-----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, SNYTKEIyJ5EteR6eifZ1PQQVIMfCh7ZOnbuAxZi0mc2+Ahgi8vDsjMDJ1pLaQMen 8GtqfFqhd1IXOp9x6HubWA== 0000893220-99-000511.txt : 19990430 0000893220-99-000511.hdr.sgml : 19990430 ACCESSION NUMBER: 0000893220-99-000511 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19990421 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990429 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CORT BUSINESS SERVICES CORP CENTRAL INDEX KEY: 0000905401 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 541662135 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-14146 FILM NUMBER: 99604969 BUSINESS ADDRESS: STREET 1: 4401 FAIR LAKES CT STE 300 CITY: FAIRFAX STATE: VA ZIP: 22033 BUSINESS PHONE: 7039688500 MAIL ADDRESS: STREET 1: 4401 FAIR LAKES COURT STE 300 STREET 2: 4401 FAIR LAKES COURT STE 300 CITY: FAIRFAX STATE: VA ZIP: 22033 FORMER COMPANY: FORMER CONFORMED NAME: NEW CORT HOLDINGS CORP DATE OF NAME CHANGE: 19930825 8-K 1 CORT BUSINESS SERVICES CORPORATION 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) APRIL 21, 1999 CORT BUSINESS SERVICES CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 1-14146 54-1662135 (STATE OR OTHER JURISDICTION (COMMISSION (I.R.S. EMPLOYER OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.) 4401 FAIR LAKES COURT FAIRFAX, VIRGINIA 22033 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (703) 968-8500 2 ITEM 5. OTHER EVENTS On April 21, 1999, CORT Business Services Corporation, a Delaware corporation (the "Company"), issued a press release (the "Press Release") announcing its financial results for the first quarter ended March 31, 1999. In the Press Release, the Company also announced that pursuant to that certain Agreement and Plan of Merger (the "Merger Agreement"), dated as of March 25, 1999, among the Company, CBF Holding LLC, a Delaware limited liability company, and CBF Mergerco Inc., a Delaware corporation, the Company had received copies of highly confident letters for the debt financing required to complete the transactions contemplated by the Merger Agreement. For more information, (i) a copy of the Press Release is attached hereto as Exhibit 99.1, (ii) a copy of a letter from Credit Suisse First Boston Corporation to CBF Holding LLC dated April 21, 1999 is attached hereto as Exhibit 99.2, and (iii) a copy of a letter from NationsBank N.A. and NationsBanc Montgomery Securities LLC to CBF Holding LLC dated April 21, 1999 is attached hereto as Exhibit 99.3. Additionally, the Company has confirmed that three alleged stockholders have separately filed complaints in Delaware Chancery Court against the Company, each of the Company's directors, and Citicorp Venture Capital Ltd. One of the three complaints also includes Bruckmann, Rosser, Sherrill & Co. as an additional defendant. Each complaint alleges breaches of fiduciary duties in connection with the directors' approval of the merger and other claims. The complaints purport to be class action complaints and the plaintiffs seek to enjoin the transactions contemplated by the Merger Agreement or, in the alternative, to recover compensatory damages. The Company believes that the claims are without merit. Copies of each complaint are attached hereto as Exhibit 99.4, Exhibit 99.5 and Exhibit 99.6. ITEM 7. EXHIBITS 99.1 Press Release of April 21, 1999. 99.2 Letter from Credit Suisse First Boston Corporation to CBF Holding LLC dated April 21, 1999. 99.3 Letter from NationsBank N.A. and NationsBanc Montgomery Securities LLC to CBF Holding LLC dated April 21, 1999. 99.4 Complaint in the Court of Chancery of the State of Delaware, naming Michael Sternberg, as Plaintiff, and the Company, each of the directors of the Company, and Citicorp Venture Capital Ltd., as Defendants. 99.5 Complaint in the Court of Chancery of the State of Delaware, naming Harbor Finance Partners, as Plaintiff, and the Company, each of the directors of the Company, and Citicorp Venture Capital Ltd., as Defendants. 99.6 Complaint in the Court of Chancery of the State of Delaware, naming Harold Shapiro, as Plaintiff, and the Company, each of the directors of the Company, Bruckmann, Rosser, Sherrill & Co. and Citicorp Venture Capital Ltd., as Defendants. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CORT BUSINESS SERVICES CORPORATION /s/ FRANCES ANN ZIEMNIAK ------------------------------------- Date: April 29, 1999 By: Frances Ann Ziemniak Executive Vice President and Chief Financial Officer 3 EXHIBIT INDEX Exhibit No. Description 99.1 Press Release of April 21, 1999. 99.2 Letter from Credit Suisse First Boston Corporation to CBF Holding LLC dated April 21, 1999. 99.3 Letter from NationsBank N.A. and NationsBanc Montgomery Securities LLC to CBF Holding LLC dated April 21, 1999. 99.4 Complaint in the Court of Chancery of the State of Delaware, naming Michael Sternberg, as Plaintiff, and the Company, each of the directors of the Company, and Citicorp Venture Capital Ltd., as Defendants. 99.5 Complaint in the Court of Chancery of the State of Delaware, naming Harbor Finance Partners, as Plaintiff, and the Company, each of the directors of the Company, and Citicorp Venture Capital Ltd., as Defendants. 99.6 Complaint in the Court of Chancery of the State of Delaware, naming Harold Shapiro, as Plaintiff, and the Company, each of the directors of the Company, Bruckmann, Rosser, Sherrill & Co. and Citicorp Venture Capital Ltd., as Defendants. EX-99.1 2 PRESS RELEASE OF APRIL 21, 1999 1 EXHIBIT 99.1 [CORT BUSINESS SERVICES LOGO] PRESS RELEASE FOR IMMEDIATE RELEASE For more information contact: Frances Ann Ziemniak Executive Vice President & CFO (703) 968-8524 CORT BUSINESS SERVICES CORPORATION ANNOUNCES FIRST QUARTER RESULTS Fairfax, VA, April 21, 1999 --- CORT Business Services Corporation (NYSE: CBZ) today reported revenue and earnings for the first quarter ended March 31, 1999. Revenues for the quarter rose 14.5% to $86.4 million compared to $75.4 million for the first quarter of 1998. Operating earnings rose 6.2% to $13.4 million. Net income for the quarter was $6.9 million or $0.51 per share. These results represent an 11.3% increase over net income of $6.2 million for the first quarter of 1998, and a 10.9% increase over earnings per share of $0.46 for the same quarter last year. Commenting on CORT's results for the first quarter, Paul N. Arnold, President and Chief Executive Officer, said, "I am pleased with the Company's overall performance. We continue to integrate acquisitions and to make the investments necessary to strengthen our business while delivering increased earnings. In particular, I'd like to note that our trade show division, which expanded significantly through acquisition late in 1998, performed well in this, its busiest, quarter. "Rental revenues grew 14.3% while sales revenues increased 15.4% compared to last year. Despite a strong quarter overall, we were disappointed by core rental revenue growth. Core growth, which is growth before the impact of acquisitions and trade show operations, increased about 2%. Improving this measure is an important objective for us, and I am confident that we are taking the right steps to achieve that. "Gross margins declined slightly during the quarter compared to the year-earlier period as a result of lower sales margins as we acted aggressively to reduce the Company's level of idle inventory," Mr. Arnold said. "For the first quarter of 1999, selling, general and administrative expenses increased as a percentage of revenue as a result of continuing investments in personnel, facilities, and the development of an effective Internet business channel. The operating margin for the first quarter was approximately 15.5% compared to 16.7% for the same quarter last year. 2 "Earlier this month we completed two small transactions with Aaron Rents that we expect will make modest but positive improvements to our profitability going forward. We acquired from Aaron their furniture rental contracts in the New Orleans market and sold to them our furniture rental contracts and real estate leases in the Birmingham, Alabama market," said Mr. Arnold. On another matter, CORT also announced today that it has been informed by the investor group with whom it has signed a merger agreement that the investor group has received commitment and highly confident letters for the debt financing required to complete the transaction. The transaction was announced on March 26, 1999, and the investor group includes the private investment firm Bruckmann, Rosser, Sherrill & Co., Inc. and members of the Company's management team. The Company continues to expect that the transaction will be completed by the end of the second quarter of 1999. CORT Business Services Corporation is the leading provider of rental furniture, accessories and related services in the "rent-to-rent" segment of the furniture industry. CORT provides quality products and services to corporate and individual customers to meet their temporary furniture needs, including those for office, residential and trade show furnishings. The Company operates 119 rental showrooms, 83 furniture clearance centers and 75 warehouses in 34 states and the District of Columbia. The statements which are not historical facts contained in this press release are forward-looking statements that involve certain risks and uncertainties including but not limited to risks associated with the uncertainty of future financial results, acquisitions, additional financing requirements, development of new products and services, the effect of competitive products or pricing, the effect of economic conditions and other uncertainties detailed in the Company's filings with the Securities and Exchange Commission. (table follows) 3 CORT BUSINESS SERVICES CORPORATION RESULTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED MARCH 31, 1999 1998 ---- ---- Furniture rental $71,795 $62,814 Furniture sales 14,569 12,629 ------ ------ Total revenue 86,364 75,443 Cost of furniture rental & sales 21,718 18,702 Selling, general & administrative expenses 51,292 44,166 ------ ------ Operating earnings 13,354 12,575 Interest expense 1,421 1,967 Income tax expense 5,040 4,417 ----- ----- Net income 6,893 6,191 ----- ----- Earnings per common share: Basic $0.53 $0.48 Diluted $0.51 $0.46 ===== ===== Shares used in per share computations: Basic 13,087 12,924 Diluted 13,394 13,472 ====== ======
# # # EX-99.2 3 LETTER FROM CREDIT SUISSE FIRST BOSTON 1 EXHIBIT 99.2 CREDIT SUISSE FIRST BOSTON CORPORATION Eleven Madison Avenue New York, New York 10010 April 21, 1999 CBF Holding LLC c/o Bruckmann, Rosser, Sherrill & Co. 126 East 56th Street, 29th Floor New York, New York 10022 Attn: Bruce Bruckmann Re: Senior Subordinated Notes Dear Ladies and Gentlemen: You have advised Credit Suisse First Boston ("CSFB") that Bruckmann, Rosser, Sherrill & Co. ("BRS") has formed CBF Holding LLC ("Holdings" or "you" ) that together with Citicorp Venture Capital, Ltd. will (i) acquire (the "Acquisition") all of the outstanding common stock of CORT Business Services Corporation ("CORT") pursuant to a merger of a wholly owned subsidiary of Holdings, CBF Mergerco, Inc., with and into CORT and (ii) refinance (the "Refinancing"), in connection with the Acquisition, certain of CORT's indebtedness. References to the "Company" mean CORT after giving effect to the Acquisition and Refinancing. You have further advised us that, in connection with such Acquisition and Refinancing, you intend to have CBF Mergerco, Inc. issue senior subordinated notes (the "Securities") in the aggregate principal amount of $250.0 million. We are pleased to inform you that, assuming satisfactory market conditions at the time of the proposed issuance, we are highly confident of our ability to sell or place the Securities. The structure, covenants and terms of the Securities will be as determined by Credit Suisse First Boston Corporation in consultation with you based on market conditions at the time of the offering or placement. Our view as to our ability to consummate the offering or placement of the Securities is subject to (i) there being at the time of such offering or placement no material adverse change in the financial condition, results of operations, business or prospects of the Company and its subsidiaries, taken as a whole, since March 31, 1999, (ii) there being at the 2 time of such offering or placement satisfactory market conditions for high-yield securities comparable in terms, structure and credit rating to the Securities, (iii) the delivery of audited and unaudited historical financial statements of the Company as would be required by the Securities Act of 1933, as amended, and the rules and regulations promulgated pursuant thereto for a registration statement filed thereunder with respect to the Securities, (iv) our being satisfied with the consolidated pro forma capitalization of the Company after giving effect to the issuance of the Securities with respect to any changes from the capitalization contemplated on the date hereof, (v) our completion of our due diligence investigation of the Company and its business as a result of which no information having come to our attention since the date hereof which we reasonably believe would have a material adverse effect on the business, condition (financial or otherwise), prospects or results of operations of the Company and its subsidiaries taken as a whole, and (vi) the execution of a customary underwriting, purchase or placement agreement and the satisfaction of the conditions stated therein in all material respects, and of a customary indenture, registration rights agreement, if applicable, and other customary documentation, in each case with respect to the Securities, in form and substance reasonably satisfactory to Credit Suisse First Boston Corporation. The letter is solely for use by you and the Company and may not be disclosed, except to representatives of the Company, without our prior written consent. This letter does not reflect a commitment to underwrite or place the Securities and shall be effective upon the date hereof and shall expire on October 31, 1999. Very truly yours, CREDIT SUISSE FIRST BOSTON CORPORATION By: /s/ Mark W. Kennelley ---------------------------------- Name: Mark W. Kennelley Title: Managing Director By: /s/ Jeffrey Howe ----------------------------------- Name: Jeffrey Howe Title: Director EX-99.3 4 LETTER FROM NATIONSBANK N.A. 1 EXHIBIT 99.3 NATIONSBANK, N.A. NATIONSBANK CORPORATE CENTER 100 NORTH TRYON STREET CHARLOTTE, NORTH CAROLINA 28255 NATIONSBANC MONTGOMERY SECURITIES LLC NATIONSBANK CORPORATE CENTER 100 NORTH TRYON STREET CHARLOTTE, NORTH CAROLINA 28255 April 21, 1999 Mr. Bruce Bruckmann CBF Holding, L.L.C. c/o Bruckmann, Rosser, Sherrill & Co., Inc. 126 East 56th Street New York, New York 10022 Re: $225 million Senior Secured Bank Acquisition Credit Facilities in respect of CORT Furniture Rental Corporation Ladies and Gentlemen: CBF Holding LLC ("Holdco") has advised us that it has entered into an Agreement and Plan of Merger pursuant to which its wholly-owned subsidiary CBF Mergerco Inc. (the "Initial Borrower") will be merged with and into Cort Business Services Corporation (the "Acquired Company") as a result of which Holdco and Citicorp Venture Capital, Ltd. (collectively, the "Sponsors") together with certain other individuals and entities will acquire the Acquired Company for approximately $453 million (including assumed indebtedness) (hereafter the transactions contemplated in connection with the foregoing merger may be referred to as the "Acquisition"). The Acquisition will be structured as a cash-out merger transaction. You have advised us that $225 million in senior bank financing will be required in order to effect the Acquisition, to pay the costs and expenses related to the Acquisition and to provide for ongoing general corporate purposes after completion of the Acquisition and that no external financing other than the financing described herein and the $250 million subordinated debt financing described in the term sheet attached hereto (the "Subordinated Debt") will be required in connection with the Acquisition. The Sponsors will provide evidence of equity capitalization in the Acquired Company of at least $105 million prior to or concurrently with the Acquisition. In connection with the foregoing, (i) NationsBank, N.A. ("NationsBank" or the "Agent") is pleased to advise you of its commitment to act as Administrative Agent for the Credit Facility and to provide the full principal amount of the senior bank credit facilities (the "Credit 2 Mr. Bruce Bruckmann April 21, 1999 Page 2 Facilities") described in the Term Sheet, and (ii) NationsBanc Montgomery Securities LLC ("NMS") is pleased to advise you that it is willing to act as Sole Lead Arranger and Sole Book Manager for the Credit Facilities and to form a syndicate of financial institutions (the "Lenders") reasonably acceptable to NMS and you for the Credit Facilities. No additional agents will be appointed without the prior approval of NationsBank and NMS. All capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Term Sheet. The commitments of NationsBank and NMS hereunder are subject to the satisfaction of each of the following conditions precedent in a manner acceptable to NationsBank and NMS in their sole discretion: (a) each of the terms and conditions set forth herein; (b) each of the terms and conditions set forth in the Term Sheet; (c) execution of the fee letter dated the date hereof among the Sponsors, the Borrower, NationsBank and NMS (the "Fee Letter") prior to or concurrently with the acceptance by the Sponsors and the Borrower of this letter; and (d) there not having occurred and being continuing since the date hereof a material adverse change in the market for syndicated bank credit facilities or a material disruption of, or a material adverse change in, financial, banking or capital market conditions, in each case as determined by NationsBank and NMS in their sole discretion. Furthermore, the commitments of NationsBank and NMS hereunder are based upon the financial and other information regarding the Borrower, the Acquired Company and their respective subsidiaries previously provided to NationsBank and NMS and are subject to the condition, among others, that there shall not have occurred after the date of such information, in the opinion of NationsBank and NMS, any material adverse change in the business, assets, liabilities (actual or contingent), operations, condition (financial or otherwise) or prospects of the Borrower, the Acquired Company and their subsidiaries taken as a whole. NMS intends to commence syndication efforts promptly following your acceptance of this commitment, and you agree to use commercially reasonable efforts to actively assist, and to cause the Acquired Company to assist, NMS in achieving a syndication of the Credit Facilities that is satisfactory to it. Such assistance by you and the Acquired Company shall include using commercially reasonable efforts to (a) provide and cause your advisors to provide NationsBank and NMS and the other Lenders upon request with all information reasonably deemed necessary by NationsBank and NMS to complete syndication, including but not limited to information and evaluations prepared by the Sponsors, the Borrower or the Acquired Company or their advisors, or on its behalf, relating to the Transactions, (b) assist NationsBank and NMS upon their reasonable request in the preparation of an Information Memorandum to be used in connection with the syndication of the Credit Facilities and (c) otherwise assist NationsBank and NMS in their syndication efforts, including by making available mutually agreed upon officers and advisors 3 Mr. Bruce Bruckmann April 21, 1999 Page 3 of the Parent, the Borrower and the Acquired Company and its subsidiaries from time to time to attend and make presentations regarding the business and prospects of the Acquired Company and its subsidiaries at a meeting or meetings of prospective Lenders. You further agree to refrain from engaging in any additional financings for the Transactions (except as described in this letter and except for the Subordinated Debt financing) during such syndication process unless otherwise agreed to by NationsBank and NMS. It is understood and agreed that NationsBank and NMS, after consultation with you, will manage and control all aspects of the syndication of the Credit Facilities, including decisions as to the selection of proposed Lenders and any titles offered to proposed Lenders, when commitments will be accepted and the final allocations of the commitments among the Lenders. It is understood that no Lender participating in the Credit Facilities will receive compensation from you outside the terms contained herein and in the Term Sheet in order to obtain its commitment. It is also understood and agreed that the amount and distribution of the fees among the Lenders will be at the sole discretion of NationsBank and NMS and that any syndication pursuant to written commitments prior to execution of definitive documentation will reduce the commitment of NationsBank by the amount of such commitments. It shall be a condition to NationsBank's commitment hereunder and NMS's agreement to provide the services contemplated hereby that (i) all information, other than Projections (as defined below), which has been or is hereafter made available to NationsBank and NMS or the Lenders by you or any of your representatives in connection with the transactions contemplated hereby ("Information") is and will be complete and correct in all material respects and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein not misleading and (ii) all financial projections concerning the Borrower and the Acquired Company that have been or are hereafter made available to NationsBank and NMS or the Lenders by you or any of your representatives (the "Projections") have been or will be prepared in good faith based upon reasonable assumptions. You agree to furnish us with such Information and Projections as we may reasonably request and to use commercially reasonable efforts to supplement the Information and the Projections from time to time until the closing of the Credit Facilities ("Closing") so that the condition in the preceding sentence is correct on such date. In arranging and syndicating the Credit Facilities, NationsBank and NMS will be using and relying on the Information and the Projections without independent verification thereof. By executing this letter agreement, you agree to reimburse NationsBank and NMS from time to time on demand for all reasonable out-of-pocket fees and expenses (including, but not limited to, the reasonable fees, disbursements and other charges of Moore & Van Allen, PLLC, as counsel to NationsBank and the other Lenders) incurred in connection with the Credit Facilities and the preparation of the definitive documentation for the Credit Facilities and the other transactions contemplated hereby. The Sponsors also agree to indemnify and hold harmless NationsBank, NMS and their affiliates and their respective directors, officers, employees and agents (the "Indemnified Parties") from and 4 Mr. Bruce Bruckmann April 21, 1999 Page 4 against any and all losses, claims, damages and liabilities, joint or several, related to or arising out of any matters contemplated by this letter, unless and only to the extent that it shall be finally judicially determined that such losses, claims, damages or liabilities resulted primarily from the gross negligence or willful misconduct of NationsBank or NMS or such other Indemnified Parties. The provisions of the immediately preceding two paragraphs shall remain in full force and effect regardless of whether definitive financing documentation shall be executed and delivered and notwithstanding the termination of this letter agreement or the commitment of NationsBank and NMS hereunder, provided, however, that the Sponsors shall be deemed released of all obligations under the immediately preceding two paragraphs upon the execution of definitive financing documentation for the Credit Facilities. As described herein and in the Term Sheet, NMS will act as Arranger and Syndication Agent for the Credit Facilities. NationsBank reserves the right to allocate, in whole or in part, to NMS certain fees payable to NationsBank in such manner as NationsBank and NMS agree in their sole discretion. You acknowledge and agree that NationsBank may share with any of its affiliates (including specifically NMS) any information relating to the Credit Facilities, the Borrower, the Acquired Company, the Sponsors and their subsidiaries and affiliates, subject to the terms of the Confidentiality Agreement dated March 26, 1999. This letter agreement may not be assigned by the Sponsors without the prior written consent of NationsBank and NMS. If you are in agreement with the foregoing, please execute and return the enclosed copy of this letter agreement no later than 5:00 p.m., Monday, April 26, 1999. This letter agreement will become effective upon your delivery to us of executed counterparts of this letter agreement and the Fee Letter and, without limiting the more specific terms hereof and of the Term Sheet, you agree upon acceptance of this commitment to pay the fees set forth in the Term Sheet and in the Fee Letter. This commitment shall terminate if not so accepted by you prior to that time. Following acceptance by you, this commitment will terminate on Friday, October 29, 1999, unless the Credit Facilities are closed by such time. Except as required by applicable law, this letter and the Fee Letter and the contents hereof and thereof shall not be disclosed by you to any third party (other than the Acquired Company) without the prior consent of NationsBank and NMS, other than to your attorneys, financial advisors and accountants, in each case to the extent necessary in your reasonable judgment; provided, however, it is understood and agreed that, you may disclose the terms of this letter to the Acquired Company and its attorneys, agents and advisors in connection with the Transaction. This letter may be executed in counterparts which, taken together, shall constitute an original. This letter, together with the Term Sheet and the Fee Letter, embodies the entire agreement and understanding among NationsBank, NMS, the Sponsors and the Borrower with respect to the specific matters set forth herein and supersedes all prior agreements and understandings relating to the subject matter hereof. No party has been authorized by NationsBank or NMS to make any 5 Mr. Bruce Bruckmann April 21, 1999 Page 5 oral or written statements inconsistent with this letter. THIS LETTER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAW. Very truly yours, NATIONSBANK, N.A. By: /s/ Bradford Jones ------------------ Title: Attorney in Fact NATIONSBANC MONTGOMERY Securities LLC By: /s/ Bradford Jones ------------------ Title: Managing Director ACCEPTED AND AGREED TO: CBF HOLDING LLC By: _________________________________ Title: Date: CBF MERGERCO INC. By:___________________________________ Title: Date: CITICORP VENTURE CAPITAL, LTD. By: __________________________________ Title: Date: 6 ANNEX I CORT FURNITURE RENTAL CORPORATION SUMMARY OF TERMS & CONDITIONS APRIL 21, 1999 BORROWER: CBF Mergerco Inc. ("CBFMI") a newly formed company will acquire (the "Acquisition") the outstanding stock or assets of and be merged with and into CORT Business Services Corporation, a Delaware corporation (the "Acquired Company" or "CBSC"). CBFMI is or will be a subsidiary of CBF Holding LLC, a holding company (the "Parent"), also newly formed and with no business other than holding the stock of CBFMI and other subsidiaries. CBSC is the parent holding company of CORT Furniture Rental Corporation, a Delaware corporation and an operating company ("CFRC"). CBFMI will be the initial Borrower to the extent necessary to accomplish the Acquisition and Merger, whereupon CFRC will assume the indebtedness and obligations under the Credit Agreement, and become the Borrower thereunder, from CBSC (being the survivor to CBFMI in the Merger) which will thereupon be released from its obligations as the Initial Borrower, but will become a Guarantor, under the Credit Agreement. As used herein and in the Commitment Letter, the "Borrower" shall refer to CBFMI prior to completion of the Acquisition, Merger and assumption by CFRC of the loans and obligations under the Credit Agreement, and thereafter, to CFRC. GUARANTORS: The Credit Facilities shall be guaranteed by CBSC and all existing and hereafter acquired direct and indirect domestic subsidiaries of CBSC other than the Borrower (the "Guarantors") upon consummation of the Acquisition. All guarantees shall be guarantees of payment and not of collection. AGENT: NationsBank, N.A. (the "Agent" or "NationsBank") will act as sole and exclusive administrative and collateral agent. As such, NationsBank will negotiate with the Borrower, act as the primary contact for the Borrower and perform all other duties associated with the role of exclusive administrative agent. No other agents or co-agents may be appointed without the prior written consent of NationsBank and NMS. SOLE LEAD ARRANGER & SOLE BOOK MANAGER: NationsBanc Montgomery Securities LLC ("NMS"). LENDERS: A syndicate of financial institutions (including NationsBank) arranged by NMS, which institutions shall be acceptable to the Borrower and the Agent (collectively, the "Lenders"). CREDIT 7 FACILITIES: An aggregate principal amount of up to $225 million will be available at Closing under the conditions hereinafter set forth: Revolving Credit Facility: $225 million revolving credit facility, which will include a $10 million sublimit for the issuance of standby and commercial letters of credit (each a "Letter of Credit") and a $10 million sublimit for the making of swingline loans (the "Swingline Loans"). Letters of Credit will be issued by NationsBank (in such capacity, the "Fronting Bank"), and each Lender will purchase an irrevocable and unconditional participation in each Letter of Credit. Swingline Loans will be made by NationsBank, and each Lender will purchase an irrevocable and unconditional participation in each Swingline Loan. Expandability Provision. The Revolving Credit Facility will include an expandability clause providing for additional commitments of up to $100 million available after the Borrower's election, subject to the Borrower's obtaining the requested commitments from existing Lenders or from other lenders which constitute eligible assignees (to be defined objectively). PURPOSE: The proceeds of the Credit Facilities shall be used: (i) to refinance the outstanding principal balance of existing indebtedness of the Acquired Company and its subsidiaries; (ii) to pay the cash portion of the purchase price for the Acquired Company pursuant to the Purchase Agreement (as defined below); (iii) to pay fees and expenses incurred in connection with the Acquisition; and (iv) to provide for working capital and general corporate purposes of the Borrower and its subsidiaries, including acquisitions (subject to minimum Revolving Credit Facility availability requirements to be determined). INTEREST RATES: The Revolving Credit Facility shall bear interest as set forth on Addendum I hereto. MATURITY: The Revolving Credit Facility shall terminate and all amounts outstanding thereunder shall be due and payable in full 6 years from Closing. AVAILABILITY: Loans under the Revolving Credit Facility ("Revolving Credit Loans" or the "Loans") may be made, and Letters of Credit may be issued subject to availability under the aggregate committed amount for the Revolving Credit Facility. SECURITY: Concurrently with the Acquisition, the Agent (on behalf of the Lenders) shall receive a first priority perfected security interest in (i) 100% of the issued and outstanding capital stock of the Borrower, (ii) 100% of the issued and outstanding capital stock of each of the direct and indirect domestic subsidiaries of the Borrower and (iii) 65% of the issued and outstanding voting capital stock and 100% of the issued and outstanding non-voting capital stock of each direct foreign subsidiary of the Parent or any of its domestic subsidiaries (or such greater or lesser percentage 2 8 allowable which would not result in a material tax liability under U.S. law), which capital stock shall not be subject to any other lien or encumbrance. The Agent (on behalf of the Lenders) shall also receive a first priority perfected security interest in all other present and future personal property of the Borrower and its subsidiaries (including, without limitation, accounts receivable, inventory, machinery, equipment, contracts, trademarks, copyrights, patents, license agreements, and general intangibles). The foregoing security shall ratably secure the Credit Facilities and any interest rate swap/foreign currency swap or similar agreements with a Lender (or an affiliate of a Lender) under the Credit Facilities. MANDATORY PREPAYMENTS AND COMMITMENT REDUCTIONS: The Credit Facilities will be prepaid by an amount equal to (a) 100% of the net cash proceeds of all asset sales (excluding rental assets sold in the normal course of business) by the Parent, the Borrower or any subsidiary of the Borrower (including stock of subsidiaries), subject to de minimus baskets and reinvestment provisions and such other exceptions as shall be mutually agreed; (b) 100% of the net cash proceeds from the issuance of any debt (excluding certain permitted debt and such other exceptions as shall be mutually agreed) by the Parent, the Borrower or any subsidiary; and (c) 50% of the net cash proceeds from the issuance of equity by the CBSC, the Borrower or any subsidiary. Prepayments shall serve to permanently reduce the commitments under the Revolving Credit Facility. OPTIONAL PREPAYMENTS AND COMMITMENT REDUCTIONS: The Borrower may prepay the Credit Facilities in whole or in part at any time without penalty, subject to reimbursement of the Lenders' breakage and redeployment costs in the case of prepayment of LIBOR borrowings prior to the end of the applicable interest period. CONDITIONS PRECEDENT TO CLOSING: Usual and customary for financing transactions of this type and for the particular financing transaction contemplated hereby, including but not limited to the following: (a) The negotiation, execution and delivery of definitive documentation with respect to the Credit Facilities satisfactory to NMS, the Agent and the Lenders. (b) A certified copy of the purchase agreement (including all amendments, supplements, schedules and exhibits thereto) regarding the Acquisition (the "Purchase Agreement") which shall 3 9 provide for an aggregate purchase price not in excess of $453 million (including assumed indebtedness). (c) The corporate capital and ownership structure (including articles of incorporation and by-laws), equityholder agreements and management of CBSC, the Borrower and its subsidiaries (after giving effect to the Acquisition), including without limitation employment contracts, equity ownership interests and key man life insurance with key executives, shall be satisfactory to the Agent. Without limiting the generality of the above, the Agent shall be reasonably satisfied that (i) CBSC will have at least $140 million in equity capitalization, (ii) CFRC or any parent company shall have issued and be in receipt of the net proceeds of at least $250 million in subordinated debt (the "Subordinated Debt") on terms and conditions consistent with existing market standards, and (iii) the amount of the initial advance under the Credit Facilities needed to accomplish the Acquisition and Merger (including fees and expenses relating thereto) will not exceed $86 million. Notwithstanding the foregoing, if market conditions permit the syndication of the Credit Facilities on terms and conditions, satisfactory to NMS and NationsBank, at the discretion of the Agent, the initial advance may be increased to an amount not to exceed $121 million and the equity contribution provided by the Sponsors may be reduced accordingly. (d) There shall not have occurred a material adverse change since December 31, 1998 in the business, assets, operations, condition (financial or otherwise) or prospects of the Acquired Company and its subsidiaries or in the facts and information regarding such entities as represented to date. (e) The Agent shall have received a certificate of solvency from a responsible officer of the Borrower and the Guarantors (after giving effect to the Acquisition and the incurrence of indebtedness related thereto) in form and substance reasonably satisfactory to the Agent and the Required Lenders. (f) The Agent shall have received (a) reasonably satisfactory opinions of counsel to the Borrower and the Guarantors (which shall cover, among other things, authority, legality, validity, binding effect and enforceability of the documents for the Credit Facilities) and such resolutions, certificates and other documents as the Agent shall reasonably require and (b) reasonably satisfactory evidence that the Agent (on behalf of the Lenders) holds a perfected, first priority lien in all collateral for the Credit Facilities, subject to no other liens except for permitted liens to be determined. (g) Receipt of all governmental, equityholder and third party consents (including Hart-Scott-Rodino clearance and the consent, if 4 10 necessary, of any existing lenders, lessors and/or bondholders of the Acquired Company to the extent that such indebtedness is to remain in place after the Acquisition) and approvals necessary or, in the reasonable opinion of the Agent, desirable in connection with the Acquisition and the related financings and other transactions contemplated hereby and expiration of all applicable waiting periods without any action being taken by any authority that could restrain, prevent or impose any material adverse conditions on the Acquired Company or any of its subsidiaries or such related financings or other transactions contemplated hereby or that could seek or threaten any of the foregoing, and no law or regulation shall be applicable which in the reasonable judgment of the Agent could have such effect. (h) The absence of any action, suit, investigation or proceeding pending or threatened in any court or before any arbitrator or governmental authority that purports to affect the Acquired Company or any of its subsidiaries or the financings and other transaction contemplated hereby, or that could have a material adverse effect on the Acquired Company or its subsidiaries or such financings or other transaction contemplated hereby or on the ability of the Borrower and the Guarantors to perform their respective obligations under the documents to be executed in connection with the Credit Facilities. (i) CBSC and its subsidiaries, including the Borrower, shall be in compliance with all existing financial obligations (after giving effect to the Acquisition). (j) Receipt and review, with results reasonably satisfactory to the Agent and its counsel, of legal due diligence and information regarding litigation, tax, accounting, labor, insurance, pension liabilities (actual or contingent), real estate leases, material contracts, debt agreements, property ownership, and contingent liabilities of the Acquired Company and its subsidiaries. (k) The Borrower shall have paid to the Lenders and the Agent all fees and expenses due and payable at Closing. REPRESENTATIONS & WARRANTIES: Usual and customary for financing transactions of this type and for the particular financing transaction contemplated hereby, including but not limited to the following: (i) corporate status; (ii) corporate power and authority/enforceability; (iii) no violation of law or contracts or organizational documents; (iv) no material litigation; (v) correctness of specified financial statements and no material adverse change; (vi) no required governmental or third party approvals; (vii) use of proceeds/compliance with margin regulations; (viii) status under Investment Company Act; (ix) ERISA; (x) environmental matters; (xi) 5 11 perfected liens and security interests; (xii) payment of taxes; and (xiii) Year 2000 preparedness. COVENANTS: Usual and customary for financing transactions of this type and for the particular financing transaction contemplated hereby, including but not limited to the following: (i) delivery of financial statements and other reports; (ii) delivery of compliance certificates: (iii) delivery of notices of default, material litigation and material governmental and environmental proceedings; (iv) compliance with laws; (v) payment of taxes; (vi) maintenance of insurance; (vii) limitation on liens and negative pledges; (viii) limitations on mergers, consolidations and sales of assets (subject, in the case of asset sales and dispositions, to de minimum baskets and reinvestment provisions); (ix) limitations on incurrence of debt (subject to expansion of the Credit Facilities as provided herein); (x) limitations on dividends and stock redemptions and the redemption and/or prepayment of other debt; (xi) limitations on investments and acquisitions (subject, in the case of acquisitions, to the limitations provided below); (xii) ERISA; (xiii) limitation on transactions with affiliates; and (xiv) Year 2000 compliance and in each case subject to agreed upon exceptions. Financial covenants to be measured quarterly and to include (without limitation): (a) Maintenance on a rolling four quarter basis of a Maximum Total Leverage Ratio (total funded debt/EBITDA), of 4.75:1.0. (b) Maintenance on a rolling four quarter basis of a Maximum Senior Leverage Ratio (senior funded debt/EBITDA), of 2.25:1.0. (c) Maintenance on a rolling four quarter basis of a Minimum Interest Coverage Ratio (EBITDA/interest expense), of 2.0:1.0. (d) Maintenance as of the end of each fiscal quarter of a Maximum Loan to Value Ratio of 1.0:1.0. The denominator will consist of an amount equal to the sum of (i) 100% of the net book value of accounts receivable, (ii) 100% of the net book value of plant, property and equipment and (iii) 100% of the net book value of rental furniture. The financial covenants will give pro forma effect for acquisitions and dispositions, where appropriate. CBSC shall have agreed that it will not engage in any business, activity or operation other than owning and holding the capital stock of the Borrower, guaranteeing the Credit Facility and pledging its assets (including the capital stock of the Borrower) as security therefor, and activities directly related thereto. The Parent shall not be permitted to merge with or into any other person other than the Borrower. PERMITTED 6 12 ACQUISITIONS: Acquisitions will be permitted provided that (i) the acquisition is in the furniture equipment rental or related or ancillary business, and (ii) no default or event of default would exist after giving effect to the acquisition on a pro forma basis. EVENTS OF DEFAULT:Usual and customary for financing transactions of this type and for the particular financing transaction contemplated hereby, including but not limited to the following and including grace and cure periods where appropriate: (i) nonpayment of principal, interest, fees or other amounts; (ii) violation of covenants; (iii) inaccuracy of representations and warranties; (iv) cross-default to other material agreements and indebtedness; (v) bankruptcy or insolvency; (vi) material judgments; (vii) ERISA; (viii) actual or asserted invalidity of any loan documents or security interests; or (ix) Change in Control (to be agreed upon in a mutually agreeable manner). ASSIGNMENTS/ PARTICIPATIONS: Each Lender will be permitted to make assignments in minimum principal amounts of $5 million to other financial institutions approved by the Borrower and the Agent, which approval shall not be unreasonably withheld. Lenders will be permitted to sell participations with voting rights limited to significant matters such as changes in amount, rate, and maturity date. An assignment fee of $3,500 is payable by the Lender to the Agent upon any such assignment occurring (including, but not limited to an assignment by a Lender to another Lender). WAIVERS & AMENDMENTS: Amendments and waivers of the provisions of the loan agreement and other definitive credit documentation will require the approval of Lenders holding loans and commitments representing more than 50% of the aggregate amount of loans and commitments under the Credit Facilities, except that the consent of all the Lenders affected thereby shall be required with respect to (i) increases in commitment amounts (other than expansion of the Credit Facilities as provided herein), (ii) reductions of principal, interest, or fees, (iii) extensions of final maturities, (iv) releases of all or substantially all collateral and (v) releases of all or substantially all guarantors. INDEMNIFICATION: The Borrower shall indemnify the Lenders from and against all losses, liabilities, claims, damages or expenses relating to their loans, the Borrower's use of loan proceeds or the commitments, including but not limited to reasonable attorneys' fees and settlement costs. This indemnification shall survive and continue for the benefit of the Lenders at all times after the Borrower's acceptance of the Lenders' commitment for the Credit Facilities, notwithstanding any failure of the Credit Facilities to close. GOVERNING LAW: New York. 7 13 FEES/EXPENSES: As outlined in ADDENDUM I. OTHER: This term sheet is intended as an outline only and does not purport to summarize all the conditions, covenants, representations, warranties and other provisions which would be contained in definitive legal documentation for the Credit Facilities contemplated hereby. Each of the Borrower and the Guarantors shall waive its right to a trial by jury. 8 14 ADDENDUM I FEES AND EXPENSES COMMITMENT FEE: A 50 basis points per annum (calculated on the basis of actual number of days elapsed in a year of 360 days) on the unused portion of the Credit Facilities shall commence to accrue upon acceptance by the Borrower of the commitment letter to which this term sheet is attached and shall be paid upon execution of a definitive credit agreement and thereafter quarterly in arrears. INTEREST RATES: The Revolving Credit Facility shall bear interest at a rate equal to LIBOR plus 200 bps (calculated on the basis of actual number of days elapsed in a year of 360 days) or the Alternate Base Rate (defined as the higher of (i) the NationsBank prime rate and (ii) the Federal Funds rate plus 1/2%) plus 75 bps (calculated on the basis of actual number of days elapsed in a year of 365/366 days); provided, that if during the 180 day period following the Closing, any breakage costs, charges or fees are incurred with respect to LIBOR loans on account of the syndication of the Credit Facilities, the Borrower shall immediately reimburse the Agent for any such costs, charges or fees. Such right of reimbursement to be in addition to and not in limitation of customary cost and yield protection. The Borrower may select interest periods of 1, 2, 3 or 6 months for LIBOR loans, subject to availability. A penalty rate shall apply on all amounts outstanding under the Credit Facilities (including Letters of Credit) upon the occurrence of an Event of Default at a rate per annum of 2% above the applicable interest rate or letter of credit fee (without duplication). PERFORMANCE PRICING: The LIBOR and Alternate Base Rate margins (and the letter of credit fees) for the Revolving Credit Facility will be subject to performance pricing step-downs commencing six (6) months from Closing, based upon the Borrower's Total Leverage Ratio, as outlined in the table below:
Applicable Total Funded Debt/ Applicable Base Rate Level EBITDA LIBOR Margin Margin I Lesser Than 2.50x 1.25% 0.00% II Greater Than 2.50x but Lesser Than 3.00x 1.50% 0.00% III Greater Than 3.00x but Lesser Than 3.50x 1.75% 0.50% IV Greater Than 3.50x but Lesser Than 4.00x 2.00% 0.75% V Greater Than 4.00x 2.25% 1.00%
COST AND YIELD 15 PROTECTION: The usual for transactions and facilities of this type, including, without limitation, in respect of prepayments, changes in capital adequacy and capital requirements or their interpretation, illegality, unavailability, reserves without proration or offset. LETTER OF CREDIT FEES: The Borrower shall pay a per annum letter of credit fee (calculated on the basis of actual number of days elapsed in a year of 360 days) on the outstanding amount of all Letters of Credit. The applicable letter of credit fee shall be (i) for standby letters of credit, the percentage over LIBOR (the "LIBOR Margin") applicable from time to time for LIBOR based loans outstanding under the Revolving Credit Facility and (ii) for trade letters of credit, 50% of the LIBOR Margin. The letter of credit fee shall be due quarterly in arrears and shared proportionately by the Lenders. In addition, the Borrower shall pay the Agent for its own account a per annum facing fee of 1/8% (calculated on the basis of actual number of days elapsed in a year of 360 days) on the outstanding amount of all Letters of Credit. The letter of credit facing fee shall be due quarterly in arrears. EXPENSES: Borrower will pay all reasonable costs and expenses associated with the preparation, due diligence, administration, syndication and enforcement of all documents executed in connection with the Credit Facilities, including without limitation, the reasonable legal fees of the Agent's counsel regardless of whether or not the Credit Facilities are closed. EX-99.4 5 COMPLAINT IN COURT OF CHANCERY OF STATE OF DE. 1 EXHIBIT 99.4 IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE - ------------------------------------------------------- MICHAEL STERNBERG, : : PLAINTIFF, : C.A. NO. 17087NC : v. : : PAUL N. ARNOLD, CHARLES M. EGAN, : CLASS ACTION COMPLAINT : MICHAEL A. DELANEY, JAMES A. URRY, : GREGORY B. MAFFEI, KEITH E. ALESSI, : BRUCE C. BRUCKMANN, CITICORP : VENTURE CAPITAL, LTD. : AND CORT BUSINESS SERVICES CORPORATION, : : : DEFENDANTS. : : - -------------------------------------------------------- Plaintiff, by his attorneys, alleges upon personal knowledge as to his own acts and upon information and belief as to all other matters, as follows: NATURE OF THE ACTION 1. Plaintiff brings this action individually and as a class action on behalf of all persons, other than defendants, who own the securities of Cort Business Services Corporation ("Cort" or the "Company") and who are similarly situated (the "Class"), for injunctive and other appropriate relief in connection with a proposed transaction whereby a management-led investor group that includes defendant Citicorp Venture Capital Ltd. ("CVC") -- the Company's 44% shareholder -- seeks to buy all of the outstanding publicly-held shares of Cort in a transaction valued at $453 million. Alternatively, in the event that the proposed transaction is implemented, plaintiff seeks to recover damages caused by the breach of fiduciary duties owed by defendants to Cort's public shareholders. 2 THE PARTIES 2. Plaintiff is and, at all relevant times, has been the owner of shares of Cort common stock. 3. Cort is a corporation organized under the laws of Delaware with his principal executive offices located at 4401 Fair Lakes Ct., Fairfax, Virginia. Cort, through his subsidiaries, is the leading provider of rental furniture, accessories and related services. 4. Defendant Paul N. Arnold ("Arnold") is Chief Executive Officer and a Director of Cort. 5. Defendant Charles M. Egan ("Egan") is the Chairman of the Board of Directors of Cort. 6. Defendant Michael A. Delaney ("Delaney") is a Director of Cort. Delaney is also the Managing Director of defendant CVC. 7. Defendant James A. Urry ("Urry") is a Director of Cort. Urry is also a Vice President of defendant CVC. 8. Defendant Bruce C. Bruckmann ("Bruckmann") is a Director of Cort. Bruckmann is also the Managing Director of Bruckmann, Rosser, Sherrill & Co., Inc., which is participating in the management-led buyout group. Until 1994, Bruckmann was a Vice President of defendant CVC. 9. Keith E. Alessi and Gregory B. Maffei are directors of Cort. 10. CVC, as controlling shareholder, and the Individual Defendants owe fiduciary duties of loyalty and good faith to plaintiff and the other members of the Class. -2- 3 CLASS ACTION ALLEGATIONS 11. Plaintiff brings this action on his own behalf and as a class action, on behalf of all stockholders of the Company (except defendants herein and any person, firm, trust, corporation, or other entity related to or affiliated with any of the defendants, or to the Company's principal stockholders), who are threatened with injury arising from defendants' actions as is described more fully below. 12. This action is properly maintainable as a class action. 13. The Class is so numerous that joinder of all members is impracticable. The Company has approximately 13 million shares of common stock outstanding owned by hundreds of record and beneficial stockholders. 14. There are questions of law and fact common to the Class including, inter alia, whether: (a) defendants have breached and will continue to breach their fiduciary and other common law duties owed by them to plaintiff and the members of the Class; and (b) plaintiff and the other members of the Class would be irreparably damaged by the wrongs complained of herein. 15. Plaintiff is committed to prosecuting this action and has retained competent counsel experienced in litigation of this nature. Plaintiff's claims are typical of the claims of the other members of the Class and plaintiff has the same interests as the other members of the Class. Accordingly, plaintiff is an adequate representative of the Class. 16. The prosecution of separate actions by individual members of the Class would create the risk of inconsistent or varying adjudications with respect to individual members -3- 4 of the Class which would establish incompatible standards of conduct for defendants, or adjudications with respect to individual members of the Class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests. 17. The defendants have acted, or refused to act, on grounds generally applicable to, and causing injury to, the Class and, therefore, preliminary and final injunctive relief on behalf of the Class as a whole is appropriate. SUBSTANTIVE ALLEGATIONS 18. On March 26, 1999, Cort announced it had entered into a definitive agreement to be acquired by an investor group that included members of Cort management; Bruckmann, Rosser, Sherrill & Co., Inc.; and CVC. 19. Under the terms of the agreement, the investor group would pay Cort's public shareholders $24.00 in cash and $2.50 in liquidation value of new series of preferred stock for each Cort share. The transaction is valued at approximately $453 million in the aggregate. CVC will retain an ownership interest in Cort and the financing for the proposed transaction would be provided, in part, by CVC. 20. The proposed transaction was announced on the heels of Cort's reporting record revenue and operating earnings for the fiscal year ended December 31, 1998. Total revenue at the Company grew by 11% over the prior year. As recently as February 18, 1999, Arnold concluded: "We are pleased with our performance as we continue to execute our long term strategies and position the Company for further growth and operating efficiencies. . . . We are optimistic that we have laid the appropriate foundations for the long term benefit of the Company and his shareholders." -4- 5 21. The investor group now seeks to take advantage of Cort's future growth and capture such value for hiself to the detriment of the Company's public shareholders at a price which is wholly inadequate. 22. Because of the investor group includes members of management and the participation of the Company's largest shareholder, the investor group was in a position to, and in fact did, dictate the terms of the proposed transaction. 23. The proposed transaction is grossly unfair, inadequate and provides value to Cort stockholders substantially below the fair or inherent value of the Company. Taking into account Cort's asset value, liquidation value, his expected growth, the strength of his business, revenues, cash flow, and earnings power, the intrinsic value of the equity of Cort is materially greater than the consideration contemplated by the proposed transaction price. 24. The proposed transaction is wrongful, unfair, and harmful to Cort's public stockholders, and will deny them their right to share proportionately in the true value of Cort's valuable assets, profitable business, and future growth in profits and earnings, while usurping the same for the benefit of the investor group. 25. As a result of defendants' action, plaintiff and the Class have been and will be damaged by the breaches of fiduciary duty complained of herein because plaintiff and the Class will not receive their fair proportionate share of Cort's assets and businesses. 26. Unless enjoined by this Court, defendants will continue to breach their fiduciary duties owed to plaintiff and the Class, and will succeed in their plan to exclude plaintiff and the Class from receiving fair value for Cort's valuable assets and businesses, to the irreparable harm of the Class. -5- 6 27. Plaintiff and the Class have no adequate remedy of law. WHEREFORE, plaintiff prays for judgment and relief as follows: (a) declaring that this lawsuit is properly maintainable as a class action and certifying plaintiff as a representative of the Class; (b) preliminarily and permanently enjoining defendants and their counsel, agents, employees, and all persons acting under, in concert with, or for them, from proceeding with or implementing the transaction complained of; (c) in the event the proposed transaction is consummated, rescinding it and setting it aside; (d) awarding rescissory and/or compensatory damages against defendants, jointly and severally, in an amount to be determined at trial, together with prejudgment interest at the maximum rate allowable by law; (e) awarding plaintiff his costs and disbursements, including reasonable allowances for plaintiff's counsel and experts' fees and expenses; and -6- 7 (f) granting such other and further relief as may be just and proper. ROSENTHAL, MONHAIT GROSS & GODDESS, P.A. By: /s/ ---------------------------- Suite 1401, Mellon Bank Center 919 Market Street P.O. Box 1070 Wilmington, Delaware 19899 (302) 656-4433 Attorneys for Plaintiff Of Counsel: ABBEY GARDY & SQUITIERI, LLP 212 East 39th Street New York, NY 10016 (212) 889-3700 -7- EX-99.5 6 COMPLAINT IN COURT REGARDING HAROLD SHAPIRO 1 EXHIBIT 99.5 IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - -------------------------------------------------- HARBOR FINANCE PARTNERS, : : PLAINTIFF, : : v. : CIVIL ACTION COMPLAINT : 17065 : : PAUL N. ARNOLD, CHARLES M. EGAN, : MICHAEL A. DELANEY, JAMES A. URRY, : GREGORY B. MAFFEI, KEITH E. ALESSI, : BRUCE C. BRUCKMANN, CITICORP : VENTURE CAPITAL, LTD. : AND CORT BUSINESS SERVICES CORPORATION, : : : DEFENDANTS. : : : - --------------------------------------------------- Plaintiff, by its attorneys, alleges upon personal knowledge as to its own acts and upon information and belief as to all other matters, as follows: NATURE OF THE ACTION 1. Plaintiff brings this action individually and as a class action on behalf of all persons, other than defendants, who own the securities of Cort Business Services Corporation ("Cort" or the "Company") and who are similarly situated (the "Class"), for injunctive and other appropriate relief in connection with a proposed transaction whereby a management-led investor group that includes defendant Citicorp Venture Capital Ltd. ("CVC") - the Company's 44% 2 shareholder - seeks to buy all of the outstanding publicly-held shares of Cort in a transaction valued at $453 million. Alternatively, in the event that the proposed transaction is implemented, plaintiff seeks to recover damages caused by the breach of fiduciary duties owed by defendants to Cort's public shareholders. THE PARTIES 2. Plaintiff is and, at all relevant times, has been the owner of shares of Cort common stock. 3. Cort is a corporation organized under the laws of Delaware with its principal executive offices located at 4401 Fair Lakes Ct., Fairfax, Virginia. Cort, through its subsidiaries, is the leading provider of rental furniture, accessories and related services. 4. Defendant Paul N. Arnold ("Arnold") is Chief Executive Officer and a Director of Cort. 5. Defendant Charles M. Egan ("Egan") is the Chairman of the Board of Directors of Cort. 6. Defendant Michael A. Delaney ("Delaney") is a Director of Cort. Delaney is also the Managing Director of defendant CVC. 7. Defendant James A. Urry ("Urry") is a Director of Cort. Urry is also a Vice President of defendant CVC. 8. Defendant Bruce C. Bruckmann ("Bruckmann") is a Director of Cort. Bruckmann is also the Managing Director of Bruckmann, Rosser, Sherrill & Co., Inc., which is -2- 3 participating in the management-led buyout group. Until 1994, Bruckmann was a Vice President of defendant CVC. 9. Keith E. Alessi and Gregory B. Maffei are directors of Cort. 10. CVC, as controlling shareholder, and the Individual Defendants owe fiduciary duties of loyalty and good faith to plaintiff and the other members of the Class. CLASS ACTION ALLEGATIONS 11. Plaintiff brings this action on its own behalf and as a class action, on behalf of all stockholders of the Company (except defendants herein and any person, firm, trust, corporation, or other entity related to or affiliated with any of the defendants, or to the Company's principal stockholders), who are threatened with injury arising from defendants' actions as is described more fully below. 12. This action is properly maintainable as a class action. 13. The Class is so numerous that joinder of all members is impracticable. The Company has approximately 13 million shares of common stock outstanding owned by hundreds of record and beneficial stockholders. 14. There are questions of law and fact common to the Class including, inter alia, whether: (a) defendants have breached and will continue to breach their fiduciary and other common law duties owed by them to plaintiff and the members of the Class; and (b) plaintiff and the other members of the Class would be irreparably damaged by the wrongs complained of herein. -3- 4 15. Plaintiff is committed to prosecuting this action and has retained competent counsel experienced in litigation of this nature. Plaintiff's claims are typical of the claims of the other members of the Class and plaintiff has the same interests as the other members of the Class. Accordingly, plaintiff is an adequate representative of the Class. 16. The prosecution of separate actions by individual members of the Class would create the risk of inconsistent or varying adjudications with respect to individual members of the Class which would establish incompatible standards of conduct for defendants, or adjudications with respect to individual members of the Class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests. 17. The defendants have acted, or refused to act, on grounds generally applicable to, and causing injury to, the Class and, therefore, preliminary and final injunctive relief on behalf of the Class as a whole is appropriate. SUBSTANTIVE ALLEGATIONS 18. On March 26, 1999, Cort announced it had entered into a definitive agreement to be acquired by an investor group that included members of Cort management; Bruckmann, Rosser, Sherrill & Co., Inc.; and CVC. 19. Under the terms of the agreement, the investor group would pay Cort's public shareholders $24.00 in cash and $2.50 in liquidation value of a new series of preferred stock for each Cort share. The transaction is valued at approximately $453 million in the -4- 5 aggregate. CVC will retain an ownership interest in Cort and the financing for the proposed transaction would be provided, in part, by CVC. 20. The proposed transaction was announced on the heels of Cort's reporting record revenue and operating earnings for the fiscal year ended December 31, 1998. Total revenue at the Company grew by 11% over the prior year. As recently as February 18, 1999, Arnold concluded: "We are pleased with our performance as we continue to execute our long term strategies and position the Company for further growth and operating efficiencies. . . . We are optimistic that we have laid the appropriate foundations for the long term benefit of the Company and its shareholders." 21. The investor group now seeks to take advantage of Cort's future growth and capture such value for itself to the detriment of the Company's public shareholders at a price which is wholly inadequate. 22. Because of the investor group includes members of management and the participation of the Company's largest shareholder, the investor group was in a position to, and in fact did, dictate the terms of the proposed transaction. 23. The proposed transaction is grossly unfair, inadequate and provides value to Cort stockholders substantially below the fair or inherent value of the Company. Taking into account Cort's asset value, liquidation value, its expected growth, the strength of its business, revenues, cash flow, and earnings power, the intrinsic value of the equity of Cort is materially greater than the consideration contemplated by the proposed transaction price. 24. The proposed transaction is wrongful, unfair, and harmful to Cort's public stockholders, and will deny them their right to share proportionately in the true value of Cort's -5- 6 valuable assets, profitable business, and future growth in profits and earnings, while usurping the same for the benefit of the investor group. 25. As a result of defendants' action, plaintiff and the Class have been and will be damaged by the breaches of fiduciary duty complained of herein because plaintiff and the Class will not receive their fair proportionate share of Cort's assets and businesses. 26. Unless enjoined by this Court, defendants will continue to breach their fiduciary duties owed to plaintiff and the Class, and will succeed in their plan to exclude plaintiff and the Class from receiving fair value for Cort's valuable assets and businesses, to the irreparable harm of the Class. 27. Plaintiff and the Class have no adequate remedy of law. WHEREFORE, plaintiff prays for judgment and relief as follow: (a) declaring that this lawsuit is properly maintainable as a class action and certifying plaintiff as a representative of the Class; (b) preliminarily and permanently enjoining defendants and their counsel, agents, employees, and all persons acting under, in concert with, or for them, from proceeding with or implementing the transaction complained of; (c) in the event the proposed transaction is consummated, rescinding it and setting it aside; (d) awarding rescissory and/or compensatory damages against defendants, jointly and severally, in an amount to be determined at trial, together with prejudgment interest at the maximum rate allowable by law; (e) awarding plaintiff its costs and disbursements, including reasonable allowances for plaintiff's counsel and experts' fees and expenses; and -6- 7 (f) granting such other and further relief as may be just and proper. ROSENTHAL MONHAIT GROSS & GODDESS, P.A. By: /s/ -------------------------------- Suite 1401, Mellon Bank Center 918 Market Street P.O. Box 1070 Wilmington, Delaware 19899 (302) 656-4433 Attorneys for Plaintiff Of Counsel: WECHSLER HARWOOD HALEBIAN & FEFFER LLP 488 Madison Avenue New York, New York 10022 (212) 935-7400 -7- EX-99.6 7 COMPLAINT IN COURT REGARDING HAROLD SHAPIRO 1 EXHIBIT 99.6 IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - ----------------------------------------------------- HAROLD SHAPIRO, : : PLAINTIFF, : : - against - : CIVIL ACTION NO. 17066NC : KEITH E. ALESSI, PAUL N. ARNOLD, : BRUCE C. BRUCKMANN, MICHAEL A. : DELANEY, CHARLES M. EGAN, GREGORY : B. MAFFEI, JAMES A. URRY, CORT : BUSINESS SYSTEMS, BRUCKMANN, : ROSSER SHERRILL & CO. AND CITICORP : VENTURE CAPITAL LTD., : : : : : DEFENDANTS. : : : - ----------------------------------------------------- CLASS ACTION COMPLAINT Plaintiff, by his attorneys, Rosenthal, Monhait, Gross & Goddess, P.A., for his complaint against defendants, alleges upon information and belief, except for paragraph 2 hereof, which is alleged upon knowledge, as follows: 1. Plaintiff brings this action pursuant to Rule 23 of the Rules of the Court of Chancery on his behalf and as a class action on behalf of all persons, other than defendants and those in privity with them, who own the common stock of Cort Business Services Corporation ("Cort" or the "Company"). 2. Plaintiff has been the owner of the common stock of the Company since prior to the transaction herein complained of and continuously to date. 3. Cort is a corporation duly organized and existing under the laws of the State of Delaware. The Company, through a wholly owned subsidiary, is a leading provider of 2 rental furniture, accessories and related services in the "rent-to-rent" segment of the furniture industry. Cort operates 119 rental showrooms, 83 furniture clearance centers and 75 warehouses in 32 states and the District of Columbia. The Company maintains its principal offices at 4401 Fair Lakes Court, Fairfax, Virginia. 4. Defendant Bruckmann, Rosser, Sherrill & Co., ("BRS") based in New York, is a private investment firm that focuses on investing in quality business. 5. Defendant Paul N. Arnold is Chief Executive Officer and a Director of the Company. 6. Defendant Charles M. Egan is Chairman of the Company and a Director of the Company. 7. Defendant Bruce C. Bruckmann is Managing Director of BRS, and a Director of the Company. 8. Defendant Michael A. Delaney is Managing Director of Citicorp Venture Capital Ltd. ("CVC"), and a Director of the Company. 9. Defendants Keith E. Alessi, Gregory B. Meffei, and James A. Urry are Directors of the Company. Defendant CVC currently owns approximately 44% of the Company's outstanding common stock. 10. The individual defendants, by reason of their corporate directorships and executive positions, stand in a fiduciary position relative to the Company's public shareholders, whose fiduciary duties, at all times relevant herein, required them to exercise their best judgment, and to act in a prudent manner, and in the best interest of the Company's shareholders. Said defendants owed the public shareholders of Cort the highest duty of good faith, fair dealing, due care, loyalty, and full, candid and adequate disclosure. -2- 3 CLASS ACTION ALLEGATIONS 11. Plaintiff brings this action on his own behalf and as a class action, pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf of all security holders of the Company (except the defendants herein and any person, firm, trust, corporation, or other entity related to or affiliated with any of the defendants) and their successors in interest, who are or will be threatened with injury arising from defendants' actions as more fully described herein. 12. This action is properly maintainable as a class action. 13. The class is so numerous that joinder of all members is impracticable. As of March 17, 1998, there were approximately 13,000,000 shares of Cort common stock outstanding, owed by shareholders located throughout the country. 14. There are questions of law and fact which are common to the class including, inter alia, the following: (a) whether defendants have breached their fiduciary and other common law duties owed by them to plaintiff and the members of the class; (b) whether the proposed acquisition, hereinafter described, constitutes a breach of defendants' duty of fair dealing; (c) whether defendants have obtained the best transaction available; and (d) whether the class is entitled to injunctive relief or damages as a result of the wrongful conduct committed by defendants. 15. Plaintiff is committed to prosecuting this action and has retained competent counsel experienced in litigation of this nature. The claims of the plaintiff are typical of the claims of other members of the class and plaintiff has the same interests as the other members of the class. Plaintiff will fairly and adequately represent the class. -3- 4 16. Defendants have acted in a manner which affects plaintiff and all members of the class, thereby making appropriate injunctive relief and/or corresponding declaratory relief with respect to the class as a whole. 17. 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 defendants, or adjudications with respect to individual members of the Class which would, as a practical matter, be dispositive of the interests of other members or substantially impair or impede their ability to protect their interests. SUBSTANTIVE ALLEGATIONS 18. On March 26, 1999, the Company announced that it had signed a definitive merger agreement with an investor group that includes BRS (the "BRS Group") whereby the BRS Group will purchase all of the Company's outstanding common stock held by the public shareholders of Cort for $24 per share in cash and $2.50 per share in liquidation value of a new series of preferred stock. CVC which owns 44% of the Company's outstanding stock, will retain a portion of its investment and thereby provide equity financing to the resulting corporation. 19. By entering into the agreement with the BRS Group, the Cort Board has initiated a process to sell the Company which imposes heightened fiduciary responsibilities and requires enhanced scrutiny by the Court. However, the terms of the proposed transaction were not the result of an auction process or active market check; they were arrived at without a full and thorough investigation by the Individual Defendants; and they are intrinsically unfair and inadequate from the standpoint of the Cort shareholders. -4- 5 20. The Individual Defendants failed to make an informed decision, as no market check of the Company's value was obtained. In agreeing to the merger, the Individual Defendants failed to properly inform themselves of Cort's highest transactional value. 21. The Individual Defendants have violated their fiduciary duties owed to the public shareholders of Cort. The Individual Defendants' agreement to the terms of the transaction, its timing, and the failure to auction the Company and invite other bidders, and defendants' failure to conduct a market check demonstrate a clear absence of the exercise of due care and a breach of their duties of loyalty to Cort's public shareholders. 22. The Individual Defendants' fiduciary obligations under these circumstances require them to: (a) Undertake an appropriate evaluation of Cort's net worth as a merger/acquisition candidate; and (b) Engage in a meaningful auction with third parties in an attempt to obtain the best value for Cort's public shareholders. 23. The Individual Defendants have breached their fiduciary duties by reason of the acts and transactions complained of herein, including their decision to be acquired by the BRS Group without making the requisite effort to obtain the best offer possible. 24. Plaintiff and other members of the Class have been and will be damaged in that they have not and will not receive their fair proportion of the value of Cort's assets and business, and will be prevented from obtaining fair and adequate consideration for their shares of Cort common stock. 25. The consideration to be paid to class members in the proposed merger is unfair and inadequate because, among other things: -5- 6 (a) Cort common stock has sold for as much as $48 per share in the past twelve months; (b) The intrinsic value of Cort's common stock is materially in excess of the amount offered for those securities in the merger giving due consideration to the anticipated operating results, net asset value, cash flow, and profitability of the Company; (c) The merger price is not the result of an appropriate consideration of the value of Cort because the Cort Board approved the proposed merger without undertaking steps to accurately ascertain Cort's value through open bidding or at least a "market check mechanisim"; and (d) By entering into the agreement with the BRS Group, the Individual Defendants have allowed the price of Cort stock to be capped, thereby depriving plaintiff and the Class of the opportunity to realize any increase in the value of Cort stock. 26. By reason of the foregoing, each member of the Class will suffer irreparable injury and damages absent injunctive relief by this Court. 27. BRS and CVC knowingly aided and abetted the breaches of fiduciary by the individual defendants. The proposed acquisition could not take place without the knowing participation of BRS and CVC. 28. Plaintiff and other members of the Class have no adequate remedy at law. WHEREFORE, plaintiff and members of the Class demand judgment against defendants as follows: a. Declaring that this action is properly maintainable as a class action and certifying plaintiff as the representative of the Class; -6- 7 b. Preliminarily and permanently enjoining defendants and their counsel, agents, employees and all persons acting under, in concert with, or for them, from proceeding with, consummating, or closing the proposed transaction; c. In the event that the proposed transaction is consummated, rescinding it and setting it aside, or awarding rescissory damages to the Class. d. Awarding compensatory damages against defendants, individually and severally, in an amount to be determined at trial, together with pre-judgment and post-judgment interest at the maximum rate allowable by law, arising from the proposed transaction; e. Awarding plaintiff its costs and disbursements and reasonable allowances for fees of plaintiff's counsel and experts and reimbursement of expenses; and f. Granting plaintiff and the Class such other and further relief as the Court may deem just and proper. -7- 8 ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A. By: /s/ Norman M. Monhait ------------------------------------- Suite 1401, Mellon Bank Center P.O. Box 1070 Wilmington, Delaware 19899-1070 (302) 656-4433 Attorneys for Plaintiff OF COUNSEL: BERNSTEIN LIEBHARD & LIFSHITZ 10 E. 40th Street New York, NY 10016 (212) 779-1414 March 26, 1999 -8- -----END PRIVACY-ENHANCED MESSAGE-----