 07/06/00 Page 2 On the basis of, and subject to the foregoing, we are of the opinion that, as of the date hereof, the Consideration to be received by the holders of the Common Shares in the Transaction, other than the Participating Holders, is fair from a financial point of view to the holders of Common Shares, other than the Participating Holders. Very truly yours, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: ------------------------------- Kit A. Kamholz Vice President Merrill Lynch Business Advisory Services -----END PRIVACY-ENHANCED MESSAGE-----