-----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, L3MafmaSTcSQD+nGx+w8y1cbAw1BdUC4kUmOiD9uDe/8LMZtE0xV7/QvcnoC4iCA 0DgP/nCEPxagcMlNAJPojg== /in/edgar/work/20000721/0000889812-00-003206/0000889812-00-003206.txt : 20000920 0000889812-00-003206.hdr.sgml : 20000920 ACCESSION NUMBER: 0000889812-00-003206 CONFORMED SUBMISSION TYPE: SC 14D9 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20000721 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 14D9 SEC ACT: SEC FILE NUMBER: 005-45031 FILM NUMBER: 676465 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: 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 14D9 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 SC 14D9 1 0001.txt SOLICITATION/RECOMMENDATION STATEMENT - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 14D-9 (Rule 14d-101) SOLICITATION/RECOMMENDATION STATEMENT UNDER SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------------ BUSINESS RESOURCE GROUP (NAME OF SUBJECT COMPANY) BUSINESS RESOURCE GROUP (NAME OF PERSON(S) FILING STATEMENT) COMMON STOCK, PAR VALUE $0.01 PER SHARE (TITLE OF CLASS OF SECURITIES) ------------------------ 12329K 10 4 (CUSIP NUMBER OF CLASS OF SECURITIES) ------------------------ HARRY S. ROBBINS BUSINESS RESOURCE GROUP 2150 NORTH FIRST STREET, SUITE 101 SAN JOSE, CALIFORNIA 95131 (408) 325-3200 (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICE AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT) ------------------------ With a copy to: SCOTT D. BLICKENSTAFF, ESQ. STEVEN J. TONSFELDT, ESQ. ORRICK, HERRINGTON & SUTCLIFFE LLP VENTURE LAW GROUP 1020 MARSH ROAD 2800 SAND HILL ROAD MENLO PARK, CALIFORNIA 94025 MENLO PARK, CALIFORNIA 94025 (650) 614-7400 (650) 854-4488
/ / Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- INTRODUCTION This Solicitation/Recommendation Statement on Schedule 14D-9 (this "Schedule 14D-9") relates to an offer by BRG Acquisition Corporation, a Delaware corporation (the "Purchaser"), which is wholly owned by Business Resource Holdings, Inc. ("Holdings, Inc."), which in turn is wholly owned by BR Holdings LLC, a Delaware limited liability company ("BR Holdings"), a majority-owned subsidiary of Three Cities Fund III, L.P., a Delaware limited partnership ("Three Cities" or "Parent"), to purchase all of the outstanding shares of Common Stock (as defined below) of Business Resource Group, a California corporation (the "Company" or "BRG"). ITEM 1. SUBJECT COMPANY INFORMATION. The name of the subject Company is Business Resource Group, its principal executive offices are located at 2150 North First Street, Suite 101, San Jose, California 95131, and its phone number is (408) 325-3200. This Schedule 14D-9 relates to the Company's common stock, par value $0.01 per share (the "Common Stock" or "Shares"). As of June 29, 2000, there were 5,298,753 shares of Common Stock outstanding. ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON. (a) NAME AND ADDRESS. The name, business address and business telephone number of the Company filing this statement are set forth in Item 1 above, which information is incorporated herein by reference. (b) TENDER OFFER. This Schedule 14D-9 relates to the tender offer made by the Purchaser disclosed in a Tender Offer Statement on Schedule TO dated July 14, 2000 (as amended or supplemented from time to time, the "Schedule TO"), to purchase all the outstanding shares of the Common Stock at a price (the "Offer Price") of $9.25 per Share, net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in the Offer to Purchase dated July 14, 2000 (as amended or supplemented from time to time, the "Offer to Purchase"), and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"), filed as Exhibits (a)(1) and (a)(2) hereto, respectively, and incorporated herein by reference. The Offer is being made pursuant to a Plan and Agreement of Merger dated as of July 7, 2000, between the Company and the Purchaser (the "Merger Agreement"). The Merger Agreement provides that, if the Purchaser purchases tendered Shares, the Purchaser will take all steps in its power (including voting its Shares) to cause the Company to be merged into the Purchaser (the "Merger") in a transaction in which Holdings, Inc. (the sole stockholder of the Purchaser) will become the owner of all the stock of the surviving corporation in the Merger ("Surviving Corporation"), 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 be required under the terms of the Merger Agreement to reincorporate under the laws of the State of Delaware before the Merger takes place, in which event the Merger would result in a merger of the new Delaware corporation into the Purchaser. If less than 51% of the outstanding Shares that neither the Purchaser nor BR Holdings owns, or has a binding agreement to acquire 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 BR Holdings own, or have a binding agreement to acquire, total at least 53.5% of the outstanding Shares. If the Purchaser does not purchase the tendered Shares, the Merger will not take place. The Merger Agreement, a copy of which is filed as Exhibit (e)(1) hereto, is summarized in the sections entitled "Purpose of the Offer and the Proposed Merger; Plans for the Company," "Terms of the Offer," "The Merger" and "Conditions to the Offer" in the Offer to Purchase, and incorporated herein by reference. As set forth in the Schedule TO, the principal executive offices of the Purchaser are located at the offices of Three Cities Research, Inc. ("TCR"), 650 Madison Avenue, New York, New York 10022. The principal executive offices of Holdings, Inc., BR Holdings and Three Cities are located at that same address. 1 ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS. Except as set forth in the response to this Item 3 or as incorporated by reference herein, to the knowledge of the Company, there are no material agreements, arrangements or understandings and no actual or potential conflicts of interest between the Company or its affiliates on the one hand and the Purchaser or its affiliates or the Company's executive officers, directors or affiliates on the other hand. A summary of the material provisions of the Merger Agreement is included in "Purpose of the Offer and the Proposed Merger; Plans for the Company," "Terms of the Offer," "Conditions to the Offer" and "The Merger" in the Offer to Purchase, which is incorporated by reference herein. The summary of the Merger Agreement in the Offer to Purchase is qualified in its entirety by reference to the Merger Agreement. In connection with the Merger Agreement, Brian McNay and Jeff Tuttle entered into Share Exchange Agreements with the Purchaser (the "Share Exchange Agreements"), dated July 7, 2000 which, among other things, and subject to certain exceptions, require such shareholders to transfer a total of 319,168 shares of Common Stock in exchange for equity interests in BR Holdings, representing a total of 6% of the total equity of BR Holdings. The exchange of the Company Common Stock for BR Holdings equity will take place immediately before Purchaser accepts the Shares which are tendered in response to the Offer. Each further agree to a number of non-competition related issues, including but not limited to, not owning, managing or consulting with a business competing with Surviving The Corporation or soliciting or influencing a customer or client of the Surviving Corporation for five (5) years after the Merger, or up to three (3) years after he ceases to be an employee of the Surviving Corporation. A copy of each Share Exchange Agreement is filed as Exhibits (e)(2)(i) and (e)(2)(ii), respectively, and incorporated herein by reference. Also in connection with the Merger Agreement, on July 7, 2000, the Company's Chief Executive Officer, John Peth agreed to cancel options he holds on 166,000 shares of Common Stock of the Company (see Deferred Compensation Agreement below). In addition, Mr. Peth, Executive Vice President of Sales, Brian McNay, Executive Vice President of Marketing, Jeff Tuttle, and Chief Financial Officer and Chief Operating Officer, John Palmer entered into Employment Agreements with Purchaser (the "Employment Agreements"). The Employment Agreements provide for a base salary of $375,000 per year for John Peth, $525,000 for Brian McNay, $300,000 for Jeff Tuttle and $160,000 for John Palmer as of the Effective Time of the Merger (as defined in the Merger Agreement), incentive compensation in the form of restricted stock at the price of $0.05 per share, with Mr. Peth receiving the right to purchase 6.5% of the Surviving Corporation issued and outstanding shares (but not less than 1,300,000), Mr. McNay receiving the right to purchase 1.75% of the issued and outstanding shares (but not less than 350,000), Mr. Tuttle receiving the right to purchase 1.75% of the issued and outstanding shares (but not less than 350,000), and Mr. Palmer receiving the right to purchase 2.0% of the issued and outstanding shares (but not less than 400,000), the scope and terms of employment, and other employment-related issues. In addition, Mr. Peth, in connection with the Offer and the Merger, and his entering into the Deferred Compensation Agreement (described below), also will purchase at the Effective Time an additional 360,000 shares at the purchase price of $0.05 per share. These purchased shares will be fully vested upon purchase and will not be subject to forfeiture or repurchase by the Surviving Corporation upon Mr. Peth's termination of employment. Copies of the Employment Agreements are filed as Exhibit (e)(3)(i)-(iv), respectively, and incorporated herein by reference. Messrs. Peth, McNay, Tuttle and Palmer are sometimes referred to in this document as the "Management Participants." Also in connection with the Merger Agreement, on July 7, 2000, John Palmer, the Company's Chief Financial Officer and Chief Operating Officer, signed a Commitment Letter with Purchaser (the "Commitment Letter"). The Commitment Letter confirms that Mr. Palmer will tender in the Offer all the Company's Shares he owns for $9.25 per Share, in cash. In the Commitment Letter, he further agreed to a number of non-competition related issues, including but not limited to, not owning, managing or consulting with a business competing with Surviving Corporation or soliciting or influencing a customer or client of the Surviving Corporation for five (5) years after the Merger, or up to three (3) years after he ceases to be an employee of the Surviving Corporation. A copy of the Commitment Letter is filed as Exhibit (e)(4), and incorporated herein by reference. Also in connection with the Merger Agreement, on July 7, 2000, John Peth, the Company's Chief Executive Officer signed a Deferred Compensation Agreement with Purchaser (the "Deferred Compensation Agreement"). The Deferred Compensation Agreement provides that upon cancellation of options currently held by Mr. Peth, 2 ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.--(CONTINUED) which entitle him to purchase a total of 166,000 shares of Common Stock of the Company, Mr. Peth will become entitled to deferred compensation from BR Holdings, receiving payments on Subordinated Notes, Junior Subordinated Notes, dividends or a liquidation distribution with regard to the Preferred Stock of Holdings, Inc., the sale of Notes by Holdings, Inc. and the sale of Preferred Stock by Holdings, Inc. He has further agreed to a number of non-competition related issues, including but not limited to, not owning, managing or consulting with a business competing with Surviving Corporation or soliciting or influencing a customer or client of the Surviving Corporation for five (5) years after the Merger, or up to three (3) years after he ceases to be an employee of the Surviving Corporation. A copy of the Deferred Compensation Agreement is filed as Exhibit (e)(5), and incorporated herein by reference. Also in connection with the Merger Agreement, at a meeting convened on July 6, 2000, the Board of Directors of the Company (the "Board") resolved (with Messrs. Peth, McNay and Tuttle being absent or not voting) to fully accelerate the vesting of all outstanding options to acquire shares of the Company's Common Stock effective three business days prior to the scheduled closing date for the Merger, subject to the condition subsequent that the Merger be consummated. The effect of this acceleration was not considered to be significant in that the Merger Agreement provides that holders of any Company stock options that remain unexercised at the time the Merger is consummated, whether vested or unvested at that time, will be entitled to receive a cash payment in the amount of the positive difference between the Offer Price and the exercise price per Share under each stock option multiplied by the number of shares of Common Stock covered by such option. ITEM 4. THE SOLICITATION OR RECOMMENDATION. (a) SOLICITATION RECOMMENDATION. At a meeting held on July 6, 2000, acting on the recommendation of a committee of independent, disinterested directors not affiliated with the Purchaser or its stockholders (the "Special Committee"), the Board unanimously (with John Peth, Brian McNay and Jeff Tuttle, the three directors who will acquire interests in one or both of Holdings, Inc. and BR Holdings, being absent or not voting) (i) approved the Merger Agreement and the transactions contemplated by it, the Offer, and the Merger as described in the Merger Agreement; (ii) determined that the Merger Agreement and the transactions contemplated by it are advisable and fair to, and in the best interests of, the Company and its shareholders; and, (iii) resolved to recommend that the Company's shareholders tender their shares in response to the Offer and, if approval of the Company's shareholders is required by applicable law to consummate the Merger, adopt and approve the Merger Agreement and the Merger. Accordingly, the Board unanimously (with the three directors who will acquire interests in one or both of Holdings, Inc. and BR Holdings being absent or not voting) recommends that the shareholders of the Company tender their shares of Common Stock pursuant to the Offer. Copies of the Company's letter to the shareholders of the Company communicating the Board's recommendation, and the Company's press release announcing the Merger Agreement and the transactions contemplated thereby, are filed as Exhibits (a)(3) and (a)(4) hereto, respectively, and are incorporated herein by reference. (b) BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. In the fall of 1999, the Company engaged a financial advisor, Huntington Holdings, Inc., to assist it in evaluating various possible strategic alternatives to enhance shareholder value. Possible strategic alternatives being considered included, but were not limited to, a merger, a strategic alliance, the infusion of additional equity, or an affiliation with a strategic partner. Huntington Holdings had had an advisory relationship with the Company intermittently since 1994 and had been engaged by the Company to source and advise upon potential acquisitions on an ongoing basis commencing in October 1998. In preparation for its new assignment, representatives of Huntington Holdings conducted a due diligence review and investigation of the Company. At the completion of this process, Huntington Holdings, along with members of the Company's management, prepared a confidential memorandum (the "Confidential Memorandum"), which described the Company and its business, for circulation in connection with the solicitation process. 3 ITEM 4. THE SOLICITATION OR RECOMMENDATION.--(CONTINUED) On January 6, 2000, the Company made a public announcement to the effect that it had retained Huntington Holdings to seek methods for enhancing shareholder value. Over the next several months, as part of a general solicitation effort, Huntington Holdings contacted 135 potential financial buyers and 44 potential strategic partners or buyers on behalf of the Company. Of these, 45 financial buyers and two strategic buyers executed confidentiality agreements with the Company and received copies of the Confidential Memorandum for their consideration. On January 21, 2000, John Corwin of Huntington Holdings contacted W. Robert Wright, II of TCR and informed him that Huntington Holdings had been retained by the Company to assist in evaluating strategic alternatives to enhance value to its shareholders. Mr. Corwin asked whether a company formed by funds advised by TCR might be interested in acquiring the Company. Following these discussions, TCR executed a confidentiality agreement on January 31, 2000 and was forwarded a package of information on the Company, including the Confidential Memorandum, to review. Due to the nature of the Company's business and the importance of key employees to the value of that business, the Company and its financial advisors believed the commitment of key employees and management to the business would be important to the marketability of the Company and would maximize shareholder value. Accordingly, with the concurrence of Huntington Holdings, the Confidential Memorandum indicated that Messrs. Peth, Palmer, McNay and Tuttle were willing to continue with and invest in the recapitalized company. On February 16, 2000, Mr. Wright and Willem deVogel of TCR attended a management presentation regarding the Company delivered by John Peth, President and Chief Executive Officer of the Company, John Palmer, Chief Operating Officer and Chief Financial Officer of the Company, Brian McNay, Executive Vice President of Sales of the Company, Jeffrey Tuttle, Executive Vice President of Marketing of the Company, 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. On March 16, 2000, Messrs. deVogel and Wright met with Messrs. Peth and Corwin at the Company's headquarters in San Jose, CA and discussed the possibility that a company formed by Three Cities advised by TCR might make a tender offer 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 acquired normally received an equity interest in the companies. Representatives of the Company said it would take some time to review the proposal. On March 23, 2000, a meeting of the Company's Board was convened and considered the TCR proposal. At this meeting, in view of the potential that the Company's management group might be requested or required to participate as an equity participant in the acquisition entities that might be employed by TCR in the proposed transaction, the Company's Board appointed a Special Committee of independent, disinterested directors (consisting of two directors, Harry Robbins and George Kelly), to consider strategic opportunities presented to the Company, enter into discussions or negotiations related to such strategies or opportunities and recommend to the Board what action, if any, should be taken with respect to them. The Special Committee retained Venture Law Group as its counsel and considered investment banks it might retain as advisors to render an opinion about the fairness of any transaction which might be agreed upon. The Special Committee selected, and the Company subsequently retained, Merrill Lynch Business Advisory Services, a division of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") for this purpose. On April 12, 2000, Harry 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. Subsequently, J. William Uhrig, another partner at 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. 4 ITEM 4. THE SOLICITATION OR RECOMMENDATION.--(CONTINUED) 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. Informal meetings of the Special Committee, including Mr. Corwin and representatives of Venture Law Group, were convened several times during this week to consider the progress of these discussions. On May 5, 2000, TCR stated to Mr. Corwin 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 Common Stock. During the days that followed, the Special Committee, together with Huntington Holdings and Venture Law Group, convened several telephonic meetings to consider the proposed transaction and proposed price per Share. On May 12, 2000, Mr. Corwin informed Mr. Uhrig that the Special Committee was prepared to authorize the Company and its advisors to proceed with the negotiation of a transaction at that price. On May 15, 2000, Clifford Chance Rogers & Wells, LLC ("CCR&W"), the attorneys for TCR, sent Orrick, Herrington & Sutcliffe LLP, the attorneys for the Company, a draft of a Plan and Agreement of Merger. Subsequently, on May 20, 2000, a representative of Venture Law Group contacted David Bernstein of CCR&W and informed him that Venture Law Group, as counsel to the Special Committee, would take the principal role in reviewing and negotiating a merger agreement. During the second and third weeks of May, representatives of TCR continued their due diligence review of the Company. Also during this period, TCR presented information regarding the Company to potential financing sources, which would be used in connection with the acquisition and as a source of funds for the Company after acquisition. On May 22, 2000, a representative of TCR informed Mr. Corwin that, because of negative reactions of prospective financing sources at the $11.75 price, TCR would not be willing to proceed at $11.75 per Share. The TCR representative said TCR was not willing to pay a price per Share of more than $9.00 for the Shares of the Company. On June 1 and 2, 2000, Messrs. Uhrig and de Vogel 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, TCR acquisition company might be willing to pay $8.00 in cash, and have the Company issue to its shareholders convertible preferred stock with a liquidation preference of $2.00 per share, which would remain outstanding but not be tradable on any securities market in the foreseeable future, 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 cash proposal, or the proposal that contemplated an $8.00 per Share cash payment together with a convertible preferred stock dividend, 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 in cash, TCR was terminating all discussions with the Company. On June 9, 2000, Mr. Robbins told Mr. deVogel that the Special Committee and the Board 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 the price to $9.25 per Share. On that 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 between TCR and the Special Committee 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 one percent (1%) of the enterprise value of the Company, rather than the five percent (5%) TCR had previously been seeking. On June 15, 2000, the Special Committee convened a telephonic meeting in which it reviewed the $9.25 per Share offer with Merrill Lynch, Huntington Holdings and Venture Law Group. At this meeting, representatives of Merrill Lynch made a presentation regarding its preliminary views as to the fairness of the proposed consideration, from a financial 5 ITEM 4. THE SOLICITATION OR RECOMMENDATION.--(CONTINUED) point of view, to the shareholders of the Company, other than the Management Participants. Representatives of Venture Law Group reviewed the proposed terms and conditions of the transaction, and Mr. Corwin reviewed the history of the discussions between the two parties and the fact that after a lengthy solicitation process no other potential buyer had made a proposal to acquire the Company or even expressed serious interest in making such a proposal. Based on a very lengthy analysis and review of status, the Special Committee concluded that it was prepared to recommend to the entire Board and its advisors to proceed with the negotiation of a transaction at $9.25 per Share in cash to the Company's shareholders on terms substantially consistent with those presented. Following this meeting, a meeting of the entire Board, including the members of management sitting on the Board and representatives of Orrick, Herrington & Sutcliffe LLP, as legal counsel to the Company, was convened. A lengthy discussion ensued regarding the proposed transaction and its proposed time schedule. At the completion of this discussion, the Board of Directors, with all of the members of management who were Board members abstaining, confirmed the Special Committee's recommendation that negotiations regarding the proposed transaction proceed along the terms of the transaction outlined at the meeting. On June 20, 2000, the attorneys for TCR sent representatives of Brobeck, Phleger & Harrison LLP, the law firm which had been retained by Messrs. Peth, Palmer, McNay and Tuttle, to represent them in connection with the proposed transaction, drafts of an agreement regarding the exchanging of a total of 319,168 shares of the Company, held by Messrs. McNay and Tuttle, for interests in BR Holdings and copies of the Limited Liability Company Agreement of BR Holdings. On June 22, CCR&W sent Brobeck, Phleger & Harrison drafts of employment agreements under which, if the Purchaser acquired the Company, the four members of the management identified above 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 a number of discussions and negotiations among the parties and their respective advisors of the terms of pertinent agreements and documents, including the Merger Agreement, the Employment Agreements, the Share Exchange Agreements, the Deferred Compensation Agreement and the Commitment Letter. On July 6, 2000, the Special Committee met with all members present. Among other things, the Special Committee received (i) an oral presentation of Merrill Lynch regarding certain principal financial terms of the transaction and the fairness from a financial point of view of the consideration to be received by the Company's shareholders in the transaction, other than the Management Participants, a written copy of which is attached hereto as Exhibit (e)(6), and is incorporated herein by reference, together with Merrill Lynch's oral opinion, subsequently confirmed in writing, as to the fairness, from a financial point of view, of the consideration to be received in the Offer and Merger by the Company's shareholders, other than the Management Participants, a copy of which is attached hereto as Annex A, and is incorporated herein by reference; and (ii) a briefing by representatives of Venture Law Group as to the terms of the proposed transaction and the financing for the transaction (with drafts of the transaction documents having been distributed to the members of the Special Committee in advance of the meeting). The Special Committee also reviewed with Mr. Corwin the history of the negotiations and the procedures that Huntington Holdings had engaged to pursue possible partners in connection with the general solicitation process. Based on the factors described below in "Reasons," the Special Committee by unanimous action resolved to recommend to the full Board the approval of the proposed transaction and approval of the Merger Agreement. A meeting of the Board was convened immediately after completion of the Special Committee meeting and, by unanimous action (with Messrs. Peth, McNay and Tuttle, the three directors who will acquire interests in one or both of Holdings, Inc. or BR Holdings, being absent or not voting), the proposed transaction and Merger Agreement were approved. During the evening of Friday, 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 had opened, the Company and TCR jointly announced the signing of the Merger Agreement and the Purchaser's intention to commence the Offer. 6 ITEM 4. THE SOLICITATION OR RECOMMENDATION.--(CONTINUED) (c) REASONS. In making the determinations and recommendations set forth in subparagraph (a) above, the Special Committee and the Board considered a number of factors, including, without limitation, the following: (i) the amount and form of consideration to be received by the Company's shareholders in the Offer and the Merger; (ii) the Company's prospects if it were to remain independent, including the risks and benefits inherent in remaining independent, including the risk arising from the workspace products and services industry becoming increasingly competitive; (iii) the possible alternatives to the Offer and the Merger (including the possibility of continuing to operate the Company as an independent entity) and other potential business combination transactions as well as discussions with other potential acquirers of the Company, the fact that, after Huntington Holdings had contacted nearly 180 potential acquirors and strategic partners, only the Purchaser and its affiliates had elected to make a definitive offer to acquire the Company, the judgment of the Special Committee and the Board that other potential acquirers were unlikely to offer greater value for the Company, the range of possible benefits to the Company's shareholders of such alternatives and the timing and likelihood of accomplishing the goal of any of such alternatives; (iv) information with regard to the financial condition, results of operations, business and prospects of the Company, the regulatory approvals required to consummate the Offer and the Merger as well as current economic and market conditions (including current conditions in the industry in which the Company competes); (v) the historical and recent trading activity and market prices of shares of Common Stock, and the fact that the Offer and the Merger will enable the holders of shares of Common Stock to realize a premium of 37% over the last sale price of such Shares reported on the NASDAQ National Market on July 7, 2000, the last full trading day prior to the day on which there was a public announcement of the execution of the Merger Agreement, 64% over the average closing prices of the past twelve (12) months, 109% over the average closing prices of the past twenty-four (24) months and 122% over the average closing prices of the past thirty-six (36) months; (vi) the limited analyst coverage for the Company and the low trading volume in the Company's Common Stock, which makes it extremely difficult, if not impossible, for any interested shareholder to acquire or dispose of any substantial block of shares; (vii) the substantial costs to the Company associated with maintaining its registration under the United States securities laws and the listing of the Company's Common Stock on the Nasdaq National Market; (viii) the fact that the Merger Agreement permits the Company to furnish information to, and enter into discussions or negotiations with, any person that makes an unsolicited bona fide written proposal to acquire the Company pursuant to a merger, consolidation, share exchange, business combination, tender or exchange offer or other similar transaction if (A) the Board determines in good faith (after consultation with its financial advisor) that the proposal would, if consummated, result in a transaction more favorable to the Company's shareholders than the transactions contemplated by the Merger Agreement, (B) the Board further determines in good faith (after consultation with its financial adviser) that the proposal would likely result in the Company's shareholders receiving consideration with a value which is greater than the Offer Price, and (C) no information is so furnished, and no such discussions or negotiations are held, prior to the execution by the receiving party and the Company of an appropriate confidentiality agreement; 7 ITEM 4. THE SOLICITATION OR RECOMMENDATION.--(CONTINUED) (ix) the fact that the Merger Agreement permits the Special Committee and the Board to withdraw or modify its approval or recommendation of the Offer and the Merger if the Special Committee or the Board determines in good faith, after having received advice from outside counsel, that the failure to take such action would be a breach of the fiduciary duties of the Board under applicable law; (x) the fact that the Merger Agreement permits the Company (with the approval of the Special Committee) to terminate the Merger Agreement, after complying with certain procedural steps and paying to the Purchaser a reasonable termination fee and reimbursing it for certain of its expenses, in order to accept a Superior Proposal (as defined in Section 7.1(d) of the Merger Agreement); (xi) the fact that the Offer and the Merger provide for a prompt cash tender offer for all of the shares of Common Stock to be followed by the Merger for the same consideration, thereby enabling the Company's shareholders, at the earliest possible time, to obtain the benefits of the transaction in exchange for their shares of Common Stock; (xii) the financial analysis and presentation of Merrill Lynch to the Special Committee on July 6, 2000, and the oral opinion of Merrill Lynch on July 6, 2000 (which opinion was subsequently confirmed by delivery of a written opinion of Merrill Lynch dated July 6, 2000), the date the Board adopted the Merger Agreement, to the effect that, as of such date, and based upon and subject to certain matters stated in such opinion, the $9.25 per Share cash consideration, net to the seller, to be received by holders of shares of Common Stock, other than the Management Participants pursuant to the Merger Agreement, was fair, from a financial point of view, to such holders, other than Management Participants. The full text of Merrill Lynch's written opinion, dated July 6, 2000, which sets forth the assumptions made, matters considered and limitations on the review undertaken by Merrill Lynch, is attached hereto as Annex A, and is incorporated herein by reference. Merrill Lynch's opinion was prepared solely for the Special Committee to assist the special committee in its analysis of the Offer and the Merger and speaks only to the fairness, from a financial point of view, of the cash consideration to be received in the Offer and the Merger by holders of shares of Common Stock, other than the Management Participants, and is not intended to constitute, and does not constitute, a recommendation as to whether any shareholder should tender shares of Common Stock pursuant to the Offer. Holders of shares of Common Stock are urged to read such opinion carefully in its entirety; (xiii) the high likelihood that the proposed acquisition would be consummated, in light of the fact that the Offer and Merger are not subject to any financing contingencies and the financial strength of Purchaser and Parent; (xiv) the terms of the Merger Agreement, including the parties' representations, warranties and covenants and the conditions to their respective obligations. The foregoing discussion of the information and factors considered by the Special Committee and the Board is not intended to be exhaustive, but includes many of the factors considered by the Special Committee and the Board. In view of the variety of factors considered in connection with its evaluation of the Offer and the Merger, the Special Committee and the Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors or determine that any single factor was of determinative importance. Rather, the Special Committee and the Board each viewed its position and recommendations as being based on the totality of the information presented to and considered by it. In addition, it is possible that different members of the Special Committee and the Board assigned different weights to the various factors described above. (d) INTENT TO TENDER. To the best of the Company's knowledge, all of its executive officers, directors, affiliates or subsidiaries currently intend to offer all Shares of the Company Common Stock which are held of record or beneficially owned by such persons pursuant to the Offer, other than the Company Common Stock, if any, held by such 8 ITEM 4. THE SOLICITATION OR RECOMMENDATION.--(CONTINUED) persons which, if tendered, could cause such person to incur liability under the provisions of Section 16(b) of the Securities Exchange Act of 1934; provided that two of the Company's senior officers will exchange certain shares in accordance with the Share Exchange Agreement and the Chief Executive Officer of the Company will forfeit certain options in exchange for an equity interest in the Purchaser pursuant to the Deferred Compensation Agreement. (e) OPINION OF MERRILL LYNCH, PIERCE, FENNER & SMITH. The Special Committee selected, and the Company retained, Merrill Lynch solely to evaluate the fairness, from a financial point of view, of the consideration to be paid in the Offer and the Merger (collectively, the "Transaction"). On July 6, 2000, Merrill Lynch delivered to the Special Committee its oral opinion, later confirmed in writing, to the effect that, as of that date and based upon the assumptions made, matters considered and limits of its review, as set forth in its opinion, the $9.25 per Share consideration was fair from a financial point of view to the holders of the Common Stock, other than Management Participants in the Transaction. THE FULL TEXT OF THE MERRILL LYNCH OPINION, DATED JULY 6, 2000, WHICH SETS FORTH A DESCRIPTION OF THE ASSUMPTIONS MADE, GENERAL PROCEDURES FOLLOWED, FACTORS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN, IS ATTACHED AS ANNEX A. BUSINESS RESOURCE GROUP SHAREHOLDERS ARE URGED TO READ THE MERRILL LYNCH OPINION CAREFULLY IN ITS ENTIRETY, ESPECIALLY WITH REGARD TO THE ASSUMPTIONS MADE AND FACTORS CONSIDERED BY MERRILL LYNCH. THE MERRILL LYNCH OPINION WAS PROVIDED FOR THE SOLE USE AND BENEFIT OF THE SPECIAL COMMITTEE AND IS DIRECTED ONLY TO THE FAIRNESS, FROM A FINANCIAL POINT OF VIEW, OF THE CONSIDERATION TO THE STOCKHOLDERS, OTHER THAN MANAGEMENT PARTICIPANTS IN THE TRANSACTION, 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 STOCKHOLDER AS TO WHETHER TO TENDER SUCH STOCKHOLDER'S SHARES IN THE OFFER OR AS TO HOW SUCH STOCKHOLDER SHOULD VOTE ON THE PROPOSED MERGER OR ANY MATTER RELATED THERETO. The summary set forth below does not purport to be a complete description of the analyses underlying the Merrill Lynch opinion or the presentation made by Merrill Lynch to the Special Committee. The preparation of a fairness opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the applications of those methods to the particular circumstances and, therefore, such an opinion is not readily susceptible to partial analysis or summary description. Accordingly, Merrill Lynch believes that its analyses must be considered as a whole and that selecting portions of its analyses, without considering all of its analyses, would create an incomplete view of the underlying Merrill Lynch opinion. In arriving at its opinion, Merrill Lynch did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. In performing its analyses, Merrill Lynch made numerous assumptions with respect to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of Merrill Lynch or the Company. Any estimates contained in the analyses performed by Merrill Lynch are not necessarily indicative of actual values or future results, which may be significantly more or less favorable than suggested by such analyses. Additionally, estimates of the value of businesses or securities do not purport to be appraisals or to reflect the prices at which such businesses or securities might actually be sold. Accordingly, such analyses and estimates are inherently subject to substantial uncertainty. In addition, as described above, the Merrill Lynch opinion and Merrill Lynch's presentation to the Special Committee were among several factors taken into consideration by the Special Committee in making its determination to accept the $9.25 per Share consideration. Consequently, the Merrill Lynch analyses described below should not be viewed as determinative of the decision of the Special Committee with respect to the fairness of the $9.25 per Share consideration. 9 ITEM 4. THE SOLICITATION OR RECOMMENDATION.--(CONTINUED) In arriving at its opinion, Merrill Lynch, among other things: o reviewed certain publicly available business and financial information relating to the Company that Merrill Lynch deemed to be relevant; o reviewed certain information, including financial forecasts, relating to the business, earnings, cash flow, assets, liabilities and prospects of the Company furnished to Merrill Lynch by the Company; o conducted discussions with members of the Company senior management and representatives of BRG concerning the matters described in the two preceding clauses; o reviewed the market prices and valuation multiples of certain publicly traded companies that Merrill Lynch deemed to be relevant; o reviewed the results of operations of the Company and compared them with those of certain publicly traded companies that Merrill Lynch deemed to be relevant; o compared the proposed financial terms of the Transaction with the financial terms of certain other transactions that Merrill Lynch deemed to be relevant; o reviewed a draft dated July 5, 2000 of the Merger Agreement; and o reviewed such other financial studies and analyses and took into account such other matters as Merrill Lynch deemed necessary, including Merrill Lynch's assessment of general economic, market and monetary conditions. In preparing its opinion, Merrill Lynch assumed and relied on the accuracy and completeness of all information supplied or otherwise made available to Merrill Lynch, discussed with or reviewed by or for Merrill Lynch, or publicly available, and Merrill Lynch did not assume any responsibility for independently verifying such information, did not undertake an independent evaluation or appraisal of any of the assets or liabilities of the Company and was not furnished with any such evaluation or appraisal. In addition, Merrill Lynch did not assume 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 Merrill Lynch by the Company, Merrill Lynch assumed that such information was reasonably prepared and reflected the best currently available estimates and judgment of the Company's management as to the expected future financial performance of the Company. Merrill Lynch also assumed that the final form of Merger Agreement was substantially similar to the last draft reviewed by Merrill Lynch. In addition, in connection with the preparation of the opinion, Merrill Lynch was not authorized by the Company or the Special Committee to solicit, nor did Merrill Lynch solicit, third-party indications of interest for the acquisition of all or any part of the Company. The Merrill Lynch opinion was necessarily based upon market, economic and other conditions as they existed and could be evaluated on, and on the information made available to Merrill Lynch, as of July 6, 2000, the date of its opinion. The following is a summary of the material portions of the financial and comparative analyses performed by Merrill Lynch in connection with its preparation of the Merrill Lynch opinion. Merrill Lynch calculated a range of implied valuations for the Company by utilizing the following three principal valuation analyses: 1. SELECTED COMPARABLE COMPANY ANALYSIS. A publicly traded comparable company analysis reviews a business' operating performance and outlook relative to a group of publicly traded peer companies to determine an implied unaffected market trading valuation multiple. 2. SELECTED COMPARABLE M&A TRANSACTION ANALYSIS. A comparable acquisition transaction analysis provides an implied valuation multiple based upon financial information of companies which have been acquired in selected recent transactions and which are in the same or similar industries as the business being valued. 10 ITEM 4. THE SOLICITATION OR RECOMMENDATION.--(CONTINUED) 3. DISCOUNTED CASH FLOW ANALYSIS. A discounted cash flow analysis provides insight into the intrinsic value of a business based on the projected earnings and capital requirements and the net present value of the subsequent cash flows anticipated to be generated by the assets of the business. SELECTED COMPARABLE COMPANIES ANALYSIS. Using publicly available information, Merrill Lynch reviewed the stock prices as of July 5, 2000 and market multiples of the common stock of the following companies for purposes of the analyses described below: o HON Industries o Kimball International o Miller (Herman), Inc. o Mity-Lite Inc o Open Plan Systems Inc. o Steelcase Inc. o Reconditioned Systems Inc. Merrill Lynch believes these companies are engaged in lines of business that are generally comparable to those of the Company. LATEST TWELVE MONTHS EBITDA ANALYSIS. Merrill Lynch determined the equity market value and derived the unlevered value (defined as market value plus preferred equity at liquidation value plus short term debt plus long term debt plus minority interest less the cash and cash equivalents) for these comparable companies. Merrill Lynch calculated a range of such unlevered values as a multiple of the latest twelve months earnings before interest, taxes, depreciation and amortization ("EBITDA"). This calculation resulted in a range of multiples from 2.6x to 7.7x, compared to an implied multiple based on the $9.25 per Share consideration of 8.6x for the Company. LATEST TWELVE MONTHS EBIT ANALYSIS. Merrill Lynch determined the equity market value and derived the unlevered value (defined as market value plus preferred equity at liquidation value plus short term debt plus long term debt plus minority interest less the cash and cash equivalents) for these comparable companies. Merrill Lynch calculated a range of such unlevered values as a multiple of the latest twelve months earnings before interest and taxes ("EBIT"). This calculation resulted in a range of multiples from 2.9x to 12.9x, compared to an implied multiple based on the $9.25 per Share consideration of 10.9x for the Company. LATEST TWELVE MONTHS EARNINGS PER SHARE ANALYSIS. Merrill Lynch determined the prices of the comparable companies as a multiple of latest twelve months earnings per share ("EPS") The latest twelve months EPS multiples ranged from 4.0x to 15.5x, compared to an implied multiple based on the $9.25 per Share consideration of 16.9x for the Company. LAST TWELVE MONTHS CASH FLOW ANALYSIS. Merrill Lynch determined the prices of the comparable companies as a multiple of latest twelve months cash flow. The latest twelve months cash flow multiples ranged from 3.7x to 10.7x, compared to an implied multiple based on the $9.25 per Share consideration of 11.0x for the Company. SELECTED COMPARABLE M&A TRANSACTION ANALYSIS. Using publicly available information and certain information provided by the Company management on the four acquisitions completed by the Company, Merrill Lynch reviewed the purchase prices and multiples paid in the following eight selected transactions.
TARGET ACQUIROR - --------------------------- ------------------------------ Baquet-Pastrijak Inc. Business Resource Group Modern Office Interiors Business Resource Group Re'Nu Office Systems Business Resource Group Office Furniture Network Business Resource Group DO Group, Inc. Mity-Lite Inc. The CenterCore Group, Inc. Mity-Lite Inc. Steelcase Strafor S.A. Steelcase Inc. Knoll Inc. Warburg, Pincus Ventures Inc.
11 ITEM 4. THE SOLICITATION OR RECOMMENDATION.--(CONTINUED) LATEST TWELVE MONTHS EBITDA ANALYSIS. Merrill Lynch derived the unlevered value (defined as offer value plus preferred equity at liquidation value plus short term debt plus long term debt plus minority interest less the cash and cash equivalents) for these selected transactions. Merrill Lynch calculated a range of such unlevered values as a multiple of the latest twelve months EBITDA. This calculation resulted in a range of multiples from 5.8x to 7.8x, compared to an implied multiple based on the $9.25 per Share consideration of 8.6x for the Company. LATEST TWELVE MONTHS EBIT ANALYSIS. Merrill Lynch derived the unlevered value (defined as offer value plus preferred equity at liquidation value plus short term debt plus long term debt plus minority interest less the cash and cash equivalents) for these selected transactions. Merrill Lynch calculated a range of such unlevered values as a multiple of the latest twelve months EBIT. This calculation resulted in a range of multiples from 5.0x to 11.2x, compared to an implied multiple based on the $9.25 per Share consideration of 10.9x for the Company. LATEST TWELVE MONTHS NET INCOME ANALYSIS. Merrill Lynch compared the multiples of latest twelve months net income implied by the offer values of the selected transactions. The latest twelve months net income multiples ranged from 8.3x to 16.5x, compared to an implied multiple based on the $9.25 per Share consideration of 16.9x for the Company. No company, transaction or business used in the analyses described under "--Selected Comparable Companies Analysis" and "--Selected Comparable M&A Transaction Analysis" is identical to the Company as of July 6, 2000. Accordingly, an examination of the results of those analyses necessarily involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the transaction or the public trading or other values of the company or companies to which they are being compared. Mathematical analysis (such as determining the average or median) is not in itself a meaningful method of using comparable acquisition or company data. DISCOUNTED CASH FLOW ANALYSIS. Merrill Lynch performed a discounted cash flow analysis of the Company on a stand alone basis using a set of forecasts provided by management of the Company. Utilizing the the Company forecasts, Merrill Lynch calculated the theoretical unlevered discounted present value for the Company by adding together the present value of (1) the projected stream of unlevered free cash flow through the fiscal year 2004 for the Company and (2) the projected terminal value of the Company at the end of fiscal year 2004. The terminal value of the Company was calculated based upon EBITDA multiples ranging from 4.75x to 5.25x and the unlevered after-tax discount rates used in the discounted cash flow analyses ranged from 17.0% to 18.0%. This calculation resulted in a range of implied equity values for the Company ranging from $7.29 to $8.87, compared to the consideration of $9.25 per Share. The Special Committee selected Merrill Lynch on the basis of its experience and expertise. Merrill Lynch is an internationally recognized investment banking and advisory firm which, as a part of its investment banking business, regularly is engaged in the valuation of businesses and securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes. Merrill Lynch has provided in the past, and may continue to provide in the future, financial advisory services to Three Cities Research Corp. In addition, in the ordinary course of its business, Merrill Lynch may actively trade the equity securities of the Company for its own account and for the accounts of its customers and, accordingly, may at any time hold a long or short position in such securities. ITEM 5. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED. The Special Committee selected, and the Company retained, Merrill Lynch to evaluate the fairness, from a financial point of view, of the consideration to be paid in connection with the Transaction. Pursuant to the engagement letter, dated as of May 9, 2000, between the Company and Merrill Lynch, the Company has agreed to pay Merrill Lynch a fee of $200,000 for services rendered in connection with the Transaction. Of this amount, $50,000 was payable on the date of the engagement letter and $150,000 was payable upon the date Merrill Lynch delivered its opinion. The Company has also agreed to reimburse Merrill Lynch for the reasonable out-of-pocket 12 ITEM 5. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.--(CONTINUED) expenses incurred by it in connection with its engagement (including reasonable counsel fees and disbursements) and to indemnify Merrill Lynch and its affiliates from and against certain liabilities, including liabilities under the federal securities laws, arising out of its engagement. The Company retained Huntington Holdings, Inc. ("Huntington") for the purposes of identifying and advising the Company on opportunities for its sale and participating in negotiations for its sale. Pursuant to the terms of the Huntington engagement letter, the Company is obligated to pay it a retainer of $10,000 per month until the close of sale, $500,000, minus the sum total of all monthly retainers paid should a purchase price be at $6.00 per Share, plus an additional $2,000 per $.01 over the $6.00 purchase price per share, for a total of $1,040,000 at the $9.25 price. The Company also agreed to indemnify Huntington against certain liabilities arising out of Huntington's engagement. A summary of the material provisions of the agreement with D.F. King & Co., Inc., in its capacity as Information Agent, is included in Section 19 of the Offer to Purchase, and incorporated herein by reference. A summary of the material provisions of the agreement with American Stock and Transfer Trust Company, in its capacity as Depositary, is included in Section 19 of the Offer to Purchase, and incorporated herein by reference. Except as disclosed herein, neither the Company nor any person acting on its behalf currently intends to employ, retain or compensate any person to make solicitations or recommendations to shareholders on its behalf concerning the Offer. ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. During the past 60 days, neither the Company nor any subsidiary of the Company nor, to the best of the Company's knowledge, any executive officer, director or affiliate of the Company, has effected a transaction in shares of Common Stock. ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS. SUBJECT COMPANY NEGOTIATIONS. Other than as set forth in this Schedule 14D-9, no negotiation is being undertaken or is underway by the Company in response to the Offer that relates to (1) a tender offer for or other acquisition of the Company's securities by the Company, any subsidiary of the Company or any other person; (2) an extraordinary transaction, such as a merger, reorganization or liquidation, involving the Company or any subsidiary of the Company; (3) a purchase, sale or transfer of a material amount of assets by the Company or any subsidiary of the Company; (4) any material change in the present dividend rate or policy, or (5) indebtedness or capitalization of the Company. Except as described above or in Item 3 of this Schedule 14D-9, there are no transactions, board resolutions, agreements in principle or signed contracts in response to the Offer which relate to, or would result in, one or more of the matters referred to in this Item 7. ITEM 8. ADDITIONAL INFORMATION. (a) REGULATORY APPROVALS. For information regarding governmental and regulatory approvals required in order to consummate the Offer and the Merger, including pre-merger notifications under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, see Section 18 of the Offer to Purchase which is incorporated by reference herein. (b) RIGHTS OF DISSENTING SHAREHOLDERS. Under California law, shareholders who have not tendered their shares of Common Stock will have certain rights to dissent from the merger and demand appraisal of, and to receive payment of, the fair value of their shares. 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 unless 13 ITEM 8. ADDITIONAL INFORMATION.--(CONTINUED) 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 California General Corporation Law ("CGCL") will be entitled to receive the appraised value of their Shares., which may be more or less than what the would receive as a result of the Merger, regardless of how many Shares are held by persons who seek appraisal of their shares. Under California law, fair market value is determined as of July 7, 2000, the trading day before the first announcement of the terms of the Merger Agreement and the Merger, excluding any appreciation or depreciation as a consequence of the Merger, but adjusted for any stock split, reverse stock split, or share dividend becoming effective after that date. If the parties are unable to agree on a fair market value or the Company denies that the Shares are dissenting Shares, the dissenting shareholder may request the Superior Court of Santa Clara County to determine the fair market value of the Shares. The Court's decision would be subject to appellate review. Persons who are beneficial owners of Shares held of record by another person, such as a broker, a bank or nominee, should instruct the record holder to follow the procedure outlined below if the beneficial owners wish to dissent from the approval of the Merger. To perfect their dissenters' rights, shareholders of record must: 1. NOT vote their dissenting Shares to approve the Merger; 2. make written demand for the purchase of their dissenting Shares to the Company or its transfer agent on or before the date of the Action by Written Consent of Shareholders of Business Resource Group; 3. within thirty (30) days after the mailing to shareholders by the Company of notice of approval of the Merger, submit the certificates representing their dissenting shares to the Company, for notation thereon that they represent the dissenting 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 the Offer to Purchase, and is incorporated herein by reference. 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 Delaware General Corporations Law ("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 the Offer to Purchase, and is incorporated herein by reference. 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 RELEVANT PORTIONS OF THE CGCL AND THE DGCL IN THE TEXT OF SCHEDULES II AND III, RESPECTIVELY, OF THE OFFER TO PURCHASE IF YOU ARE CONSIDERING DISSENTING AND SEEKING THE APPRAISED VALUE OF YOUR SHARES. (c) CERTAIN LEGAL PROCEEDINGS. On July 10, 2000, a few hours after the Offer was announced, George Reynolds, a purported 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 14 ITEM 8. ADDITIONAL INFORMATION.--(CONTINUED) Common Stock (the "Class") against the Company and its directors "arising out of the defendants' efforts to complete a management-led buyout" 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 outstanding shares of the Company for $9.25 per Share. The Company and the directors named as defendants in the lawsuit intend to defend the lawsuit vigorously and believe it is without merit. A copy of the Complaint is filed as Exhibit (e)(8), and incorporated herein by reference. (d) OTHER MATERIAL INFORMATION. The information contained in all of the Exhibits referred to in Item 9 below is incorporated by reference herein. ITEM 9. EXHIBITS. o + (a)(1) Offer to Purchase dated June 14, 2000. o + (a)(2) Letter of Transmittal. * (a)(3) Letter to Shareholders of the Company dated July 18, 2000. ^ (a)(4) Press Release of the Company dated July 11, 2000. + (a)(5) Form of Summary Advertisement dated July 17, 2000. + (e)(1) Plan and Agreement of Merger dated as of July 7, 2000, between Business Resource Group and BRG Acquisition Corporation. + (e)(2)(i) Share Exchange Agreement dated July 7, 2000 between BR Holdings, LLC and Brian McNay. + (e)(2)(ii) Share Exchange Agreement dated July 7, 2000 between BR Holdings, LLC and Jeff Tuttle. + (e)(3)(i) Employment Agreement of John Peth dated as of July 7, 2000. + (e)(3)(ii) Employment Agreement of Jeff Tuttle dated as of July 7, 2000. + (e)(3)(iii) Employment Agreement of Brian McNay dated as of July 7, 2000. + (e)(3)(iv) Employment Agreement of John Palmer dated as of July 7, 2000. + (e)(4) Commitment Letter of John Palmer dated July 7, 2000. + (e)(5) Deferred Compensation Agreement of John Peth dated July 7, 2000. (e)(6) Summary of presentation delivered by Merrill Lynch, to the Special Committee, on July 6, 2000. *# (e)(7) Opinion of Merrill Lynch dated July 6, 2000 to the Special Committee of the Board of Directors of the Company. (e)(8) Complaint of George Reynolds filed July 10, 2000 against Business Resource Group et al. (e)(9) Unanimous Written Consent of the Board of Directors of the Company dated July 18, 2000.
- ------------------ * Included in materials delivered to shareholders of the Company. + Filed as an exhibit to the Purchaser's Tender Offer Statement on Schedule TO dated July 14, 2000, and incorporated herein by reference. ^ Filed as an exhibit to the Company's 14d-9 dated July 11, 2000, and incorporated herein by reference. # Incorporated by reference to Annex A of this Schedule 14d-9. o Delivered to shareholders with the Schedule TO. 15 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. By: /s/ HARRY S. ROBBINS -------------------------------- Name: Harry S. Robbins Title: Member, Special Committee of the Board of Directors July 18, 2000 16 ANNEX A OPINION OF MERRILL LYNCH Private Client Group Business Advisory Services Sears Tower 233 South Wacker Drive [LOGO] MERRILL LYNCH 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: /s/ Kit A. Kamholz ---------------------------------------- Kit A. Kamholz Vice President Merrill Lynch Business Advisory Services EXHIBIT INDEX o + (a)(1) Offer to Purchase dated June 14, 2000. o + (a)(2) Letter of Transmittal. * (a)(3) Letter to Shareholders of the Company dated July 18, 2000. ^ (a)(4) Press Release of the Company dated July 11, 2000. + (a)(5) Form of Summary Advertisement dated July 17, 2000. + (e)(1) Plan and Agreement of Merger dated as of July 7, 2000, between Business Resource Group and BRG Acquisition Corporation. + (e)(2)(i) Share Exchange Agreement dated July 7, 2000 between BR Holdings, LLC and Brian McNay. + (e)(2)(ii) Share Exchange Agreement dated July 7, 2000 between BR Holdings, LLC and Jeff Tuttle. + (e)(3)(i) Employment Agreement of John Peth dated as of July 7, 2000. + (e)(3)(ii) Employment Agreement of Jeff Tuttle dated as of July 7, 2000. + (e)(3)(iii) Employment Agreement of Brian McNay dated as of July 7, 2000. + (e)(3)(iv) Employment Agreement of John Palmer dated as of July 7, 2000. + (e)(4) Commitment Letter of John Palmer dated July 7, 2000. + (e)(5) Deferred Compensation Agreement of John Peth dated July 7, 2000. (e)(6) Summary of presentation delivered by Merrill Lynch, to the Special Committee, on July 6, 2000. *# (e)(7) Opinion of Merrill Lynch dated July 6, 2000 to the Special Committee of the Board of Directors of the Company. (e)(8) Complaint of George Reynolds filed July 10, 2000 against Business Resource Group et al. (e)(9) Unanimous Written Consent of the Board of Directors of the Company dated July 18, 2000.
- ------------------ * Included in materials delivered to shareholders of the Company. + Filed as an exhibit to the Purchaser's Tender Offer Statement on Schedule TO dated July 14, 2000, and incorporated herein by reference. ^ Filed as an exhibit to the Company's 14d-9 dated July 11, 2000, and incorporated herein by reference. # Incorporated by reference to Annex A of this Schedule 14d-9. o Delivered to shareholders with the Schedule TO. EX-99.(A)(3) 2 0002.txt LETTER TO SHAREHOLDERS EXHIBIT (a)(3) LETTER TO SHAREHOLDERS July 18, 2000 To the Shareholders of Business Resource Group: We are pleased to report that on July 7, 2000, Business Resource Group (the "Company") entered into a Plan and Agreement of Merger (the "Merger Agreement") with BRG Acquisition Corporation, a Delaware corporation (the "Purchaser"). The Merger Agreement provides for the acquisition of all outstanding shares of Common Stock, par value $0.01 per share, of the Company (the "Common Stock") by the Purchaser at a price of $9.25 per share, net to the seller in cash, without interest. Under the terms of the proposed transaction, the Purchaser has commenced a tender offer (the "Offer") for all of the outstanding shares of Common Stock at $9.25 per share, net to the seller in cash, without interest. The Offer is currently scheduled to expire at 5:00 PM New York City time, August 11, 2000, unless otherwise extended. Following the successful completion of the Offer and upon approval by a shareholder vote, if required, the Company will be merged with and into the Purchaser (the "Merger") and all shares of Common Stock not purchased in the Offer will be converted into the right to receive, without interest, an amount in cash equal to the amount paid pursuant to the Offer. UPON THE RECOMMENDATION OF A COMMITTEE OF INDEPENDENT, DISINTERESTED DIRECTORS NOT AFFILIATED WITH THE PURCHASER OR ITS SHAREHOLDERS, YOUR BOARD OF DIRECTORS (WITH THE THREE DIRECTORS WHO WILL ACQUIRE EQUITY INTERESTS IN ONE OR BOTH THE PURCHASER OR ITS PARENT CORPORATION BEING ABSENT OR NOT VOTING) HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER, DETERMINED THAT THE OFFER AND THE MERGER ARE ADVISABLE AND FAIR TO, AND IN THE BEST INTERESTS OF, THE HOLDERS OF SHARES OF COMMON STOCK AND RECOMMENDS THAT ALL HOLDERS OF SHARES OF COMMON STOCK TENDER THEIR SHARES OF COMMON STOCK PURSUANT TO THE OFFER. Accompanying this letter is a copy of the Solicitation/Recommendation Statement on Schedule 14D-9 filed by the Company with the Securities and Exchange Commission. The Special Committee of the Board of Directors of the Company has received an opinion, dated July 6, 2000, of Merrill Lynch, Pierce, Fenner & Smith Incorporated, that the $9.25 per share cash consideration to be paid in the Offer and the Merger to the holders of shares of Common Stock is fair, from a financial point of view, to such holders, other than the management participants. A copy of this opinion is attached to the Schedule 14D-9. Under separate cover, you will be receiving a copy of the Offer to Purchase and related materials of the Purchaser, including a Letter of Transmittal for use in tendering your shares of Common Stock. These documents set forth the terms and conditions of the Offer and provide instructions for tendering your shares of Common Stock. WE URGE YOU TO READ EACH OF THE ENCLOSED MATERIALS CAREFULLY. The management and directors of the Company thank you for the support you have given the Company. Sincerely, The Special Committee to Business Resource Group EX-99.(E)(6) 3 0003.txt SUMMARY OF PRESENTATION DELIVERED BY MERRILL LYNCH, TO THE SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS Strictly Confidential Presentation to the Special Committee of the Board of Directors of Business Resource Group July 6, 2000 [LOGO]Merrill Lynch ------------------------------------------------------------- Page 1
Transaction Summary - ------------------------------------------------------------------------------------------------------------------------------------ ++ Two-Step Structure Cashtender offer at $9.25 per share (the "Transaction Price") of Business Resource Group (the "Company") common stock (the "Shares") by a newly formed affiliate corporation ("Purchaser") of Three Cities Research ("TCR"), followed by a back-end cash merger at $9.25 per Share ++ Commencement of Tender Offer Tender offer to commence within five business days of public announcement ++ Tender Offer Schedule Initial expiration date for tender offer will be 20-25 business days following commencement; may be extended until 60 days following commencement to permit satisfaction of closing conditions ++ Principal Tender Offer Closing Conditions o Tender of at least 51% of the outstanding Shares not owned by TCR affiliates (or as to which TCR has a binding agreement to acquire) o Tender of at least 53.5% of the outstanding Shares o No material disruptions in US capital markets o Representations and warranties of Company remaining true o Compliance by Company with its obligations under the Plan and Agreement of Merger (the "Merger Agreement") o No withdrawal or adverse modification of Company board's recommendation of transaction ++ Absence of Financing Condition Need to obtain third-party financing is not a condition to consummation of transaction ++ Reincorporation Merger If the number of Shares tendered exceeds the minimum tender condition described above, but is less than 90% of the Shares outstanding, as an interim step, Company will reincorporate into the State of Delaware and then, as the final step, merge with Purchaser [LOGO]Merrill Lynch ----------------------------------------------------------------------------------------------------------------- Page 2
Transaction Summary - ------------------------------------------------------------------------------------------------------------------------------------ ++ No solicitation During pendency of transaction, Company and its advisors will be prohibited from soliciting additional third-party interest in the acquisition of the Company; however, they will be permitted to fully respond to any unsolicited communication, and if deemed appropriate in light of the board's fiduciary duties, the Company's board will be permitted to withdraw its recommendation of the transaction ++ Antitrust filing Transaction will be subject to review by US federal government under HSR Act ++ Principal Termination Rights o Breach of representation or warranty under Merger Agreement or failure of a closing condition o By Company, in order to accept a Superior Proposal (as defined in the Merger Agreement) ++ Termination Fees If Company terminates to accept a Superior Proposal, Company will be required to pay a termination of $750,000 to Purchaser and reimburse Purchaser for its expenses (up to $500,000) in connection with transaction ++ Organization of Acquisition Corporation TCR will form a limited liability company ("Holdings") which will indirectly hold 100% of the equity of Purchaser ++ Contributions by Company Management Two members of Company management, Brian McNay and Jeffrey Tuttle, will enter into agreements with Holdings pursuant to which they will contribute a total of approximately 320,000 Shares to Holdings in exchange for equity units in Holdings. Two other members of management, John Peth and John Palmer, will acquire units of Holdings in consideration of the cancellation of a portion of their Company stock options or the contribution of cash [LOGO]Merrill Lynch ----------------------------------------------------------------------------------------------------------------- Page 3
Transaction Summary - ------------------------------------------------------------------------------------------------------------------------------------ ++ TCR Financing One or more TCR funds will contribute, or arrange for the contribution of, at least $31 million, in the form of cash or demand notes, to Purchaser. Affiliates of TCR will also commit to at least $15 million in subordinated, mezzanine debt financing for the acquisition. And finally, Purchaser will receive a commitment of $45 million in senior debt financing from Comerica Bank--California Transaction Summary Source: Outside counsel to the Special Committee of the Board of Directors of the Company [LOGO]Merrill Lynch ----------------------------------------------------------------------------------------------------------------- Page 4
Valuation Analysis - -------------------------------------------------------------------------------- Historical Stock Performance [Graphic Appears here] [LOGO]Merrill Lynch ------------------------------------------------------------- Page 5 Valuation Analysis - -------------------------------------------------------------------------------- Premium Analysis Per Share Share Price Premium --------- ----------- ------- Transaction Price $9.25 NA 7/5/00 Price $6.50 42% 52 Week High $9.00 3% 52 Week Low $2.87 222% Source: Price information from Factset Research SYstems [LOGO] Merrill Lynch ------------------------------------------------------------ Page 6 Valuation - -------------------------------------------------------------------------------- Historical Financial Summary [Graphs Appears Here] [LOGO]Merrill Lynch ------------------------------------------------------------- Page 7 Valuation--Discounted Cash Flow - -------------------------------------------------------------------------------- Summary of Financial Projections
Key Assumptions 2000 2001 2002 2003 2004 --------------- ---- ---- ---- ---- ---- Sales Growth 56.5% 25.1% 22.0% 10.5% 10.5% EBITDA margins 6.6% 8.6% 8.6% 8.6% 8.6% EBIT margins 5.6% 7.8% 7.5% 7.4% 7.4% Adjusted working capital (% Rev) 13.1% 13.1% 13.1% 13.1% 13.1% Capital expenditures $1.3 $1.0 $2.0 $2.3 $2.5 Cash paid in acquisitions $6.7 $5.7 $6.9 $8.4 $11.1 Forecast ________________________ 2000E 2001E 2002E 2003E 2004E ----- ----- ----- ----- ----- Sales $195.6 $244.7 $298.5 $329.8 $364.3 EBITDA (a) $13.0 $21.1 $25.7 $28.4 $31.3 EBIT (a) $11.0 $19.1 $22.3 $24.4 $27.0
(a) Excludes special items Source: Confidential Offering Memorandum prepared by Huntington Holdings, Inc.; Revised Forecast of Fiscal 2000 and Fiscal 2001, dated May 15, 2000 provided by Company management; discussions with Company management. [Merrill Lynch LOGO] ------------------------------------------------------------ Page 8 Valuation Analysis - -------------------------------------------------------------------------------- Selected Comparable Company Analysis
Market Value Market Cap. as a Multiple of: as a Multiple of: ----------------- ----------------- LTM LTM Price Shares Market Market Net to Cash LTM LTM Companies (07/05/00) (millions) Value Cap. (a) Common Flow (b) EBITDA EBIT --------- ---------- ---------- ----- -------- ------ -------- ------ --- Hon Industries $ 24.81 60.15 $ 1,492.5 $ 1,731.7 14.9x 8.6x 7.4x 10.4x Kimball International -Cl B $ 15.00 40.20 $ 603.0 $ 510.9 12.2x 6.7x 4.5x 7.2x Miller (Herman)Inc $ 27.36 78.57 $ 2,149.6 $ 2,323.7 15.5x 9.4x 7.7x 10.3x Mity-Lite Inc $ 12.75 4.82 $ 61.4 $ 55.3 13.5x 10.7x 7.4x 8.3x Open Plan Systems Inc $ 1.88 4.40 $ 8.3 $ 11.6 5.2x 6.7x 6.0x 12.9x Steelcase Inc $ 17.31 151.16 $ 2,616.9 $ 2,995.1 15.3x 8.4x 7.1x 10.6x Reconditioned Systems Inc $ 2.80 1.33 $ 3.7 $ 2.8 4.0x 3.7x 2.6x 2.9x -------------------------------------- Maximum 15.5x 10.7x 7.7x 12.9x Mean 11.5 7.7 6.1 8.9 Median 13.5 8.4 7.1 10.3 Minimum 4.0 3.7 2.6 2.9
- ---------------- (a) Market Capitalization = Market Value + Preferred Equity at Liquidation Value (Incl. Redeemable) + Short-Term Debt + Long-Term Debt + Minority Interest - Cash & Marketable Securities (b) Cash Flow = Income Available to Common Shareholders + Depreciation, Depletion & Amortization + Deferred Taxes - Unremitted Earnings of Unconsolidated Subsidiaries [LOGO] Merrill Lynch ------------------------------------------------------------ Page 9
Valuation Analysis - ------------------------------------------------------------------------------------------------------------------------------------ M&A Transaction Analysis Effective Offer Enterprise Date Target Acquiror Value Value Consideration (c) - --------- --------------------------- ------------------------------ ------ ---------- -------------------------- 11/9/99 Baquet-Pastrijak Inc. Business Resource Group $4.4 $4.4 Cash, debt, stock; earnout 8/3/99 Modern Office Interiors Business Resource Group 0.9 1.4 Cash, debt, stock; earnout 2/2/99 Re'Nu Office Systems Inc. Business Resource Group 4.1 5.1 Cash, debt, stock; earnout 5/26/98 Office Furniture Networking Business Resource Group 3.5 3.3 Cash, stock; earnout Pending DO Group, Inc. Mity-Lite Inc. 5.8 6.8 (a) Cash and assumed debt 4/9/99 The CenterCore Group, Inc. Mity-Lite Inc. 5.3 7.3 Cash and assumed debt 4/26/99 Steelcase Strafor S.A. Steelcase Inc. 225.2 325.2 Cash 11/4/99 Knoll Inc. Warburg, Pincus Ventures, Inc. 1,147.7 1,200.6 (b) Cash
Offer Value As a Enterprise Value a Multiple Of: As a Multiple Of: ---------------- ------------------ LTM Effective Net To LTM LTM Date Common EBITDA EBIT - --------- ---------------- ------ ------- 11/9/99 8.3 x N/A x 5.0 x 8/3/99 12.2 N/A 11.2 2/2/99 16.5 N/A 10.8 5/26/98 12.8 7.8 8.2 Pending N/A N/A N/A 4/9/99 NM NM NM 4/26/99 12.6 N/A 9.8 11/4/99 12.5 5.8 6.9 - ------------------------------------------------------------ Max 16.5 x 7.8 x 11.2 x Mean 12.5 x 6.8 x 8.6 x - ------------------------------------------------------------ Median 12.5 x 6.8 x 9.0 x - ------------------------------------------------------------ Min 8.3 x 5.8 x 5.0 x - ----------------------------------------- (a) Acquisition of 50.1% interest in DO Group, Inc. not already owned by Mity-Lite Inc. (b) Acquisition of 40% interest not already owned by Warburg, Pincus Ventures Inc. (c) The PV of the maximum potential earnout payments were included in the transaction values indicated.
[LOGO] Merrill Lynch ------------------------------------------------------------ Page 10 Valuation Analysis - -------------------------------------------------------------------------------- Valuation Summary Methodology Equity Value per Share Discounted Cash Flow Analysis $7.29 - $8.87 Market Comparable Analysis $6.23 - $7.49 M&A Transaction Analysis $6.80 - $7.20 [LOGO] Merrill Lynch ------------------------------------------------------------ Page 11 EX-99.(E)(8) 4 0004.txt COMPLAINT FOR BREACH OF FIDUCIARY DUTY MILBERG WEISS BERSHAD HYNES & LERACH LLP WILLIAM S LEARCH (68581) DARREN J ROBBINS (168593) 600 West Broadway, Suite 1800 San Diego, CA 92101 Telephone 619/231-1058 CAULEY & GELLER, LLP PAUL J. GELLER One Boca Place, Suite 421A 2255 Glades Road Boca Raton, FL 33431 Telephone 561/750-3000 Attorneys for Plantiff SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SANTA CLARA GEORGE REYNOLDS, On Behalf of Himself | BY FAX and All Others Similarly Situated, | Case No. | Plantiff, | CLASS ACTION | ------------ vs | COMPLAINT FOR BREACH OF BUSINESS RESOURCE GROUP, HARRY S. | FIDUCIARY DUTY ROBBINS, JOHN W. PETH, BRIAN D. | McNAY, JEFFREY D. TUTTLE and DOES 1- | 25, inclusive, | | Defendants. | |DEMAND FOR JURY TRIAL - ------------------------------------------------------------------ COMPLAINT FOR BREACH OF FIDUCIARY DUTY Plantiff, by his attorneys, alleges as follows. SUMMARY OF THE ACTION 1. This is a stockholder class action brought by plantiff on behalf of the holders of Business Resource Group ("BRG" or the "Company") common stock against BRG and its directors arising out of defendants' efforts to complete a management-led buyout ("MBO")of BRG 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. 2. On March 31, 2000, BRG announced that the CEO and President (John W Peth) together with three of its senior officers had submitted an offer to the BRG Board to purchase the outstanding shares of BRG for $9.25 per share (the "Acquisition"). 3. In pursuing the unlawful plan to cash out BRG's public stockholders for grossly inadequate consideration, each of the defendants violated applicable law by directly breaching and/or aiding the other defendants' breaches of their fiduciary duties of loyalty, due care, independence and good faith and fair dealing. 4. In fact, instead of attempting to obtain the highest price reasonably available for BRG for its shareholders, the Individual Defendants spent a substantial effort tailoring the structural terms of the Acquisition to meet the specific needs of Perth. 5. In essence, the proposed Acquisition is the product of a hopelessly flawed process that was designed to ensure the sale of BRG to one buyer and one buyer only on terms preferential to Peth and to subvert the interests of the plaintiff and the other public stockholders of BRG Plaintiff seeks to enjoin the proposed transaction or, alternatively, rescind the transaction in the event that the transaction is consummated. JURISDICTION AND VENUE 6. This Court has jurisdiction over BRG because BRG conducts business in California and is a citizen of California, as its principal place of business is in San Jose, California and is incorporated in California. Likewise, certain of the Individual Defendants, including defendants Peth, Tuttle and McNay are citizens of California. This action is not removable. -1- COMPLAINT FOR BREACH OF FIDUCIARY DUTY 7. Venue is proper in this Court because the conduct at issue took place and had an effect in this County. PARTIES 8. Plaintiff George Reynolds is a resident and citizen of Tulsa, Oklahoma and at all times relevant hereto, was a shareholder of BRG. 9. Defendant BRG is a corporation organized and existing under the laws of the State of California with its principal place of business located in San Jose, California. BRG operates in this County as a provider of workspace service: and products to businesses. The Company markets a variety of new office workstation products, refurbished office systems furniture, and related services such as management outsourcing and consulting services, computer-aided facilities management, computerized space planning and design, move management, and installation. 10. Defendant Harry S. Robbins ("Robbins") is a director of BRG. 11. Defendant Brian D. McNay ("McNay") is a director and Executive Vice President of Sales for BRG. 12. Defendant John W. Peth ("Peth") is a director and the President and Chief Executive Officer of BRG. 13. Defendant Jeffrey D. Tuttle ("Tuttle") is Executive Vice President of Marketing and a director of BRG. 14. The defendants named above, Robbins, Peth, McNay and Tuttle, are sometimes collectively referred to herein as the "Individual Defendants." 15. The true names and capacities of defendants sued herein under California Code of Civil Procedures ss. 474 as Does 1 through 35, inclusive, are presently not known to plantiff, who therefore sues these defendants by such fictitious names. Plantiff will seek to amend this Complaint and include these Doe defendants' true names and capacities when they are ascertained. Each of the fictitiously named defendants is responsible in some manner for the conduct alleged herein and for the injuries suffered by the Class. -2- COMPLAINT FOR BREACH OF FIDUCIARY DUTY Defendants' Fiduciary Duties 16. In any situation where the directors of a publicly traded corporation undertake a transaction that will result in either (i) a change in corporate control or (ii) a break-up of the corporation's assets, the directors have an affirmative fiduciary obligation to obtain the highest value reasonably available for the corporation's shareholders, and if such transaction will result in a change of corporate control, the shareholders are entitled to receive a significant premium. To diligently comply with these duties, the directors may not take any action that. (a) adversely affects the value provided to the corporation's shareholders; (b) will discourage or inhibit alternative offers to purchase control of the corporation or its assets, (c) contractually prohibits them from complying with theit fiduciary duties; (d) will otherwise adversely affect their duty to search and secure the best value reasonably available under the circumstances for the corporation's shareholders; and/or (e) will provide them preferennal treatment at the expense of, or separate from, the public shareholders. 17. In accordance with their duties of loyalty and good faith, the defendants as directors and/or officers of BRG are obligated to refrain from; (a) participating in any transaction where the directors' or officers' loyalties are divided; (b) participating in any transaction where the directors or officers receive or are entitled to receive a personal financial benefit not equally shared by the public shareholders of the corporation; and/or (c) unjustly enriching themselves at the expense or to the detriment of the public shareholders. 18. Plaintiff alleges herein that the Individual Defendants, separately and together, in connection with the Acquisition, violated the fiduciary duties owned to plantiff and the other public shareholders of BRG, including their duties of loyalty, good faith and independence, insofar as they -3- COMPLAINT FOR BREACH OF FIDUCIARY DUTY stood on both sides of the transaction and engaged in self-dealing and obtained for themselves personal benefits, including personal financial benefits, not shared equally by plaintiff or the Class. 19. Because the Individual Defendants have breached their duties of loyalty, good faith and independence in connection with the Acquisition, the burden of proving the inherent or entire fairness of the Acquisition, including all aspects of its negotiation, structure, price and terms, is placed upon the Individual Defendants as a matter of law. CLASS ACTION ALLEGATIONS 20. Plaintiff brings this action pursuant to ss.382 of the California Code of Civil Procedure on his own behalf and as a class action on behalf of all holders of BRG stock who are being and will be harmed by defendants' actions described below (the "Class"). Excluded from the Class are defendants herein and any person, firm, trust, corporation, or other entity related to or affiliated with any defendants. 21. This action is properly maintainable as a class action. 22. The Class is so numerous that joinder of all members is impracticable. According to BRG's SEC filings, there were more than [??] million shares of BRG common stock outstanding as of April 30, 2000. 23. There are questions of law and fact which are common to the Class and which predominate over questions affecting any individual Class member. The common questions include, inter alia, the following: (a) whether defendants have breached their fiduciary duty of undivided loyalty, independence or due care with respect to plaintiff and the other members of the Class in connection with the Acquisition; (b) whether the Individual Defendants are engaging in self-dealing in connection with the Acquisition, (c) whether the Individual Defendants have breached their fiduciary duty to secure and obtain the best price reasonable under the circumstances for the benefit of plaintiff and the other members of the Class in connection with the Acquisition; -4- COMPLAINT FOR BREACH OF FIDUCIARY DUTY (d) whether the Individual Defendants are unjustly enriching themselves and other insiders or affiliates of BRG, (e) whether defendants have breached any of their other fiduciary duties to plaintiff and the other members of the Class in connection with the Acquisition, including the duties of good faith, diligence, honesty and fair dealing, (f) whether the defendants, in bad faith and for improper motives, have impeded or erected barriers to discourage other offers for the Company or its assets, (g) whether the Acquisition compensation payable to plaintiff and the Class is unfair and inadequate, and (h) whether plaintiff and the other members of the Class would be irreparably damaged were the transactions complained of herein consummated. 24. Plaintiff's claims are typical of the claims of the other members of the Class and plaintiff does not have any interest adverse to the Class. 25. Plaintiff is an adequate representative of the Class, has retained competent counsel experienced in litigation of this nature and will fairly and adequately protect the interests of the Class. 26. The prosecution of separate actions by individual members of the Class would create a risk of inconsistent or varying adjudications with respect to individual members of the Class which would establish incompatible standards of conduct for the party opposing the Class. 27. Plaintiff anticipates that there will be no difficulty in the management of this litigation. A class action is superior to other available methods for the fair and efficient adjudication of this controversy. 28. Defendants have acted on grounds generally applicable to the Class with respect to the matters complained of herein, thereby making appropriate the relief sought herein with respect to the Class as a whole. THE PROPOSED ACQUISITION 29. BRG provides workspace services and products to businesses. The Company markets a variety of new office workstation products, refurbished office systems furniture, and related services -5- COMPLAINT FOR BREACH OF FIDUCIARY DUTY such as management outsourcing and consulting services, computer-aided facilities management, computerized space planning and design, move management and installation. 30. On January 6, 2000, BRG announced it intended to explore strategic alternatives to enhance shareholder value. The press release associated with the announcement stated in part, SAN JOSE, Calif -- Jan. 6 2000 -- Business Resource Group (BRG), a leading provider of total workspace solutions, today announced that its board of directors has engaged the investment banking firm of Huntington Holdings, Inc. to explore various strategic and financial alternatives for maximizing shareholder value. Such alternatives may include, but are not limited to, a merger, a strategic alliance, the infusion of additional equity, or an affiliation with a strategic partner. There can be no assurance that a transaction will result from the process. John W. Peth, president and chief executive officer, commented. "The management team of BRG is pleased with the progress that it has made to date and is committed to continue leading the company to achieve its long-term growth and profit objectives. We believe it is in the best interests of BRG shareholders to explore a wide range of strategic alternatives in order to more aggressively expand our operations and capitalize on the market opportunities available to BRG. Our goal in this process is to maximize shareholder value by strengthening our position as a leading supplier of total workspace solutions, which we believe will also enhance career opportunities for our employees." 31. On February 24, 2000, BRG reported record quarterly revenues of $40.7 million and a net earnings increase of 195% to $1.1 million. The press release associated with the report stated in part, SAN JOSE, Calif. --Feb. 24, 2000 -- Business Resource Group (BRG), a leading provider of total workspace solutions, today announced total net revenues for the first quarter of fiscal 2000 of $40.7 million, an increase of 57% over fiscal 1999 first quarter net revenues of $26.0 million. In addition, the Company reported net income for the first quarter ended January 31, 2000 of $1,066,000, an increase of 195% over the net income of $36,000 reported in the first quarter fiscal 1999 Diluted earnings per share for the first quarter of fiscal 2000 were $0.19 per share, an increase of 171% over the $0.07 per share reported for the first quarter of fiscal 1999 * * * "We are pleased with the Company's revenue growth and the improvement in our operating performance for the first quarter of fiscal 2000," commented John W. Peth, president and chief executive officer of BRG. "In addition to establishing a new quarterly record for revenues, it marks the seventh consecutive quarter of double digit earnings growth from the Company. We believe that these operating results demonstrate that BRG's value proportion of providing customers with single-sourced workspace solutions continues to be well received in the marketplace and provides us with a platform for future success." -6- COMPLAINT FOR BREACH OF FIDUCIARY DUTY 32. On May 25, 2000, BRG reported record quarterly revenues and earnings, a revenue increase of 62% and a net earnings increase of 122%. The press release associated with the report stated in part. SAN JOSE, Calif., May 25, 2000 -- Business Resource Group (BRG), a leading provider of total workspace solutions, today announced total net revenues for the second quarter of fiscal 2000 of $47.7 million, an increase of 62% over fiscal 1999 second quarter net revenues of $29 million. In addition, the Company reported net income for the second quarter ended April 30, 2000 of $1,252,000 an increase of 122% over the net income of $663,000 reported in the second quarter fiscal 1999. Diluted earnings per share for the second quarter of fiscal 2000 were $0.21 per share, an increase of 91% over the $0.11 per share reported for the second quarter of fiscal 1999. * * * "We are extremely pleased with the Company's continuing trend of significant growth in revenue and earnings for both the second quarter and the first six month of fiscal 2000," commented John W. Peth, president and chief executive officer of BRG. "In addition to establishing a new quarterly record for revenues and net earnings, this quarter represents the eighth consecutive quarter that we have achieved double digit growth in both revenues and earnings. We believe that these operating results continue to validate the acceptance of BRG's value proposition in the market place." 33. On July 20 2000, BRG announced that a management group formed by Peth, its President and Chief Executive Officer, had submitted an offer to BRG wherein Peth and other management proposed to pay shareholders of BRG the sum of $9.25 in cash for each share they own of BRG. The press release, stated in part: NEW YORK, July 10 --BRG Acquisition Corporation and Business Resource Group today jointly announced that they have executed a definitive merger agreement under which BRG Acquisition Corporation will commence a cash tender offer to acquire all of the outstanding shares of Business Resource Group, other than those owned by BRG Acquisition Corporation or its affiliates at the expiration of the offer, for $9.25 per share. The tender offer is scheduled to expire at 5:00 p.m., New York City time, on August 7, 2000. * * * In connection with the transition, the chief executive officer and three other senior officers of Business Resource Group have agreed to maintain an equity interest in the company after the completion of the transaction and have entered into employment agreements with BRG. Acquisition that will take effect when the merger is completed. John W. Peth, Business Resource Group president and chief executive officer stated "We believe that this transaction provides significant value to our existing stockholders. In addition, we are very excited about our new partnership with Three Cities. We believe that this relationship will enhance our company's market position and provide additional resources to help meet our long-term strategic objectives." -7- COMPLAINT FOR BREACH OF FIDUCIARY DUTY SELF-DEALING 34. The self-dealing, conflicts of interest and conduct harmful to the interests of the shareholders results from at least the following (a) The $9.25 price offered to the public shareholders is inadequate. (b) It is in Peth's interest to buy the public's shares at the lowest possible price, $9.25. The realizable value from growth and a recovery of the Company's historic performance is far in excess of $9.25 per share. The $9.25 per share price does not reflect this fact nor the fact that the offer is a substantial discount to where BRG stock traded in the past months. (c) The BRG Board is fraught with conflicts. It consists of, and is controlled by, Peth, Tuttle, and McNay, who control approximately 38% of the outstanding shares. (d) While Peth was exploring personal opportunities to buy out BRG, the conflicted Board did not search for competitive suitors in compliance with its fiduciary obligation to do so. 35. The Acquisition is designed to essentially freeze BRG's public stockholders out of a large portion of the valuable assets which have produced, and defendants expect will continue to produce, substantial revenue and earnings, and these assets are being sold for grossly inadequate consideration to Peth. 36. The price of $9.25 per share which Peth proposes to pay to Class members is grossly unfair and inadequate because, among other things (a) The announcement of the proposed Acquisition was made at a time when the Company's stock price was trading below where it had traded in the month prior, and (b) The defendants timed the announcement of the Acquisition to place an artificial cap on the price for BRG's stock to enable them to acquire the stock at the lowest possible price. 37. If the Acquisition is consummated, plaintiff and the other members of the Class will no longer own shares in a "growth" company, but rather will be cashed out of their BRG shares for just $9.25 per share. -8- COMPLAINT FOR BREACH OF FIDUCIARY DUTY 38. The shareholders have been denied the fair process and arm's- length negotiated terms to which they are entitled in a sale of their Company. The officers and directors are obligated to maximize shareholder value, not structure a preferential deal for themselves. 39. The director defendants are obligated to maximize the value of BRG to its shareholders. The Class members are being deprived of their right to a fair and unbiased process to sell the Company, and the opportunity to obtain maximum value and terms for their interests, without preferential treatment to the insiders. 40. By reason of their positions with BRG, the Individual Defendants are in possession of non-public information concerning the financial condition and prospects of BRG, and especially the true value and expected increased future value of BRG and its assets, which they have not disclosed to BRG's public stockholders, including, but not limited to, BRG's third quarter 2000 results, which Peth and other defendants have access to. Moreover, despite their duty to maximize shareholder value, the defendants have clear and material conflicts of interest and are acting to better their own interests at the expense of BRG's public shareholders. 41. The Board members and advisors identified herein have irremediable positions of conflict and cannot be expected to act in the best interest of BRG's public stockholders in connection with this proposed Acquisition, as they are beholden to Peth, McNay and Tuttle. 42. The proposed MBO is wrongful, unfair and harmful to BRG's public stockholders, and represents an effort by Peth to aggrandize his own financial position and interests at the expense of and to the detriment of Class members. The Acquisition is an attempt to deny plaintiff and the other members of the Class their right to share proportionately in the true value of BRG's valuable assets, and future growth in profits and earnings, while usurping the same for the benefit of Peth on unfair and inadequate terms. 43. As a result of defendants' unlawful actions, plaintiff and the other members of the Class will be damaged in that they will not receive their fair portion of the value of BRG's assets and business and will be prevented from obtaining the real value of their equity ownership of the Company. -9- COMPLAINT FOR BREACH OF FIDUCIARY DUTY 44. In light of the foregoing, the Individual Defendants must, as their fiduciary obligations require, o Undertake an appropriate evaluation of BRG's worth as an acquisition candidate. o Act independently so that the interests of BRG's public stockholders will be protected, including, but not limited to, the retention of truly independent advisors and/or the appointment of a truly independent Special Committee. o Adequately ensure that no conflicts of interest exist between defendants' own interests and their fiduciary obligations to maximize stockholder value or, if such conflicts exist, to ensure that all conflicts be resolved in the best interests of BRG's public stockholders. o If an acquisition transaction is to go forward, require that it be approved by a majority of BRG's minority stockholders and require that BRG's third quarter 2000 results be revealed to the shareholders. 45. Peth designed the Acquisition in a manner which best serves his interests in order to secure for himself personal benefits which will not be shared equally by Plaintiff and the Class. 46. The Individual Defendants have also approved the Acquisition so that it transfers 100% of BRG's revenues and profits to BRG and Peth, and thus all of BRG's operations will now accrue to the personal benefit of Peth. By contrast, plaintiff and the Class will be frozen out of all of these revenues, earnings and profits. CAUSE OF ACTION Claim for Breach of Fiduciary Duties 47. Plaintiff repeats and realleges each allegation set forth herein. 48. The defendants have violated fiduciary duties of care, loyalty, candor and independence owed to the public shareholders of BRG and have acted to put their personal interests ahead of the interests of BRG shareholders. 49. By the acts, transactions and courses of conduct alleged herein, defendants, individually and acting as a part of a common plan, are attempting to unfairly deprive plaintiff and other members of the Class of the true value of their investment in BRG. 50. The Individual Defendants have violated their fiduciary duties by entering into a transaction with BRG without regard to the fairness of the transaction to BRG shareholders. -10- COMPLAINT FOR BREACH OF FIDUCIARY DUTY Defendant BRG directly breached and/or aided and abetted the other defendants' breaches of fiduciary duties owed to plaintiff and the other holders of BRG stock. 51. As demonstrated by the allegations above, the defendant directors failed to exercise the care required, and breached their duties of loyalty, good faith, candor and independence owed to the shareholders of BRG because, among other reasons (a) they failed to take steps to maximize the value of BRG to its public shareholders and they took steps to avoid competitive bidding, to cap the price of BRG's stock and to give the Individual Defendants an unfair advantage, by, among other things, failing to solicit other potential acquirors or alternative transactions, (b) they failed to properly value BRG, and (c) they ignored or did not protect against the numerous conflicts of interest resulting from the directors' own interrelationships, or connections with the Acquisition. 52. Because the Individual Defendants dominate and control the business and corporate affairs of BRG, and are in possession of private corporate information concerning BRG's assets (including BRG's third quarter 2000 results) businesses and future prospects, there exists an unbalance and disparity of knowledge and economic power between them and the public shareholders of BRG which makes it inherently unfair for them to pursue any proposed transaction wherein they will reap disproportionate benefits to the exclusion of maximizing stockholder value. 53. By reason of the foregoing at its practices and course of conduct, the defendants have failed to exercise ordinary care and diligence in the exercise of their fiduciary obligations toward plaintiff and the other members of the Class. 54. As a result of the actions of defendants, plaintiff and the Class have been and will be irreparably damaged in that they have not and will not receive their fair portion of the value of BRG's assets and business. 55. Unless enjoined by this Court, the defendants will continue to breach their fiduciary duties owed to plaintiff and the Class, and may consummate the proposed Acquisition which will exclude the Class from its fair share of BRG's valuable assets and business, and/or benefit defendants in the unfair manner complained of herein, all to the irreparable harm of the Class, as aforesaid. -11- COMPLAINT FOR BREACH OF FIDUCIARY DUTY 56. 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. 57. Unless the proposed Acquisition is enjoined by the Court, defendants will continue to breach their fiduciary duties owed to plaintiff and the members for the Class, will not engage in arm's-length negotiations on the Acquisition terms, and will not supply to BRG's minority stockholders sufficient information to enable them to cast informed votes on the proposed Acquisition and may consummate the proposed Acquisition all to the irreparable harm of the members of the Class 58. Plaintiff and the members of the Class have no adequate remedy at law. Only through the exercise of this Court's equitable powers can plaintiff and the Class be fully protected from the immediate and irreparable injury which defendants' actions threaten to inflict. PRAYER FOR RELIEF WHEREFORE, plaintiff demands preliminary and permanent relief, including injunctive relief in his favor and in favor of the Class and against defendants as follows: A. Declaring that this action is properly maintainable as a class action, B. Declaring and decreeing that the Acquisition agreement was entered into in breach of the juduciary duties of the defendants and is therefore unlawful and unenforceable, C. Enjoining defendants, their agents, counsel, employees and all persons action in concert with them from consummating the Acquisition, unless and until the Company adopts and implements a procedure of process that is free from conflicts of interest: D. Directing the individual Defendants to exercise their fiduciary duties to obtain a transaction which is in the best interests of BRG's shareholders until the process for the sale or auction of the Company is completed. E. Rescinding, to the extent already implemented, the Acquisition or any of the terms thereof. F. Awarding plaintiff the costs and disbursements of this action, including reasonable attorneys' and experts fees; and -12- COMPLAINT FOR BREACH OF FIDUCIARY DUTY G. Granting such other and further relief, including equitable relief, as this Court may deem just and proper. JURY DEMAND Plaintiff demands a trial by jury. DATED July 10, 2000 MILBERG WEISS BERSHAD HYNES & LERACH LLP WILLIAM S. LERACH DARREN J. ROBBINS /s/ Darren J. Robbins ------------------------ Darren J. Robbins 600 West Broadway, Suite 1800 San Diego, CA 92101 Telephone: 619- 231-1058 CAULEY & GELLER, LLP PAUL J. GELLER One Boca Place, Suite 421A 2255 Glades Road Boca Raton, FL 33431 Telephone: 561-750-3000 Attorneys for Plaintiff -13- COMPLAINT FOR BREACH OF FIDUCIARY DUTY EX-99.(E)(9) 5 0005.txt UNANIMOUS WRITTEN CONSENT OF DIRECTORS UNANIMOUS WRITTEN CONSENT OF DIRECTORS OF BUSINESS RESOURCE GROUP July 18, 2000 The undersigned, constituting all of the members of the Board of Directors of Business Resource Group, a California corporation (the "Company"), acting pursuant to the authority of Section 307(b) of the California General Corporation Law and the Bylaws of the Company, do hereby approve and adopt the following resolution: Authorization WHEREAS, the Board of Directors of the Company has determined that it is in the best interests of the Company to authorize either of Messrs. George Kelly and Harry Robbins, the members of the Special Committee of the Board of Directors, to sign on behalf of the Company the Schedule 14d-9 (together with any related documents and any amendments thereto) to be filed by the Company, in connection with the Tender Offer and Merger with BRG Acquisition Corporation; RESOLVED: That either such member of the Special Committee is hereby authorized to sign on behalf of the Company the Schedule 14d-9 together with any related documents and any amendments thereto. [Signature page follows.] IN WITNESS WHEREOF, the undersigned directors of the Company have executed this unanimous written consent as of the date first written above. /s/ Brian D. McNay ---------------------------- Brian D. McNay /s/ John W. Peth ---------------------------- John W. Peth /s/ Harry S. Robbins ---------------------------- Harry S. Robbins /s/ Jeffrey Tuttle ---------------------------- Jeffrey Tuttle /s/ George Kelly ---------------------------- George Kelly -----END PRIVACY-ENHANCED MESSAGE-----