UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. 1)

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

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Preliminary Proxy Statement

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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material Pursuant to § 240.14a-12

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Cornerstone Building Brands, Inc.

(Name of Registrant as Specified in its Charter)​

   

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box)

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No fee required.

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Fee paid previously with preliminary materials.

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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

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PRELIMINARY PROXY MATERIALS-SUBJECT TO COMPLETION

5020 Weston Parkway
Suite 400
Cary, North Carolina 27513

[           ], 2022​

Dear Cornerstone Building Brands Stockholder:

You are invited to attend a special meeting (we refer to such meeting, including any adjournment or postponement thereof, as the “special meeting”) of the stockholders of Cornerstone Building Brands, Inc., which we refer to as “Cornerstone Building Brands” or the “Company,” to be held on [     ], 2022, at [     ] Eastern Time. Due to concerns regarding the ongoing coronavirus pandemic, and to protect the health and safety of our employees, stockholders and other stakeholders, the special meeting will be a virtual meeting conducted solely online via live webcast at www.proxydocs.com/CNR. There is no physical location for the special meeting.

On March 5, 2022, the Company entered into an Agreement and Plan of Merger (as amended from time to time, the “merger agreement”) by and among Camelot Return Intermediate Holdings LLC, a Delaware limited liability company (“Parent”), Camelot Return Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), and the Company, pursuant to which Merger Sub will merge with and into the Company (which we refer to as the “merger”), with the Company surviving the merger (the “Surviving Corporation”) as a subsidiary of Parent. Parent and Merger Sub are subsidiaries of investment funds managed by Clayton, Dubilier & Rice, LLC (“CD&R”), which, together with its affiliates, owns approximately 49% of the issued and outstanding shares of Company common stock, par value $0.01 per share (which we refer to as a “share” or, collectively, “shares”).

In connection with the merger agreement, an affiliate of CD&R has provided a limited guarantee (as amended from time to time, the “limited guarantee”) with respect to the payment of a termination fee that may be payable by Parent to the Company under the merger agreement, as well as certain reimbursement obligations that may be owed by Parent pursuant to the merger agreement, in each case, subject to the terms of the merger agreement and the limited guarantee.

At the special meeting, you will be asked to approve the adoption of the merger agreement and the approval of the merger and the other transactions contemplated by the merger agreement.

If the merger is completed, each share of Company common stock outstanding immediately prior to the effective time of the merger (other than (1) shares of Company common stock that are to be cancelled or converted into shares of common stock of the Surviving Corporation in accordance with the merger agreement and (2) shares of Company common stock that are owned by stockholders of the Company (other than CD&R, certain investment funds managed by CD&R and other affiliates of CD&R that hold shares of Company common stock, which we refer to as the “affiliated stockholders”) who did not vote in favor of the merger agreement or the merger and who have perfected and not withdrawn a demand for appraisal rights pursuant to Section 262 of the DGCL (the shares of Company common stock held by such stockholders, the “dissenting shares” and, together with the shares described in clause (1), including any shares held by affiliated stockholders and any other affiliates of the Company and Parent, “excluded shares”)) will be converted into the right to receive $24.65 in cash per share, without interest, which we refer to as the “merger consideration.”

 

 

The special committee (the “Special Committee”) of the board of directors of the Company (the “Board”), consisting solely of the Company’s independent directors who are independent of, and not affiliated with, CD&R or its affiliates, evaluated the merger in consultation with the Company’s management and legal and financial advisors. The Special Committee unanimously (1) determined that the terms of the merger agreement, the voting and support agreement, dated as of March 5, 2022, by and among the Company and affiliates of Parent, including CD&R, which we refer to as the “voting and support agreement,” the limited guarantee and the transactions contemplated by the merger agreement, the voting and support agreement and the limited guarantee (the “transaction”), including the merger, are fair to, and in the best interests of, the Company and its stockholders other than the affiliated stockholders, which stockholders we refer to as the “unaffiliated stockholders,” ​(2) determined that it is advisable and in the best interests of the Company and the unaffiliated stockholders to enter into the merger agreement, the voting and support agreement and the limited guarantee and (3) recommended that the Board approve and authorize the merger agreement, the voting and support agreement, the limited guarantee and the transaction.

The Board, other than John Krenicki, Timothy O’Brien, Nathan Sleeper and Jonathan L. Zrebiec, who recused themselves due to their affiliation with CD&R and who we refer to as the “Recused Directors,” acting upon the recommendation of the Special Committee, unanimously (1) determined that the terms of the merger agreement, the voting and support agreement, the limited guarantee and the transaction are fair to, and in the best interests of, the Company and its stockholders, including the unaffiliated stockholders, (2) determined that it is advisable and in the best interests of the Company and the unaffiliated stockholders to enter into the merger agreement, the voting and support agreement and the limited guarantee, and (3) resolved to recommend that the stockholders of the Company vote to adopt and approve the merger agreement. The approval of the proposal to adopt and approve the merger agreement, which we refer to as the “Merger Agreement Proposal,” requires both (a) the affirmative vote of the stockholders representing a majority of the aggregate voting power of the outstanding shares of Company common stock entitled to vote on the Merger Agreement Proposal at the special meeting, which we refer to as the approval of the “majority of the outstanding shares” and (b) the affirmative vote of the stockholders representing a majority of the aggregate voting power of the outstanding shares beneficially owned by the unaffiliated stockholders entitled to vote on the Merger Agreement Proposal at the special meeting, which we refer to as the approval of the “majority of the unaffiliated shares,” in each case assuming a quorum is present.

You will also be asked to vote at the special meeting on (1) one or more proposals to adjourn the special meeting to a later date or dates if necessary or appropriate, including adjournments to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the Merger Agreement Proposal, which we refer to as the “Adjournment Proposal” and which requires the affirmative vote by the holders representing a majority of the votes cast by the stockholders present virtually or by proxy and entitled to vote on the matter at the special meeting, whether or not a quorum is present, and (2) the nonbinding, advisory proposal regarding certain compensation arrangements for the Company’s named executive officers in connection with the merger, which we refer to as the “Merger-Related Compensation Proposal” and which requires the affirmative vote by the holders representing a majority of the votes cast by the stockholders present virtually or by proxy and entitled to vote on the matter at the special meeting, assuming a quorum is present.

The merger agreement and the merger have been unanimously approved and recommended by the Special Committee of the Company’s independent directors who are independent of, and not affiliated with, CD&R or its affiliates. The Board, by a unanimous vote of the Company’s directors (other than the Recused Directors), recommends that you vote “FOR” the Merger Agreement Proposal, “FOR” the Adjournment Proposal and “FOR” the Merger-Related Compensation Proposal.

Your vote is very important. The merger cannot be completed unless both a majority of the outstanding shares and a majority of the unaffiliated shares approve the Merger Agreement Proposal. A failure to vote your shares of Company common stock “FOR” the Merger Agreement Proposal will have the same effect as a vote “AGAINST” the Merger Agreement Proposal.

Therefore, whether or not you expect to attend the special meeting, at your earliest convenience, please sign, date and vote on the enclosed proxy card and return it in the enclosed postage-paid reply envelope or submit your proxy using the telephone or Internet procedures that may be provided to you. If you attend the special meeting and vote online during the special meeting, your vote by ballot will revoke any proxy previously

 

 

submitted. If you hold your shares of Company common stock through a bank, broker or other nominee, you should follow the procedures provided by your bank, broker or other nominee in order to vote.

Completion of the merger is subject to the satisfaction or waiver of certain conditions set forth in the merger agreement.

The accompanying proxy statement provides you with more detailed information about the special meeting, the merger agreement and the transactions contemplated by it, including the merger. A copy of the merger agreement is attached as Annex A to the accompanying proxy statement. We encourage you to carefully read the entire proxy statement and its annexes, including the merger agreement and the documents referred to or incorporated by reference in this proxy statement. You may also obtain additional information about the Company from other documents we have filed with the U.S. Securities and Exchange Commission (the “SEC”). In particular, you should read the “Risk Factors” section beginning on page 13 in our annual report on Form 10-K for the year ended December 31, 2021, and other risk factors detailed from time to time in the Company’s reports filed with the SEC and incorporated by reference in this proxy statement, for risks relating to our business and for a discussion of the risks that you should consider in evaluating the proposed transaction and how it may affect you.

If you have any questions or need assistance voting your shares of Company common stock, please contact MacKenzie Partners, Inc., the Company’s proxy solicitor in connection with the special meeting:

MacKenzie Partners, Inc.
1407 Broadway, 27th Floor
New York, NY 10018
(800) 322-2885 (toll free)
(212) 929-5500 (call collect)
Email: proxy@mackenziepartners.com

Thank you in advance for your cooperation and continued support.

Sincerely,
 

Rose Lee
President and Chief Executive Officer

The accompanying proxy statement is dated [           ], 2022, and is first being mailed to the Company’s stockholders on or about [           ], 2022.

NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THE MERGER, PASSED UPON THE MERITS OR FAIRNESS OF THE MERGER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY IT, INCLUDING THE MERGER, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

 

PRELIMINARY PROXY MATERIALS-SUBJECT TO COMPLETION

5020 Weston Parkway
Suite 400
Cary, North Carolina 27513

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD [           ], 2022

Virtual Meeting Only — No Physical Meeting Location

Dear Cornerstone Building Brands Stockholder:

You are cordially invited to attend a special meeting (we refer to such meeting, including any adjournment or postponement thereof, as the “special meeting”) of the stockholders of Cornerstone Building Brands, Inc. (“Cornerstone Building Brands,” the “Company” or “us”) to be held virtually, on
[           ], [           ], 2022, at [     ] Eastern Time. The special meeting will be held for the following purposes:

1.   to consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of March 5, 2022 (as amended from time to time, the “merger agreement”), by and among Camelot Return Intermediate Holdings, LLC, a Delaware limited liability company (“Parent”), Camelot Return Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), and the Company, a copy of which is attached as Annex A to the accompanying proxy statement, pursuant to which, among other things, Merger Sub will merge with and into the Company (the “merger”), with the Company surviving the merger (the “Surviving Corporation”) as a subsidiary of Parent (the “Merger Agreement Proposal”);

2.   to consider and vote on one or more proposals to adjourn the special meeting to a later date or dates if necessary or appropriate, including adjournments to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the Merger Agreement Proposal (the “Adjournment Proposal”); and

3.   to approve, by nonbinding, advisory vote, certain compensation arrangements for the Company’s named executive officers in connection with the merger (the “Merger-Related Compensation Proposal”).

These items of business are more fully described in the proxy statement of which this notice forms a part.

The affirmative vote of both (1) the stockholders representing a majority of the aggregate voting power of the outstanding shares of Company common stock entitled to vote on the Merger Agreement Proposal at the special meeting, which we refer to as the approval of the “majority of the outstanding shares,” and (2) of the stockholders representing a majority of the aggregate voting power of the outstanding shares of Company common stock beneficially owned by stockholders other than Clayton, Dubilier & Rice, LLC (“CD&R’’), certain investment funds managed by CD&R and other affiliates of CD&R that hold shares of Company common stock, which we refer to as the “unaffiliated stockholders” entitled to vote on the Merger Agreement Proposal at the special meeting, which we refer to as the “majority of the unaffiliated shares,” is necessary for the approval of the Merger Agreement Proposal. The affirmative vote of the holders of the majority of the shares of Company common stock cast at the special meeting or by proxy

 

 

and entitled to vote thereon at the special meeting is necessary for the approval of the Adjournment Proposal and the Merger-Related Compensation Proposal.

The record date for the special meeting is [           ], 2022. Only stockholders of record as of the close of business on the record date are entitled to notice of, and to vote at, the special meeting, or any adjournment or postponement thereof. Any stockholder entitled to attend and vote at the special meeting is entitled to appoint a proxy to attend and act on such stockholder’s behalf.

If the merger is consummated, stockholders who continuously hold shares of Company common stock through the effective time, who do not vote in favor of the adoption of the merger agreement and who properly demand appraisal of their shares of Company common stock and who do not withdraw their demands or otherwise lose their rights of appraisal will be entitled to seek appraisal of their shares of Company common stock in connection with the merger. Stockholders must comply with all the requirements of Delaware law, which are summarized in the proxy statement accompanying this notice and reproduced in their entirety in Annex C to the accompanying proxy statement.

The merger agreement and the merger have been unanimously approved and recommended by the Special Committee of the Company’s independent directors who are independent of, and not affiliated with, CD&R or its affiliates. The Board, by a unanimous vote of the Company’s directors (other than John Krenicki, Timothy O’Brien, Nathan Sleeper and Jonathan L. Zrebiec, who recused themselves due to their affiliation with CD&R) recommends that you vote “FOR” the Merger Agreement Proposal, “FOR” the Adjournment Proposal and “FOR” the Merger-Related Compensation Proposal.

Your vote is very important. The merger cannot be completed unless both a majority of the outstanding shares and a majority of the unaffiliated shares approve the Merger Agreement Proposal. A failure to vote your shares of Company common stock “FOR” the Merger Agreement Proposal will have the same effect as a vote “AGAINST” the Merger Agreement Proposal.

Therefore, whether or not you expect to attend the special meeting, at your earliest convenience, please sign, date and vote on the enclosed proxy card and return it in the enclosed postage-paid reply envelope, or submit your proxy using the telephone or Internet procedures that may be provided to you. If you attend the special meeting and vote online during the special meeting, your vote by ballot will revoke any proxy previously submitted. If you hold your shares of Company common stock through a bank, broker or other nominee, you should follow the procedures provided by your bank, broker or other nominee in order to vote.

The proxy statement of which this notice forms a part provides a detailed description of the merger agreement, the merger and the other transactions contemplated by the merger agreement. We encourage you to carefully read the entire proxy statement and its annexes, including the merger agreement and the documents referred to or incorporated by reference in this proxy statement. If you have any questions concerning the merger or the proxy statement, would like additional copies of the proxy statement or need help voting your shares of Company common stock, please contact Cornerstone Building Brands’s proxy solicitor:

 

 

By Order of the Board of Directors,

 

ALENA S. BRENNER
Executive Vice President, General Counsel and Corporate Secretary

Cary, North Carolina
[           ], 2022

Important Notice Regarding the Availability of Proxy Materials for the Special Meeting to Be Held on
[           ], 2022 via live webcast at www.proxydocs.com/CNR

The Notice of Special Meeting of Stockholders and our Proxy Statement are available at
www.proxydocs.com/ CNR.

 

 

TABLE OF CONTENTS

 

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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

The following questions and answers are intended to address briefly some commonly asked questions regarding the merger, the merger agreement and the special meeting. These questions and answers may not address all questions that may be important to you as a stockholder of the Company. Please refer to the section of this proxy statement entitled “Summary Term Sheet” and the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred to or incorporated by reference in this proxy statement, all of which you should read carefully. See the section of this proxy statement entitled “Where You Can Find More Information.”

Q.

Why am I receiving this document?

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A.

The Company is soliciting proxies for the special meeting. You are receiving this proxy statement because you own shares of Company common stock. The Company is holding the special meeting so that its stockholders may vote on the Merger Agreement Proposal, the proposal to adjourn the special meeting to a later date or dates if necessary or appropriate to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the Merger Agreement Proposal, which we refer to as the “Adjournment Proposal,” and the nonbinding, advisory proposal regarding certain compensation arrangements for the Company’s named executive officers in connection with the merger, which we refer to as the “Merger-Related Compensation Proposal.” The approval of this proposal by our stockholders is a condition to the consummation of the merger. See the section of this proxy statement entitled “Conditions to the Closing of the Merger.” This proxy statement contains important information about the merger and the special meeting, and you should read it carefully. The enclosed proxy card allows you to vote your shares of Company common stock without attending the special meeting virtually.

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Your vote is extremely important, and we encourage you to submit your proxy as soon as possible.   For more information on how to vote your shares of Company common stock, please see the section of this proxy statement entitled “The Special Meeting.”

Q.

When and where is the special meeting, and who may attend?

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A.

The special meeting will be conducted solely online via live webcast starting at [      ] Eastern Time on [      ], 2022. The Company’s stockholders will be able to join and ask questions of, and engage in dialogue with, members of the Board, the Special Committee and senior management during the meeting. You will need to have the control number included on your proxy card or voting instruction form to vote at the Company’s special meeting. Because there is no physical location for the special meeting and the special meeting will be a virtual meeting conducted solely online via live webcast, stockholders will not be able to attend the meeting in person. To be admitted to the special meeting’s live webcast, you must register in advance at [      ] prior to the registration deadline of [      ] Eastern Time on [      ], 2022. As part of the registration process, you must enter the control number provided in your proxy card, voting instruction form, or other communication you received. After completion of your registration, further instructions, including a link to access the special meeting, will be emailed to you. Please note that you are not permitted to record the special meeting.

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Q.

Who can vote at the special meeting?

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All Company stockholders of record as of the close of business on [           ], 2022, the record date for the special meeting, are entitled to receive notice of, and to vote at, the special meeting, or any adjournment or postponement thereof.

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Q.

What is the difference between being a “stockholder of record” and a “beneficial owner” of shares of Company common stock held in “street name”?

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If, on the record date, your shares of Company common stock are registered directly in your name with the Company’s transfer agent, Computershare Trust Company, N.A., you are considered, with respect to those shares, the stockholder of record.

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If your shares of Company common stock are held by a bank, broker or other nominee, you are considered the beneficial owner of shares held in “street name.”

Q.

What is a quorum?

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The presence virtually or by proxy of the holders of a majority of the voting power of the shares of Company common stock entitled to vote at the special meeting is necessary to constitute a quorum at the special meeting. If you submit a properly executed proxy card, even if you vote “AGAINST” the proposal or vote to “ABSTAIN” in respect of the proposal, your shares of common stock will be counted for purposes of calculating whether a quorum is present.

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If a quorum is not present at the special meeting, under the Company’s bylaws, the person presiding at the special meeting, or the stockholders entitled to vote at the special meeting present virtually or represented by proxy, will have the power to adjourn the special meeting until a quorum is present or represented.

As of the close of business on the record date, there were [       ] shares of Company common stock outstanding.

Q.

How many votes do I have?

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You are entitled to one vote on each of the proposals for each share of Company common stock that you owned as of the close of business on [           ], 2022, which is the record date. As of the close of business on the record date, there were [       ] shares of Company common stock outstanding.

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Q.

How will CD&R vote the shares of Company common stock it holds?

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Pursuant to the voting and support agreement, the CD&R Stockholders, who collectively own approximately 49% of the issued and outstanding shares of Company common stock, agreed to vote or cause to be voted any shares of Company common stock owned by them in favor of the merger and the adoption of the merger agreement, each of the other actions contemplated by the merger agreement or necessary or desirable in furtherance of the merger and the other transactions contemplated by the merger agreement and the adjournment of any meeting of the Company’s stockholders in accordance with the merger agreement and against any action or agreement that would reasonably be expected to result in any of the conditions to the consummation of the merger under the merger agreement not being fulfilled. For more information, see the section of this proxy statement entitled “Voting and Support Agreement.”

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Q.

Why are the Company’s stockholders being asked to cast a nonbinding, advisory vote to approve certain compensation arrangements for the Company’s named executive officers under existing agreements with the Company in connection with the merger?

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SEC rules require the Company to seek approval on a nonbinding, advisory basis with respect to certain compensation arrangements for the Company’s named executive officers in connection with the merger. Approval of the Merger-Related Compensation Proposal is not required to consummate the merger.

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Q.

How does the Board recommend that I vote?

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The Board recommends that you vote:

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“FOR” the Merger Agreement Proposal;

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“FOR” the Adjournment Proposal; and

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“FOR” the Merger-Related Compensation Proposal.

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You should read the section of this proxy statement entitled “Special Factors — Reasons for the Merger; Recommendation of the Board; Fairness of the Merger” for a discussion of the factors that the

 

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Board considered in deciding to recommend the approval of the merger agreement. See also the section of this proxy statement entitled “Special Factors — Interests of Executive Officers and Directors of the Company in the Merger.”

Q.

How do I vote?

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If you are a stockholder of record as of the record date, you may vote your shares of Company common stock on matters presented at the special meeting in any of the following ways:

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visit the website shown on your proxy card to submit your proxy via the Internet;

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call the toll-free number for telephone proxy submission shown on your proxy card;

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complete, sign, date and return the enclosed proxy card in the enclosed postage-paid reply envelope; or

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appear virtually at the special meeting and vote electronically.

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If you are a beneficial owner of the shares of Company common stock as of the record date, you will receive instructions from your bank, broker or other nominee that describe the procedures for voting your shares of Company common stock at the special meeting. You should follow the instructions provided by your bank, broker or other nominee to vote your shares of Company common stock at the special meeting. In order to attend and vote at the special meeting via the special meeting website, you will need to obtain a “legal proxy” from your bank, broker or other nominee.

The control number located on your proxy card is designed to verify your identity and allows you to vote your shares of Company common stock and to confirm that your voting instructions have been properly recorded when submitting a proxy through the Internet or by telephone.

Q.

What is the deadline for voting my shares of Company common stock?

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If you are a stockholder of record as of the record date and choose to vote your shares of Company common stock through the Internet or by telephone, your proxy must be received through the Internet or by telephone by 11:59 p.m. Eastern Time on [      ], 2022, the day before the special meeting, for your shares of Company common stock to be voted at the special meeting. If you choose to submit your proxy by mailing a proxy card, your proxy card must be completed, signed, dated and returned in the enclosed postage-paid reply envelope or otherwise filed with our Corporate Secretary no later than 11:59 p.m. Eastern Time on [      ], 2022, the day before the special meeting. You may also attend the special meeting virtually. If you are a beneficial owner, please review the voting instructions provided by your bank, broker or other nominee for information on the deadline for voting your shares.

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Q.

What is a proxy?

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A proxy is your legal designation of another person to vote your shares of Company common stock. This written document describing the matters to be considered and voted on at the special meeting is called a “proxy statement.” The document used to designate a proxy to vote your shares of Company common stock is called a “proxy card.”

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Q.

If I am a stockholder of record, what happens if I do not vote or submit a proxy card?

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If you fail to vote, either virtually at the special meeting or by proxy, your shares of Company common stock will not be voted at the special meeting and will not be counted for purposes of determining whether a quorum exists.

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Additionally, your failure to vote will have (1) the effect of counting as a vote “AGAINST” the Merger Agreement Proposal with respect to the approval thresholds requiring the affirmative vote of (a) the majority of the outstanding shares and (b) the majority of the unaffiliated shares, in each case assuming a quorum is present, and (2) no effect on the Adjournment Proposal or the Merger-Related Compensation Proposal.

 

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Q.

If my shares of Company common stock are held in “street name” by my bank, broker or other nominee, will my bank, broker or other nominee vote my shares of Company common stock for me?

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A.

If your common stock is held in “street name” in a stock brokerage account or by a broker, bank or other nominee, you must provide the record holder of your common stock with instructions on how to vote your shares.

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Your bank, broker or other nominee will only be permitted to vote your shares of Company common stock if you instruct your bank, broker or other nominee as to how to vote. You should follow the procedures provided by your bank, broker or other nominee regarding the voting of your shares of Company common stock. Under the rules of the NYSE, a bank, broker or other nominee does not have discretionary authority to vote on “non-routine” matters without specific instructions from its customers and all of the matters to be considered at the special meeting are “non-routine” for this purpose. When a bank, broker or other nominee refrains from voting your shares on a particular proposal because the bank, broker or other nominee has not received your instructions and has discretionary authority to vote on the “routine” matters to be considered, it is called a “broker non-vote.” Because there are no routine matters to be considered at the special meeting, there should not be any broker non-votes.

A failure to provide instructions to your bank, broker or other nominee with respect to any of the proposals will have (1) the effect of a vote “AGAINST” the Merger Agreement Proposal with respect to the approval thresholds requiring the affirmative vote of (a) the majority of the outstanding shares and (b) the majority of the unaffiliated shares, assuming a quorum is present, and (2) no effect on the Adjournment Proposal or the Merger-Related Compensation Proposal. In such instance, your shares will not be counted towards determining whether a quorum is present.

If you instruct your bank, broker or other nominee how to vote on at least one, but not all of the proposals to be considered at the special meeting, your shares of Company common stock will be voted according to your instructions on those proposals for which you have provided instructions and will be counted as present for purposes of determining whether a quorum is present at the special meeting.

Q.

If a stockholder gives a proxy, how are the shares of Company common stock voted?

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A.

Regardless of the method you choose to submit a proxy, the individuals named on the enclosed proxy card will vote your shares of Company common stock as you instruct. When completing the Internet or telephone processes or the proxy card, you may specify whether your shares of Company common stock should be voted “FOR” or “AGAINST,” or to “ABSTAIN” from voting on, all, some or none of the specific items of business to come before the special meeting.

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If you properly sign your proxy card but do not mark the boxes indicating how your shares of Company common stock should be voted on any particular matter, the shares of Company common stock represented by your properly signed proxy will be voted as recommended by the Board, which means your shares of Company common stock will be voted “FOR” the Merger Agreement Proposal, “FOR” the Adjournment Proposal and “FOR” the Merger-Related Compensation Proposal.

Q.

Can I change or revoke my vote?

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Yes. You have the right to revoke a proxy, whether delivered over the Internet, by telephone or by mail, at any time before it is exercised by:

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submitting another proxy, including a proxy card, at a later date through any of the methods available to you;

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giving written notice of revocation to the Company’s Corporate Secretary, which must be filed with the Company’s Corporate Secretary before the special meeting begins; or

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attending the special meeting virtually and voting.

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If your shares of Company common stock are held in “street name” by your bank, broker or other nominee, please refer to the information forwarded by your bank, broker or other nominee for procedures on revoking your proxy.

 

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Only your last submitted proxy will be considered. Please vote “FOR” each of the proposals, following the instructions in your proxy card or voting instructions form provided by your bank, broker or other nominee, as promptly as possible.

Q.

What do I do if I receive more than one proxy or set of voting instructions?

​

A.

If you hold shares of Company common stock in “street name,” or through more than one bank, broker or other nominee, and also directly as a record holder or otherwise, you may receive more than one proxy or set of voting instructions relating to the special meeting. These should each be executed and returned separately in accordance with the instructions provided in this proxy statement to ensure that all of your shares of Company common stock are voted.

​

Q.

What happens if I sell my shares of Company common stock before the special meeting?

​

A.

The record date for the special meeting is earlier than the date of the special meeting and the date the merger is expected to be completed. If you sell or transfer your shares of Company common stock after the record date but before the special meeting, unless you provide the person to whom you sell or otherwise transfer your shares with a proxy, you will retain your right to vote at the special meeting. Even if you sell or otherwise transfer your shares of Company common stock after the record date, we encourage you to sign, date and return the enclosed proxy card in the enclosed postage-paid reply envelope or grant your proxy electronically over the Internet or by telephone (using the instructions provided in the enclosed proxy card).

​

Unless special arrangements are made between you and the person to whom you sell or otherwise transfer your shares and each of you notifies the Company in writing of such special arrangements, you will have transferred the right to receive the merger consideration, if the merger is completed, to the person to whom you sell or transfer your shares.

Q.

Am I entitled to rights of appraisal under the DGCL?

​

A.

If the merger is completed, stockholders who do not vote in favor of the adoption of the merger agreement and who properly demand appraisal of their shares will be entitled to appraisal rights in connection with the merger under Section 262 of the DGCL. This means that holders of shares of Company common stock are entitled to have their shares appraised by the Delaware Court of Chancery and to receive payment in cash for the “fair value” of their shares of Company common stock, exclusive of any elements of value arising from the accomplishment or expectation of the merger, together with interest on the amount determined to be fair value, if any, as determined by the court. Stockholders of the Company who wish to seek appraisal of their shares are in any case encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights due to the complexity of the appraisal process. The DGCL requirements for exercising appraisal rights are described in additional detail in this proxy statement, and the relevant section of the DGCL regarding appraisal rights is reproduced in Annex C to this proxy statement. See the section of this proxy statement entitled “Special Factors — Appraisal Rights.”

​

Q.

Who will solicit and pay the cost of soliciting proxies?

​

A.

The Company has engaged MacKenzie Partners, Inc. (“MacKenzie”) to assist in the solicitation of proxies for the special meeting. The Company has agreed to pay MacKenzie a fee of $30,000, and to reimburse MacKenzie for reasonable out-of-pocket expenses. The Company will indemnify MacKenzie and its affiliates against certain claims, liabilities, losses, damages, expenses and/or judgments. The Company also will reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of the shares of Company common stock for their expenses in forwarding solicitation materials to beneficial owners of our shares of Company common stock and in obtaining voting instructions from those owners. Our directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, by email, through the Internet or virtually. They will not be paid any additional amounts for soliciting proxies.

​

 

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Q.

What do I need to do now?

​

A.

You should carefully read and consider this entire proxy statement and the annexes to this proxy statement, including the merger agreement, along with all of the documents that referred to in this proxy statement, as they contain important information about, among other things, the merger and how it affects you. Even if you plan to attend the special meeting virtually, after carefully reading and considering the information contained in this proxy statement, please sign, date and return, as promptly as possible, the enclosed proxy card in the enclosed postage-paid reply envelope, or grant your proxy electronically over the Internet or by telephone (using the instructions provided in the enclosed proxy card) to ensure that your shares of Company common stock are represented and can be voted at the special meeting, unless you wish to seek appraisal. If you hold your shares in “street name,” please refer to the instructions provided by your bank, broker or other nominee to see which of the above choices are available to you.

​

Q.

Should I send in my evidence of ownership now?

​

A.

No. You should not return your stock certificates or send in other documents evidencing ownership of shares of Company common stock with the proxy card. If the merger is consummated, the paying agent will send each holder of record of shares of Company common stock as of immediately prior to the effective time a letter of transmittal and instructions that explain how to exchange shares of Company common stock for merger consideration. If you are a beneficial owner of shares of Company common stock held in “street name,” you may receive instructions from your bank, broker or other nominee as to what action, if any, you need to take to effect the surrender of your shares.

​

Q.

What is householding and how does it affect me?

​

A.

The Company is sending only one copy of this proxy statement to stockholders who share the same last name and address, unless they have notified the Company that they want to continue receiving multiple copies. This practice, known as “householding,” is designed to reduce duplicate mailings and save significant printing and postage costs.

​

If you received a household mailing and you would like to have additional copies of this proxy statement mailed to you or you would like to opt out of this practice for future mailings, we will promptly deliver such additional copies to you if you submit your request to the Company’s Investor Relations in writing at 5020 Weston Parkway, Suite 400, Cary, North Carolina 27513, or call us at (866) 419-0042. You may also contact us in the same manner if you received multiple copies of this proxy statement and would prefer to receive a single copy of future mailings.

Q.

Where can I find the voting results of the special meeting?

​

A.

The Company will publish final voting results from the special meeting in a Current Report on Form 8-K to be filed with the SEC following the special meeting. For more information, please see the section of this proxy statement entitled “Where You Can Find More Information.”

​

Q.

Who can help answer my other questions?

​

A.

If you have additional questions about the merger, need assistance in submitting your proxy or voting your shares of Company common stock, or need additional copies of the proxy statement or the enclosed proxy card, please contact:

​

MacKenzie Partners, Inc.
1407 Broadway, 27th Floor
New York, NY 10018
(800) 322-2885 (toll free)
(212) 929-5500 (call collect)
Email: proxy@mackenziepartners.com

 

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SPECIAL FACTORS

This discussion of the merger is qualified by reference to the merger agreement, which is attached to this proxy statement as Annex A. You should read the entire merger agreement carefully because it is the legal document that governs the merger.

We are asking our stockholders to vote on the adoption of the merger agreement. If the merger is completed, the holders of the shares of common stock will have the right to receive the merger consideration.

Background of the Merger

The CD&R Stockholders have maintained a significant equity ownership interest in the Company since 2009, and, since the completion of the merger of the Company with Ply Gem Holdings in 2018 (the “Ply Gem Transaction”), the CD&R Stockholders have owned approximately 62 million shares of Company common stock (representing approximately 49% of the outstanding shares of Company common stock as of March 5, 2022), and have been party to a stockholders agreement containing a number of provisions governing the relationship between the Company and the CD&R Stockholders. Among other things, the stockholders agreement contains standstill provisions prohibiting the CD&R Stockholders and their affiliates from increasing their ownership interest and making an acquisition proposal to the Company without Board approval, provides the CD&R Stockholders with minority representation on the Board, which representation may not exceed one less than the number of independent directors, and subjects the CD&R Stockholders to certain voting and transfer restrictions and limitations. Four directors affiliated with CD&R (John Krenicki, Timothy O’Brien, Nathan K. Sleeper and Jonathan L. Zrebiec) currently serve on the Board.

From time to time, CD&R has considered alternatives for its investment in the Company, including the possibility of increasing its investment to a control position or acquiring all of the outstanding shares of Company common stock not then-owned by the CD&R Stockholders. In the summer of 2019, CD&R communicated to director George L. Ball, an independent director who had served as chairman of the special committee of independent directors formed in 2018 to evaluate the Ply Gem Transaction, CD&R’s potential interest in exploring a transaction in which CD&R would acquire all of the outstanding shares of Company common stock not then-owned by the CD&R Stockholders.  In response to this communication, the Board formed a special committee consisting of five directors, selected solely from among the Company’s independent directors who were not affiliated with CD&R, to review and evaluate any proposal from CD&R. CD&R preliminarily indicated that, if invited by the special committee, CD&R would be prepared to consider exploring a potential transaction at a premium to the then-current trading price of Company common stock that would have implied a valuation of less than $10.00 per share. However, the special committee that had been formed at that time determined that CD&R’s expression of interest was not at an attractive valuation level, and explorations were terminated.

On September 16, 2021, Mr. Sleeper, acting in his capacity as a representative of CD&R, contacted Mr. Ball to inform Mr. Ball of CD&R’s potential interest in determining the Board’s receptivity to, and interest in, the possibility of exploring a potential transaction in which CD&R would acquire all of the outstanding shares of Company common stock not already owned by the CD&R Stockholders. Mr. Sleeper did not discuss or make any indication concerning valuation or price. Messrs. Sleeper and Ball agreed that CD&R’s potential interest should be communicated to the Board, and that any evaluation should be conducted by a fully empowered special committee of independent directors who are independent of CD&R and its affiliates. They also discussed that, in light of the standstill restrictions under the Company’s stockholders agreement, a limited waiver of the standstill restrictions would be required before CD&R would be permitted to make a formal proposal, and thus CD&R would not make a formal proposal unless and until invited to do so by a special committee of independent directors. Later that day, Mr. Ball contacted Wachtell, Lipton, Rosen & Katz (which we refer to as “Wachtell Lipton”), independent outside counsel that does not represent CD&R or its affiliated investment funds, to discuss appropriate next steps. Wachtell Lipton served as independent counsel to the independent directors, or to independent special committees of the Board formed on several occasions in the past, in connection with actual or potential transactions between the Company and CD&R, including in 2019, 2018, 2012 and 2009.

On September 21, 2021, the Board met, together with members of the Company’s senior management and a representative of Wachtell Lipton. At this meeting, Wachtell Lipton reviewed process, governance

 

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and fiduciary duty considerations in connection with a potential transaction between the Company and CD&R. At the request of the other directors, Mr. Sleeper discussed with the Board the reasons for CD&R’s potential interest in exploring a transaction in which CD&R would acquire all of the outstanding shares of the Company not already owned by the CD&R Stockholders, and stated that CD&R would only proceed pursuant to a process appropriate for a transaction between a public company and a significant stockholder, including that CD&R would only proceed if invited to do so by a special committee of independent directors. Mr. Sleeper did not discuss or make any indication concerning valuation or price. Following the departure from the meeting of Messrs. Krenicki, O’Brien, Sleeper and Zrebiec (whom we refer to as the “Recused Directors”), the remaining members of the Board discussed process and timing considerations as well as the potential opportunities and risks associated with a potential transaction with CD&R. The Board, excluding the Recused Directors, determined to form a special committee consisting of five directors, selected solely from among the Company’s independent directors who were not, and continue not to be, affiliated with CD&R and its affiliates (which we refer to as the “Special Committee”), to review, evaluate and make a recommendation to the Board as to whether the Company should further explore a potential transaction with CD&R, and should a proposal be invited and made, to develop, assess and negotiate the terms of the proposed transaction and make a recommendation to the Board as to whether the Company should engage in the proposed transaction. Because the Board resolved not to approve any potential transaction with CD&R unless first recommended by the Special Committee, the Special Committee had the power to veto any such transaction with CD&R. The Board, excluding the Recused Directors, appointed directors George L. Ball, Gary L. Forbes, John J. Holland, William E. Jackson and Judith Reinsdorf to serve on the Special Committee, with Mr. Ball later selected by the Special Committee to serve as chairman. From and after the formation of the Special Committee, the Recused Directors were recused from all future Board discussions concerning any actual or potential transaction with CD&R.

Later on September 21, 2021, the Special Committee met, together with members of the Company’s senior management and representatives of Wachtell Lipton, to confirm the engagement of Wachtell Lipton as legal advisor to the Special Committee, review legal and procedural matters, and commence a process for interviewing potential independent financial advisors.

On September 24, 2021, representatives of Wachtell Lipton spoke by telephone with representatives of Kirkland & Ellis LLP (which we refer to as “Kirkland & Ellis”), legal counsel to CD&R. During this conversation, the Kirkland & Ellis representatives communicated, on behalf of CD&R, that any transaction proposed by CD&R would be conditioned upon approval by a fully empowered Special Committee of independent, non-management directors that are independent of CD&R and its affiliates and conditioned upon the approval of the holders of a majority of the shares of Company common stock that are not owned by the CD&R Stockholders or any of their affiliates, which conditions would be non-waivable. The Kirkland & Ellis representatives also communicated that CD&R was not interested in selling or reducing its investment in the Company and would not vote to approve any alternative transaction that would result in any such sale or reduction.

On October 4, 2021, the Special Committee met, together with representatives of Wachtell Lipton, to, among other things, confirm its intention to engage Centerview Partners LLC (which we refer to as “Centerview”) as independent financial advisor to the Special Committee, and authorize management to engage with and provide limited, specified financial information to CD&R. The Special Committee selected Centerview based on Centerview’s reputation, experience both in the industry and with transactions of a similar nature to the potential transaction with CD&R, and independence. In this regard, Centerview conveyed verbally, later confirmed in writing, that Centerview had not been engaged by, and had not received fees from, CD&R or its portfolio companies at least since January 1, 2018, and had no current engagement with any of them. The Special Committee instructed Centerview to conduct a preliminary financial analysis in order to enable the Special Committee to be prepared to evaluate any proposal or indication of value from CD&R and to assist the Special Committee in assessing the desirability of engaging in such a transaction.

On October 25, 2021, the Special Committee met, together with members of the Company’s senior management and representatives of Centerview and Wachtell Lipton. Members of the Company’s senior management reviewed and discussed the Company’s strategic positioning and management’s plans for the Company as a standalone public company, and made an initial presentation of preliminary five-year projections of future performance under three scenarios (a base case, an upside case and a downside case)

 

16

 

that management had begun to prepare to assist the Special Committee in its evaluation of a potential transaction but which had not previously been presented to or reviewed or adopted by the Special Committee or the Board. Neither the base case nor the upside case case assumed any recession at any point during the five-year projection period. Centerview made a presentation concerning a potential transaction with CD&R, including preliminary financial analyses of the Company on a standalone basis and in the context of a transaction. During this meeting, the Special Committee and its advisors discussed and reviewed the Company’s strategic and competitive positioning, management’s preliminary projections of future performance and the assumptions upon which such projections were based, preliminary valuation considerations, potential reactions to a proposal or indication of value from CD&R at various prices and the Company’s strategic alternatives to continuing as a standalone public company or engaging in a transaction with CD&R, including the likelihood or unlikelihood of other parties being willing and able to engage in a stockholder-value-maximizing strategic transaction with the Company, in particular, in light of CD&R’s statement that it was not interested in pursuing any potential alternative transaction that would result in a sale or reduction of its stake in the Company. Although the Special Committee observed a number of reasons to be optimistic about the Company’s future financial performance, the Special Committee noted that neither the Company’s performance nor strategic or financial actions have translated into meaningful share price gains in recent years, and in particular that despite these actions, the Company’s share price has, for more than 10 years (other than for a brief period in 2018 prior to the announcement of the Ply Gem Transaction), been unable to reach or exceed $20.00 per share. The Special Committee further noted that the Company’s share price underperformance appeared to be due, in part, to its limited public float due to CD&R’s approximate 49% ownership and that, in light of CD&R’s indication to date that it does not intend to be a seller of shares of Company common stock, the limited public float is likely to continue to impact the Company’s share price and trading multiple for the foreseeable future. Following discussion, the Special Committee was of the view that a transaction with CD&R could, depending on valuation, be attractive to the Company and its unaffiliated stockholders, and, without committing to any particular course of action, concluded that the Special Committee would be interested in learning more from CD&R in order to determine whether a transaction at an attractive valuation might be possible. The Special Committee authorized Centerview and management to provide CD&R with a financial update and information about management’s operating, financial and strategic plans, including preliminary base case and upside case projections prepared by management, that could have a positive impact on CD&R’s valuation of the Company.

On November 2, 2021, at the request of the Special Committee, members of the Company’s senior management and representatives of Centerview met by teleconference with representatives of CD&R to provide CD&R with a financial update and information about management’s operating, financial and strategic plans, including preliminary base case and upside case projections.

On November 5, 2021, the Special Committee met, together with representatives of Centerview and Wachtell Lipton, to receive an update on the November 2 meeting with CD&R. Following discussion, the Special Committee directed Centerview to communicate to CD&R that the Special Committee would be open to hearing an indication of value from CD&R, should CD&R remain interested, though there could be no assurances that the Special Committee would ultimately determine to recommend that the Company continue discussions or engage in a transaction. Later that day, Centerview made this communication to representatives of CD&R.

On November 12, 2021, Messrs. Sleeper and Zrebiec spoke by telephone with representatives of Centerview to communicate that, if invited by the Special Committee, CD&R would be prepared to consider exploring a potential transaction at an indicative valuation of $22.00 per share of Company common stock. During this conversation, Messrs. Sleeper and Zrebiec reiterated that CD&R was not interested in selling or reducing its investment in the Company. In addition, CD&R requested permission to begin to engage with up to two potential sources of debt financing, noting that such engagement would provide greater certainty as to CD&R’s ability to finance any potential transaction.

On November 15, 2021, the Special Committee met, together with representatives of Centerview and Wachtell Lipton, to discuss the indicative value communicated by CD&R on November 12. Following discussion, the Special Committee determined to continue to engage with CD&R to seek a higher valuation and to permit CD&R to engage with up to two potential sources of debt financing.

 

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On November 16, 2021, representatives of Centerview spoke with Messrs. Sleeper and Zrebiec to communicate that the Special Committee was seeking a higher valuation and to convey that CD&R may engage with up to two potential sources of debt financing.

On November 22, 2021, Messrs. Sleeper and Zrebiec spoke by telephone with representatives of Centerview to communicate that, if invited by the Special Committee, CD&R would be prepared to consider exploring a potential transaction at an indicative valuation of $23.00 per share of Company common stock. Messrs. Sleeper and Zrebiec noted that the increased indicative valuation was informed by discussions between CD&R and two potential sources of debt financing, and that CD&R believed it would have limited room to increase the indicative valuation above $23.00 per share.

On November 23, 2021, the Special Committee met, together with representatives of Centerview and Wachtell Lipton, to discuss the indicative valuation communicated by CD&R on November 22 and to review a preliminary financial analysis from Centerview based on preliminary five-year projections under three scenarios (a base case, an upside case and a downside case) that management had been continuing to prepare in order to assist the Special Committee in its evaluation of a potential transaction. The preliminary projections were substantially similar to the projections presented on October 25, other than adjustments to cash on hand to reflect the anticipated receipt of the proceeds from the settlement of litigation. It was noted that neither the base case nor the upside case assumed any recession at any point during the five-year projection period. Following discussion, including concerning the assumptions underlying each of the cases, the Special Committee determined to instruct management to prepare and present to the Special Committee a single, risk-adjusted case taking into account, among other things, the Company’s recent and current performance and management’s most updated view of the Company’s prospects and the execution and other risks associated with achieving targeted results. The Special Committee requested that management consider the appropriateness of including an assumption regarding the possibility of a recession during the five-year projection period. Following discussion, the Special Committee instructed Centerview to convey to CD&R that the Special Committee believed $23.00 per share to be insufficient, but that the Special Committee would be willing to continue to engage with, and provide information to, CD&R in order to determine whether CD&R might be prepared to increase its indicative valuation.

On December 2, 2021, CD&R sent an email to Centerview to request specific information and meetings with management and business unit leaders to facilitate its due diligence review and valuation efforts.

On December 3, 2021, the Special Committee met, together with members of the Company’s senior management and representatives of Centerview and Wachtell Lipton, to discuss CD&R’s requests and to receive a presentation from the Company’s senior management concerning management’s plans and projections for the Company for the five-year period of fiscal year 2022 through fiscal year 2026. Members of the Company’s senior management presented the five-year projections (the “December 3 Projections”), and explained the assumptions and judgments made in the preparation of the December 3 Projections, including the assumption of a recession affecting both the Company’s residential and commercial businesses during the projections period, which had not been present in prior iterations of base case projections, and other considerations taken into account at the instruction of the Special Committee at the Special Committee’s November 23 meeting. Following discussion, the Special Committee authorized Centerview and the Company’s senior management to facilitate the requested meetings with management and business unit leaders in order to encourage CD&R to increase its indicative valuation.

On December 14, 2021, the Special Committee met, together with representatives of Centerview and Wachtell Lipton, to further discuss the indicative valuation communicated by CD&R on November 22 and to review a preliminary financial analysis from Centerview.

On December 16, 2021, CD&R conducted a financial- and business due diligence conference call with members of the Company’s management and its business unit leaders.

On December 20, 2021, the Special Committee met, together with members of the Company’s senior management and representatives of Centerview and Wachtell Lipton, to receive an update on the December 16, 2021 due diligence conference call, to discuss CD&R’s requests for further information and to engage in further discussion with senior management concerning potential risks to the achievability of the

 

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December 3 Projections, including, within the Company’s windows business unit, the Company’s ability to maintain volume/pricing and achieve operational improvements and, within the Company’s commercial business unit, the Company’s ability to achieve management’s assumed steel price spreads. Following discussion, the Special Committee authorized Centerview and management to provide CD&R with additional diligence information requested by CD&R which was shared later that day.

On December 22, 2021, Messrs. Sleeper and Zrebiec spoke by telephone with representatives of Centerview to communicate that, if invited by the Special Committee, CD&R would be prepared to consider exploring a potential transaction at an indicative valuation of $23.50 per share of Company common stock. During this call, Messrs. Sleeper and Zrebiec indicated that CD&R was having difficulty seeing additional value above $23.50 per share, particularly after accounting for execution risk inherent in the Company’s standalone plans, the risk of economic downturn or recession, and potential volatility in financing markets.

On December 23, 2021, the Special Committee met, together with representatives of Centerview and Wachtell Lipton, to discuss the indicative value communicated by CD&R on December 22.

On January 3, 2022, members of the Company’s senior management notified Mr. Ball and Wachtell Lipton that management had made a revision to management’s forecast for fiscal year 2022 which in turn resulted in a revision to the December 3 Projections. Later on January 3, 2022, the Special Committee met, together with members of the Company’s senior management and representatives of Centerview and Wachtell Lipton, to receive a presentation from management concerning these revisions. Members of senior management explained that they had prepared a revised plan for fiscal year 2022 after considering, in their best judgment, the probable impact of the current market environment on Cornerstone’s business, with particular focus on the ability of Cornerstone to achieve operational improvements in its windows business unit and the likelihood of maintaining favorable steel pricing. In this regard, management noted that third party forecasts for 2022 steel prices had declined significantly relative to third party forecasts made in the Fall of 2021 when the December 3 Projections were being developed. The revised five-year projections based on the revised plan for fiscal year 2022 are referred to as the “January 3 Projections.” Subsequently, Centerview informed the Special Committee that management had conveyed that the revisions made to the fiscal year 2022 plan were in line with historical revisions made to the Company’s annual operating plan on the basis of new information, which were typically made multiple times each year in light of the often-volatile business environment in which the Company operates. Following discussion, the Special Committee requested Centerview to prepare additional financial analyses based on both the December 3 Projections and on the January 3 Projections.

On January 7, 2022, the Special Committee met, together with representatives of Centerview and Wachtell Lipton, to review a preliminary financial analysis from Centerview concerning the indicative $23.50 per share valuation communicated by CD&R. Following discussion, the Special Committee instructed Centerview to convey to CD&R that the Special Committee believed $23.50 per share to be insufficient, but that the Special Committee would be willing to continue to engage with, and provide information to, CD&R in order to determine whether CD&R might be prepared to increase its indicative valuation. The Special Committee authorized Centerview to update CD&R on management’s plan for fiscal year 2022 and, believing that CD&R was unlikely to indicate a value significantly above $24.00 per share absent guidance from the Special Committee, to convey that Centerview believed that the Special Committee would not be willing to recommend a transaction at or below $24.00 per share but that Centerview viewed $25.00 per share as a price that the Special Committee would likely be willing to recommend a transaction.

On January 10, 2022, representatives of Centerview spoke with Messrs. Sleeper and Zrebiec to communicate the Special Committee’s response to CD&R’s most recent indication of value. During these conversations, Centerview communicated its view that the Special Committee would likely be willing to recommend a transaction at $25.00 per share or above and almost certainly would not be willing to recommend a transaction at $24.00 per share or below, and suggested that Centerview’s expectation of a positive response from the Special Committee was significantly higher at values closer to $25.00 per share than to $24.00 per share. During a conversation with representatives of Centerview on January 11, 2022, Messrs. Sleeper and Zrebiec indicated that CD&R could likely get to a value in the middle of the range between $24.00 and $25.00 per share. The Centerview representatives responded that CD&R should put its best foot

 

19

 

forward, and that the Special Committee would carefully evaluate any proposal made by CD&R, though there could be no assurance that the Special Committee would approve of any particular valuation.

On January 12, 2022, a representative of Kirkland & Ellis contacted a representative of Wachtell Lipton to convey that CD&R believed it would likely be able to provide an indication of value that would be acceptable to the Special Committee, but that CD&R required two to three weeks of further due diligence and internal analysis and, potentially, further engagement with potential sources of debt financing before it would be prepared to make a proposal. During this conversation, the Kirkland & Ellis representative reaffirmed that CD&R would not make a proposal unless invited to do so by the Special Committee and then only subject to an appropriate waiver of the standstill provisions of the stockholders agreement that would otherwise prohibit CD&R from making a proposal.

On January 13, 2022, the Special Committee met, together with representatives of Centerview and Wachtell Lipton, to discuss the interactions with CD&R and its representatives that had occurred over the preceding week. Following discussion, the Special Committee determined to grant CD&R’s request for an additional two to three weeks for further due diligence and internal analysis and, should CD&R elect, to permit CD&R to engage with additional sources of debt financing. Representatives of Centerview and Wachtell Lipton subsequently conveyed the Special Committee’s determination to representatives of CD&R and Kirkland & Ellis, respectively.

On January 13, 2022, CD&R provided a proposed diligence work plan and information request list. From January 13, 2022 through February 6, 2022, CD&R continued to engage in due diligence, including, beginning on January 19, 2022, access to a virtual data room containing legal and financial information concerning the Company, as well as holding various diligence calls with management and CD&R and its advisors.

In late January 2022 and early February 2022, management made four adjustments to the January 3 Projections to reflect (1) the additional pro forma contributions to revenue, free cash flow and other financial metrics from Union Corrugated Company Holdings (which we refer to as “UCC”), which had been acquired by the Company at the end of fiscal year 2021, (2) actual rather than estimated balance sheet figures as of December 31, 2021, (3) management’s updated estimate of net working capital over the projection period, and (4) management’s updated estimate of amortization charges over the projection period. These adjustments together resulted in an upward revision to management’s January 3 Projections, which revision we refer to as the “February 3 Projections.” The acquisition of UCC had not been reflected in the January 3 Projections in order to preserve comparability to the December 3 Projections, which were prepared prior to the completion of the acquisition. At the direction of Mr. Ball after consultation with other members of the Special Committee and with Centerview, in order to encourage CD&R to increase its indicative valuation, Centerview provided preliminary versions of the February 3 Projections to CD&R on January 28, 2022 (reflecting only the first two adjustments referred to above, both of which resulted in an increase in unlevered free cash flow ), and on February 3, 2022 (reflecting only the first three adjustments referred to above) relating to UCC and to net working capital and to reflect actual balance sheet figures as of December 31, 2021). The final February 3 Projections reflecting all four adjustments referred to above were provided to CD&R on February 15, 2022.

On January 22, 2022, the parties entered into a customary confidentiality agreement, supplementing existing confidentiality provisions of the Company’s stockholders agreement, to facilitate CD&R’s further due diligence.

On February 7, 2022, Messrs. Sleeper and Zrebiec spoke by telephone with representatives of Centerview to communicate that, if invited by the Special Committee, CD&R would be prepared to consider exploring a potential transaction at an indicative valuation of $24.50 per share. The CD&R representatives described this indication as the highest value CD&R believed it could offer, indicated that CD&R did not see incremental value above $24.50 per share, and indicated that CD&R had considered, but decided against, lowering its indication of value when the Company’s stock price recently had fallen below $15.00 per share.

On February 9, 2022, the Special Committee met, together with representatives of Centerview and Wachtell Lipton, to review the final February 3 Projections and to receive a financial presentation from Centerview concerning the indicative $24.50 per share valuation communicated by CD&R. Following the

 

20

 

financial presentation from Centerview and further discussion, the Special Committee determined to direct Centerview to make another effort to seek a higher valuation indication from CD&R.

On February 10, 2022, following multiple conversations between representatives of CD&R and representatives of Centerview during which Centerview sought to obtain a higher valuation indication from CD&R, Messrs. Sleeper and Zrebiec communicated that, if invited by the Special Committee, CD&R would be prepared to consider exploring a potential transaction at a best and final indicative valuation of $24.65 per share. Messrs. Sleeper and Zrebiec stated that this indication was CD&R’s best and final indication, that CD&R did not see incremental value above $24.65, that CD&R would not seek to transact at a higher valuation and that no further indications would be forthcoming. Messrs. Sleeper and Zrebiec also reconfirmed that CD&R was not willing to sell or reduce its investment in the Company, would not vote to approve any alternative transaction that would result in any such sale or reduction and would not permit a so-called “go-shop” period following the execution of the merger agreement during which the Company would be permitted to affirmatively seek a competing proposal from a third party. The parties discussed that, should the Special Committee invite CD&R to proceed at the indicated value, the Special Committee and Board should grant CD&R a limited waiver from the standstill provisions under the stockholders agreement, following which CD&R would submit a written transaction proposal that CD&R would publicly disclose (as required by law) by filing amendments to its Schedule 13D filings with respect to the Company, and after such filings the parties would plan for two to three weeks for negotiation of transaction documentation and for CD&R to complete its confirmatory due diligence and negotiate financing commitments. It was understood that any transaction would remain subject to further review and final approval or disapproval by the Special Committee, and that neither the Special Committee nor the Company would be committed to engage in any transaction, whether at $24.65 per share or otherwise, unless and until the Special Committee and then the full Board (other than the Recused Directors) made a final determination to approve a transaction and enter into a binding merger agreement.

On February 11, 2022, the Special Committee met, together with representatives of Centerview and Wachtell Lipton, to discuss, and to receive a financial presentation from Centerview concerning the indicative $24.65 per share valuation communicated by CD&R. A representative of Centerview updated the Special Committee on discussions with CD&R, noting that Mr. Sleeper had described the $24.65 indicative value as CD&R’s best and final indication of value. During this meeting, the Committee and its advisors discussed and reviewed the Company’s strategic and competitive positioning, projections of future performance, valuation, potential reactions to a proposal or indication of value from CD&R at various prices and the Company’s strategic alternatives to continuing as a public company or engaging in a transaction with CD&R, including the likelihood or unlikelihood of other parties being willing and able to engage in a stockholder-value-maximizing strategic transaction with the Company. After discussion and deliberation by the Special Committee, including consideration of the financial presentation made by Centerview using, where relevant, the February 3 Projections, as well as consideration of the history of the Company’s efforts to achieve a higher valuation for the Company’s common stock, including the Company’s historic inability to achieve and sustain a stock price of $20.00 per share or greater, the Company’s strategic and financial alternatives, and the Company’s business plans and prospects, and including as to the matters described in the section of this proxy statement entitled “Special Factors — Reasons for the Merger; Recommendation of the Board; Fairness of the Merger,” the Special Committee determined unanimously that it would be in the best interests of the Company and its unaffiliated stockholders to seek to develop and negotiate a transaction on acceptable terms at a price of $24.65 per share, subject to further review and final approval or disapproval by the Special Committee and the Board. The Special Committee determined to invite CD&R to make a written proposal for such a transaction, to recommend that the Board approve a limited waiver of the standstill provisions of the stockholders agreement necessary to permit CD&R to make such a proposal and to publicly disclose such proposal, and to permit CD&R to pursue, develop and, if approved by the Special Committee and the Board, enter into a transaction with the Company.

On February 12, 2022, following the Special Committee meeting, the full Board (other than the Recused Directors) met, together with members of senior management and representatives of Wachtell Lipton. After discussion, acting upon the recommendation of the Special Committee, the Board unanimously granted the required approvals for the limited waiver under the Company’s stockholders agreement.

On February 13, 2022, CD&R submitted to the Special Committee a letter containing its best and final, non-binding proposal to acquire all of the outstanding shares of Company common stock not already owned

 

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by the CD&R Stockholders for cash consideration of $24.65 per share. Among other things, the letter reiterated that any transaction would be required to be approved by a fully empowered Special Committee of non-management directors that are independent of CD&R and its affiliates and subject to a non-waivable condition requiring the approval of the holders of a majority of the shares of Company common stock that are not owned by the CD&R Stockholders or any of their affiliates. In the letter, CD&R confirmed that CD&R was only interested in acquiring all of the shares of Company common stock not already owned by the CD&R Stockholders, and not interested in pursuing any potential alternative transaction, including a transaction that would result in the sale of all or a portion of CD&R’s investment in the Company. In addition, CD&R noted that its proposal assumed that the Company’s indebtedness under its term loan, ABL and senior notes would remain outstanding following the closing of the potential transaction. On February 14, 2022, CD&R publicly disclosed the proposal letter in amendments to its Schedule 13D filings with respect to the Company, and the Company publicly confirmed receipt of the proposal.

On February 15, 2022, at the direction of the Special Committee, Centerview provided the February 3 Projections to CD&R. From February 15 through March 4, 2022, CD&R completed its due diligence review of the Company and arranged financing for the potential transaction, and CD&R and representatives of the Special Committee negotiated structure and non-financial terms of the transaction and negotiated the merger agreement (an initial draft of which was provided by Wachtell Lipton to Kirkland & Ellis on February 17, 2022) and the related legal documentation, including the limited guarantee, equity commitment letter and voting and support agreement. During this period following February 15, with the permission of the Special Committee, CD&R held discussions with one of the Company’s senior executive officer regarding such executive’s post-closing employment with the Company. The discussions were of a general nature, and no specific financial or other terms were discussed. A representative of Wachtell Lipton attended each of these discussions. The discussions occurred because it had been communicated that the executive was considering leaving the Company to pursue a different opportunity, and both the Company and CD&R thought highly of the executive and hoped he could be persuaded to remain.

In conversations between CD&R and its representatives, on the one hand, and representatives of the Special Committee, on the other, CD&R had communicated consistently that because CD&R was not willing to participate in or vote to approve any transaction involving the sale of all or part of CD&R’s interest in the Company, CD&R would not agree to include in the merger agreement a so-called “go-shop” period. Recognizing that the merger agreement would not include a “go-shop”, the Special Committee authorized Centerview to contact several potentially interested third parties prior to entering into a merger agreement with CD&R. During the period from February 15 through March 4, 2022, at the direction of the Special Committee, Centerview contacted seven industry participants identified by Centerview and the Special Committee to be most likely to have the interest and ability to engage in a transaction with the Company, to determine their respective potential interest in exploring an acquisition of the Company. Six of the seven parties declined to engage with Centerview and confirmed that they had no interest. One party expressed some initial interest but declined to follow-up or proceed further despite several outreaches from Centerview, including on March 4, 2022.

On March 5, 2022, the Special Committee met, together with representatives of Centerview and Wachtell Lipton, to discuss and deliberate on the proposed transaction. Although the Special Committee deliberated separately, at the request of the Special Committee, members of the Company’s senior management joined for a portion of the meeting in order to provide information and input to the Special Committee. Mr. Ball and representatives of Centerview and Wachtell Lipton briefed the other members of the Special Committee on the status of negotiations with CD&R. Centerview reviewed the results of the outreach efforts made during the period from February 15 through March 4, 2022 to seven potentially interested third parties, none of whom ultimately indicated any interest in pursuing a transaction with the Company. It was also observed that since the public disclosure on February 14, 2022 of CD&R’s proposal to acquire the shares of the Company that CD&R did not already own at a price of $24.65 per share, neither the Company nor Centerview had received any unsolicited inquiries from any third parties concerning a potential acquisition of all or any portion of the Company. Centerview then reviewed with the Special Committee Centerview’s financial analysis of the merger consideration and rendered to the Special Committee its oral opinion, which was subsequently confirmed by delivery of a written opinion dated March 5, 2022, as of such date, and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the $24.65

 

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in cash per share of Company common stock to be paid to the holders of shares of Company common stock (other than CD&R, its affiliates and other holders of excluded shares) pursuant to the merger agreement was fair, from a financial point of view, to such holders, as more fully described below in the section of this proxy statement entitled “Special Factors — Opinion of Centerview” beginning on page 39 of this proxy statement. A representative of Wachtell Lipton reviewed the directors’ fiduciary duties and presented a detailed summary of the terms of the draft merger agreement and the related legal documentation, as well as of the financing commitments received by CD&R. After discussion and deliberation by the Special Committee, including as to the matters described in the section of this proxy statement entitled “Special Factors — Reasons for the Merger; Recommendation of the Board; Fairness of the Merger,” including that the approval of the Merger Agreement Proposal is conditioned on the affirmative vote of the majority of the outstanding shares and the majority of the unaffiliated shares (as more fully described in the section of this proxy statement entitled “The Special Meeting — Vote Required”), the Special Committee, by unanimous vote of all of its members, resolved to recommend that the Board approve the merger agreement, the merger and the related transactions. After the Special Committee concluded its meeting, the Board (other than the Recused Directors) met telephonically, together with members of the Company’s senior management and representatives of Centerview, Wachtell Lipton and Sullivan & Cromwell LLP (“Sullivan & Cromwell”), the Company’s customary outside corporate and securities counsel. Mr. Ball and a representative of Wachtell Lipton informed the Board of the Special Committee’s unanimous favorable recommendation of the proposed transaction with CD&R and the reasons for the recommendation. The Wachtell Lipton representative provided the Board (other than the Recused Directors) with a detailed summary of the draft merger agreement and related legal documentation, a representative of Sullivan & Cromwell discussed the directors’ fiduciary duties and representatives of Centerview presented the financial terms of the proposed transaction with CD&R, as well as Centerview’s updated financial analyses of the Company on a standalone basis. Thereafter, the Board (other than the Recused Directors), on behalf of the Company and based on the recommendation of the Special Committee, unanimously (1) determined that the terms of the merger agreement, the voting and support agreement, the limited guarantee and the transaction are fair to, and in the best interests of, the Company and its stockholders, including the unaffiliated stockholders, (2) determined that it is advisable and in the best interests of the Company and its unaffiliated stockholders to enter into the merger agreement, the voting and support agreement and the limited guarantee, and (3) resolved to recommend that the stockholders of the Company vote to adopt and approve the merger agreement.

Following conclusion of the meetings of the Special Committee and the Board, the parties finalized the transaction documentation and executed the merger agreement on March 5, 2022, and, on March 7, 2022, issued a press release announcing the merger. On March 7, 2022, CD&R amended its Schedule 13D filings with respect to the Company to disclose CD&R’s entry into the merger agreement with the Company.

Reasons for the Merger; Recommendation of the Board; Fairness of the Merger

The Board (which, for purposes of this section of this proxy statement entitled “Reasons for the Merger; Recommendation of the Board; Fairness of the Merger,” means the Board without the participation of Messrs. Krenicki, O’Brien, Sleeper and Zrebiec (the “Recused Directors”), who recused themselves due to their affiliation with CD&R) formed a Special Committee, consisting of five of the Company’s independent directors who are independent of, and not affiliated with, CD&R and its affiliates (the “Special Committee”), to evaluate and consider any potential or actual proposal from CD&R and any other alternative proposals or other strategic alternatives that may be available to the Company, including the merger.

After careful consideration, with the assistance of independent financial and legal advisors, the Special Committee unanimously determined, and the Board (other than the Recused Directors), acting upon the recommendation of the Special Committee, unanimously determined (1) that the terms of the merger agreement, the voting and support agreement, the limited guarantee and the transactions contemplated thereby (the “transaction”), including the merger, are fair to, and in the best interests of, the Company and its stockholders (including the unaffiliated stockholders) and (2) that it is advisable and in the best interests of the Company and its unaffiliated stockholders to enter into the merger agreement, the voting and support agreement and the limited guarantee. Accordingly, based on its evaluation and having received the recommendation of the Special Committee, the Board, by unanimous vote of the Company’s directors (other than the Recused Directors), recommends that the Company’s stockholders vote “FOR” the adoption

 

23

 

of the Merger Agreement Proposal and “FOR” each of the Adjournment Proposal and the Merger-Related Compensation Proposal. In addition, the Special Committee and the Board believe that the merger is fair to the Company’s “unaffiliated security holders,” as defined under Rule 13e-3 of the Exchange Act.

In evaluating the merger, the Special Committee and the Board consulted with independent legal and financial advisors, as well as the Company’s management team, and considered a number of factors, including the following factors that weighed in favor of the merger:

•

Attractive Value. The merger consideration of $24.65 per share of Company common stock represented a per share premium of approximately (1) 75% above the closing price of the shares of Company common stock as of February 4, 2022, the last trading day prior to speculation in the market regarding a potential transaction, (2) 26% above the 52-week high closing price of the shares of Company common stock as of February 4, 2022, and (3) 7% above the highest closing price of the shares of Company common stock in the 10 years prior to February 4, 2022, which high was achieved in June 2018.

​

•

Receipt of Fairness Opinion from Centerview. The Special Committee considered the oral opinion of Centerview rendered to the Special Committee on March 5, 2022, which was subsequently confirmed by delivery of a written opinion dated such date that, as of such date, and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the $24.65 in cash per share of Company common stock to be paid to the holders (other than CD&R and its affiliates and the other holders of excluded shares) of shares of Company common stock pursuant to the merger agreement was fair, from a financial point of view, to such holders, as more fully described below in the section of this proxy statement entitled “Special Factors — Opinion of Centerview Partners LLC” beginning on page 33 of this proxy statement. In considering Centerview’s opinion, the Special Committee was aware that Centerview’s opinion was based on the totality of factors and analyses considered by Centerview and on Centerview’s judgment and experience, and that the result or implication of any one particular analysis or factor considered by Centerview was not dispositive.

​

•

Best Alternative for Maximizing Stockholder Value. The Special Committee and the Board considered that the merger consideration of $24.65 in cash per share of Company common stock was more favorable to the Company’s stockholders than the potential value that might result from other alternatives reasonably available to the Company, including, but not limited to, the continued operation of the Company on a standalone basis with no change in its relationship with CD&R, in light of a number of factors, including:

​

•

the Special Committee’s and the Board’s respective assessments of the Company’s business, operations, financial condition, earnings and prospects, its strategic and competitive positioning and historical and projected financial performance, its valuation, its long-range plans and the risk in achieving its prospects and plans, as well as industry, economic and market conditions and trends, including the Special Committee’s and the Board’s assessments of the Company’s exposure to the changes in the residential and commercial construction, manufactured housing or remodeling and renovation industries including, among other things, commodity price volatility and/or limited availability of raw materials, the impact on the Company of general, macro-economic risks and other risks and uncertainties discussed in the Company’s public filings with the SEC, and the benefits and risks of the Company’s relationship with CD&R;

​

•

that, although the Special Committee observed a number of reasons to be optimistic about the Company’s future financial performance, the Special Committee noted that neither the Company’s performance nor its strategic or financial actions had translated into meaningful share price gains in recent years and, in particular, that despite these actions, the Company’s share price had, for more than 10 years (other than for a brief period in 2018 prior to the announcement of the Ply Gem transaction), been unable to reach or exceed $20 per share;

​

•

that the Company’s share price underperformance appears to be due, in part, to its limited public float due to CD&R’s ownership of approximately 49% of the issued and outstanding shares of Company common stock and that, in light of CD&R’s indication to date that it does

​

 

24

 

not intend to be a seller of its shares of Company common stock, the limited public float is likely to continue to impact the Company’s share price and trading multiple for the foreseeable future;

•

the strategic and other alternatives reasonably available to the Company, including the alternative of remaining a standalone public company and the likelihood or unlikelihood of other parties being willing and able to engage in a stockholder-value-maximizing strategic transaction with the Company, in light of a number of factors and the risks and uncertainty associated with those alternatives, none of which were deemed likely to result in value to the Company’s stockholders that would exceed, on a present-value basis, the value of the merger consideration;

​

•

that CD&R was the most logical acquiror of the Company and, in light of CD&R’s long-term investment in the Company, deep understanding of the Company’s business and industries and track record of providing the Company with strategic support, that CD&R was the potential transaction partner most likely to offer the highest value to CD&R’s stockholders;

​

•

the fact that, during the period from February 15 through March 4, 2022, at the direction of the Special Committee, Centerview contacted seven industry participants identified by discussed with the Special Committee to be most likely to have the interest and ability, to determine their respective potential interest in exploring an acquisition of the Company. Six of the seven parties declined to engage with Centerview and confirmed that they had no interest. One party expressed some initial interest, but declined to follow-up or proceed further despite several outreaches from Centerview, including as late as March 4, 2022;

​

•

the fact that, following the public disclosure on February 14, 2022 of CD&R’s proposal to acquire the shares of Company common stock that CD&R did not already own at a price of $24.65 per share, neither the Company nor Centerview received any unsolicited inquiries from any third parties concerning a potential acquisition of all or any portion of the Company. The Special Committee and the Board considered that, if any third parties were interested in exploring a transaction with the Company, such potential acquirers would have been motivated to approach the Company during the period following the February 14, 2022 public disclosure of CD&R’s $24.65 per share proposal, and considered, after consultation with Centerview, that no other potential transaction party was likely to be both willing and able to acquire the Company at a valuation of $24.65 per share or greater, including, among other things, because of CD&R’s indication to date that it does not intend to be a seller of its shares of Company common stock, which could deter a third-party acquiror from submitting a proposal for the Company; and

​

•

CD&R’s statement to the Company and the Special Committee that the $24.65 merger consideration was its best and final offer, and that such offer had taken into account, and had been increased because of, the negotiating efforts of the Special Committee and its advisors, and the Special Committee’s belief, after discussion with its advisors and based on the course of negotiations with CD&R and the familiarity with CD&R in light of CD&R’s long history with the Company, that $24.65 per share was at or very close to the maximum price that CD&R would offer.

​

•

Greater Certainty of Value. The Special Committee and the Board considered that the proposed merger consideration is all cash, so that the transaction provides stockholders certainty of value and liquidity for their shares of Company common stock, especially when viewed against the risks and uncertainties inherent in the Company’s business, including the internal and external risks associated with the Company’s long-term plan.

​

•

High Likelihood of Completion. The Special Committee and the Board considered the likelihood of completion of the merger to be high, particularly in light of the terms of the merger agreement and closing conditions, including:

​

•

the absence of a financing condition in the merger agreement (as more fully described under “Special Factors — Financing of the Merger”);

​

•

Parent having obtained committed debt financing from reputable financial institutions and committed equity financing from an affiliated fund of Parent in an aggregate amount sufficient

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25

 

to fund the required amounts (as described in the section of this proxy statement entitled “The Merger Agreement — Representations and Warranties of Parent and Merger Sub”);

•

the obligation of Parent and Merger Sub to, and to cause their affiliates to, use reasonable best efforts to obtain the debt and equity financing, and the limited number and nature of the conditions to the debt and equity financing;

​

•

the Company’s ability, under circumstances specified in the merger agreement, to seek specific performance of Parent’s and Merger Sub’s obligation to cause the merger to occur;

​

•

the commitment of Parent in the merger agreement to use reasonable best efforts to satisfy conditions and complete the merger, and to obtain applicable regulatory approvals, including the obligation to make divestitures of any of the businesses, assets or properties of Parent, the Company or their respective subsidiaries (as more fully described under “The Merger Agreement — Filings; Other Actions; Notification”);

​

•

the commitment of CD&R Fund X, which is the CD&R Entity through which CD&R will be acquiring the remaining shares of the Company that are not owned by the CD&R Stockholders, in the voting and support agreement not to make, or agree to make, any acquisitions that would reasonably be expected to prevent, materially delay or materially impede the obtaining of any antitrust approval or the expiration or termination of any waiting period necessary to consummate the transactions contemplated by the merger agreement, including the merger, or materially increase the risk of any governmental authority prohibiting the consummation of the transactions contemplated by the merger agreement, including the merger; and the commitment of the CD&R Stockholders to certain cooperation and support obligations in connection with obtaining any requisite antitrust approvals (as more fully described under “The Voting and Support Agreement”);

​

•

the requirement that, if the merger agreement is terminated by the Company due to Parent’s and Merger Sub’s failure to consummate the merger or Parent’s or Merger Sub’s breach, in each case, under certain circumstances set forth in the merger agreement, or by Parent due to the failure to close before the outside date while the Company could have terminated for either of the foregoing reasons, Parent will be required to pay the Company a termination fee of $210,000,000 (as more fully described under “The Merger Agreement — Parent Termination Fee”);

​

•

the absence of any conditions to the consummation of the merger that are unlikely to be satisfied (as more fully described under “The Merger Agreement — Conditions to the Merger”); and

​

•

the commitment of the CD&R Stockholders, which collectively own approximately 49% of the issued and outstanding shares of Company common stock, to, among other things, vote or cause to be voted at the special meeting any shares of Company common stock owned by them in favor of the merger, the adoption of the merger agreement and the other actions contemplated by the merger agreement, in each case, on the terms and subject to the conditions set forth in the voting and support agreement, which limits CD&R’s ability to seek to avoid completing the merger should CD&R’s view of the desirability of the transaction change during the pendency of the merger (as more fully described under “Special Factors — CD&R’s Obligation to Vote in Favor of the Merger” and “The Voting and Support Agreement”).

​

•

Opportunity to Receive Unsolicited Acquisition Proposals and to Terminate the CD&R Transaction in Order to Accept a Superior Proposal. The Special Committee and the Board considered the terms of the merger agreement permitting the Company to receive unsolicited acquisition proposals, and the other terms and conditions of the merger agreement, including:

​

•

that until the time the Company’s stockholders approve the Merger Agreement Proposal, subject to certain conditions and requirements set forth in the merger agreement, the Company is permitted to receive, consider and respond to unsolicited acquisition proposals or engage in discussions or negotiations with third parties making such acquisition proposals (as more fully described under “The Merger Agreement — No Solicitation of Acquisition Proposals; Board Recommendation Changes — No Solicitation Exceptions”); and

​

 

26

 

•

the ability of the Special Committee, subject to customary requirements included in the merger agreement, to effect a change of recommendation or of the Company to terminate the merger agreement to enter into a superior proposal, in each case, subject to payment to Parent of a termination fee of $105,000,000, which amount the Special Committee and the Board believed to be reasonable under the circumstances taking into account the range of such termination fees in similar transactions, and the unlikelihood that a fee of such size would be a meaningful deterrent to alternative acquisition proposals (as more fully described under “The Merger Agreement — Termination — Termination Fees”).

​

•

Other Factors. The Special Committee and the Board also considered:

​

•

that the approval of the Merger Agreement Proposal is conditioned on the affirmative vote of the majority of the outstanding shares and the majority of the unaffiliated shares (as more fully described under “The Special Meeting — Vote Required”);

​

•

that the Company’s stockholders who do not vote to approve the merger agreement and who follow certain prescribed procedures are entitled to dissent from the merger and demand payment of the “fair value” of their shares of Company common stock, as and to the extent provided by Delaware law (as more fully described under “Special Factors — Dissenters’ Rights”);

​

•

that the terms of the merger agreement provide the Company sufficient operating flexibility to conduct its business in the ordinary course until the earlier of the consummation of the merger or the termination of the merger agreement (as more fully described under “The Merger Agreement — Conduct of Our Business Pending the Merger”);

​

•

that an affiliate of CD&R has provided a limited guarantee with respect to the payment of the termination fee that may be owed by Parent pursuant to the merger agreement, as well as certain reimbursement obligations that may be owed by Parent pursuant to the merger agreement, in each case, subject to the terms of the merger agreement and the limited guarantee; and

​

•

the Special Committee’s and the Board’s belief that they were fully informed about the extent to which the interests of CD&R and its affiliates in the merger differ from those of the Company’s other stockholders.

​

In the course of their respective deliberations, the Special Committee and the Board also considered a variety of uncertainties, risks and potentially negative factors, including:

•

that, following the completion of the merger, the Company’s stockholders will not participate in potential further growth in the Company’s assets, future earnings growth or future appreciation in value of the shares of Company common stock;

​

•

the risk that the transactions contemplated by the merger agreement, and the financing for the transaction, may not be consummated in a timely manner or at all, and the consequences thereof, including (1) the potential loss of value to the Company’s stockholders, (2) the potential negative impact on the operations and prospects of the Company, including the risk of loss of key personnel, and (3) that the market’s perception of the Company’s prospects could be adversely affected if such transactions were delayed or were not consummated;

​

•

the risk that the equity or debt financing contemplated by the equity and debt commitment letters will not be obtained, resulting in Parent and Merger Sub not having sufficient funds to complete the transaction;

​

•

that Parent and Merger Sub are newly formed entities with essentially no assets and the limited guarantee, provided by CD&R Fund X, guarantees Parent’s and Merger Sub’s obligations under the merger agreement only with respect to payment of the termination fee payable by Parent and certain other obligations;

​

•

the possible effects of the pendency or consummation of the transactions contemplated by the merger agreement, including the potential for suits, actions or proceedings in respect of the merger agreement or the transactions contemplated by the merger agreement, the risk of any loss or change in the relationship of the Company and its subsidiaries with their respective employees, agents,

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27

 

customers and other business relationships, and any possible effect on the Company’s ability to attract and retain key employees, including that employees might choose not to remain employed with the Company prior to the completion of the merger;

•

that CD&R’s and its affiliates’ ownership interest in the Company would likely be taken into account by third parties considering whether to make unsolicited acquisition proposals prior to the receipt of the requisite Company stockholder approvals;

​

•

that, if the merger agreement is terminated in connection with the Company’s entry into a definitive agreement with respect to a superior proposal, CD&R and its affiliates have not agreed to vote their shares of Company common stock in favor of such superior proposal, which may be taken into account by third parties considering whether to make unsolicited acquisition proposals prior to the receipt of the requisite Company stockholder approvals;

​

•

that the Company’s remedies (if any) in the event that the merger agreement is terminated may be limited to the termination fee payable by Parent under certain circumstances and certain associated enforcement costs and reimbursement obligations in connection with the Company’s cooperation with the debt financing, if applicable, which may be inadequate to compensate the Company for any damage caused;

​

•

the possibility that under certain limited circumstances, such as upon the Company’s termination of the merger agreement to enter into an alternative acquisition agreement providing for a superior proposal, the Company may be required to pay Parent a termination fee of $105,000,000 (as more fully described under “The Merger Agreement — Company Termination Fee”);

​

•

the restrictions placed on the conduct of the Company’s business prior to the completion of the merger pursuant to the terms of the merger agreement, which could delay or prevent the Company from undertaking business opportunities that may arise or any other action it would otherwise take with respect to the operations of the Company absent the pending completion of the merger; and

​

•

that the Company’s directors, officers and employees have expended and will expend extensive efforts attempting to complete the transactions contemplated by the merger agreement and such persons have experienced and will experience significant distractions from their work during the pendency of such transactions, that the Company could experience talent loss as a result of the announcement or pendency of the merger, and that the Company has incurred and will incur substantial costs in connection with such transactions, even if such transactions are not consummated.

​

The Special Committee and the Board concluded that the uncertainties, risks and potentially negative factors relevant to the Merger were outweighed by the potential benefits of the Merger.

In the course of reaching its decision to approve and declare advisable the merger agreement and the transactions contemplated thereby, including the merger, the Special Committee and the Board did not consider the liquidation value of the Company, and did not believe it to be a relevant methodology, because (1) they considered the Company to be a viable, going concern, (2) they considered determining a liquidation value to be impracticable given the significant execution risk involved in any breakup of the Company and (3) the Company will continue to operate its business following the merger. Further, the Special Committee and the Board did not consider net book value, an accounting concept, of the Company as a factor because they believe that net book value is not a material indicator of the value of the Company as a going concern but rather is indicative of historical costs and because net book value does not take into account the prospects of the Company, market conditions, trends in the industries in which the Company operates or the business risks inherent in those industries. The Special Committee and the Board were not aware of any firm offer for a merger, sale of all or a substantial part of the Company’s assets, or a purchase of a controlling amount of the Company securities having been received by the Company from anyone other than CD&R with respect to the current transaction in the two years preceding the signing of the merger agreement.

The Special Committee and the Board did not seek to establish a pre-merger going concern value for the Company, and therefore no such value was considered by the Board in making its fairness determination on behalf of the Company. Rather, the Special Committee believed that the financial analyses presented by Centerview, as more fully summarized in the section of this proxy statement entitled “Special

 

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Factors — Opinion of Centerview Partners LLC,” on which the Special Committee relied in making its recommendation to the Board, were indicative of going concern values for the Company as it continues to operate its business.

In addition, the Special Committee and the Board were aware of and considered the interests that the Company’s directors (including the Recused Directors) and executive officers may have with respect to the transaction that may differ from, or are in addition to, their interests as stockholders of the Company generally, as described in the section of this proxy statement entitled “Special Factors — Interests of Executive Officers and Directors of the Company in the Merger.”

This discussion of the information and factors considered by the Special Committee and the Board includes the material positive and negative factors considered by the Special Committee and the Board, but it is not intended to be exhaustive and may not include all the factors considered by the Special Committee or the Board. Neither the Special Committee nor the Board quantified or assigned any relative or specific weights to the various factors that it considered in reaching its determination to approve the merger agreement and the transactions contemplated thereby. Rather, the Special Committee and the Board each viewed its position and recommendation as being based on the totality of the information presented to and factors considered by it. In addition, individual members of the Special Committee and the Board may have given differing weights to different factors. This explanation of the reasoning of the Special Committee and the Board and certain information presented in this section is forward-looking in nature and should be read in light of the factors set forth in the section of this proxy statement entitled “Cautionary Statement Concerning Forward-Looking Information.”

The Special Committee and the Board believe that sufficient procedural safeguards were and are present to ensure the fairness of the merger and to permit the Special Committee and the Board to represent effectively the interests of the unaffiliated stockholders. These procedural safeguards include the following:

•

the Board formed the Special Committee, consisting of five of the Company’s independent directors who are independent of, and not affiliated with, CD&R and its affiliates, to evaluate and consider any potential or actual proposal from CD&R and any other alternative proposals or other strategic alternatives that may be available to the Company, including the merger.

​

•

the Special Committee had the power to reject any transaction proposal regardless of the wishes or the vote or objection of the four CD&R-affiliated directors, or any other directors;

​

•

that the members of the Special Committee are not officers or employees of the Company and the members of the Special Committee are not representatives of CD&R, and are not expected to have an economic interest in the Company following the completion of the merger;

​

•

that members of the Special Committee will not personally benefit from the consummation of the transactions contemplated by the merger agreement in a manner different from the Company’s stockholders (other than CD&R and its affiliates and the other holders of excluded shares), except for indemnification and continuing directors and officers liability insurance coverage, the vesting of certain Company equity awards upon the closing and the receipt of customary fees for service on the Special Committee as described in the section of this proxy statement entitled “Special Factors — Interests of Executive Officers and Directors of the Company in the Merger”;

​

•

that the Special Committee retained independent financial and legal advisors to evaluate the merger, and was empowered to review, identify and negotiate the merger agreement and the transactions contemplated thereby, including the merger, and any alternatives thereto, and to make a recommendation to the Board as to what actions, if any, should be taken by the Company with respect thereto, and that the Special Committee had the full authority to determine at any point that the Company should not engage in a potential transaction with CD&R;

​

•

at the direction of the Special Committee, the terms of the merger agreement and the transactions contemplated thereby, including the merger, were extensively negotiated by the Special Committee and its independent financial and legal advisors, and were closely reviewed and scrutinized by the Special Committee, and extensive negotiations occurred with CD&R regarding the merger consideration that resulted in an increase in the merger consideration from $22.00 per share to $24.65 per share;

​

 

29

 

•

that, at the outset of negotiations, CD&R conditioned its entry into the transaction on (1) the approval of the merger agreement and the transactions contemplated thereby, including the merger, by a fully empowered Special Committee of non-management directors who are independent of the Company and of CD&R and its affiliates and (2) there being a non-waivable condition requiring the approval of the merger agreement and the transactions contemplated thereby, including the merger, by the holders of a majority of the outstanding Company common stock entitled to vote at the special meeting that is not owned by the CD&R Stockholders or any of their affiliates;

​

•

that the approval of the Merger Agreement Proposal is conditioned on the affirmative vote of the majority of the outstanding shares and the majority of the unaffiliated shares (as more fully described under “The Special Meeting — Vote Required”);

​

•

the various terms of the merger agreement, including the ability of the Company to receive, negotiate and, under specified circumstances, to terminate the merger agreement to accept a “superior proposal” ​(as more fully described under “The Merger Agreement”);

​

•

that the Special Committee and the Board made their evaluations of the merger agreement and the merger based upon the factors discussed in this proxy statement and with the full knowledge of the interests of CD&R and their affiliates in the merger;

​

•

that the members of the Special Committee met frequently during the period from September 21, 2021 through the execution of the merger agreement, to receive updates; to review, among other things, the Company’s business, operations, financial condition, earnings and prospects, its strategic and competitive positioning and historical and projected financial performance, its valuation, its long-range plans and the risk in achieving those prospects and plans, as well as industry, economic and market conditions and trends; to review the Company’s strategic and commercial alternatives and options, including potential reactions to a proposal or indication of value from CD&R at various prices and the likelihood or unlikelihood of other parties being willing and able to engage in a stockholder-value-maximizing strategic transaction with the Company; and to consider and evaluate discussions with CD&R and, ultimately, the proposal from CD&R; and

​

•

the members of the Board who are affiliated with CD&R have recused themselves and were excluded from all deliberations with respect to the limited waiver of the standstill provisions of the stockholders agreement to allow CD&R to submit a proposal, the subsequent negotiation, evaluation and approval of the merger agreement and the merger and the consideration of other strategic alternatives, deferring all decisions relating to the merger and the Company’s potential strategic alternatives to the Special Committee.

​

Position of the CD&R Entities as to the Fairness of the Merger

Under the SEC rules governing “going-private” transactions, each of the CD&R Entities is an affiliate of the Company and, therefore, required to express their beliefs as to the fairness of the merger to the unaffiliated stockholders. Parent and Merger Sub are making the statements included in this section solely for purposes of complying with the requirements of Rule 13e-3 and related rules and regulations under the Exchange Act. However, the view of Parent and Merger Sub as to the fairness of the merger should not be construed as a recommendation to any Company stockholder as to how that stockholder should vote on the Merger Agreement Proposal. The CD&R Entities have interests in the merger that are different from, and in addition to, the unaffiliated stockholders of the Company.

The CD&R Entities did not participate in the deliberation of the Special Committee or the Board regarding, nor receive advice from the respective legal or other advisors of the Special Committee or the Board as to, the fairness of the merger. While four directors affiliated with the CD&R Entities the Board, as discussed in the section of this proxy statement entitled “Special Factors — Background of the Merger,” such Recused Directors were excluded from all Board deliberations relating to the approval of the merger agreement. The CD&R Entities have not performed, or engaged a financial advisor to perform, any valuation or other analysis for the purposes of assessing the fairness of the merger to the unaffiliated stockholders. Based on, among other things, the factors considered by, and the analysis and resulting conclusions of, the Board and the Special Committee discussed in the section of this proxy statement entitled “Special Factors — Reasons for the Merger; Recommendation of the Board; Fairness of the Merger” ​(which analysis

 

30

 

and resulting conclusions Parent and Merger Sub adopt), Parent and Merger Sub believe that the merger is substantively fair to the unaffiliated stockholders. In particular, the CD&R Entities considered the following:

•

the current and historical market prices of the shares of Company common stock, including the market performance of the shares of Company common stock relative to those of other participants in the Company’s industry and general market indices, and the fact that the merger consideration of $24.65 per share represented a premium of approximately (1) 75% above the closing price of the shares of Company common stock as of February 4, 2022, the last trading day prior to speculation in the market regarding a potential transaction, (2) 34% above the closing price of the shares of Company common stock on February 11, 2022, the last trading day before the filing of the Schedules 13D/A by the CD&R Stockholders, (3) 26% above the 52-week high closing price of the shares of Company common stock as of February 4, 2022, and (4) 7% above the highest closing price of the shares of Company common stock in the 10 years prior to February 4, 2022, which high was achieved in June 2018;

​

•

the fact that the Special Committee and the Board (other than the Recused Directors) unanimously determined that the merger agreement and the transactions contemplated thereby, including the merger, are advisable, fair to, and in the best interests of, the Company and the Company’s stockholders (including the unaffiliated stockholders);

​

•

the fact that the merger consideration is all cash, thus allowing the unaffiliated stockholders to immediately realize a certain and fair value for their shares, which value represents a significant premium over the closing price of the shares of Company common stock on the last trading day before the first public reports of a potential transaction between the Company and the CD&R Entities;

​

•

the fact that the merger will provide liquidity for the unaffiliated stockholders without the delays that would otherwise be necessary in order to liquidate the positions of larger holders, and without incurring brokerage and other costs typically associated with market sales;

​

•

the fact that there are no conditions to the merger that are unlikely to be satisfied and that the merger is not conditioned on any financing being obtained by Parent, increasing the likelihood that the merger will be consummated and that the consideration to be paid to the unaffiliated stockholders in the merger will be received; and

​

•

the potential risks to the Company of continuing to have publicly traded common stock, including the risks of market volatility and global economic uncertainty.

​

The CD&R Entities further believe that the merger is procedurally fair to the unaffiliated stockholders based upon, among other things, the following factors:

•

the Board was fully informed about the extent to which the interests of the CD&R Entities in the merger differed from those of the unaffiliated stockholders;

​

•

the fact that the Recused Directors were excluded from certain Board discussions;

​

•

the fact that the Board formed a special committee consisting solely of non-management independent members of the Board not affiliated with CD&R at the outset of discussions of a potential transaction between the Company and CD&R;

​

•

the fact that since the outset of discussion of a potential transaction with the Company, CD&R has conditioned the approval of any such transaction on both approval by the Special Committee and a majority of the unaffiliated stockholders;

​

•

the fact that the Special Committee retained, and had the benefit of advice from, nationally recognized legal and financial advisors;

​

•

the fact that the merger consideration was the result of the Special Committee’s extensive arm’s-length negotiations with Parent;

​

•

notwithstanding the fact that the Centerview opinion was not delivered to the CD&R Entities and the CD&R Entities are not entitled to rely on such opinion, the fact that the Board received an oral opinion from Centerview on March 5, 2022, which oral opinion was subsequently confirmed by delivery of a written opinion, that, as of such date and based upon and subject to the assumptions

​

 

31

 

made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the merger consideration was fair, from a financial point of view, to the holders of shares of Company common stock;

•

the fact that the closing of the merger is conditioned on the Company’s receipt of the requisite Company stockholder approvals, including the adoption of the merger agreement by the affirmative vote of the majority of the unaffiliated shares;

​

•

the Company’s ability, under certain circumstances as set out in the merger agreement, to provide information to, or participate in discussions or negotiations with, third parties regarding acquisition proposals that constitute, or are reasonably likely to lead to, superior proposals;

​

•

the Company’s ability, under certain circumstances as set out in the merger agreement, to terminate the merger agreement to enter into a definitive agreement related to a superior proposal, subject to paying Parent a termination fee of $105,000,000 in cash, subject to and in accordance with the terms and conditions of the merger agreement; and

​

•

the availability of appraisal rights to the Company’s stockholders who comply with all of the required procedures under Delaware law for exercising appraisal rights, which allow such holders to seek appraisal of the fair value of their shares.

​

The CD&R Entities also considered a variety of risks and other countervailing factors related to the substantive and procedural fairness of the proposed Merger, including:

•

the unaffiliated stockholders will not participate in any future earnings, appreciation in value or growth of the Company’s business and will not benefit from any potential sale of the Company or its assets to a third party in the future;

​

•

the risk that the merger might not be completed in a timely manner or at all;

​

•

that Parent and Merger Sub are newly formed corporations with essentially no assets other than the funding commitments of CD&R Fund X and the Debt Commitment Parties;

​

•

the restrictions on the conduct of the Company’s business prior to the completion of the merger set forth in the merger agreement, which may delay or prevent the Company from undertaking business opportunities that may arise and certain other actions it might otherwise take with respect to the operations of the Company pending completion of the merger;

​

•

the negative effect that the pendency of the merger, or a failure to complete the merger, could potentially have on the Company’s business and relationships with its employees, vendors and customers;

​

•

subject to the terms and conditions of the merger agreement, the Company and its subsidiaries are restricted from soliciting, proposing, initiating or knowingly encouraging the submission of acquisition proposals from third parties or the making of any inquiry, proposal or offer that would reasonably be expected to lead to an acquisition proposal;

​

•

the possibility that the amounts that may be payable by the Company upon the termination of the merger agreement, including payment to Parent of a termination fee of $105,00,000 in cash, and the processes required to terminate the merger agreement, including the opportunity for Parent to make revisions to its merger proposal, could discourage other potential acquirors from making a competing bid to acquire the Company; and

​

•

the fact that an all cash transaction would be taxable to the Company’s stockholders that are U.S. holders for U.S. federal income tax purposes.

​

The foregoing discussion of the information and factors considered and given weight by the CD&R Entities in connection with the fairness of the merger is not intended to be exhaustive but is believed to include all material factors considered by them. The CD&R Entities did not find it practicable to, and did not, quantify or otherwise attach relative weights to the foregoing factors in reaching their conclusion as to the fairness of the merger. Rather, the CD&R Entities reached their position as to the fairness of the merger after considering all of the foregoing as a whole. The CD&R Entities believe these factors provide a reasonable basis upon which to form their position regarding the fairness of the merger to the unaffiliated

 

32

 

stockholders. This position should not, however, be construed as a recommendation to any Company stockholder to approve the merger agreement. The CD&R Entities make no recommendation as to how stockholders of the Company should vote their shares relating to the merger. The CD&R Entities attempted to negotiate the terms of a transaction that would be most favorable to them, and not to the unaffiliated stockholders of the Company, and, accordingly, did not negotiate the merger agreement with a goal of obtaining terms that were fair to such stockholders.

Based on the CD&R Entities’ knowledge and analysis of available information regarding the Company, the Special Committee and the Board, as well as discussions with members of the Company’s senior management regarding the Company and its business and the factors considered by, and findings of, the Special Committee and the Board and discussed in the section of this proxy statement entitled “Special Factors — Reasons for the Merger; Recommendation of the Board; Fairness of the Merger,” the CD&R Entities believe that the merger is fair to the unaffiliated stockholders.

Opinion of Centerview Partners LLC

On March 5, 2022, Centerview rendered to the Special Committee its oral opinion, subsequently confirmed in a written opinion dated such date, that, as of such date and based upon and subject to various assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the merger consideration to be paid to the holders of shares of Company common stock (other than excluded shares) pursuant to the merger agreement was fair, from a financial point of view, to such holders.

The full text of Centerview’s written opinion, dated March 5, 2022, which describes the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, is attached as Annex B and is incorporated herein by reference. The summary of the written opinion of Centerview set forth below is qualified in its entirety to the full text of Centerview’s written opinion attached as Annex B. Centerview’s financial advisory services and opinion were provided for the information and assistance of the Special Committee (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the merger and the other transactions contemplated by the merger agreement and Centerview’s opinion only addressed the fairness, from a financial point of view, as of the date thereof, to the holders of shares of Company common stock (other than excluded shares) of the merger consideration to be paid to such holders pursuant to the merger agreement. Centerview’s opinion did not address any other term or aspect of the merger agreement and the transactions contemplated by it and does not constitute a recommendation to any stockholder of the Company or any other person as to how such stockholder or other person should vote with respect to the merger agreement or otherwise act with respect to the transactions contemplated by it or any other matter.

The full text of Centerview’s written opinion should be read carefully in its entirety for a description of the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion.

In connection with rendering the opinion described above and performing its related financial analyses, Centerview reviewed, among other things:

•

a draft of the merger agreement dated March 5, 2022, referred to as the “draft merger agreement”;

​

•

annual reports on Form 10-K of the Company for the years ended December 31, 2021, December 31, 2020 and December 31, 2019;

​

•

certain interim reports to stockholders and quarterly reports on Form 10-Q of the Company;

​

•

certain publicly available research analyst reports for the Company;

​

•

certain other communications from the Company to its stockholders; and

​

•

certain internal information relating to the business, operations, earnings, cash flow, assets, liabilities and prospects of the Company, including certain financial forecasts, analyses and projections relating to the Company prepared by management of the Company and furnished to Centerview by the Company for purposes of Centerview’s analysis, which we refer to as the “forecasts,” and which are

​

 

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collectively referred to as the “internal data.” See the section of this proxy statement entitled “Special Factors — Unaudited Prospective Financial Information of the Company.”

Centerview also participated in discussions with members of the senior management and representatives of the Company regarding their assessment of the internal data. In addition, Centerview reviewed publicly available financial and stock market data, including valuation multiples, for the Company and compared that data with similar data for certain other companies, the securities of which are publicly traded, in lines of business that Centerview deemed relevant. Centerview also compared certain of the proposed financial terms of the merger agreement and the transactions contemplated by it with the financial terms, to the extent publicly available, of certain other transactions that Centerview deemed relevant, and conducted such other financial studies and analyses and took into account such other information as Centerview deemed appropriate.

Centerview assumed, without independent verification or any responsibility therefor, the accuracy and completeness of the financial, legal, regulatory, tax, accounting and other information supplied to, discussed with, or reviewed by Centerview for purposes of its opinion and, with the Special Committee’s consent, Centerview relied upon such information as being complete and accurate. In that regard, Centerview assumed, at the Special Committee’s direction, that the internal data (including, without limitation, the forecasts) were reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of the Company as to the matters covered thereby and Centerview relied, at the Special Committee’s direction, on the internal data for purposes of Centerview’s analysis and opinion. Centerview expressed no view or opinion as to the internal data or the assumptions on which it was based. In addition, at the Special Committee’s direction, Centerview did not make any independent evaluation or appraisal of any of the assets or liabilities (contingent, derivative, off-balance-sheet or otherwise) of the Company, nor was Centerview furnished with any such evaluation or appraisal, and was not asked to conduct, and did not conduct, a physical inspection of the properties or assets of the Company. Centerview assumed, at the Special Committee’s direction, that the final executed merger agreement would not differ in any respect material to Centerview’s analysis or opinion from the draft merger agreement reviewed by Centerview. Centerview also assumed, at the Special Committee’s direction, that the merger and other transactions contemplated by the merger agreement will be consummated on the terms set forth in the merger agreement and in accordance with all applicable laws and other relevant documents or requirements, without delay or the waiver, modification or amendment of any term, condition or agreement, the effect of which would be material to Centerview’s analysis or Centerview’s opinion and that, in the course of obtaining the necessary governmental, regulatory and other approvals, consents, releases and waivers for the merger and other transactions contemplated by the merger agreement, no delay, limitation, restriction, condition or other change will be imposed, the effect of which would be material to Centerview’s analysis or Centerview’s opinion. Centerview did not evaluate and did not express any opinion as to the solvency or fair value of the Company, or the ability of the Company to pay its obligations when they come due, or as to the impact of the merger and other transactions contemplated by the merger agreement on such matters, under any state, federal or other laws relating to bankruptcy, insolvency or similar matters. Centerview is not a legal, regulatory, tax or accounting advisor, and Centerview expressed no opinion as to any legal, regulatory, tax or accounting matters.

Centerview’s opinion expressed no view as to, and did not address, the Company’s underlying business decision to proceed with or effect the merger and other transactions contemplated by the merger agreement, or the relative merits of the merger and other transactions contemplated by the merger agreement as compared to any alternative business strategies or transactions that might be available to the Company or in which the Company might engage. Centerview’s opinion was limited to and addressed only the fairness, from a financial point of view, as of the date of Centerview’s written opinion, to the holders of the shares of Company common stock (other than excluded shares) of the merger consideration to be paid to such holders pursuant to the merger agreement. For purposes of its opinion, Centerview was not asked to, and Centerview did not, express any view on, and its opinion did not address, any other term or aspect of the merger agreement or the transactions contemplated by it, including, without limitation, the structure or form of the merger and other transactions contemplated by the merger agreement, or any other agreements or arrangements contemplated by the merger agreement or entered into in connection with or otherwise contemplated by the merger and other transactions contemplated by the merger agreement, including, without limitation, the fairness of the merger and other transactions contemplated by the merger agreement

 

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or any other term or aspect of the merger and other transactions contemplated by the merger agreement to, or any consideration to be received in connection therewith by, or the impact of the merger and other transactions contemplated by the merger agreement on, the holders of any other class of securities, creditors or other constituencies of the Company or any other party. In addition, Centerview expressed no view or opinion as to the fairness (financial or otherwise) of the amount, nature or any other aspect of any compensation to be paid or payable to any of the officers, directors or employees of the Company or any party, or class of such persons in connection with the merger and other transactions contemplated by the merger agreement, whether relative to the merger consideration to be paid to the holders of the shares of Company common stock (other than excluded shares) pursuant to the merger agreement or otherwise. Centerview’s opinion was necessarily based on financial, economic, monetary, currency, market and other conditions and circumstances as in effect on, and the information made available to Centerview as of, the date of Centerview’s written opinion, and Centerview does not have any obligation or responsibility to update, revise or reaffirm its opinion based on circumstances, developments or events occurring after the date of Centerview’s written opinion. Centerview’s opinion does not constitute a recommendation to any stockholder of the Company or any other person as to how such stockholder or other person should vote with respect to the merger or otherwise act with respect to the transactions contemplated by the merger agreement or any other matter. Centerview’s financial advisory services and its written opinion were provided for the information and assistance of the Special Committee (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the merger and other transactions contemplated by the merger agreement. The issuance of Centerview’s opinion was approved by the Centerview Partners LLC Fairness Opinion Committee.

Summary of Centerview Financial Analysis

The following is a summary of the material financial analyses prepared and reviewed with the Special Committee in connection with Centerview’s opinion, dated March 5, 2022. The summary set forth below does not purport to be a complete description of the financial analyses performed or factors considered by, and underlying the opinion of, Centerview, nor does the order of the financial analyses described represent the relative importance or weight given to those financial analyses by Centerview. Centerview may have deemed various assumptions more or less probable than other assumptions, so the reference ranges resulting from any particular portion of the analyses summarized below should not be taken to be Centerview’s view of the actual value of the Company. Some of the summaries of the financial analyses set forth below include information presented in tabular format. In order to fully understand the financial analyses, the tables must be read together with the text of each summary, as the tables alone do not constitute a complete description of the financial analyses performed by Centerview. Considering the data in the tables below without considering all financial analyses or factors or the full narrative description of such analyses or factors, including the methodologies and assumptions underlying such analyses or factors, could create a misleading or incomplete view of the processes underlying Centerview’s financial analyses and its opinion. In performing its analyses, Centerview made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of the Company or any other parties to the merger and other transactions contemplated by the merger agreement. None of the Company, Parent, Merger Sub or Centerview or any other person assumes responsibility if future results are materially different from those discussed. Any estimates contained in these analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than as set forth below. In addition, analyses relating to the value of the Company do not purport to be appraisals or reflect the prices at which the Company may actually be sold. Accordingly, the assumptions and estimates used in, and the results derived from, the financial analyses are inherently subject to substantial uncertainty. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before March 4, 2022 (the last trading day prior to the public announcement of the merger) and is not necessarily indicative of current market conditions.

Selected Public Company Analysis

Centerview reviewed certain financial information of the Company and compared it to corresponding financial information of certain publicly traded building products companies that Centerview deemed comparable, based on its experience and professional judgment, to the Company (the “selected companies”). Although none of the selected companies is directly comparable to the Company, the selected companies

 

35

 

listed below were chosen by Centerview, among other reasons, because they are companies with certain operational, business and/or financial characteristics that, for purposes of Centerview’s analysis, may be considered similar to those of the Company. However, because none of the selected companies is exactly the same as the Company, Centerview believed that it was inappropriate to, and therefore did not, rely solely on the quantitative results of the selected public company analysis. Accordingly, Centerview also made qualitative judgments, based on its experience and professional judgment, concerning differences between the business, financial and operational characteristics of the Company and the selected companies that could affect the public trading values of each in order to provide a context in which to consider the results of the quantitative analysis.

Using publicly available information obtained from SEC filings and other data sources as of March 4, 2022, Centerview calculated for each selected company, the Company’s implied enterprise value (calculated as the equity value (determined using the treasury stock method and taking into account outstanding in-the-money options, warrants, restricted stock units and other dilutive equity instruments) plus the book value of debt and certain liabilities less cash and cash equivalents, in each case calculated consistently with the determinations made in arriving at the Company’s implied enterprise value for purposes of Centerview’s analyses to the extent comparable information was publicly available) (“EV”), as a multiple of Wall Street research analyst consensus estimated earnings before interest expense, income taxes, depreciation and amortization, stock-based compensation expense, non-recurring items and certain pension expenses (in each case calculated consistently with the determinations made in arriving at the Company’s EBITDA used for purposes of Centerview’s analyses to the extent comparable information was publicly available) (which we refer to in this summary of Centerview’s opinion as “EBITDA”) for fiscal year 2022 (which we refer to in this summary of Centerview’s opinion as “2022E”).

The selected companies and the results of this analysis are summarized as follows:

Based on the foregoing analysis and other considerations that Centerview deemed relevant in its professional judgment and experience, Centerview selected a range of multiples of EV to 2022E EBITDA of 5.5x to 7.0x. In selecting this range of multiples, Centerview made qualitative judgments based on its experience and professional judgment concerning differences between the business, financial and operating characteristics and prospects of the Company and the selected companies that could affect their public trading values in order to provide a context in which to consider the results of the quantitative analysis.

Centerview applied the range of multiples of EV to 2022E EBITDA to the Company’s 2022E EBITDA of $750 million derived from the internal data, to derive a range of implied enterprise values for the Company. Centerview subtracted from each of these ranges the face value of the Company’s net debt as of December 31, 2021 as set forth in the internal data to derive a range of implied equity values for the Company. Centerview then divided these implied equity values by the number of fully-diluted outstanding shares as of February 22, 2022 as set forth in the internal data to derive a range of implied values per share of approximately $10.75 to $19.25, rounded to the nearest $0.25. Centerview compared this range to the consideration of $24.65 per share to be paid to the holders of shares of Company common stock (other than excluded shares) pursuant to the merger agreement.

Selected Precedent Transactions Analysis

Centerview reviewed and analyzed certain information relating to selected transactions involving building products companies that Centerview, based on its experience and professional judgment, deemed

 

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relevant to consider in relation to the Company and the merger and other transactions contemplated by the merger agreement. These transactions were selected, among other reasons, because their participants, size or other factors, for purposes of Centerview’s analysis, may be considered similar to the merger and other transactions contemplated by the merger agreement. In addition, these transactions were selected from acquisitions of U.S. building products companies over the last five years with a deal size greater than $1.0 billion.

No company or transaction used in this analysis is identical or directly comparable to the Company or the merger and other transactions contemplated by the merger agreement. The reasons for and the circumstances surrounding each of the selected transactions analyzed were diverse and there are inherent differences in the business, operations, financial conditions and prospects of the Company and the companies included in the selected transactions analysis. Accordingly, Centerview believed that it was inappropriate to, and therefore did not, rely solely on the quantitative results of the selected transactions analysis. This analysis involves complex considerations and qualitative judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading, acquisition or other values of the selected target companies and the Company.

Financial data for the precedent transactions was based on publicly available information at the time of the announcement of the relevant transactions that Centerview obtained from public filings and other data sources. Using publicly available information, Centerview calculated, for each selected transaction set forth below the EV implied for the applicable target company based on the consideration payable in the applicable selected transaction as a multiple of the target company’s EBITDA for the latest 12-month period (“LTM”) at the time of the transaction announcement. The selected transactions considered in this analysis are summarized as follows:

*

Reflects actual 2018 EBITDA.

​

**

Reflects estimated 2018 EBITDA.

​

Based on its analysis and other considerations that Centerview deemed relevant in its professional judgment and experience, Centerview selected a range of multiples of EV to LTM EBITDA of 8.5x to 11.0x derived from the target companies in the selected precedent transactions. In selecting this range of multiples, Centerview made qualitative judgments based on its experience and professional judgment concerning differences between the business, financial and operating characteristics and prospects of the Company and the target companies included in the selected transactions and other factors that could affect the public trading, acquisition or other values of such companies or the Company in order to provide a context in which to consider the results of the quantitative analysis. Centerview applied this range to the Company’s LTM EBITDA of $721 million for the period ended December 31, 2021 based on the internal data, to calculate an illustrative range of implied enterprise values for the Company. Centerview subtracted from each of these ranges the face value of the Company’s net debt as of December 31, 2021 as set forth in the internal data to derive a range of implied equity values for the Company. Centerview then divided these implied equity values by the number of fully-diluted outstanding shares as of February 22, 2022 as set forth in the internal

 

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data to derive an implied per share equity value range for the shares of approximately $25.75 to $39.00, rounded to the nearest $0.25. Centerview compared such range to the consideration of $24.65 per share to be paid to the holders of shares of Company common stock (other than excluded shares) pursuant to the merger agreement. Although the bottom of the foregoing range is greater than the $24.65 per share to be paid to the holders of shares of Company common stock (other than excluded shares) pursuant to the merger agreement, the Selected Precedent Transaction Analysis was only one of the factors Centerview considered in determining the fairness, from a financial point of view, of the merger consideration to the holders of Company common stock (other than excluded shares) and, accordingly, based on the totality of the factors and analyses considered, Centerview concluded that the merger consideration was fair, from a financial point of view, to the holders of Company common stock (other than excluded shares).

Discounted Cash Flow Analysis

Centerview performed a discounted cash flow analysis of the Company based on the forecasts. A discounted cash flow analysis is a traditional valuation methodology used to derive a valuation of an asset by calculating the “present value” of estimated future cash flows of the asset. ”Present value” refers to the current value of future cash flows or amounts and is obtained by discounting those future cash flows or amounts by a discount rate that takes into account macroeconomic assumptions and estimates of risk, the opportunity cost of capital, expected returns and other appropriate factors.

In performing this analysis, Centerview calculated a range of implied per share equity values for the Company by discounting to present value as of December 31, 2021 (using discount rates ranging from 10.0% to 12.5%, reflecting Centerview’s analysis of the Company’s weighted average cost of capital and utilizing Centerview’s professional judgment and experience) and the mid-year convention: (1) the forecasted fully taxed unlevered free cash flows of the Company based on the forecasts over the period beginning January 1, 2022 and ending on December 31, 2026 (see the section of this proxy statement entitled “— Unaudited Prospective Financial Information of the Company”) and (2) a range of implied terminal values of the Company at the end of the forecast period shown in the forecasts, estimated by Centerview applying perpetuity growth rates to the Company’s unlevered free cash flows for the terminal year ranging from 1.75% to 2.5%. As inputs to the weighted average cost of capital, Centerview took into account, among other things, risk-free rate, equity risk premium, market size premium, the betas and capitalization of the selected companies, pre-tax cost of debt and post-tax cost of debt. The range of perpetuity growth rates was estimated by Centerview utilizing its professional judgment and experience, taking into account market expectations regarding long-term real growth of gross domestic product and inflation as well as the Company’s long-term expected growth based on the internal data. Based on its analysis, Centerview calculated a range of implied enterprise values of the Company. Centerview subtracted from this range the face value of the Company’s net debt as of December 31, 2021 as set forth in the internal data to derive a range of implied equity values for the Company. Centerview then divided this range of implied equity values by the number of fully-diluted outstanding shares as of February 22, 2022 based on the internal data to derive a range of implied values per share of approximately $20.50 to $35.50, rounded to the nearest $0.25. Centerview compared such range to the consideration of $24.65 per share to be paid to the holders of Company common stock (other than excluded shares) pursuant to the merger agreement.

Other Factors

Centerview noted for the Special Committee certain additional factors solely for informational purposes, including, among other things, the following:

•

Historical Price Trading Analysis.   Centerview reviewed historical trading prices of the shares during the 52-week period ended February 4, 2022, the last trading day prior to speculation in the market regarding a potential transaction, which reflected low and high closing stock prices for shares of Company common stock during such period of $11.10 and $19.50 per share of Company common stock.

​

•

Analyst Price Targets Analysis.   Centerview reviewed price targets for the shares in publicly available Wall Street research analyst reports as of February 4, 2022, the last trading day prior to speculation in the market regarding a potential transaction, and March 4, 2022, the last trading day

​

 

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prior to the public announcement of the merger, and noted that such price targets were between $19.00 and $27.00 and $24.65 and $27.00, respectively, per share of Company common stock.

•

Premia Paid Analysis.   Centerview performed an analysis of the premia paid in selected precedent going-private transactions. Based on the analysis above and other considerations that Centerview deemed relevant in its professional judgment, Centerview applied the 25th and 75th percentile premia in such transactions to (1) the unaffected closing price of the shares on February 4, 2022 of $14.09, (2) the unaffected 30-day volume weighted average price for the shares of $15.94 and (3) the unaffected 52-week high for the shares of $19.50, which analyses resulted in ranges of implied share prices of $16.50 to $20.00, $18.00 to $21.50 and $18.00 to $21.75, respectively, per share of Company common stock.

​

General

The preparation of a financial opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a financial opinion is not readily susceptible to summary description. In arriving at its opinion, Centerview did not draw, in isolation, conclusions from or with regard to any factor or analysis that it considered. Rather, Centerview made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of the analyses.

Centerview’s financial analyses and opinion were only one of many factors taken into consideration by the Special Committee in its evaluation of the merger and the other transactions contemplated by the merger agreement. Consequently, the analyses described above should not be viewed as determinative of the views of the Special Committee or management of the Company with respect to the merger consideration or as to whether the Special Committee would have been willing to determine that a different consideration was fair. The consideration for the transaction was determined through arm’s-length negotiations between the Company and Parent and was approved by the Special Committee. Centerview provided advice to the Special Committee during these negotiations. Centerview did not, however recommend any specific amount of consideration to the Special Committee or that any specific amount of consideration constituted the only appropriate consideration for the transaction.

Centerview is a securities firm engaged directly and through affiliates and related persons in a number of investment banking, financial advisory and merchant banking activities. In the two years prior to the date of its written opinion, except for its current engagement by the Special Committee, Centerview had not been engaged on a fee-paying basis to provide financial advisory or other services to the Company, and Centerview did not receive any compensation from the Company during such period. In the two years prior to the date of its written opinion, Centerview had not been engaged on a fee-paying basis to provide financial advisory or other services to Parent, CD&R, an affiliate of Parent, or Merger Sub, and Centerview did not receive any compensation from Parent, CD&R or Merger Sub during such period. Centerview may provide financial advisory and other services to or with respect to the Company, Parent, CD&R, or their respective affiliates, including portfolio companies of CD&R, in the future, for which Centerview may receive compensation. Certain (1) of Centerview’s and Centerview’s affiliates’ directors, officers, members and employees, or family members of such persons, (2) of Centerview’s affiliates or related investment funds and (3) investment funds or other persons in which any of the foregoing may have financial interests or with which they may co-invest, may at any time acquire, hold, sell or trade, in debt, equity and other securities or financial instruments (including derivatives, bank loans or other obligations) of, or investments in, the Company, Parent, CD&R or any of their respective affiliates, including portfolio companies of CD&R, or any other party that may be involved in the merger and the other transactions contemplated by the merger agreement.

The Special Committee selected Centerview based on Centerview’s reputation, experience both in the industry and with transactions of a similar nature to the potential transaction with CD&R, and independence. Centerview is an internationally recognized investment banking firm that has substantial experience in transactions similar to the merger and the other transactions contemplated by the merger agreement.

In connection with Centerview’s services as the financial advisor to the Special Committee, the Company has agreed to pay Centerview an transaction fee of $15,000,000, all of which is payable contingent upon

 

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consummation of the merger and the other transactions contemplated by the merger agreement and a fee of $5,000,000, which was payable upon the rendering of Centerview’s opinion. In addition, the Company has agreed to reimburse certain of Centerview’s expenses arising, and to indemnify Centerview against certain liabilities that may arise, out of Centerview’s engagement.

Other Presentations by Centerview

In addition to the presentation made to the Special Committee on March 5, 2022, which will be filed with the SEC as an exhibit to the Transaction Statement on Schedule 13E-3 (the “Schedule 13E-3”) and is described above, copies of preliminary illustrative presentations presented or delivered by Centerview to the Special Committee on October 25, 2021, November 23, 2021, December 14, 2021, January 7, 2022, February 9, 2022 and February 11, 2022 containing preliminary illustrative financial analyses also are attached as exhibits to such Schedule 13E-3.

A summary of these preliminary illustrative presentations is provided below. The following summaries, however, do not purport to be a complete description of these preliminary illustrative presentations or of the preliminary financial analyses performed by Centerview.

•

The preliminary illustrative presentation presented or delivered by Centerview to the Special Committee on October 25, 2021, filed as exhibit (c)(1) to the Schedule 13E-3, contains, among other information, (i) observations and perspectives on the Company’s historical financial performance and, based on Company management’s then-current standalone plan, projected financial performance, (ii) observations and perspectives on potential strategic alternatives and (iii) a preliminary financial analysis of the Company.

​

•

The preliminary illustrative presentation presented or delivered by Centerview to the Special Committee on November 23, 2021, filed as exhibit (c)(2) to the Schedule 13E-3, contains, among other information, (i) a review of the Special Committee’s initial response to the indicative valuation communicated by CD&R on November 12 and (ii) a preliminary financial analysis of CD&R’s updated indicative valuation of $23.00 in cash per share of Company common stock.

​

•

The preliminary illustrative presentation presented or delivered by Centerview to the Special Committee on December 14, 2021, filed as exhibit (c)(3) to the Schedule 13E-3, contains, among other information, a preliminary financial analysis of CD&R’s revised indicative valuation of $23.00 in cash per share of Company common stock based on Company management’s December 3 Projections.

​

•

The preliminary illustrative presentation presented or delivered by Centerview to the Special Committee on January 7, 2022, filed as exhibit (c)(4) to the Schedule 13E-3, contains, among other information, a preliminary financial analysis of CD&R’s revised indicative valuation of $23.50 in cash per share of Company common stock based on Company management’s January 3 Projections, with references to Company management’s December 3 projections.

​

•

The preliminary illustrative presentation presented or delivered by Centerview to the Special Committee on February 9, 2022, filed as exhibit (c)(5) to the Schedule 13E-3, contains, among other information, a preliminary financial analysis of CD&R’s revised indicative valuation of $24.50 in cash per share of Company common stock.

​

•

The preliminary illustrative presentation presented or delivered by Centerview to the Special Committee on February 11, 2022, filed as exhibit (c)(6) to the Schedule 13E-3, contains, among other information, a preliminary financial analysis of CD&R’s revised indicative valuation of $24.65 in cash per share of Company common stock based on Company management’s February 3 projections.

​

None of these other preliminary illustrative presentations by Centerview, alone or together, constitute, or form the basis of, an opinion of Centerview with respect to the consideration payable under the merger agreement, and the preliminary illustrative financial analyses therein were based on economic, monetary, market and other conditions as in effect on, and the information made available to Centerview as of, the dates of the respective presentations.

 

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Purpose and Reasons of the Company for the Merger

The Company’s purpose for engaging in the merger is to enable its stockholders to receive the merger consideration, which represents a per share premium of approximately (1) 75% above the closing price of the shares of Company common stock as of February 4, 2022, the last trading day prior to speculation in the market regarding a potential transaction, (2) 26% above the 52-week high closing price of the shares of Company common stock as of February 4, 2022, and (3) 7% above the highest closing price of the shares of Company common stock in the 10 years prior to February 4, 2022, which high was achieved in June 2018. The Special Committee and the Board believe that the merger provides the best opportunity to maximize stockholder value. The Company has determined to undertake the merger at this time based on the analyses, determinations and conclusions of the Special Committee and the Board described in detail above under the section of this proxy statement entitled “Special Factors — Reasons for the Merger; Recommendation of the Board; Fairness of the Merger.”

Purpose and Reasons of the CD&R Entities for the Merger

Under the SEC rules governing “going-private” transactions, each of the CD&R Entities is an affiliate of the Company and, therefore, required to express their reasons for the merger to the Company’s unaffiliated stockholders, as defined in Rule 13e-3 of the Exchange Act. The CD&R Entities are making the statements included in this section solely for the purpose of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act. For the CD&R Entities, the primary purpose of the merger is to allow Parent to own equity interests in the Company and to bear the rewards and risks of such ownership after the merger is completed and the shares of Company common stock cease to be publicly traded. The CD&R Entities believe that structuring the transaction as a merger is preferable to other transaction structures because it (1) will enable Parent to acquire all of the shares of Company common stock at the same time, (2) will allow the Company to cease to be a publicly registered and reporting company, and (3) represents an opportunity for the Company’s unaffiliated stockholders to receive the merger consideration in cash, without interest and less any applicable withholding taxes, subject to and in accordance with the terms and conditions of the merger agreement.

Plans for the Company After the Merger

Following completion of the merger, Merger Sub will have been merged with and into the Company, with the Company surviving the merger as a subsidiary of Parent. The shares of Company common stock are currently listed on the NYSE and registered under the Exchange Act. Following completion of the merger, there will be no further market for the shares of Company common stock and, as promptly as practicable following the effective time and in compliance with applicable law, Company common stock will be delisted from the NYSE, deregistered under the Exchange Act and will cease to be publicly traded.

Given the CD&R Stockholders’ long-standing ownership stake in the Company, the CD&R Entities currently anticipate that the Company’s strategy and operations will initially be conducted following completion of the merger substantially as they are currently being conducted (except that the Company will cease to be a public company and will instead be a wholly owned subsidiary of Parent). The CD&R Entities believe that, as a private company, the Company will be able to improve its ability to execute quickly and effectively on a series of existing value creation levers, including improving manufacturing productivity and service levels, accelerating new product innovation and with respect to the acquisition and integration of accretive M&A targets (however, no definitive contracts, arrangements, plans, proposals, commitments or understanding currently exist with respect to such acquisitions). Following completion of the merger, the CD&R Entities will continue to assess the Company’s assets, corporate and capital structure, capitalization, operations, business, properties and personnel to determine what additional changes, if any, would be desirable to enhance the business and operations of the Company.

From and after the effective time, the officers of the Company at the effective time will be the officers of the Surviving Corporation and the directors of Merger Sub immediately prior to the Effective Time will be the directors of the Surviving Corporation, in each case, to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation until their death, resignation or removal or until their respective successors have been duly elected or appointed and qualified in accordance with the DGCL or the certificate of incorporation and bylaws of the Surviving Corporation, as the case may be.

 

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Recent Developments

On April 10, 2022, the Company entered into a Membership Interest Purchase Agreement (which we refer to as the “Coil Coatings Purchase Agreement”) with BlueScope Steel North America Corporation, a Delaware corporation (“BlueScope”) and a subsidiary of BlueScope Steel Limited, to sell the Company’s metal coil coatings business to BlueScope for an aggregate purchase price of $500 million in cash, subject to certain customary adjustments (the “Coil Coatings Transaction”). The Coil Coatings Transaction is subject to the satisfaction of customary closing conditions, including the expiration or termination of the waiting period under the HSR Act. Subject to the satisfaction or waiver of certain conditions and the other terms and conditions of the Coil Coatings Purchase Agreement, the Coil Coatings Transaction is expected to close in the second half of 2022. Pursuant to the merger agreement, Parent consented to the Company’s entry into the Coil Coatings Purchase Agreement. Neither the entry into the Coil Coatings Purchase Agreement nor the consummation of the Coil Coatings Transaction will result in any change to the merger consideration to be paid to holders of shares of Company common stock in connection with the merger.

Certain Effects of the Merger

If the Company’s stockholders approve the Merger Agreement Proposal and all other conditions to the closing of the merger are either satisfied or waived, Merger Sub will merge with and into the Company, with the Company surviving the merger as a subsidiary of Parent.

Treatment of the Shares of Company Common Stock

Each share of Company common stock issued and outstanding immediately prior to the effective time of the merger (other than the excluded shares) will be converted into the right to receive from Parent $24.65 in cash per share, without interest, less any applicable withholding taxes. Each share of Company common stock issued and outstanding immediately prior to the effective time of the merger that is held by Merger Sub or by the Company and not held on behalf of third parties will be cancelled without payment of any consideration. Each share of Company common stock issued and outstanding immediately prior to the effective time of the merger that is held by Parent and the CD&R Funds (in the case of shares of Company common stock held by CD&R Fund VIII, solely to the extent such shares are not validly transferred or sold to Parent prior to closing), will be converted into one share of common stock of the Surviving Corporation. Each share of common stock of Merger Sub issued and outstanding immediately prior to the effective time will be converted into one share of common stock of the Surviving Corporation.

Treatment of Company Equity Awards

At the effective time of the merger: (1) each then outstanding and vested stock option will be cancelled and converted into the right to receive an amount in cash equal to the product of (x) the excess, if any, of the merger consideration over the exercise price per share of such stock option and (y) the number of shares subject to such stock option; (2) each then outstanding and unvested stock option will be cancelled and converted into a contingent contractual right to receive a payment in cash from the Surviving Corporation equal to the product of (x) the excess, if any, of the merger consideration over the exercise price per share of such stock option and (y) the number of shares subject to such stock option, and such resulting cash-based award will be subject to the same terms and conditions as are applicable to the corresponding stock option (including time-based vesting conditions but excluding provisions related to exercise); (3) each then outstanding restricted stock unit corresponding to shares of Company common stock (a “Company RSU Award”) will be cancelled and converted into a contingent contractual right to receive a cash payment from the Surviving Corporation equal to (x) the number of shares subject to such Company RSU Award multiplied by (y) the merger consideration, and such resulting cash-based award will be subject to the same terms and conditions as are applicable to the corresponding Company RSU Award (including time-based vesting conditions); (4) each then outstanding performance-based share unit award (a “Company PSU Award”) (I) granted during the 2020 calendar year (each, a “2020 Company PSU Award”) or (II) granted during the 2021 calendar year to the Company’s Chief Executive Officer or the Chief Executive Officer’s direct reports (each, a “2021 Company Executive PSU Award”) will be cancelled and converted into a contingent contractual right to receive a cash payment from the Surviving Corporation equal to (A) the number of performance share units earned under the terms of the applicable award agreement, but with the

 

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applicable total shareholder return metric determined using a per share price equal to the merger consideration and the EBITDA-based metric determined based on actual performance as of the end of the performance period applicable to such Company PSU Award multiplied by (B) the merger consideration, with the resulting cash-based award subject to the same terms and conditions as are applicable to the corresponding 2020 Company PSU Award or 2021 Company Executive PSU Award (including time-based vesting conditions and EBITDA-based vesting conditions, but excluding any vesting conditions based on total shareholder return); and (5) each then outstanding Company PSU Award granted during the 2021 calendar year that is not a 2021 Company Executive PSU Award (each, a “2021 Company Non-Executive PSU Award”) will be cancelled and converted into a contingent contractual right to receive a cash payment from the Surviving Corporation equal to (A) the number of performance-based share units earned under the terms of the applicable award agreement, but with the applicable total shareholder return determined using a per share price equal to the merger consideration and the EBITDA-based metric in the applicable award agreement deemed achieved at target performance and determined without proration for any portion of the performance period that has not yet been completed, multiplied by (B) the merger consideration.

Benefits of the Merger for the Company’s Unaffiliated Stockholders

The primary benefit of the Merger to the unaffiliated stockholders will be their right to receive the merger consideration of $24.65 in cash per share of Company common stock, less applicable withholding taxes, as described above, which represents a per share premium of approximately (1) 75% above the closing price of the shares of Company common stock as of February 4, 2022, the last trading day prior to speculation in the market regarding a potential transaction, (2) 26% above the 52-week high closing price of the shares of Company common stock as of February 4, 2022, and (3) 7% above the highest closing price of the shares of Company common stock in the 10 years prior to February 4, 2022, which high was achieved in June 2018. Additionally, such stockholders will avoid the risk after the merger of any possible decrease in our future earnings, growth or value.

Detriments of the Merger to the Company’s Unaffiliated Stockholders

The primary detriments of the merger to our unaffiliated stockholders include the lack of an interest of such stockholders in the potential future earnings, growth or value realized by the Company after the merger.

Certain Effects of the Merger for Parent

Following the consummation of the merger, Parent will own all of the equity interests of the Company and be the sole beneficiary of future earnings, growth and value, and will be the only one entitled to vote on corporate matters affecting the Company.

Additionally, following the merger, the shares of Company common stock will be delisted from the NYSE, will be deregistered under the Exchange Act and will cease to be publicly traded. See the section of this proxy statement entitled “Special Factors — Plans for the Company After the Merger.” As such, the Company will be relieved of the requirements applicable to public companies, including the pressure to meet analyst forecasts and the requirements and restrictions on trading that directors, officers and beneficial owners of more than 10% of the shares of the common stock face as a result of the provisions of Section 16 of the Exchange Act. The Company will also be relieved of the obligation to separately prepare and furnish information to its stockholders. Parent will benefit from any regulatory compliance cost savings realized by the Company after it becomes a private company.

The primary detriments of the merger to Parent include the fact that all of the risk of any possible decrease in the future earnings, growth or value of the Company following the merger will be borne by Parent. Additionally, Parent’s ownership of the Company will be illiquid, with no public trading market for such securities.

Certain Effects on the Company if the Merger Is Not Completed

If the Merger Agreement Proposal is not approved by the Company’s stockholders or if the merger is not completed for any other reason, the Company’s stockholders will not receive any payment for their

 

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shares of Company common stock in connection with the merger. Instead, the Company will remain an independent public company, and the shares of Company common stock will continue to be quoted on the NYSE, for so long as it continues to meet eligibility listing standards. In addition, if the merger is not completed, the Company expects that management will operate the Company’s business in a manner similar to that in which it is being operated today and that the Company’s stockholders will continue to be subject to the same risks and opportunities to which they are currently subject, including, without limitation, risks related to the residential and commercial construction, manufactured housing or remodeling and renovation industries in which the Company operates, and adverse economic conditions. You should also read and consider carefully the other information in this proxy statement, the annexes to this proxy statement and the documents incorporated by reference herein, including the risk factors contained in the Company’s Annual Report on Form 10-K and other SEC filings. See the section of this proxy statement entitled “Where You Can Find More Information.”

Failure to complete the merger could negatively impact the Company’s business and the market price of the shares of Company common stock.

If the merger is not completed, and depending on the circumstances that would have caused the merger not to be completed, the price of the shares of Company common stock may decline significantly. If that were to occur, it is uncertain when, if ever, the price of the shares of Company common stock would return to the price at which the shares of Company common stock are trading as of the date of this proxy statement. Accordingly, if the merger is not completed, there can be no assurance as to the effect of these risks and opportunities on the future value of your shares of Company common stock. If the merger is not completed, the Board will continue to evaluate and review the Company’s business operations, properties, dividend policy, share repurchase policy and capitalization, among other things, make such changes as are deemed appropriate and continue to seek to identify strategic alternatives to enhance stockholder value. If the Merger Agreement Proposal is not approved by the Company’s stockholders or if the merger is not completed for any other reason, there can be no assurance that any other transaction acceptable to the Company will be offered or that the Company’s business, financial condition or results of operation will not be adversely impacted.

If the merger is not completed for any reason, we will be subject to a number of material risks, including the disruption to our business resulting from the announcement of the signing of the merger agreement, the diversion of management’s attention from our day-to-day business, and the substantial restrictions imposed by the merger agreement on the operation of our business during the period before the completion of the merger, which may make it difficult for us to achieve our business goals if the merger does not occur. In addition, CD&R and its affiliates would continue to hold a substantial portion of the outstanding shares of our common stock.

Failure to complete the merger could trigger the payment of a termination fee.

If the merger agreement is terminated, under specified conditions, including as a result of a change in the recommendation of the Board or the Special Committee or by termination by the Company of the merger agreement to enter into an alternative acquisition agreement providing for a superior proposal, or, if the merger agreement is terminated (in certain circumstances) and the Company enters into or completes an alternative transaction within 12 months, the Company will be required to pay Parent a termination fee of $105,000,000.

If the merger agreement is terminated by the Company due to Parent’s failure to close or Parent’s uncured breach, or by Parent due to the failure to close before the outside date while the Company could have terminated for other reasons, Parent will be required to pay the Company a termination fee of $210,000,000. See the section of this proxy statement entitled “The Merger Agreement — Termination —  Company Termination Fee.”

Unaudited Prospective Financial Information of the Company

The Company’s management does not as a matter of course make public projections as to future performance, revenues, earnings or other results beyond the next fiscal quarter due to, among other reasons, the uncertainty, unpredictability and subjectivity of the underlying assumptions and estimates. The

 

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Company is especially reluctant to disclose projections for extended periods due to the increasing uncertainty, unpredictability and subjectivity of such assumptions and estimates when applied to time periods further in the future. As a result, the Company does not endorse projections or other unaudited prospective financial information as a reliable indication of future results. However, in connection with the Special Committee’s evaluation of a potential transaction, the Company’s management independently prepared certain unaudited prospective financial information for fiscal years 2022 through 2026, which we refer to generally as “Projections,” and the final version of which we refer to as the “February 3 Projections.” The February 3 Projections were made available to the Special Committee and the Board in connection with their consideration and evaluation of the merger, and were provided to Centerview in connection with its financial analyses and opinion. At the direction of the Special Committee, the February 3 Projections were also made available to CD&R.

The Company is including a summary of the February 3 Projections in this proxy statement in order to provide the Company’s stockholders with access to the final projections that were made available to, and approved by, the Special Committee and the Board in connection with their evaluation of the merger, made available to CD&R in connection with its due diligence review and made available to Centerview, and which Centerview was instructed by the Special Committee to use, in connection with its financial analyses and opinion.

February 3 Projections

The following table presents a summary of the February 3 Projections:(1)

(1)

The February 3 Projections are on a pro forma basis for acquisitions and divestitures completed by the Company.

​

(2)

“Adjusted EBITDA” is defined as Net Income, plus tax expense, plus interest expense, plus depreciation and amortization, minus Non-Operating Gains, plus Non-Operating Losses.

​

(3)

‘‘EBIT’’ is defined as Adjusted EBITDA minus depreciation & amortization.

​

(4)

“Net Operating Profit After Tax” is defined as Net Income, plus tax expense, plus interest expense, minus Non-Operating Gains, plus Non-Operating Losses, multiplied by one minus tax rate.

​

(5)

“Unlevered Free Cash Flow” is defined as Net Operating Profit After Tax, plus Change in Working Capital, plus Depreciation Expense, plus Amortization Expense, minus Capital Spending.

​

(6)

Burdened by $20 million per year of stock-based compensation expense (i.e., stock-based compensation is treated as a cash expense and not being added back to these metrics).

​

Prior Iterations of the Projections

In October 2021, the Company’s management shared with the Special Committee preliminary unaudited prospective financial information for fiscal years 2022 through 2026 under three scenarios, a base case, an upside case and a downside case (which we refer to collectively as the “Preliminarily Presented Projections”), that management had begun to prepare to assist the Special Committee in connection with a potential transaction but which had not previously been presented to or reviewed or adopted by the Special Committee or the Board. Neither the base case nor the upside case assumed any recession at any point during the five-year projection period. The Preliminarily Presented Projections were discussed with and made available to the Special Committee and Centerview in October 2021, and although the Special Committee did not adopt or

 

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take a view on such projections at the time, the Special Committee authorized Centerview and the Company’s management to provide the base case and upside case portions of these projections to CD&R.

In early December 2021, after more than a month of additional work, and taking into account feedback from the Special Committee, the Company’s management presented to the Special Committee projections under a single scenario for fiscal years 2022 through 2026 (the “December 3 Projections”). The December 3 Projections reflected, among other things, the assumption of a recession affecting both the Company’s residential and commercial businesses during the projections period, which had not been present in prior iterations of base case projections.  The December 3 Projections were discussed with and made available to the Special Committee and Centerview in December 2021.

In early January 2022, the Company’s management subsequently updated the December 3 Projections to reflect a downward revision to management’s forecast for fiscal year 2022 after considering, in their best judgment, the probable impact of the current market environment on the Company’s business, with particular focus on the ability of Cornerstone to achieve operational improvements in one of its significant business lines, and the likelihood of maintaining favorable steel pricing (the “January 3 Projections”). The January 3 Projections were discussed with and made available to the Special Committee and Centerview in January. The January 3 Projections were not provided to CD&R, but were used by Centerview, at the direction of the Special Committee, to prepare additional financial analyses for consideration by the Special Committee.

In late January 2022 and early February 2022, the Company’s management prepared the February 3 Projections, which were an update to the January 3 Projections to reflect (1) the additional pro forma contributions to revenue, free cash flow and other financial metrics from UCC, which had been acquired by the Company at the end of fiscal year 2021, (2) actual rather than estimated balance sheet figures as of December 31, 2021, (3) management’s updated estimate of net working capital over the projection period, and (4) management’s updated estimate of amortization charges over the projection period.

The Company is including a summary of each of the Preliminarily Presented Projections, the December 3 Projections and the January 3 Projections in this proxy statement in order to provide the Company’s stockholders with access to additional information that was previously made available to the Special Committee and Centerview and, in the case of the base case and the upside case contained in the Preliminarily Presented Projections, CD&R, in connection with the uses described above. The Preliminarily Presented Projections, the December 3 Projections, the January 3 Projections and the February 3 Projections are referred to collectively as the “Projections.”

January 3 Projections

The following table presents a summary of the January 3 Projections:(1)

(1)

The January 3 Projections do not reflect the acquisition of Union Corrugated Company Holdings, which was acquired by the Company at the end of 2021.

​

(2)

“Adjusted EBITDA” is defined as Net Income, plus tax expense, plus interest expense, plus depreciation and amortization, minus Non-Operating Gains, plus Non-Operating Losses.

​

(3)

‘‘EBIT’’ is defined as Adjusted EBITDA minus depreciation & amortization.

​

(4)

“Net Operating Profit After Tax” is defined as Net Income, plus tax expense, plus interest expense, minus Non-Operating Gains, plus Non-Operating Losses, multiplied by one minus tax rate.

​

 

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(5)

“Unlevered Free Cash Flow” is defined as Net Operating Profit After Tax, plus Change in Working Capital, plus Depreciation Expense, plus Amortization Expense, minus Capital Spending.

​

(6)

Burdened by $20 million per year of stock-based compensation expense (i.e., stock-based compensation is treated as a cash expense and not being added back to these metrics).

​

December 3 Projections

The following table presents a summary of the December 3 Projections:(1)

(1)

The December 3 Projections do not reflect the acquisition of Union Corrugated Company Holdings, which was acquired by the Company at the end of 2021.

​

(2)

“Adjusted EBITDA” is defined as Net Income, plus tax expense, plus interest expense, plus depreciation and amortization, minus Non-Operating Gains, plus Non-Operating Losses.

​

(3)

‘‘EBIT’’ is defined as Adjusted EBITDA minus depreciation & amortization.

​

(4)

“Net Operating Profit After Tax” is defined as Net Income, plus tax expense, plus interest expense, minus Non-Operating Gains, plus Non-Operating Losses, multiplied by one minus tax rate.

​

(5)

“Unlevered Free Cash Flow” is defined as Net Operating Profit After Tax, plus Change in Working Capital, plus Depreciation Expense, plus Amortization Expense, minus Capital Spending.

​

(6)

Burdened by $20 million per year of stock-based compensation expense (i.e., stock-based compensation is treated as a cash expense and not being added back to these metrics).

​

Preliminarily Presented Projections

Downside Case. The following table presents a summary of the downside case projections contained in the Preliminarily Presented Projections:(1)

(1)

The Preliminarily Presented Projections do not reflect the acquisition of Union Corrugated Company Holdings, which was acquired by the Company at the end of 2021.

​

(2)

“Adjusted EBITDA” is defined as Net Income, plus tax expense, plus interest expense, plus depreciation and amortization, plus stock-based compensation, minus Non-Operating Gains, plus Non-Operating Losses.

​

(3)

“Unlevered Free Cash Flow” is defined as Net Operating Profit After Tax, plus Change in Working Capital, plus Depreciation Expense, plus Amortization Expense, minus Capital Spending.

​

(4)

Unburdened by $19 million per year of stock-based compensation expense (i.e., stock-based compensation is added back to these metrics).

​

 

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Base Case. The following table presents a summary of the base case projections contained in the Preliminarily Presented Projections:(1)

(1)

The Preliminarily Presented Projections do not reflect the acquisition of Union Corrugated Company Holdings, which was acquired by the Company at the end of 2021.

​

(2)

“Adjusted EBITDA” is defined as Net Income, plus tax expense, plus interest expense, plus depreciation and amortization, plus stock-based compensation, minus Non-Operating Gains, plus Non-Operating Losses.

​

(3)

“Unlevered Free Cash Flow” is defined as Net Operating Profit After Tax, plus Change in Working Capital, plus Depreciation Expense, plus Amortization Expense, minus Capital Spending.

​

(4)

Unburdened by $20 million per year of stock-based compensation expense (i.e., stock-based compensation is added back to these metrics).

​

Upside Case. The following table presents a summary of the upside case projections contained in the Preliminarily Presented Projections:(1)

(1)

The Preliminarily Presented Projections do not reflect the acquisition of Union Corrugated Company Holdings, which was acquired by the Company at the end of 2021.

​

(2)

“Adjusted EBITDA” is defined as Net Income, plus tax expense, plus interest expense, plus depreciation and amortization, plus stock-based compensation, minus Non-Operating Gains, plus Non-Operating Losses.

​

(3)

“Unlevered Free Cash Flow” is defined as Net Operating Profit After Tax, plus Change in Working Capital, plus Depreciation Expense, plus Amortization Expense, minus Capital Spending.

​

(4)

Unburdened by $23 million per year of stock-based compensation expense (i.e., stock-based compensation is added back to these metrics).

​

Additional Information About the Projections

The inclusion of the Projections in this proxy statement should not be regarded as an indication that any of the Company or any of its affiliates, advisors or representatives have considered the Projections to be predictive of actual future events, and the Projections should not be relied upon as such. This summary of these internal financial Projections is not being included in this proxy statement to influence your decision whether to vote in favor of any proposal. The Company advises the recipients of the Projections that its internal financial forecasts upon which the Projections were based are subjective in many respects.

Although presented with numerical specificity, the Projections were based on numerous variables, assumptions and estimates as to future events made by the Company’s management that the Company’s management believed were reasonable at the time the Projections were prepared, taking into account the relevant information available to management at the time. These variables, assumptions and estimates are inherently uncertain and many are beyond the control of the Company. Important factors that may affect actual results and cause these internal financial Projections to not be achieved include, but are not limited

 

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to, risks and uncertainties relating to the business of the Company (including its ability to achieve strategic goals, objectives and targets over applicable periods), industry performance, the regulatory and competitive environment, changes in technology, general business and economic conditions and other risk factors referenced in the section of this proxy statement entitled “Cautionary Statement Concerning Forward-Looking Information.” Various assumptions underlying the Projections may not prove to have been, or may no longer be, accurate. The Projections may not be realized, and actual results may be significantly higher or lower than projected in the Projections. The Projections summarized above do not give effect to the merger. The Projections also reflect assumptions as to certain business strategies or plans that are subject to change. The Projections do not take into account any circumstances or events occurring after the date they were prepared. The Projections cover multiple years, and such information by its nature becomes less predictive with each successive year. As a result, the inclusion of the Projections in this proxy statement should not be relied on as necessarily predictive of actual future events and actual results may differ materially (and will differ materially if the merger and the other transactions contemplated by the merger agreement are completed) from the Projections. For all of these reasons, the internal financial Projections, and the assumptions upon which they are based, (i) are not guarantees of future results; (ii) are inherently speculative; and (iii) are subject to a number of risks and uncertainties. As a result, actual results may differ materially from those contained in these internal financial Projections. Accordingly, there can be no assurance that the Projections will be realized.

The Projections were prepared solely for internal use and to assist the Special Committee and the Board with their consideration and evaluation of the transactions, including the merger, Centerview with its financial analyses and opinion and CD&R with its due diligence review of the Company, and although they were prepared on an accounting basis consistent with the Company’s financial statements, they were not prepared with a view toward public disclosure or toward compliance with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. The Projections included in this document have been prepared by, and are the responsibility of, the Company. Neither the Company’s independent auditor nor any other independent accountant has compiled, examined or performed any procedures with respect to the Projections, nor have they expressed any opinion or any other form of assurance on such information or its achievability.

Adjusted EBITDA, Net Operating Profit After Tax and Unlevered Free Cash Flow contained in the Projections are “non-GAAP financial measures,” where are financial performance measures that are not calculated in accordance with GAAP. The non-GAAP financial measures used in the Projections were relied upon by Centerview for purposes of its opinion and by the Board and the Special Committee in connection their evaluation of the merger. The SEC rules which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure do not apply to non-GAAP financial measures included in disclosures relating to a proposed business combination such as the merger if the disclosure is included in a document such as this proxy statement. In addition, reconciliations of non-GAAP financial measures were not relied upon by Centerview for purposes of its opinion or by the Board or the Special Committee in connection with their evaluation of the merger. Accordingly, the Company has not provided a reconciliation of the financial measures included in the Projections to the relevant GAAP financial measures. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by the Company may not be comparable to similarly titled amounts used by other companies. Furthermore, there are limitations inherent in non-GAAP financial measures because they exclude charges and credits that are required to be included in a GAAP presentation. Accordingly, these non-GAAP financial measures should be considered together with, and not as an alternative to, financial measures prepared in accordance with GAAP.

For these reasons, as well as the basis and assumptions on which the Projections were compiled, the inclusion of specific portions of the Projections in this proxy statement should not be regarded as an indication that such Projections will be an accurate prediction of future events, and they should not be relied on as such. None of the Company or any of its affiliates, advisors, officers, directors, partners or representatives (including Centerview) can give you any assurance that actual results will not differ from these Projections. Except as required by applicable law, none of the Company or any of its affiliates, advisors, officers, directors, partners or representatives (including Centerview) undertake any obligation to update or

 

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otherwise revise or reconcile the Projections or the specific portions presented to reflect circumstances existing after the date the Projections were generated or to reflect the occurrence of future events, even in the event that any or all of the assumptions are shown to be in error. Therefore, readers of this proxy statement are cautioned not to place undue, if any, reliance on the specific portions of the Projections set forth below. None of the Company or any of its affiliates, advisors, officers, directors, partners or representatives (including Centerview) intend to make publicly available any update or other revision to these Projections. In addition, none of the Company or any of its affiliates, advisors, officers, directors, partners or representatives (including Centerview) have made, make, or are authorized in the future to make, any representation to any stockholder or other person regarding the Company’s ultimate performance compared to the information contained in the Projections or that projected results will be achieved, and any statements to the contrary should be disregarded. The Company has made no representation to Parent or CD&R, in the merger agreement or otherwise, concerning the Projections.

Interests of Executive Officers and Directors of the Company in the Merger

In considering the recommendation of the Board that the stockholders of the Company adopt the merger agreement, the Company’s stockholders should be aware that the executive officers and directors of the Company have certain interests in the transactions that may be different from, or in addition to, the interests of the Company’s stockholders generally. The Special Committee and the Board were aware of these interests and considered them, among other matters, in approving the merger agreement and the transactions contemplated by it, including the merger, and in making their recommendations that the Company’s stockholders approve the merger agreement.

In addition to the matters described below, four directors, Messrs. Krenicki, O’Brien, Sleeper and Zrebiec, were designated by CD&R as directors on the Board (they recused themselves from deliberations regarding the merger due to their affiliation with Parent).

For purposes of this disclosure, we have included the named executive officers of the Company for the Company’s annual report filed on Form 10-K/A for the fiscal year ended December 31, 2021 (which we refer to together as the “NEOs”), which includes each of the Company’s current executive officers. As such, our NEOs are:

•

Rose Lee, President and Chief Executive Officer;

​

•

Jeffrey S. Lee, Executive Vice President, Chief Financial Officer and Chief Accounting Officer;

​

•

Katy K. Theroux, Executive Vice President and Chief Human Resources Officer;

​

•

James F. Keppler, Executive Vice President, Operations;

​

•

Alena S. Brenner, Executive Vice President, General Counsel and Corporate Secretary; and

​

•

James S. Metcalf, former Chief Executive Officer and Executive Chairman.

​

The closing of the transactions contemplated by the merger agreement will not constitute a “change in control” under the employment agreements that the Company’s executive officers are party to and/or the compensation arrangements in which they or the Company’s directors participate. The treatment of the Company’s equity awards and certain other compensation arrangements in connection with the merger is provided in the merger agreement and is detailed below.

Treatment of Company Equity Awards

Options

At the effective time, each then vested and outstanding stock option to purchase shares of Company common stock (a “Company Option”) will automatically be cancelled and converted into the right to receive, no later than the second regularly scheduled payroll of the Company following the date of the closing of the merger, an amount in cash, without interest and less applicable tax withholdings, equal to the product of (1) the number of shares of common stock subject to such Company Option immediately prior to the effective time multiplied by (2) the excess, if any, of (A) the merger consideration over (B) the exercise price per share of such Company Option.

 

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At the effective time, each then unvested and outstanding Company Option will automatically be cancelled and converted into a contingent contractual right to receive a payment in an amount in cash from the Surviving Corporation equal to the product of (1) the number of shares of common stock subject to such option immediately prior to the effective time multiplied by (2) the excess, if any, of (A) the merger consideration over (B) the exercise price per share of such Company Option. The resulting cash-based award will be subject to the same terms and conditions (including time-based vesting conditions) as are applicable to the corresponding Company Option.

Each Company Option (whether vested or unvested) for which the exercise price per share is equal to or greater than the merger consideration will be cancelled at the closing of the merger without payment of consideration.

Restricted Stock Units

At the effective time, each then outstanding Company RSU Award will be cancelled and converted into a contingent contractual right to receive a payment in an amount in cash from the Surviving Corporation equal to (1) the number of shares subject to such Company RSU Award multiplied by (2) the merger consideration. The resulting cash-based award will be subject to the same terms and conditions (including time-based vesting conditions) as are applicable to the corresponding Company RSU Award.

The Company RSU Awards held by the 12 Company non-employee directors that were granted in 2021 are expected to be amended so that they vest in full immediately prior to the closing of the merger if they do not vest in the ordinary course prior to such time.

Performance-based Share Units

At the effective time, each then outstanding 2020 Company PSU Award and 2021 Company Executive PSU Award will automatically be cancelled and converted into a contingent contractual right to receive a payment in an amount in cash from the Surviving Corporation equal to the product of (i) the Earned PSUs (as defined below) applicable to such Company PSU Award multiplied by (ii) the merger consideration. “Earned PSUs” means the number of performance share units earned under the terms of the applicable award agreement, but with the applicable total shareholder return metric determined using a per share price equal to the merger consideration and the EBITDA-based metric determined based on actual performance as of the end of the performance period applicable to such Company PSU Award. The resulting cash-based award will be subject to the same terms and conditions (including time-based vesting conditions, but excluding any vesting conditions based on total shareholder return) as are applicable to the corresponding Company PSU Award. In the event of a qualifying termination (i.e., upon termination by the Company without “cause” or by the employee with “good reason”), pursuant to the existing terms of the Company PSU Awards, a prorated portion of any award for which the performance period is at least 50% complete will vest.

At the effective time, each then outstanding 2021 Company Non-Executive PSU Award will automatically vest with respect to the number of performance-based share units as set forth in clause (A) below and be cancelled and converted into the right to receive, within 60 days following the effective time (or at such later time as would not result in the imposition of a penalty under Section 409A of the Code), an amount in cash from the Surviving Corporation, without interest and less applicable tax withholdings, equal to (A) the number of performance-based share units earned under the terms of the applicable award agreement, but with the applicable total shareholder return determined using a per share price equal to the merger consideration and the EBITDA-based metric in the applicable award agreement deemed achieved at target performance and determined without proration for any portion of the performance period that has not yet been completed, multiplied by (B) the merger consideration.

For an estimate of the amounts that would be payable to each of the Company’s NEOs on settlement of their unvested Company equity awards, see the section of this proxy statement entitled “Special Factors — Interests of Executive Officers and Directors of the Company in the Merger — Golden Parachute Compensation” below. The estimated aggregate amount that would be realized by the 12 Company non-employee directors in respect of their unvested Company RSU Awards as of April 1, 2022 is $2,261,859. Messrs. Krenicki, Sleeper and Zrebiec assign all of the compensation each would receive for his service as a director, including Company RSU Awards, to CD&R.

 

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Common Stock

At the effective time, each issued share of Company common stock held by our executives and directors shall be treated in the same manner as the shares of Company common stock held by our public stockholders, as discussed above in the section of this proxy statement entitled “Certain Effects of the Merger — Benefits of the Merger for the Company’s Unaffiliated Stockholders.” Based on each stockholders’ right to receive the merger consideration of $24.65 in cash per share of Company common stock, the estimated amount that would be realized by each of the NEOs in respect to their beneficially owned shares of Company common stock is as follows: $216,156 in the case of Ms. Brenner, $1,220,249 in the case of Mr. Keppler, $8,363,992 in the case of Mr. Lee, $0 in the case of Ms. Lee, $19,070,719 in the case of Mr. Metcalf, and $2,958,863 in the case of Ms. Theroux. The estimated aggregate amount that would be realized by the 12 Company non-employee directors in respect to their beneficially owned shares of Company common stock is $25,371,234. For further information pertaining to the beneficial ownership of our executives and directors, see the section of this proxy statement entitled “Security Ownership of Certain Beneficial Owners and Management,” below.

Employment Agreements with Named Executive Officers

Each NEO other than Mr. Metcalf has an employment agreement with the Company providing for severance payments and termination benefits upon a termination of an NEO’s employment that is a qualifying termination (i.e., upon termination by the Company without “cause” or by the employee with “good reason”). The merger will not constitute a “change in control” for purposes of the NEO’s employment agreements.

Where a qualifying termination occurs, other than in connection with a change in control of the Company, each employment agreement provides for (1) payment of one times (two times, in the case of Ms. Lee) the NEO’s annual salary at the highest annualized rate in effect during the one-year period immediately preceding the date of termination, payable in equal installments on regular payroll dates over the course of the one-year period (two-year period, in the case of Ms. Lee) immediately following the date of termination, (2) a prorated annual bonus based on actual performance in the year of termination, payable in a lump sum not later than March 15th of the year following the year in which the date of termination occurs, (3) a maximum of 12 months of continued coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) coverage (in the case of Ms. Lee, a lump sum cash payment equal to 18 months of the premium cost of family medical coverage at the active-employee rate, payable in a lump sum not later than March 15th of the year following the year in which the date of termination occurs) and (4) in the case of Ms. Lee, payment of two times her target annual bonus, which is payable in equal installments on regular payroll dates over the course of the two-year period immediately following the date of termination. The severance benefits described above are generally conditioned upon the NEO’s execution and non-revocation of a release of claims in favor of the Company as well as continued compliance with the following restrictive covenants: (a) perpetual confidentiality and non-disclosure, and (b) non-competition, non-solicitation of customers and employees, non-disparagement and non-interference, in each case during employment and for one year post-termination (or two years, in the case of Ms. Lee).

To the extent payments to a NEO under an employment agreement constitute “parachute payments” within the meaning of Section 280G of the Code, the payments to be received by the NEO may be reduced to the extent a reduction in the payment amount would put the officer in a better after-tax position than he or she would be in if the excise tax under Section 4999 were imposed on such payments.

For an estimate of the value of the payments and benefits described above that would be payable to the Company’s NEOs under their employment agreements upon a qualifying termination, see the section of this proxy statement entitled “Special Factors — Interests of Executive Officers and Directors of the Company in the Merger — Golden Parachute Compensation” below.

Retirement Agreement with Mr. Metcalf

Mr. Metcalf, our former Chairman and Chief Executive Officer, retired from the Company on March 31, 2022 after a transition period during which he transferred his duties and responsibilities and served as Executive Chairman. In connection with his retirement, the Company entered into a retirement

 

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agreement with Mr. Metcalf in September 2021, pursuant to which the Company agreed to fully vest certain awards that would otherwise have been forfeited upon his retirement, on the originally scheduled vesting dates. Mr. Metcalf’s outstanding equity awards as of the effective time will be treated as described in the section of this proxy statement entitled “Special Factors — Interests of Executive Officers and Directors of the Company in the Merger — Treatment of Company Equity Awards.”

Because Mr. Metcalf departed from the Company prior to the effective time, his departure did not entitle him to severance pay or termination benefits under his employment agreement and he will not be entitled to any such payments in connection with the merger.

Post-Closing Compensation

It is expected that the Company and CD&R will work together to develop a new long-term incentive plan for the Company to be implemented following the closing, and representatives of Parent may hold preliminary discussions with certain members of the Company’s management team regarding employment with, and the right to purchase or participate in the equity of, Parent or one or more of its affiliates. However, as of the date of this proxy statement, none of the Company’s executive officers has entered into any agreement or understanding with respect to the foregoing, and there can be no assurances that the terms of any such agreements or arrangements will be agreed upon with any executive officers in the future. If Parent or its affiliates and the Company’s executive officers do not enter into agreements regarding employment with Parent or its affiliates, then the Company’s executive officers will remain subject to their existing arrangements with the Company.

Indemnification and Insurance

Pursuant to the terms of the merger agreement, each of the Company’s and its subsidiaries’ present and former directors, executive officers and employees will be entitled to certain ongoing indemnification and coverage for a period of six years following the effective time under directors’ and officers’ liability insurance policies from the Surviving Corporation. Such indemnified parties will be held harmless against any costs or expenses arising out of or related to (x) their service in their respective positions with the Company or its subsidiaries or (y) services performed by such indemnified parties at the request of the Company or its subsidiaries, in each case at or prior to the effective time, whether asserted or claimed prior to, at or after the effective time, including (1) the merger and any other transactions contemplated by the merger agreement and (2) actions to enforce any indemnification or advancement right of any indemnified party.

Any indemnified party’s (or their predecessors and heirs) rights to exculpation or indemnification for acts or omissions occurring prior to the effective time existing as of the date of the merger agreement, as provided in the Company’s (or its subsidiaries’) certificates of incorporation or bylaws (or comparable organizational or governing documents) or in any contract, will survive the merger and the transactions contemplated by the merger agreement and will continue in full force and effect in accordance with their terms. After the effective time, Parent and the Surviving Corporation will fulfill and honor such obligations to the maximum extent that the Company (or its applicable subsidiary) would have been permitted to fulfill and honor them by applicable law.

For six years following the effective time, the certificates of incorporation and bylaws of the Surviving Corporation will contain provisions with respect to indemnification and exculpation that are at least as favorable as the indemnification and exculpation provisions contained in the certificates of incorporation and bylaws of the Company immediately prior to the effective time, and such provisions will not be amended, repealed or otherwise modified for six years following the effective time, except as required by applicable law.

Prior to the effective time, the Company will obtain and fully pay the premium for “tail” insurance policies for the extension of (1) the directors’ and officers’ liability coverage of the Company’s existing directors’ and officers’ insurance policies and (2) the Company’s existing fiduciary liability insurance policies, in each case, for a claims reporting or discovery period of at least six years from and after the effective time (the “tail period”) from one or more insurance carriers with the same or better credit rating as the Company’s insurance carrier as of the date of the merger agreement with respect to directors’ and officers’ liability insurance and fiduciary liability insurance with terms, conditions, retentions and limits of liability

 

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that are at least as favorable to the insureds as the Company’s existing policies with respect to any actual or alleged error, misstatement, misleading statement, act, omission, neglect, breach of duty or any matter claimed against a director or officer of the Company or any of its subsidiaries by reason of his or her serving in such capacity that existed or occurred at or prior to the effective time. If the amount of the “tail” insurance policy exceeds such amount, the Surviving Corporation will obtain a policy with the greatest coverage available for a cost not exceeding such amount. If the Company and the Surviving Corporation for any reason fail to obtain such “tail” insurance policies as of the effective time, the Surviving Corporation will continue to maintain in effect for the tail period the D&O insurance in place as of the date of the merger agreement with terms, conditions, retentions and limits of liability that are at least as favorable to the insureds as provided in the Company’s existing policies as of the date of the merger agreement, or the Surviving Corporation will purchase comparable D&O insurance for the tail period with terms, conditions, retentions and limits of liability that are at least as favorable to the insureds as provided in the Company’s existing policies as of the date of the merger agreement. However, neither Parent nor the Surviving Corporation will be required to expend for such “tail” insurance policy an aggregate amount greater than 300% of the annual premiums paid by the Company in the calendar year immediately preceding the date of the merger agreement.

The indemnification rights provided in the merger agreement are in addition to the indemnification rights that exist under the certificates of incorporation or bylaws of the Company. Moreover, if Parent or the Surviving Corporation (or any of their respective successors or assigns) will consolidate or merge with any other entity and will not be the continuing or surviving entity in such transaction, or transfers at least 50% of its properties and assets to any other entity, then in each case proper provision will be made so that the continuing or Surviving Corporation or entity (or its successors or assigns, if applicable), or transferee of such assets, as the case may be, will assume the indemnification obligations set forth in the merger agreement.

Quantification of Payments and Benefits to Company’s Named Executive Officers

The information set forth in the table below is intended to comply with Item 402(t) of Regulation S-K under the Securities Act, which requires disclosure of information about certain compensation for each NEO of the Company that is based on, or otherwise relates to, the merger. This compensation is referred to as “golden parachute” compensation by the applicable SEC disclosure rules, and is subject to a non-binding advisory vote of the stockholders of the Company.

The table below sets forth the amount of payments and benefits that each of the Company’s NEOs would receive in connection with the merger, assuming (1) that the merger was consummated and each such NEO experienced a qualifying termination on April 1, 2022 (which is the assumed date solely for purposes of this golden parachute compensation disclosure); (2) a per share price of Company common stock of $24.65 (the merger consideration); (3) that each NEO’s base salary rate and annual target bonus remain unchanged from those in effect as of the date of this proxy statement; and (4) equity awards that are outstanding as of April 1, 2022.

The calculations in the table below do not include any amounts that the NEOs were entitled to receive or that were vested as of the date hereof. In addition, these amounts do not attempt to forecast any additional awards, grants or forfeitures that may occur prior to the effective time of the merger or any awards that, by their terms, vest irrespective of the merger prior to April 1, 2022. As a result of the foregoing assumptions, which may or may not actually occur or be accurate on the relevant date, including the assumptions described in the footnotes to the table, the actual amounts, if any, to be received by an NEO may materially differ from the amounts set forth below.

For purposes of this discussion, “single trigger” refers to benefits that arise as a result of the completion of the merger. Because the closing of the transactions contemplated by the merger agreement will not constitute a “change in control” under the employment agreements and/or compensation arrangements in which the Company’s NEOs participate, “double trigger” in this disclosure refers to benefits that simply require a qualifying termination of employment.

 

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Golden Parachute Compensation

(1)

James S. Metcalf, the Company’s former Chairman and Chief Executive Officer, retired on March 31, 2022. Mr. Metcalf is not eligible to receive any payments in connection with the merger (other than in connection with outstanding equity awards for which vesting conditions were waived in connection with his retirement and vested shares on the same basis as other stockholders).

​

(2)

Cash.   Consists of cash severance payments (which, for Ms. Lee include a base salary component and a bonus component) and a prorated bonus for the year of termination. The prorated bonus component is estimated based on target performance. The cash lump sum severance payments are “double trigger” and become payable only upon a qualifying termination. The merger will not constitute a “change in control” for purposes of the NEOs’ employment agreements, and, accordingly, the NEOs are not entitled to any “enhanced” severance in connection with their employment agreements. The estimated amount of each such payment is shown in the following table.

​

​

(3)

Equity.   The amounts in this column represent the value of Company PSU Awards held by the NEOs, which will be converted into a cash-based award at the effective time and are subject to “double-trigger” vesting upon a qualifying termination of the NEO of a prorated portion of any award for which the performance period is at least 50% complete, assuming payout at maximum performance. The value of such Company PSU Awards, assuming payout at target performance, would total $1,713,627 for Mr. Lee, $388,278 for Mr. Keppler, and $799,707 for Ms. Theroux. The amounts in this column exclude the value of unvested Company Options and Company RSU Awards, which will be converted into a cash-based award at the effective time, subject to the same general terms and conditions as are applicable to the corresponding award, and 2021 Company Executive PSU Awards, for which less than 50% of the performance period will be complete as of April 1, 2022. None of the NEOs holds any 2021 Company Non-Executive PSU Awards, which are subject to “single trigger” vesting. See the section of this proxy statement entitled “Special Factors — Interests of Executive Officers and Directors of the Company in the Merger — Treatment of Company Equity Awards.”

​

(4)

Other.   Amounts shown reflect the value of the applicable multiple of continued COBRA coverage payable by the Company to the Company NEOs (and the Company NEO’s spouse and dependents, as applicable). Such benefits are “double trigger” and become payable only upon a qualifying termination under the terms of the NEO’s employment agreement.

​

Intent to Vote in Favor of the Merger

Our directors (other than the Recused Directors) and executive officers have informed us that, as of the date of this proxy statement, they intend to vote all of the shares of Company common stock owned directly

 

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by them in favor of the Merger Agreement Proposal, the Adjournment Proposal and the Merger-Related Compensation Proposal. As of [           ], 2022, the record date for the special meeting, our directors (other than the Recused Directors) and executive officers directly owned, in the aggregate, [       ] shares of Company common stock entitled to vote at the special meeting, or collectively approximately [   ]% of all the outstanding shares of Company common stock entitled to vote at the special meeting and approximately [   ]% of the outstanding shares of Company common stock not held by affiliated stockholders or Recused Directors and entitled to vote at the special meeting.

Appraisal Rights

If the merger is consummated, stockholders who continuously hold shares of Company common stock through the effective time, who do not vote in favor of the adoption of the merger agreement and who properly demand appraisal of their shares and who do not withdraw their demands or otherwise lose their rights of appraisal will be entitled to seek appraisal of their shares in connection with the merger under Section 262 of the DGCL (“Section 262”). The following discussion is not a complete statement of the law pertaining to appraisal rights under the DGCL and is qualified in its entirety by the full text of Section 262, which is attached to this proxy statement as Annex C and incorporated herein by reference. The following summary does not constitute any legal or other advice and does not constitute a recommendation that stockholders exercise their appraisal rights under Section 262. All references in Section 262 and in this summary to a “stockholder” are to the holder of record of shares of Company common stock unless otherwise expressly noted herein. Only a holder of record of shares of Company common stock is entitled to demand appraisal of the shares registered in that holder’s name. A person having a beneficial interest in shares of Company common stock held of record in the name of another person, such as a bank, broker, trust or other nominee, must act promptly to cause the record holder to follow the steps summarized below properly and in a timely manner to perfect appraisal rights. If you hold your shares of Company common stock through a bank, broker or other nominee and you wish to exercise appraisal rights, you should consult with your bank, broker or the other nominee.

Under Section 262, if the merger is completed, holders of shares of Company common stock who: (1) submit a written demand for appraisal of their shares; (2) do not vote in favor of the adoption of the merger agreement; (3) continuously are the record holders of such shares through the effective time; and (4) otherwise exactly follow the procedures set forth in Section 262 may be entitled to have their shares appraised by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of the shares of Company common stock, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest to be paid on the amount determined to be fair value, if any, as determined by the court. However, after an appraisal petition has been filed, the Delaware Court of Chancery will dismiss appraisal proceedings as to all stockholders who have asserted appraisal rights unless (a) the total number of shares for which appraisal rights have been pursued and perfected exceeds 1% of the outstanding shares of Company common stock as measured in accordance with subsection (g) of Section 262; or (b) the value of the aggregate merger consideration in respect of the shares of Company common stock for which appraisal rights have been pursued and perfected exceeds $1 million (conditions (a) and (b) referred to as the “ownership thresholds”). Unless the Delaware Court of Chancery, in its discretion, determines otherwise for good cause shown, interest on an appraisal award will accrue and compound quarterly from the effective time through the date the judgment is paid at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during such period. However, at any time before the Delaware Court of Chancery enters judgment in the appraisal proceedings, the Surviving Corporation may voluntarily pay to each stockholder entitled to appraisal an amount in cash pursuant to subsection (h) of Section 262, in which case such interest will accrue after the time of such payment only on an amount that equals the difference, if any, between the amount so paid and the “fair value” of the shares as determined by the Delaware Court of Chancery, in addition to any interest accrued prior to the time of such voluntary cash payment, unless paid at such time. The Surviving Corporation is under no obligation to make such voluntary cash payment prior to such entry of judgment.

Under Section 262, where a merger agreement is to be submitted for adoption at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, must notify each of its stockholders who was such on the record date for notice of such meeting with respect to shares for which appraisal rights are available that appraisal rights are available and include in the notice a copy of Section 262. This

 

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proxy statement constitutes the Company’s notice to stockholders that appraisal rights are available in connection with the merger, and the full text of Section 262 is attached to this proxy statement as Annex C. In connection with the merger, any holder of shares of Company common stock who wishes to exercise appraisal rights, or who wishes to preserve such holder’s right to do so, should review Annex C carefully. Failure to strictly comply with the requirements of Section 262 in a timely and proper manner may result in the loss of appraisal rights under the DGCL. A stockholder who loses his, her or its appraisal rights will be entitled to receive the merger consideration described in the merger agreement. Moreover, because of the complexity of the procedures for exercising the right to seek appraisal of shares of Company common stock, the Company believes that if a stockholder considers exercising such rights, that stockholder should seek the advice of legal counsel.

Stockholders wishing to exercise the right to seek an appraisal of their shares of Company common stock must do ALL of the following:

•

the stockholder must not vote in favor of the Merger Agreement Proposal;

​

•

the stockholder must deliver to the Company a written demand for appraisal before the vote on the merger agreement at the special meeting;

​

•

the stockholder must continuously hold the shares from the date of making the demand through the effective time (a stockholder will lose appraisal rights if the stockholder transfers the shares before the effective time); and

​

•

the stockholder (or any person who is the beneficial owner of shares of Company common stock held either in a voting trust or by a nominee on behalf of such person) or the Surviving Corporation must file a petition in the Delaware Court of Chancery requesting a determination of the fair value of the shares within 120 days after the effective time. The Surviving Corporation is under no obligation to file any petition and has no intention of doing so.

​

In addition, one of the ownership thresholds must be met.

Because a proxy that does not contain voting instructions will, unless revoked, be voted in favor of the adoption of the merger agreement, a stockholder who votes by proxy and who wishes to exercise appraisal rights must vote against the adoption of the merger agreement, abstain or not vote its shares.

Filing Written Demand

Any holder of shares of Company common stock wishing to exercise appraisal rights must deliver to the Company, before the vote on the adoption of the merger agreement at the special meeting at which the Merger Agreement Proposal will be submitted to stockholders, a written demand for the appraisal of the stockholder’s shares, and that stockholder must not vote or submit a proxy in favor of the adoption of the merger agreement. A holder of shares of Company common stock exercising appraisal rights must hold of record the shares on the date the written demand for appraisal is made and must continue to hold the shares of record through the effective time. A proxy that is submitted and does not contain voting instructions will, unless revoked, be voted in favor of the adoption of the merger agreement, and it will constitute a waiver of the stockholder’s right of appraisal and will nullify any previously delivered written demand for appraisal. Therefore, a stockholder who submits a proxy and who wishes to exercise appraisal rights must submit a proxy containing instructions to vote against the adoption of the merger agreement or abstain from voting, or otherwise fail to vote, on the adoption of the merger agreement. Neither voting against the adoption of the merger agreement nor abstaining from voting or failing to vote on the Merger Agreement Proposal will, in and of itself, constitute a written demand for appraisal satisfying the requirements of Section 262. The written demand for appraisal must be in addition to and separate from any proxy or vote on the adoption of the merger agreement. A stockholder’s failure to make the written demand prior to the taking of the vote on the adoption of the merger agreement at the special meeting of the Company Stockholders will constitute a waiver of appraisal rights.

Only a holder of record of shares of Company common stock is entitled to demand appraisal rights for the shares registered in that holder’s name. A demand for appraisal in respect of shares of Company common stock must be executed by or on behalf of the holder of record, and must reasonably inform the Company of the identity of the holder and that the person intends thereby to demand appraisal of the

 

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holder’s shares in connection with the merger. If the shares are owned of record in a fiduciary or representative capacity, such as by a trustee, guardian or custodian, such demand must be executed by or on behalf of the record owner, and if the shares are owned of record by more than one person, as in a joint tenancy and tenancy in common, the demand must be executed by or on behalf of all joint owners. An authorized agent, including an authorized agent for two or more joint owners, may execute a demand for appraisal on behalf of a holder of record; however, the agent must identify the record owner or owners and expressly disclose that, in executing the demand, the agent is acting as agent for the record owner or owners.

STOCKHOLDERS WHO HOLD THEIR SHARES IN BROKERAGE OR BANK ACCOUNTS OR OTHER NOMINEE FORMS AND WHO WISH TO EXERCISE APPRAISAL RIGHTS SHOULD CONSULT WITH THEIR BANK, BROKER OR OTHER NOMINEES, AS APPLICABLE, TO DETERMINE THE APPROPRIATE PROCEDURES FOR THE BANK, BROKER OR OTHER NOMINEE TO MAKE A DEMAND FOR APPRAISAL OF THOSE SHARES. A PERSON HAVING A BENEFICIAL INTEREST IN SHARES HELD OF RECORD IN THE NAME OF ANOTHER PERSON, SUCH AS A BANK, BROKER OR OTHER NOMINEE, MUST ACT PROMPTLY TO CAUSE THE RECORD HOLDER TO FOLLOW PROPERLY AND IN A TIMELY MANNER THE STEPS NECESSARY TO PERFECT APPRAISAL RIGHTS.

All written demands for appraisal pursuant to Section 262 should be mailed or delivered to:

Cornerstone Building Brands, Inc.
Attention: Executive Vice President, General Counsel and Corporate Secretary
5020 Weston Parkway, Suite 400
Cary, NC 27513

Any holder of shares of Company common stock who has delivered a written demand to the Company and who has not commenced an appraisal proceeding or joined that proceeding as a named party may withdraw his, her or its demand for appraisal and accept the consideration offered pursuant to the merger agreement by delivering to the Company a written withdrawal of the demand for appraisal. However, any such attempt to withdraw the demand made more than 60 days after the effective time will require written approval of the Surviving Corporation. No appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any stockholder without the approval of the Delaware Court of Chancery, and such approval may be conditioned upon any terms the Delaware Court of Chancery deems just; provided, however, that this will not affect the right of any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholder’s demand for appraisal and to accept the merger consideration within 60 days after the effective time. If an appraisal proceeding is commenced and the Company, as the Surviving Corporation, does not approve a request to withdraw a demand for appraisal when that approval is required, or, except with respect to any stockholder who withdraws such stockholder’s demand in accordance with the proviso in the immediately preceding sentence, if the Delaware Court of Chancery does not approve the dismissal of an appraisal proceeding with respect to a stockholder, the stockholder will be entitled to receive only the appraised value determined in any such appraisal proceeding, which value could be less than, equal to or more than the merger consideration being offered pursuant to the merger agreement.

Notice by the Surviving Corporation

If the merger is completed, within 10 days after the effective time, the Surviving Corporation will notify each holder of shares of Company common stock who has properly made a written demand for appraisal pursuant to Section 262, and who has not voted in favor of the adoption of the merger agreement, that the merger has become effective and the effective date thereof.

Filing a Petition for Appraisal

Within 120 days after the effective time, but not thereafter, the Surviving Corporation or any holder of shares of Company common stock who has complied with Section 262 and is entitled to seek appraisal under Section 262 (including for this purpose any beneficial owner of the relevant shares) may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery, with a copy served on the

 

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Surviving Corporation in the case of a petition filed by a stockholder (or beneficial owner), demanding a determination of the fair value of the shares held by all dissenting stockholders entitled to appraisal. The Surviving Corporation is under no obligation, and has no present intention, to file a petition, and stockholders should not assume that the Surviving Corporation will file a petition or initiate any negotiations with respect to the fair value of the shares of Company common stock. Accordingly, any holders of shares of Company common stock who desire to have their shares appraised should initiate all necessary action to perfect their appraisal rights in respect of their shares of Company common stock within the time and in the manner prescribed in Section 262. The failure of a holder of Company common stock to file such a petition within the period specified in Section 262 could nullify the stockholder’s previous written demand for appraisal.

Within 120 days after the effective time, any holder of shares of Company common stock who has complied with the requirements of Section 262 and who is entitled to appraisal rights thereunder will be entitled, upon written request, to receive from the Surviving Corporation a statement setting forth the aggregate number of shares not voted in favor of the adoption of the merger agreement and with respect to which the Company has received demands for appraisal, and the aggregate number of holders of such shares. The Surviving Corporation must mail this statement to the requesting stockholder within 10 days after receipt by the Surviving Corporation of the written request for such a statement or within 10 days after the expiration of the period for delivery of demands for appraisal, whichever is later. A beneficial owner of shares of Company common stock held either in a voting trust or by a nominee on behalf of such person may, in such person’s own name, file a petition seeking appraisal or request from the Surviving Corporation the foregoing statements. As noted above, however, the demand for appraisal can only be made by a stockholder of record.

If a petition for an appraisal is duly filed by a holder of shares of Company common stock and a copy thereof is served upon the Surviving Corporation, the Surviving Corporation will then be obligated within 20 days after such service to file with the Delaware Register in Chancery a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached. Upon the filing of any such petition, the Delaware Court of Chancery may order that notice of the time and place fixed for the hearing on the petition be mailed to the Surviving Corporation and all of the stockholders shown on the written statement described above at the addresses stated therein. Such notice will also be published at least one week before the day of the hearing in a newspaper of general circulation published in the City of Wilmington, Delaware, or in another publication determined by the court. The costs of these notices are borne by the Surviving Corporation. After notice to stockholders as required by the court, the Delaware Court of Chancery is empowered to conduct a hearing on the petition to determine those stockholders who have complied with Section 262 and who have become entitled to appraisal rights thereunder. The Delaware Court of Chancery may require the stockholders who demanded payment for their shares to submit their stock certificates (if any) to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings and, if any stockholder fails to comply with the direction, the Delaware Court of Chancery may dismiss that stockholder from the proceedings. The Delaware Court of Chancery will dismiss appraisal proceedings as to all stockholders who have asserted appraisal rights if neither of the ownership thresholds is met.

Determination of Fair Value

After determining the holders of Company common stock entitled to appraisal and that at least one of the ownership thresholds described above has been satisfied as to stockholders seeking appraisal rights, the appraisal proceeding will be conducted in accordance with the rules of the Delaware Court of Chancery, including any rules specifically governing appraisal proceedings. Through such proceeding, the Delaware Court of Chancery will determine the “fair value” of the shares of Company common stock, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining fair value, the Delaware Court of Chancery will take into account all relevant factors. Unless the court in its discretion determines otherwise for good cause shown, interest from the effective time through the date of payment of the judgment will be compounded quarterly and will accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective time and the date of payment of the judgment. However, at any time before the Delaware Court of Chancery enters judgment

 

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in the appraisal proceedings, the Surviving Corporation may pay to each stockholder entitled to appraisal an amount in cash, in which case such interest will accrue after the time of such payment only on an amount that equals the difference, if any, between the amount so paid and the “fair value” of the shares as determined by the Delaware Court of Chancery, in addition to any interest accrued prior to the time of such voluntary payment, unless paid at such time.

In Weinberger v. UOP, Inc., the Supreme Court of Delaware discussed the factors that could be considered in determining fair value in an appraisal proceeding, stating that “proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court” should be considered, and that “[f]air price obviously requires consideration of all relevant factors involving the value of a company.” The Delaware Supreme Court stated that, in making this determination of fair value, the court must consider market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts that could be ascertained as of the date of the merger that throw any light on future prospects of the merged corporation. Section 262 provides that fair value is to be “exclusive of any element of value arising from the accomplishment or expectation of the merger.” In Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court stated that such exclusion is a “narrow exclusion [that] does not encompass known elements of value,” but which rather applies only to the speculative elements of value arising from such accomplishment or expectation. In Weinberger, the Supreme Court of Delaware also stated that “elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the merger and not the product of speculation, may be considered.” In addition, the Delaware courts have decided that the statutory appraisal remedy, depending on factual circumstances, may or may not be a dissenting stockholder’s exclusive remedy.

Stockholders considering seeking appraisal should be aware that the fair value of their shares as so determined by the Delaware Court of Chancery could be more than, the same as or less than the consideration they would receive pursuant to the merger if they did not seek appraisal of their shares and that an opinion of an investment banking firm as to the fairness from a financial point of view of the consideration payable in a merger is not an opinion as to, and does not in any manner address, fair value under Section 262. No representation is made as to the outcome of the appraisal of fair value as determined by the Delaware Court of Chancery, and stockholders should recognize that such an appraisal could result in a determination of a value higher or lower than, or the same as, the merger consideration. Neither the Company nor Parent anticipates offering more than the merger consideration to any stockholder exercising appraisal rights, and each of the Company and Parent reserves the rights to make a voluntary cash payment pursuant to subsection (h) of Section 262 and to assert, in any appraisal proceeding, that for purposes of Section 262, the “fair value” of a share of Company common stock is less than the merger consideration. If a petition for appraisal is not timely filed, or if neither of the ownership thresholds described above has been satisfied as to stockholders seeking appraisal rights, then the right to an appraisal will cease. The costs of the appraisal proceedings (which do not include attorneys’ fees or the fees and expenses of experts) may be determined by the Delaware Court of Chancery and charged upon the parties as the Delaware Court of Chancery deems equitable under the circumstances. Upon application of a stockholder, the Delaware Court of Chancery may also order that all or a portion of the expenses incurred by a stockholder in connection with an appraisal proceeding, including, without limitation, reasonable attorneys’ fees and the fees and expenses of experts, be charged pro rata against the value of all the shares entitled to be appraised. In the absence of such determination or assessment, each party bears its own expenses.

If any stockholder who demands appraisal of his, her or its shares of Company common stock under Section 262 fails to perfect, or effectively loses or withdraws, such holder’s right to appraisal, the stockholder’s shares of Company common stock will be deemed to have been converted at the effective time into the right to receive the merger consideration. A stockholder will fail to perfect, or effectively lose or withdraw, the holder’s right to appraisal if no petition for appraisal is filed within 120 days after the effective time, if neither of the ownership thresholds described above has been satisfied as to stockholders seeking appraisal rights or if the stockholder delivers to the Surviving Corporation a written withdrawal of the holder’s demand for appraisal and an acceptance of the merger consideration in accordance with Section 262.

From and after the effective time, no stockholder who has demanded appraisal rights will be entitled to vote such shares of Company common stock for any purpose or to receive payment of dividends or other distributions on the stock, except dividends or other distributions on the holder’s shares of Company common

 

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stock, if any, payable to stockholders as of a time prior to the effective time. If no petition for an appraisal is filed, if neither of the ownership thresholds described above has been satisfied as to the stockholders seeking appraisal rights, or if the stockholder delivers to the Surviving Corporation a written withdrawal of the demand for an appraisal and an acceptance of the merger, either within 60 days after the effective time or thereafter with the written approval of the Surviving Corporation, then the right of such stockholder to an appraisal will cease. Once a petition for appraisal is filed with the Delaware Court of Chancery, however, the appraisal proceeding may not be dismissed as to any stockholder without the approval of the court, and such approval may be conditioned upon any terms the court deems just; provided, however, that the foregoing will not affect the right of any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholder’s demand for appraisal and to accept the terms offered upon the merger within 60 days after the effective time.

Failure to comply strictly with all of the procedures set forth in Section 262 may result in the loss of a stockholder’s statutory appraisal rights. Consequently, any stockholder wishing to exercise appraisal rights is encouraged to consult legal counsel before attempting to exercise those rights.

Material U.S. Federal Income Tax Consequences of the Merger

The following is a general discussion of the material U.S. federal income tax consequences of the merger to U.S. holders (as defined below) whose shares of Company common stock are exchanged for cash pursuant to the merger. This discussion is based on current provisions of the Code, the U.S. Treasury regulations promulgated thereunder, judicial interpretations thereof and administrative rulings and published positions of the Internal Revenue Service (the “IRS”), all as in effect as of the date hereof, and all of which are subject to change or differing interpretations, possibly with retroactive effect, and any such change or interpretation could affect the accuracy of the statements and conclusions set forth in this discussion. This discussion does not address any tax consequences arising under the unearned income Medicare contribution tax pursuant to the Health Care and Education Reconciliation Act of 2010, any considerations with respect to any withholding required pursuant to the Foreign Account Tax Compliance Act of 2010 (including the U.S. Treasury regulations promulgated thereunder and intergovernmental agreements entered into in connection therewith and any laws, regulations or practices adopted in connection with any such agreement), nor any considerations under state, local or foreign laws or U.S. federal laws other than those pertaining to the U.S. federal income tax.

For purposes of this discussion, the term “U.S. holder” means a beneficial owner of shares of Company common stock that is for U.S. federal income tax purposes:

•

a citizen or individual resident of the United States;

​

•

a corporation, or other entity or arrangement classified as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state thereof, or the District of Columbia;

​

•

a trust if (1) a court within the United States is able to exercise primary supervision over the trust’s administration, and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) such trust has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person; or

​

•

an estate the income of which is subject to U.S. federal income tax regardless of its source.

​

This discussion applies only to U.S. holders who hold their shares of Company common stock as “capital assets” within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the “Code”) (generally, property held for investment). Further, this discussion is for general information only and does not purport to address all aspects of U.S. federal income taxation that may be relevant to particular holders in light of their particular circumstances, and does not apply to U.S. holders subject to special treatment under U.S. federal income tax laws (including, for example, insurance companies, dealers or brokers in securities or foreign currencies, traders in securities who elect to apply the mark-to-market method of accounting, U.S. holders subject to the alternative minimum tax, U.S. holders that have a “functional currency” other than the U.S. dollar, tax-exempt organizations, tax-qualified retirement plans, banks and other financial institutions, mutual funds, certain former citizens or former long-term residents of the United

 

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States, partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes, S corporations, real estate investment trusts, regulated investment companies or other flow-through entities (and their respective investors), U.S. holders who hold shares of Company common stock as part of a hedge, straddle, constructive sale, conversion or other integrated transaction for tax purposes, holders other than U.S. holders, U.S. holders required to accelerate the recognition of any item of gross income as a result of such income being recognized on an applicable financial statement, U.S. holders who continue to own shares of Company common stock directly, indirectly or constructively after the merger and U.S. holders who acquired their shares of Company common stock through the exercise of employee stock options or other compensation arrangements).

If a partnership (including for this purpose any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds shares of Company common stock, the tax treatment of a person treated as a partner in such partnership will generally depend on the status of the partner and the activities of the partnership. If you are, for U.S. federal income tax purposes, a partner in a partnership holding shares of Company common stock, you should consult your own tax advisor.

Holders of shares of Company common stock are urged to consult their own tax advisors regarding the particular tax consequences to them of the merger, including the applicability and effect of any U.S. federal, state, local, foreign or other tax laws.

The receipt of cash in exchange for shares of Company common stock pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes. In general, for U.S. federal income tax purposes, a U.S. holder who receives cash in exchange for shares of Company common stock pursuant to the merger will recognize capital gain or loss in an amount equal to the difference, if any, between (1) the amount of cash received, and (2) the U.S. holder’s adjusted tax basis in such shares of Company common stock.

Any such gain or loss will be a long-term capital gain or loss if a U.S. holder’s holding period in the shares of Company common stock surrendered in the merger is greater than one year as of the date of the merger. Long-term capital gains of certain non-corporate holders, including individuals, are generally subject to U.S. federal income tax at preferential rates. The deductibility of capital losses is subject to limitations. U.S. holders who acquired different blocks of shares of Company common stock at different times or different prices should consult their tax advisers as to the determination of the tax bases, gain or loss and holding period with respect to each such block.

Information Reporting and Backup Withholding

Payments of cash made in exchange for shares of Company common stock pursuant to the merger agreement may be subject, under certain circumstances, to information reporting and backup withholding (currently at a rate of 24%). To avoid backup withholding, a U.S. holder that does not otherwise establish an applicable exemption from backup withholding should complete and return to the applicable withholding agent a properly completed and executed IRS Form W-9, certifying that such U.S. holder is a U.S. person, that the taxpayer identification number provided is correct, and that such U.S. holder is not subject to backup withholding.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or credited against a U.S. holder’s U.S. federal income tax liability, if any, provided that such U.S. holder furnishes the required information to the IRS in a timely manner.

Financing of the Merger

Equity Financing

The merger agreement does not contain any financing-related contingencies or financing conditions to consummation of the merger. Parent estimates that the total funds necessary to complete the merger will be approximately $1,745 million, including estimated transaction fees and expenses. In addition, Parent may purchase shares of the Company held by CD&R Fund VIII prior to closing, which Parent estimates would require an additional $562 million. Parent expects these amounts to be funded via approximately $1,675 million from committed debt financing by specified lenders, which will be sufficient to pay the

 

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aggregate merger consideration to the unaffiliated stockholders, $195 million from equity investment by CD&R Fund X and approximately $437 million from cash of the Company on hand as of the closing of the merger.

In connection with the merger, Parent delivered to the Company the equity commitment letter, pursuant to which CD&R Fund X has committed, subject to the terms and conditions contained therein, to contribute, or cause to be contributed, to Parent (directly, or indirectly through one or more parent companies of Parent, or otherwise) an aggregate amount, in immediately available funds, of $195 million on or prior to the closing of the merger in connection with the funding of the merger (the “equity financing”).

The obligation of CD&R Fund X to provide the equity financing is subject to a number of conditions, including (1) satisfaction or waiver by Parent of all conditions set forth in Section 7.1 and Section 7.2 of the merger agreement (other than those conditions that by their terms are to be satisfied at the closing of the merger, but subject to the satisfaction or waiver (to the extent permitted under the merger agreement) of such conditions) and the closing of the merger is then occurring or required to occur pursuant to the Merger Agreement and (2) the debt financing contemplated by the debt commitment letters has been funded or will be funded at the closing of the merger (in each case, in accordance with the terms and conditions of the debt commitment letters and in an aggregate amount that, together with the equity financing, is sufficient to fund the aggregate merger consideration and all fees and expenses of or payable by Camelot Return Holdings, LLC, a Delaware limited liability company and an indirect parent entity of Parent (“Holdings”), Parent, Merger Sub or CD&R Fund X (the “required amounts”)), subject only to the equity financing being funded and the financing sources have indicated as such in writing.

CD&R Fund X’s obligation to fund the equity financing and all of its obligations under the equity commitment letter will terminate automatically and immediately upon the earliest to occur of (1) the funding of the equity financing to the extent required by the equity commitment letter, (2) the payment of the required amounts, (3) the valid termination of the merger agreement in accordance with its terms, (4) the payment in full by CD&R Fund X of its obligations under the limited guarantee or (5) the assertion in writing or filing of a claim or legal proceeding by the Company, any of is controlled affiliates or any of their respective representatives against Parent, CD&R Fund X or any of their affiliates in respect of the merger agreement, the limited guarantee or the transactions contemplated thereby, other than a claim against (a) CD&R Fund X to enforce its obligations to fund the equity financing, including through the Company’s right to obtain specific performance of Parent’s obligation to cause the equity financing to be funded and consummate the closing in accordance with the equity commitment letter and the merger agreement, (b) Parent or Merger Sub pursuant to the merger agreement, including the right of specific performance or similar injunctive relieve in accordance with the merger agreement, (c) CD&R Fund X pursuant to the limited guarantee or (d) CD&R pursuant to the confidentiality agreement, dated as of January 22, 2022, by and between CD&R and the Company.

The Company is an express third-party beneficiary only for the purpose of obtaining specific performance of Parent’s right to cause the equity financing to be funded by CD&R Fund X to Parent, subject to the terms and conditions of the equity commitment letter and the merger agreement.

Debt Financing

Holdings and Merger Sub have obtained debt financing commitments in an aggregate principal amount of up to $1,675 million, the proceeds of which will be used to consummate the merger and the other transactions contemplated by the merger agreement, including paying a portion of the aggregate merger consideration, and paying all fees and expenses of or payable by Holdings, Parent, Merger Sub or CD&R Fund X (the “required amounts”). The debt financing commitments may also be used to purchase shares of the Company held by CD&R Fund VIII. Deutsche Bank AG New York Branch, Deutsche Bank AG Cayman Islands Branch, Deutsche Bank Securities Inc., UBS AG, Stamford Branch, UBS Securities LLC, Barclays Bank PLC, BNP Paribas, BNP Paribas Securities Corp., Royal Bank of Canada, Société Générale, Goldman Sachs Bank USA, Natixis, New York Branch, Jefferies Finance LLC, Apollo Global Funding, LLC, Apollo Capital Management, L.P., Blackstone Alternative Credit Advisors LP, U.S. Bank National Association and Arawak X, L.P. (the “Debt Commitment Parties”) have committed to provide Holdings and Merger Sub, severally, but not jointly, with debt financing in connection with the consummation of the merger, the other transactions contemplated by the merger agreement, and related transactions, in

 

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the amounts and on the terms and subject to the conditions set forth in (1) a debt commitment letter, dated as of March 5, 2022, by and among certain of the Debt Commitment Parties and Merger Sub and (2) a debt commitment letter, dated as of March 5, 2022, by and among certain of the Debt Commitment Parties and Holdings (collectively, the “debt commitment letters”). The obligations of the Debt Commitment Parties to provide the debt financing under the debt commitment letters are subject to certain customary conditions.

Each of Parent and Merger Sub has agreed to, and to cause their respective subsidiaries and CD&R to, use reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and obtain the financing on the terms (including the market “flex” provisions) set forth in the equity commitment letter and the debt commitment letters (or on other terms and conditions that are acceptable to Parent, subject to certain restrictions set forth in the merger agreement).

The Company has agreed to provide, and to cause its subsidiaries to provide, to Parent and Merger Sub such cooperation as is customary and reasonably requested by Parent in connection with the arrangement and obtainment of the debt financing or any high-yield bonds being issued in lieu of all or a portion of the debt financing, subject to the terms set forth in the merger agreement.

Limited Guarantee

Subject to the terms and conditions set forth in the limited guarantee, CD&R Fund X has guaranteed the due and punctual payment by Parent to the Company of (1) the Parent termination fee of $210 million, if and when payable pursuant to the merger agreement, (2) any reasonable, documented and out-of-pocket cost and expenses incurred by the Company in connection with enforcement proceedings to collect the Parent termination fee, subject to a cap of $5.0 million, if and when payable pursuant to the merger agreement, and (3) any reimbursement and indemnification obligations of Parent and Merger Sub in connection with the debt financing, if and when payable pursuant to the merger agreement (collectively, the “guaranteed obligations”).

Subject to specified exceptions, the limited guarantee will terminate upon the earliest to occur of (1) the closing of the merger (but only if the merger has been consummated and the required amounts have been paid in full), (2) the valid termination of the merger agreement under circumstances in which none of the guaranteed obligations is payable, (3) with respect to each of the guaranteed obligations, the payment of such guaranteed obligation and (4) the 180th day after the valid termination of the merger agreement under circumstances in which any of the guaranteed obligations is payable unless, prior to such date, the Company has commenced a legal proceeding in writing against Parent or CD&R Fund X pursuant to the limited guarantee alleging any of the guaranteed obligations is due and owing, in which case the limited guarantee shall survive until the earliest to occur of (a) the closing of the merger (but only if the merger has been consummated and the required amounts have been paid in full), (b) a final, non-appealable judgment of a court of competent jurisdiction that Parent or CD&R Fund X does not owe the guaranteed obligations, (c) a written agreement between CD&R Fund X and the Company terminating the obligations and liabilities of CD&R Fund X under the limited guarantee and (d) payment in full of the guaranteed obligations by Parent or CD&R Fund X.

Litigation Relating to the Merger

As of May 9, 2022, three complaints have been filed by purported stockholders of the Company. The actions are captioned Stein v. Cornerstone Building Brands, Inc., et al., Case No. 1:22-cv-02981 (Apr. 11, 2022), filed in the United States District Court for the Southern District of New York, Hopkins v. Cornerstone Building Brands, Inc., et al., Case No. 1:22-cv-02258 (Apr. 20, 2022), filed in the United States District Court for the Eastern District of New York, and Whitfield v. Cornerstone Building Brands, Inc., et al., Case No. 2:22-cv-01547 (Apr. 20, 2022), filed in the United States District Court for the Eastern District of Pennsylvania. The complaints name the Company and the members of the Board as defendants and generally allege that the preliminary proxy statement filed with the SEC on April 7, 2022 contains alleged material misstatements and omissions in violation of Section 14(a) and Section 20(a) of the Exchange Act and Rule 14a-9 of the Exchange Act. The complaints seeks, among other relief, an injunction preventing the closing of the merger unless and until the information sought is disclosed; rescission of the merger agreement to the

 

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extent already implemented; or recissory damages and attorneys’ and experts’ fees. The Company believes the claims asserted in the complaints are without merit.

Fees and Expenses

The estimated fees and expenses incurred or expected to be incurred by the Company in connection with the merger are as follows:

It is also expected that Merger Sub and/or Parent will incur approximately $12.5 million of legal, financial and other advisory fees.

The estimate for legal fees set forth in this proxy statement does not include any amounts attributable to any existing or future litigation challenging the merger. All costs and expenses incurred in connection with the preparation, negotiation, execution and performance of the merger agreement and the merger and any other transactions contemplated by the merger agreement, will be paid by the party incurring such expense, except that expenses incurred in connection with the filing fee for this proxy statement and the Schedule 13E-3 and printing and mailing the proxy statement and the Schedule 13E-3 will be paid by Parent.

Regulatory Approvals

Under the HSR Act, and the rules and regulations promulgated thereunder, certain transactions, including this merger, may not be completed until notifications have been given and information furnished to the Antitrust Division of the United States Department of Justice (the “DOJ”) and the United States Federal Trade Commission (the “FTC”), and all statutory waiting period requirements have been satisfied. Completion of the merger is subject to the expiration or termination of the applicable waiting periods under the HSR Act. The waiting period with respect to the notification and report forms under the HSR Act filed by the parties expired at 11:59 p.m. Eastern Time on April 18, 2022.

Completion of the merger is further subject to the receipt of antitrust approvals and/or clearances in Mexico and Canada. The parties received the requisite antitrust approval in Canada on March 31, 2022 and in Mexico on April 25, 2022.

At any time before or after the effective time of the merger, the DOJ, the FTC, U.S. state attorneys general, as well as non-U.S. regulatory bodies could take action under the antitrust laws as they deem necessary or desirable in the public interest, including, without limitation, seeking to enjoin the consummation of the merger or conditionally approving the merger upon certain regulatory conditions or remedies. Private parties may also seek to take legal action under the applicable laws under some circumstances. There can be no assurance that a challenge to the merger will not be made or, if such a challenge is made, that it would not be successful.

Effective Time of the Merger

The closing of the merger will take place on the third business day following the day on which the last of the conditions to the closing of the merger has been satisfied or waived (other than those conditions that by their nature are to be satisfied at the closing, but subject to the satisfaction or waiver (to the extent waivable under applicable law and the merger agreement) of those conditions), including the receipt of all required regulatory approvals and consents, unless (1) otherwise agreed in writing by Parent and the Company or (2) the marketing period (as described in “The Merger Agreement — Marketing Period”) has not ended at the time the closing conditions condition are satisfied or waived, in which case closing will occur on the

 

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earlier of a day during the marketing period specified by Parent on no fewer than three business days’ notice to the Company, or the third business day following the final day of the marketing period. At the closing, the Company and Parent will cause the merger to be consummated by filing all necessary documentation, including a certificate of merger, and the merger will become effective as of the time that the certificate of merger has been duly filed with and accepted by the Secretary of State of the State of Delaware (or at such later date as may be agreed by the parties in writing and specified in the certificate of merger).

Payment of Merger Consideration

At the effective time of the merger, each share of Company common stock issued and outstanding immediately prior to the effective time of the merger (other than excluded shares), will be converted into the right to receive the merger consideration upon the terms and subject to the conditions set forth in the merger agreement whereupon all such shares of Company common stock will be automatically cancelled, will cease to be outstanding and will cease to exist, and the holders of such shares of Company common stock will cease to have any rights with respect to their shares of Company common stock other than the right to receive the merger consideration, without interest. The shares of Company common stock held by Parent or Merger Sub will be cancelled and cease to exist and will not be converted into the right to receive the merger consideration in the merger.

Prior to the effective time of the merger, Parent and Merger Sub will designate a paying agent to exchange the shares of Company common stock for the merger consideration. At or prior to the effective time of the merger, Parent or Merger Sub will deposit or cause to be deposited with the paying agent sufficient cash to pay the aggregate merger consideration. Parent will cause the paying agent to promptly pay each holder of record as of immediately prior to the effective time (other than those not entitled to merger consideration, as described in the preceding paragraph) the merger consideration upon the entry through a book-entry transfer agent of the surrender of such shares of Company common stock on a book-entry account statement. Interest will not be paid or accrue on any amount payable upon surrender of any of Company common stock. The paying agent will reduce the amount of any merger consideration paid by any applicable withholding taxes.

After the completion of the merger, you will cease to have any rights as a stockholder of the Company other than the right to receive the merger consideration upon the terms and subject to the conditions set forth in the merger agreement.

The paying agent will return to the Surviving Corporation or one of its affiliates, as designated by the Surviving Corporation, all funds in its possession at the one year anniversary of the effective time. After that time, if you have not received payment of the merger consideration, you may look only to the Surviving Corporation as general creditor thereof for payment of your claims for the merger consideration, subject to applicable abandoned property, escheat and other similar laws.

Provisions for Unaffiliated Stockholders

No provision has been made to grant the Company’s stockholders, other than Parent or its affiliates, access to the corporate files of the Company or any other party to the merger or to obtain counsel or appraisal services at the expense of the Company or any other such party.

Accounting Treatment

The merger will be accounted for in accordance with GAAP. The Company, as the Surviving Corporation in the merger, is considered the acquirer for accounting purposes. The merger will result in the recognition of net assets acquired based on their estimated fair value.

 

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THE MERGER AGREEMENT

The following describes the material provisions of the merger agreement, which is attached as Annex A to this proxy statement and which is incorporated by reference within this proxy statement. The description in this section and elsewhere in this proxy statement is qualified in its entirety by reference to the merger agreement. This summary does not purport to be complete and may not contain all of the information about the merger agreement that is important to you. You are encouraged to read carefully the merger agreement in its entirety before making any decisions regarding the merger because it is the principal document governing the merger.

In reviewing the merger agreement, please remember that it is included to provide you with information regarding its terms. The merger agreement contains representations and warranties by each party to the merger agreement. These representations and warranties have been made for the benefit of the other party to the merger agreement and have been qualified by certain disclosures that were made to the other party in connection with the negotiation of the merger agreement, which disclosures are not reflected in the merger agreement, and may apply standards of materiality in a way that is different from what may be viewed as material by you or other investors.

Moreover, information concerning the subject matter of the representations and warranties may change after the date of the merger agreement. The representations and warranties and other provisions of the merger agreement should not be read alone, but instead should be read together with the information provided elsewhere in this proxy statement and in the documents incorporated by reference within this proxy statement. See the section of this proxy statement entitled “Where You Can Find More Information.”

Effects of the Merger; Directors and Officers; Articles of Incorporation; Bylaws

The merger agreement provides for the merger of Merger Sub with and into the Company upon the terms, and subject to the conditions, set forth in the merger agreement. As a result of the merger, the separate corporate existence of Merger Sub will cease and the Company will continue as the Surviving Corporation as a subsidiary of Parent.

Immediately prior to, but conditioned on, the effective time of the merger, the directors of the Company will resign from the Board. The directors and officers of Merger Sub at the effective time of the merger will, from and after the effective time of the merger, be the directors and officers, respectively, of the Surviving Corporation, in each case, until their respective successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the DGCL, the charter and bylaws of the Surviving Corporation.

At the effective time of the merger, the amended and restated certificate of incorporation of the Company will be amended and restated to read in the same form as set forth in Exhibit A to the merger agreement, until thereafter amended as provided in the merger agreement or as provided by applicable law, and the bylaws of Merger Sub in effect immediately prior to the effective time of the merger will be the bylaws of the Surviving Corporation, until thereafter amended as provided in the merger agreement or as provided by applicable law.

If the merger is completed, Company common stock will be delisted from the NYSE, will be deregistered under the Exchange Act and will cease to be publicly traded.

Closing and Effective Time of the Merger

The merger agreement provides that the closing of the merger, which we refer to as the “closing,” will take place at 9:00 a.m. Eastern Time on the third business day following the day on which the last of the conditions to closing (described in the section of this proxy statement entitled “— Conditions to the Merger”) has been satisfied or waived (to the extent waivable under applicable law and the merger agreement) (other than those conditions that by their nature are to be satisfied at the closing, but subject to the satisfaction or waiver (to the extent waivable under applicable law and the merger agreement) of those conditions), or such other time and date as may be mutually agreed in writing by the Company and Parent. Notwithstanding the foregoing, if the marketing period (described below under “The Merger Agreement — Marketing Period”) has not ended at the time of the satisfaction or waiver (to the extent waivable under applicable law and the merger agreement) of the conditions, the closing will instead occur on the earlier of a day during

 

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the marketing period specified by Parent on no fewer than three business days’ notice to the Company (unless a shorter period is agreed to between Parent and the Company) and the third business day following the final day of the marketing period (subject to the satisfaction or waiver (to the extent waivable under applicable law and the merger agreement) of the conditions to closing (other than those conditions that by their nature are to be satisfied at the closing of the merger, but subject to the satisfaction or waiver (to the extent waivable under applicable law and the merger agreement) of those conditions)).

Assuming receipt of required regulatory approvals and timely satisfaction of other closing conditions, including the approval by our stockholders of the Merger Agreement Proposal, we currently expect the closing of the merger to occur in the second or third quarter of 2022.

The effective time of the merger will occur upon the certificate of merger having been duly filed with and accepted by the Secretary of State of the State of Delaware, or at such later time as the Company and Parent may agree in writing and specify in the certificate of merger.

Marketing Period

The marketing period, a time allotted to Parent and Merger Sub for purposes of marketing the debt financing, will, through and including November 9, 2022, be the first period of 17 consecutive business days throughout and at the end of which (1) Parent will have the required information (as described below) and (2) the conditions to the merger for the benefit of Parent and Merger Sub have been satisfied or waived (other than those conditions that by their nature are to be satisfied at the closing) and nothing has occurred and no condition exists that would cause any of such conditions to fail to be satisfied assuming the closing were to be scheduled for any time during such 17 consecutive business day period. If the marketing period has not expired by November 9, 2022, the marketing period will be the first period of 17 consecutive business days after such date throughout and at the end of which (1) Parent will have the required information and (2) the conditions to the merger for the benefit of Parent and Merger Sub have been satisfied or waived (other than those conditions that by their nature are to be satisfied at the closing, the condition related to the requisite Company stockholder approvals and the conditions related to the HSR Act and other antitrust laws) and nothing has occurred and no condition exists that would cause any of such conditions to fail to be satisfied assuming the closing were to be scheduled for any time during such 17 consecutive business day period; provided, that (1) if such 17 consecutive business day period will not have ended on or prior to August 19, 2022, then such 17 consecutive business day period will not commence prior to September 6, 2022, and (2) November 25, 2022 will not constitute a business day for purposes of calculating such 17 consecutive business day period

Further, the marketing period will not be deemed to have commenced if (w) any of the historical financial statements that are included in the required information become “stale,” ​(x) the Company’s auditor will have withdrawn its audit opinion with respect to any of the audited financial statements of the Company or that are included in the required information, (y) the Company restates, or the Board or the Company auditors has determined that it is necessary to restate any historical financial statements of the Company that are included in the required information or (z) the required information, taken as a whole, contains any untrue statement of a material fact or omits to state any material fact, in each case with respect to the Company, necessary in order to make the statements contained in the required information, in light of the circumstances under which they were made, not misleading. The marketing period will end on any earlier date prior to the expiration of the 17 consecutive business day period described above if the debt financing is actually funded on such earlier date.

As used in the merger agreement, “required information” means (A) (1) the audited consolidated balance sheets and the related audited consolidated statements of income or operations, stockholders’ equity and cash flows of the Company for the two most recently completed fiscal years of the Company ended at least 75 days prior to the closing date, together with all related notes and schedules thereto, and in each case accompanied by the audit reports thereon, and (2) the unaudited consolidated balance sheets and related consolidated statements of income or operations, stockholders’ equity and cash flows of the Company, reviewed by the Company’s auditors, for any subsequent fiscal quarter ended at least 40 days prior to the closing date and the portion of the fiscal year through the end of such quarter (other than in each case the fourth quarter of any fiscal year) and, in each case, for the comparable period of the prior fiscal year, together with all related notes and schedules thereto, in all cases prepared in accordance with U.S.

 

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GAAP and in compliance with Regulation S-X under the Securities Act, subject to certain exceptions; (B) certain other historical financial information reasonably necessary to allow Parent to prepare pro forma financial statements that give effect to the merger and related transactions as if such transactions had occurred as of such date at or at the beginning of such period (as applicable); (C) certain other financial data, audit reports, business and other information (including a customary “Management’s Discussion and Analysis of Financial Condition and Results of Operations” with respect to the Company’s financial statements described above), in each case to the extent the same is of the type and form customarily included in an offering memorandum for private placements of non-convertible high-yield bonds under Rule 144A promulgated under the Securities Act, or otherwise necessary to receive from the independent auditors of the Company customary “comfort” with respect to the financial information of the Company to be included in such an offering memorandum; (D) the consents of the Company’s auditors for use of their audit reports with respect to the financial statements described above in any materials relating to the debt financing or any high-yield bonds being issued in lieu of all or a portion of the debt financing; and (E) draft comfort letters form the Company’s auditors.

Treatment of Common Stock and Company Equity Awards

Each share of Company common stock issued and outstanding immediately prior to the effective time of the merger (other than the excluded shares) will be converted into the right to receive from Parent $24.65 in cash, without interest, less any applicable withholding taxes. Each share of Company common stock issued and outstanding immediately prior to the effective time of the merger that is held by Merger Sub or by the Company and not held on behalf of third parties will be cancelled without payment of any consideration. Each share of Company common stock issued and outstanding immediately prior to the effective time of the merger that is held by Parent and the CD&R Funds (in the case of shares of Company common stock held by CD&R Fund VIII, solely to the extent such shares are not validly transferred or sold to Parent prior to closing), will be converted into one share of common stock of the Surviving Corporation. Each share of common stock of Merger Sub issued and outstanding immediately prior to the effective time will be converted into one share of common stock of the Surviving Corporation.

At the effective time of the merger: (1) each then outstanding and vested stock option will be cancelled and converted into the right to receive, for each share subject to such stock option, an amount in cash equal to product of (x) the excess, if any, of the merger consideration over the exercise price per share of such stock option and (y) the number of shares subject to such stock option; (2) each then outstanding and unvested stock option will be cancelled and converted into a contingent contractual right to receive, for each share subject to such stock option, a payment in cash from the Surviving Corporation equal to the product of (x) the excess, if any, of the merger consideration over the exercise price per share of such stock option and (y) the number of shares subject to such stock option, and such resulting cash-based award will be subject to the same terms and conditions as are applicable to the corresponding stock option (including time-based vesting conditions but excluding provisions related to exercise); (3) each then outstanding restricted stock unit corresponding to shares (a “Company RSU Award”) will be cancelled and converted into a contingent contractual right to receive a cash payment from the Surviving Corporation equal to (x) the number of shares subject to such Company RSU Award multiplied by (y) the merger consideration, and such resulting cash-based award will be subject to the same terms and conditions as are applicable to the corresponding Company RSU Award (including time-based vesting conditions); (4) each then outstanding performance-based share unit award (a “Company PSU Award”) (I) granted during the 2020 calendar year (each, a “2020 Company PSU Award”) or (II) granted during the 2021 calendar year to the Company’s Chief Executive Officer or the Chief Executive Officer’s direct reports (each, a “2021 Company Executive PSU Award”) will be cancelled and converted into a contingent contractual right to receive a cash payment from the Surviving Corporation equal to (A) the number of performance share units earned under the terms of the applicable award agreement, but with the applicable total shareholder return metric determined using a per share price equal to the merger consideration and the EBITDA-based metric determined based on actual performance as of the end of the performance period applicable to such Company PSU Award multiplied by (B) the merger consideration, with the resulting cash-based award subject to the same terms and conditions as are applicable to the corresponding 2020 Company PSU Award or 2021 Company Executive PSU Award (including time-based vesting conditions and EBITDA-based vesting conditions, but excluding any vesting conditions based on total shareholder return); and (5) each then outstanding Company PSU Award granted during the 2021 calendar year that is not a 2021 Company Executive PSU Award (each, a “2021

 

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Company Non-Executive PSU Award”) will be cancelled and converted into a contingent contractual right to receive a cash payment from the Surviving Corporation equal to (A) the number of performance-based share units earned under the terms of the applicable award agreement, but with the applicable total shareholder return determined using a per share price equal to the merger consideration and the EBITDA-based metric in the applicable award agreement deemed achieved at target performance and determined without proration for any portion of the performance period that has not yet been completed, multiplied by (B) the merger consideration.

Surrender and Payment Procedures

At or prior to the effective time of the merger, Parent or Merger Sub will deposit, or will cause to be deposited, with the paying agent a cash amount in U.S. dollars sufficient to pay the aggregate merger consideration, other than in respect of the excluded shares as discussed below.

Promptly after the effective time of the merger, and in any event within five business days thereafter, the Surviving Corporation will cause the paying agent to mail to each of our holders of shares of record immediately prior to the effective time of the merger (other than holders of excluded shares) (1) a notice advising such holders of the effectiveness of the merger; (2) a letter of transmittal specifying that delivery will be effected, and risk of loss and title will pass, only upon the delivery of the share certificates representing such shares of Company common stock (or affidavits of loss in lieu of such share certificates as provided in the merger agreement) or the transfer of the shares of Company common stock represented by book-entry not held, directly or indirectly, through The Depository Trust Company to the paying agent, and such materials will be in such form and having such provisions as Parent desires with approval of the Company (such approval not to be unreasonably withheld, conditioned or delayed); and (3) instructions advising each such holder of record how to surrender his, her or its shares of Company common stock in exchange for the merger consideration. Parent will cause the paying agent to deliver to each holder of record, as promptly as reasonably practicable after the effective time of the merger, a check in the amount (after giving effect to any required tax withholdings) of merger consideration to which such holder is entitled after delivery or transfer of such shares of Company common stock. Interest will not be paid or accrue in respect of the merger consideration.

With respect to book-entry shares of Company common stock held, directly or indirectly, through The Depository Trust Company, Parent and the Company will cooperate to establish procedures with the paying agent, The Depository Trust Company, The Depository Trust Company’s nominees and other relevant intermediaries to ensure that the paying agent will transmit to The Depository Trust Company as promptly as practicable after the effective time, upon surrender of shares of Company common stock held of record by The Depository Trust Company or its nominees in accordance with The Depository Trust Company’s customary surrender procedures and such other procedures as agreed by Parent, the Company, the paying agent, The Depository Trust Company, The Depository Trust Company’s nominees and such other necessary or desirable third-party intermediaries, the merger consideration to which the beneficial owners thereof are entitled to receive as a result of the merger.

In the event of a transfer of ownership of shares of Company common stock that is not registered in the transfer records of the Company, or if the merger consideration is to be paid in a name other than that in which the share certificate surrendered or transferred in exchange therefor is registered in the transfer records of the Company, a check for any cash to be exchanged upon due surrender of the share certificates may be issued to such transferee if the share certificates formerly representing such shares of Company common stock are presented to the paying agent, accompanied by all documents reasonably required to evidence and effect such transfer and to evidence that any applicable stock transfer taxes have been paid or are not applicable.

Any holder of book-entry shares of Company common stock will not be required to deliver a share certificate or an executed letter of transmittal to the paying agent to receive the merger consideration that such holder is entitled to receive. Payment of the merger consideration with respect to book-entry shares of Company common stock will only be made to the person in whose name such book-entry shares of Company common stock are registered in the stock transfer records of the Company.

 

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From and after the effective time of the merger, there will be no transfers on the stock transfer books of the Company of the shares of Company common stock that were outstanding immediately prior to the effective time of the merger. If, after the effective time of the merger, any share certificate or acceptable evidence of a book-entry share is presented to the Surviving Corporation, Parent or the paying agent for transfer, it will be cancelled and exchanged for the cash amount in immediately available funds to which the holder is entitled to receive as a result of the merger.

If any cash deposited with the paying agent remains unclaimed by, or otherwise undistributed to, holders of shares of Company common stock by the one year anniversary of the effective time of the merger, such cash will be delivered to the Surviving Corporation or an affiliate thereof designated by the Surviving Corporation. Thereafter, holders of our common stock (other than holders of excluded shares) who have not received payment due to non-compliance with the exchange procedures will be entitled to look only to the Surviving Corporation with respect to payment of the merger consideration (after giving effect to any required tax withholdings), without any interest thereon.

Parent, the Company, Merger Sub, the Surviving Corporation and the paying agent, as applicable, will be entitled to deduct and withhold from the amounts otherwise payable pursuant to the merger agreement such amounts as it is required to deduct and withhold with respect to the making of such payment under the Code or any other applicable federal, state, local or foreign tax law. To the extent that amounts are so withheld and timely remitted to the applicable governmental authority, such amounts will be treated for all purposes of the merger agreement as having been paid to the person in respect of which such deduction and withholding was made. If Parent, the Company, Merger Sub or CD&R Fund X determines that it or any of its affiliates, permitted successors or assigns is required to deduct or withhold any amount from any payment pursuant to the merger agreement or in connection with the transactions contemplated by the merger agreement, in each case, which payment is to be made to any of Parent, the Company, Merger Sub or CD&R Fund X, then Parent or the Company, as applicable, will provide notice to the other party of the intent to deduct or withhold such amount and the basis for such deduction or withholding as promptly as reasonably practicable, and Parent, the Company and Merger Sub will and will cause their applicable affiliates, permitted successors and assigns to reasonably cooperate with one another in order to eliminate or reduce any such deduction or withholding, including providing a reasonable opportunity for the applicable payee to provide forms or other evidence that would mitigate, reduce or eliminate such deduction or withholding.

Representations and Warranties

Representations and Warranties of the Company

We made customary representations and warranties in the merger agreement that are subject, in many cases, to exceptions and qualifications contained in the merger agreement, in the Company’s confidential disclosure schedule delivered to Parent in connection with execution of the merger agreement (the “disclosure schedule”) or in certain reports filed with the SEC. These representations and warranties relate to, among other things:

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our and our subsidiaries’ due organization, good standing, existence and authority to carry on our and their businesses;

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our capitalization, including:

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the number of authorized and outstanding shares of Company common stock and Company preferred stock and the number of Company equity awards outstanding;

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that all outstanding shares of Company common stock, and all issued and outstanding equity interests of the Company’s subsidiaries, are duly authorized and validly issued in accordance with the Company’s and its subsidiaries’ organizational documents, as applicable, and are, or will be when issued, fully paid (to the extent required) and nonassessable, and have not been issued in violation of applicable securities laws or preemptive rights, rights of first refusal or other similar rights of any person;

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except as set forth in the organizational documents of the Company, the absence of preemptive rights or other outstanding rights, options, warrants, conversion rights, stock appreciation rights,

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phantom equity interests, redemption rights, repurchase rights, agreements, arrangements, calls, subscription agreements, commitments or rights of any kind obligating the issuance or sale of any equity interests or securities or obligations convertible or exchangeable for any equity interests of the Company or our subsidiaries;

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the absence of any outstanding bonds, debentures, notes or other obligations of the Company, the holders of which have the right to vote with the holders of equity interests in the Company or any of its subsidiaries on any matter;

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the absence of any agreement or understanding relating to the voting or registration of the shares of Company common stock or other equity interests of the Company or any of its subsidiaries; and

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our or our subsidiaries’ ownership of equity or long-term debt securities of any other entity;

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our corporate power and authority related to the merger agreement, including as it relates to our entry into and performance of our obligations under the merger agreement and to consummate the merger and the other transactions contemplated by the merger agreement and the enforceability of the merger agreement against us;

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that the adoption of the merger agreement and the approval of the merger by (1) the holders of a majority of the aggregate voting power of the outstanding shares of Company common stock entitled to vote on such matter and (2) the holders of a majority of the aggregate voting power of the outstanding shares of Company common stock beneficially owned by unaffiliated stockholders entitled to vote on such matter, in each case, at a stockholder meeting duly called and held for such purpose, are the only votes of the holders of shares of Company common stock necessary to approve the merger agreement and to consummate the merger and any other transactions contemplated by the merger agreement;

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the required actions by or in respect of, and filings with, governmental authorities in connection with the merger and the merger agreement;

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our execution, delivery and performance under the merger agreement, and whether such execution, delivery and performance would result in violations of, or conflicts with, our governing documents or applicable law, or any defaults, terminations, cancellations or accelerations under certain agreements or the creation of liens on any of our assets;

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our SEC filings since December 31, 2019 and the financial statements included in such SEC filings, and our disclosure controls and procedures and internal controls over financial reporting;

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our compliance with the applicable listing and corporate governance requirements of the NYSE;

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the absence of obligations or liabilities of the Company that would be required by U.S. GAAP to be reflected on a consolidated balance sheet of the Company and its subsidiaries, other than (1) obligations or liabilities reflected or reserved against in the consolidated balance sheet of the Company for the year ended December 31, 2021; (2) obligations or liabilities arising in connection with the transactions contemplated by the merger agreement; (3) obligations or liabilities incurred in the ordinary course of business since December 31, 2021; (4) executory obligations arising from any contract entered into in the ordinary course of business; or (5) obligations or liabilities that have not had, and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect (as described below);

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(1) our conduct of business in all material respects in the ordinary course of business from December 31, 2021 through the date of the merger agreement, except in connection with the Company’s sale process, the merger agreement and the transactions contemplated thereby and actions taken in good faith to respond to COVID-19 Measures (as defined below); (2) that neither the Company nor its subsidiaries has taken, or agreed to take, any action that, if taken on or after the date of the merger agreement, would have constituted a breach of certain covenants relating to mergers, dividends, changes to financial accounting policies or procedures or dispositions of material assets; and (3) the absence since January 1, 2022 of certain changes, including any change, effect, occurrence, event or development that has had or would reasonably be expected to have, individually or in the aggregate, a material adverse effect (as described below);

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the absence of certain legal proceedings, investigations and governmental orders against the Company or any of its subsidiaries;

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certain matters relating to employee benefit plans of the Company and its subsidiaries;

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since January 1, 2020, compliance with applicable laws, including anti-corruption laws, and the permits, licenses, certifications, approvals, registrations, identification numbers, consents, authorizations, franchises, variances, exemptions and orders (including all product certifications) necessary for the operation of the business of the Company and its subsidiaries as currently conducted;

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certain matters relating to material contracts;

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certain material rights to the owned real property and leases of real property of the Company and any of its subsidiaries;

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the inapplicability of anti-takeover statutes and any anti-takeover provisions in the Company’s certificate of incorporation or bylaws to the merger agreement or the transactions contemplated by it;

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certain environmental matters relating to the Company and its subsidiaries;

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certain tax matters relating to the Company and its subsidiaries;

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certain labor matters relating to the Company and its subsidiaries;

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certain intellectual property matters relating to the Company and its subsidiaries;

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certain matters relating to insurance policies;

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the absence of certain related party transactions that have not been disclosed in the company reports as of the date of the merger agreement;

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the receipt by the Special Committee of a fairness opinion;

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the accuracy of information supplied for inclusion or incorporation by reference in this proxy statement or the Schedule 13E-3 and any amendment or supplement thereto;

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the absence of any undisclosed broker’s or finder’s fees; and

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the absence of a default or event of default under the Company’s Cash Flow Credit Agreement, dated as of April 12, 2018, the Company’s ABL Credit Agreement, dated as of April 12, 2018, and the Company’s Indenture, dated as of April 12, 2018 (collectively, the “existing credit documents”), in each case, as of the date of the merger agreement and as of immediately prior to the closing.

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Material Adverse Effect

Many of our representations and warranties are qualified by, among other things, exceptions relating to the absence of a “material adverse effect,” which means any change, effect, event, occurrence or development (which we collectively refer to as an “effect”) that is materially adverse to the business or financial condition of the Company and its subsidiaries, taken as a whole, excluding any effect resulting from the following:

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changes in the economy or financial, debt, credit or securities markets generally in the United States or any other country or region in the world, or changes in conditions in the global economy generally (except to the extent the Company and its subsidiaries, taken as a whole, are disproportionately adversely affected by such effects, compared to other similarly sized and situated companies in the residential and commercial building product manufacturing sector, and then solely to the extent of any such disproportionality);

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changes generally affecting the industries (including the residential and commercial construction, manufactured housing or remodeling and renovation industries) in which the Company and its subsidiaries operate (including changes or developments in aluminum, steel or other commodity prices or the Company’s raw material inputs and end products or any change affecting the aluminum or steel industries generally) (except to the extent the Company and its subsidiaries, taken as a whole, are

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disproportionately adversely affected by such effects, compared to other similarly sized and situated companies in the residential and commercial building product manufacturing sector, and then solely to the extent of any such disproportionality);

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changes in U.S. GAAP or of applicable law, or the official interpretations thereof (except to the extent the Company and its subsidiaries, taken as a whole, are disproportionately adversely affected by such effects, compared to other similarly sized and situated companies in the residential and commercial building product manufacturing sector, and then solely to the extent of any such disproportionality);

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changes in any political or geopolitical, regulatory, legislative or social conditions, acts of war (whether or not declared), hostilities, military actions or acts of terrorism, or any escalation or worsening of the foregoing (except to the extent the Company and its subsidiaries, taken as a whole, are disproportionately adversely affected by such effects, compared to other similarly sized and situated companies in the residential and commercial building product manufacturing sector, and then solely to the extent of any such disproportionality);

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weather conditions or acts of God (including storms, earthquakes, tsunamis, tornados, hurricanes, pandemics (including SARS-CoV-2 or COVID-19, any evolutions or mutations thereof or related or associated epidemics, pandemics or disease outbreaks (“COVID-19”)), epidemics or other outbreaks of disease, quarantine restrictions, floods, droughts or other natural disasters and force majeure events) (or escalation or worsening of any such events or occurrences, including, as applicable, subsequent wave(s)) (except to the extent the Company and its subsidiaries, taken as a whole, are disproportionately adversely affected by such effects (other than any effect with respect to COVID-19 or COVID-19 Measures or any escalation or worsening thereof (including any subsequent waves)), compared to other similarly sized and situated companies in the residential and commercial building product manufacturing sector, and then solely to the extent of any such disproportionality);

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any capital market conditions, in each case in the U.S. or any other country or region in the world (except to the extent the Company and its subsidiaries, taken as a whole, are disproportionately adversely affected by such effects, compared to other similarly sized and situated companies in the residential and commercial building product manufacturing sector, and then solely to the extent of any such disproportionality);

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any quarantine, “shelter in place,” “stay at home,” workforce reduction, social distancing, shut down, closure, sequester, safety or similar law, directive, guidelines or recommendations promulgated by any governmental authority, including the Centers for Disease Control and Prevention and the World Health Organization, in each case, in connection with or in response to COVID-19 (“COVID-19 Measures”);

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a decline, in and of itself, in the price or trading volume of the shares of Company common stock of the Company on the NYSE or any other securities market or in the trading price of any other securities of the Company or any of its subsidiaries (provided that the underlying causes of any such decline may be taken into account unless (and to the extent) such underlying cause would otherwise be excluded by other clauses of this definition);

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any failure, in and of itself, by the Company to meet any internal or published projections, forecasts, estimates or predictions of revenues, earnings, cash flow or cash position or other financial or operating measures or metrics (whether such projections, forecasts, estimates or predictions were made by the Company or independent third parties) for any period (provided that the underlying causes of any such failure may be taken into account unless (and to the extent) such underlying cause would otherwise be excluded by other clauses of this definition);

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the identity of Parent or Merger Sub, or the announcement, pendency or consummation of the merger agreement or the merger, or any amendment of the Schedule 13D or Schedule 13D/A filed by the applicable CD&R Funds (including the impact on relationships with employees, customers, suppliers, distributors, partners, vendors or other persons) (other than with respect to any representation or warranty contained in the merger agreement to the extent such representation or warranty expressly addresses consequences resulting from the execution of the merger agreement or the consummation or pendency of the transactions contemplated by the merger agreement);

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any action or claim made or brought by any of the current or former stockholders of the Company (or on their behalf or on behalf of the Company) against the Company or any of its directors, officers, or employees arising out of the merger agreement or the merger or the other transactions contemplated by it;

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any action or inaction by the Company or its subsidiaries taken or omitted to be taken at the written request of Parent or Merger Sub or with the written consent of Parent or Merger Sub, or expressly required by the merger agreement; or

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the availability or cost of equity, debt or other financing to Parent or Merger Sub.

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Representations and Warranties of Parent and Merger Sub

The merger agreement also contains customary representations and warranties made by Parent and Merger Sub that are subject, in some cases, to specified exceptions and qualifications contained in the merger agreement. The representations and warranties of Parent and Merger Sub relate to, among other things:

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their due organization, existence, good standing, and authority to carry on their businesses;

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their corporate power and authority related to the merger agreement, including their power to enter into the merger agreement, perform their obligations under the merger agreement, and consummate the merger and the other transactions contemplated by the merger agreement and the enforceability of the merger agreement against them;

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the required actions by or in respect of, and filings with, governmental authorities in connection with the merger and the merger agreement;

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their execution, delivery and performance under the merger agreement, and whether such entry and performance would result in violations of, or conflicts with, their governing documents or applicable law, or any defaults, terminations, cancellations or accelerations under certain agreements or the creation of liens on any of their assets;

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the absence of certain legal proceedings or investigations against Parent or Merger Sub;

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the delivery by CD&R Fund X of a true, complete and correct copy of its duly executed limited guarantee and the delivery by the CD&R Stockholders of a true, complete and correct copy of their duly executed voting and support agreement, and the limited guarantee and the voting and support agreement being in full force and effect and enforceable against CD&R Fund X and the CD&R Stockholders, as applicable, in accordance with their terms;

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the delivery by Parent of true, correct and complete copies of fully executed equity commitment letters with respect to equity financing for the merger (the “equity financing”), debt commitment letters with respect to debt financing for the merger (the “debt financing” and together with the equity financing, the “financing”) and fee letters (the foregoing collectively, the “financing letters”), and the financing letters being in full force and effect and enforceable against the applicable counterparties thereto in accordance with their terms;

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that the financing, when funded in accordance with the financing letters and after giving effect to any “flex” provisions in or related to the debt commitment letters (including with respect to fees and original issue discounts), will provide Parent and Merger Sub with available funds sufficient for the satisfaction of Parent’s and Merger Sub’s payment obligations under the merger agreement and the financing letters, including for the payment of the required amounts (as described in the section of this proxy statement entitled “Special Factors — Financing of the Merger”);

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the capitalization and business conduct of Merger Sub;

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the solvency of Parent and its subsidiaries;

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the absence of any broker’s or finder’s fees for which the Company would be responsible;

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the accuracy of information supplied for inclusion or incorporation by reference in this proxy statement or the Schedule 13E-3 and any amendment or supplement thereto;

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the CD&R Stockholders’ ownership of shares of Company common stock as of the date of the merger agreement and as of the closing; and

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the tax residency of CD&R Fund X.

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The representations and warranties in the merger agreement of each of the Company, Parent and Merger Sub will not survive the consummation of the merger or the termination of the merger agreement pursuant to its terms.

Conduct of Our Business Pending the Merger

Under the merger agreement, between the date of the merger agreement and the earlier of the effective time of the merger and the termination of the merger agreement in accordance with its terms, except (1) as expressly contemplated, required or permitted by the merger agreement; (2) as required by applicable law; (3) as approved in writing by Parent (such approval not to be unreasonably withheld, delayed or conditioned); (4) as set forth on the disclosure schedule; or (5) subject to certain restrictions, for any necessary or advisable actions taken in good faith to respond to the actual or reasonably anticipated effects of COVID-19 or to comply with COVID-19 Measures, the Company has agreed that it will, and that it will cause its subsidiaries to, use its and their commercially reasonable efforts to conduct their respective businesses in the ordinary course of business and preserve intact their business organizations and relationships with customers, suppliers, distributors and other Persons with which it has material business dealings.

We have further agreed that, between the date of the merger agreement and the earlier of the effective time of the merger and the termination of the merger agreement in accordance with its terms, except (1) as expressly contemplated, required or permitted by the merger agreement; (2) as required by applicable law; (3) as approved in writing by Parent (such approval not to be unreasonably withheld, delayed or conditioned); (4) set forth on the disclosure schedule; or (5) subject to certain restrictions, for any necessary or advisable actions taken in good faith to respond to the actual or reasonably anticipated effects of COVID-19 or to comply with COVID-19 Measures, the Company will not, and will cause its subsidiaries not to:

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adopt any changes in the certificate of incorporation or bylaws of the Company or its subsidiaries;

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merge or consolidate the Company or any of its subsidiaries with any other third party;

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restructure, reorganize, recapitalize or completely or partially liquidate or dissolve or otherwise impose any changes or restrictions on the assets, the operations or business of the Company or any of its subsidiaries;

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issue, sell, pledge, dispose of, or encumber, among other related actions, or authorize the issuance, sale, pledge or transfer of, among other related actions, or otherwise enter into any contract or understanding with respect to the voting of any shares of Company common stock or that of any of its subsidiaries, or any security interests that can convert or exchange into, or carry the right to purchase, Company common stock or that of its subsidiaries, other than:

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any transaction among the Company and its subsidiaries or among the Company’s wholly owned subsidiaries;

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pursuant to the exercise or settlement of the Company equity awards outstanding as of the date of the merger agreement; or

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the incurrence of any liens permitted under the merger agreement;

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make any loans, advances or capital contributions to or investments in any person, other than (1) to the Company or any of its wholly owned subsidiaries and (2) operating leases and extensions of credit terms to customers in each case in the ordinary course of business consistent with past practice;

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declare, set aside, make or pay any dividend or other distribution with respect to any of its capital stock, except for dividends or other distributions paid by any wholly owned subsidiary of the Company to the Company or to any other wholly owned subsidiary of the Company;

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reclassify, split, combine, purchase or otherwise acquire, among other related actions, any shares of the Company’s capital stock or securities convertible into or exercisable for shares of its capital stock, except for (1) any such action by a wholly owned subsidiary of the Company; (2) acquisitions of shares in satisfaction of withholding obligations in respect of certain Company equity awards to the extent required by such Company equity awards, or (3) payment of the exercise price in respect of certain stock options, in the case of clauses (2) and (3), outstanding as of the date of the merger agreement pursuant to its terms or granted after the date of the merger agreement without violating the terms of the merger agreement;

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create, incur, assume or guarantee any indebtedness for borrowed money or issue any debt securities or guarantees of the same or any other indebtedness, except for (1) borrowings in the ordinary course of business under the Company’s existing revolving credit facilities (as long as any such incurrence does not and is not reasonably expected to cause the Payment Condition (as defined in the ABL Credit Agreement) to fail to be satisfied on, or as of, the closing date); (2) guarantees or credit support provided by the Company or any of its subsidiaries of the obligations of the Company or any of its subsidiaries in the ordinary course of business to the extent such indebtedness is in existence on the date of the merger agreement or incurred in compliance with clause (1); and (3) any indebtedness solely among the Company and its wholly owned subsidiaries or among the Company’s wholly owned subsidiaries;

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incur or commit to capital expenditures of $5 million individually or $10 million in the aggregate, other than those in accordance with the Company’s capital expenditure budget made available to Parent or capital expenditures as required on an emergency basis for the safety of individuals or the environment;

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other than in the ordinary course of business consistent with past practice, subject to certain exceptions, enter into certain material contracts or amend, modify or waive in a material respect or terminate certain material contracts in a manner adverse to the Company (other than expirations of any such contract in accordance with its terms);

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make any material changes with respect to financial accounting policies or procedures, except as required by changes in applicable law, proposed law or U.S. GAAP;

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settle certain actions, suits, claims, hearings, arbitrations, investigations or other proceedings for an amount in excess of $1 million individually or $5 million in the aggregate, other than where the amount paid or to be paid by the Company or any of its subsidiaries is (1) fully covered by insurance coverage or retention amounts maintained by the Company or any of its subsidiaries or (2) not materially in excess of the amount, if any, reflected or specifically reserved in the Company’s balance sheets included in documents filed or furnished to the SEC since December 31, 2019 (or the notes thereto) (with materiality measured relative to the amount so reflected or reserved, if any), in each case, as long as the settlement or compromise does not (x) impose any non-de minimis restriction on the business or operations of the Company or any of its subsidiaries (or Parent or any of its subsidiaries after the closing) or (y) include any non-de minimis non-monetary or injunctive relief, or the admission of wrongdoing, by the Company or any of its subsidiaries or any of their respective officers or directors;

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sell, lease, license, encumber (other than liens permitted under the merger agreement), permit to lapse, abandon or otherwise dispose of any material assets or property (including any material intellectual property rights), except (1) pursuant to existing contracts or commitments (or refinancings thereof); (2) as may be required by a governmental authority to permit or facilitate the consummation of the merger or any of the other transactions contemplated in the merger agreement solely to the extent required by the merger agreement; (3) transactions among the Company and its wholly owned subsidiaries or among the Company’s wholly owned subsidiaries; (4) in the ordinary course of business and in no event in an amount exceeding $1 million individually or $5 million in the aggregate;

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except for such actions required by the terms of any Company benefit plan as in effect on the date of the merger agreement: (1) increase the compensation or other benefits payable or provided to the Company’s employees or other service providers; (2) increase or accelerate or commit to accelerate the funding, payment or vesting of compensation or benefits provided under any Company benefit

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plan; (3) grant or announce any cash- or equity or equity-based incentive awards, bonus, change of control, severance or retention award to any employee or other service provider of the Company or its subsidiaries; (4) establish, adopt, enter into terminate or amend any labor agreement or material Company benefit plan (or any plan, program, agreement or arrangement that would be a Company benefit plan if in effect on the date of the merger agreement); (5) recognize or certify any labor union, labor organization, works council, or group of employees as the bargaining representative of any employees of the Company or its subsidiaries or (6) hire or terminate the employment of any employee of the Company whose annualized base compensation exceed $300,000;

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acquire any business, assets or capital stock of any person or division thereof, whether in whole or in part (and whether by purchase of stock, purchase of assets, merger, consolidation or otherwise), other than the acquisition of assets from vendors or suppliers of the Company or any of its subsidiaries in the ordinary course of business;

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cancel, modify, amend or waive or terminate any of the existing credit documents, except for modifications or amendments that would not (1) impair the ability of Parent to obtain the debt financing or any high-yield bonds being issued in lieu of all or a portion of the debt financing on the closing date; (2) reduce the ability of the Company and its subsidiaries to incur secured debt for borrowed money in the form of the debt financing or any high-yield bonds being issued in lieu of all or a portion of the debt financing on the closing date in any material respect; (3) reduce the ability of the Company and its subsidiaries to make Restricted Payments (as defined in the applicable existing credit document) on the closing date in any material respect; (4) impair the ability of the merger to be consummated in compliance with any “merger” or “fundamental changes” covenant in the existing credit documents; or (5) amend or modify the stated final maturity date of any indebtedness for borrowed money thereunder to be sooner than such maturity date as in effect as of the date of the merger agreement, amend or modify the interest rate or undrawn commitment fees payable by the Company or its subsidiaries under any such agreement in a manner materially adverse to the Company and its subsidiaries or amend or modify any such agreement to reduce the amount of the total lending commitments thereunder;

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implement or announce any permanent plant closings or permanent facility shutdown that would implicate the WARN Act;

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other than in the ordinary course of business or consistent with past practice (1) change or revoke any material tax election; (2) change any annual tax accounting period or material method of tax accounting; (3) file any material amended tax return; (4) settle or compromise any material claim related to taxes for an amount materially in excess of amounts reserved; (5) enter into any material closing agreement; (6) surrender any right to claim a material tax refund, offset or other reduction in liability for an amount materially in excess of amounts reserved; or

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agree, authorize or commit to do any of the foregoing.

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Parent, Merger Sub and their subsidiaries also agree that, from the date of the merger agreement until the effective time of the merger, they will not (1) knowingly take any action that would prevent, materially delay or materially impede the consummation of the equity financing or the debt financing; (2) acquire or agree to acquire any person (a “specified acquisition”), if the entering into a definitive agreement relating to or consummating the specified acquisition would reasonably be expected to (a) prevent, materially delay or materially impair the obtaining of, or adversely affect in any material respect the ability of Parent or its affiliates to procure, any authorizations, consents, orders, declarations or approvals of any governmental authority or the expiration or termination of any applicable waiting period necessary to consummate the transactions contemplated by the merger agreement, or (b) materially increase the risk of any governmental authority entering an order, ruling, judgment or injunction prohibiting the consummation of the transactions contemplated by the merger agreement; or (3) take any action that would reasonably be expected to prevent, materially impair or materially delay the consummation of the merger or the satisfaction of any of the closing conditions thereto.

 

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No Solicitation of Acquisition Proposals; Board Recommendation Changes

No Solicitation or Negotiation

Except as expressly permitted by the terms of the merger agreement described below, we have agreed in the merger agreement that neither the Company nor any of its subsidiaries, nor any of the employees (including any officers) and directors of the Company or its subsidiaries will, and the Company will instruct and use its reasonable best efforts to cause its and its subsidiaries’ investment bankers, attorneys, accountants and other advisors or representatives, along with employees (including any officers and directors) (which we collectively refer to as “representatives”) not to, directly or indirectly:

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initiate, solicit, propose or knowingly encourage or knowingly facilitate any inquiries or the making of any proposal or offer that constitutes, or would reasonably be expected to lead to, any acquisition proposal (as defined below);

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engage in, continue or otherwise participate in any discussions or negotiations regarding, or provide any non-public information or data relating to, any acquisition proposal or any inquiry, proposal, indication of interest or offer that would reasonably be expected to lead to an acquisition proposal;

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furnish any non-public information relating to the Company or any of its subsidiaries or afford any access to the business, properties, assets, books, records or other non-public information, or to any personnel, of the Company and its subsidiaries, in any such case with the intent to induce, or that could reasonably be expected to result in, the making, submission or announcement of, an acquisition proposal;

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approve, endorse or recommend any proposal that constitutes or would reasonably be expected to lead to an acquisition proposal; or

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resolve or agree to do any of the foregoing.

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The merger agreement defines the term “acquisition proposal” to mean any proposal or offer from a third party that, if consummated, would result in (1) a direct or indirect purchase or acquisition by such third party of the assets of the Company constituting 15% or more of the consolidated net revenues, net income or total assets (including equity securities of the subsidiaries of the Company) of the Company and its subsidiaries, taken as a whole; (2) any direct or indirect purchase or acquisition by such third party of beneficial ownership of 15% or more of the total voting power of the Company; or (3) a direct or indirect merger, joint venture, partnership, consolidation, dissolution, liquidation, tender offer, recapitalization, reorganization, share exchange, business combination or other similar transaction involving the Company pursuant to which such third party (or its equityholders) would hold securities representing 15% or more of the total voting power of the Company (or the surviving or resulting entity) after giving effect to such transaction.

We also have agreed in the merger agreement that the Company will, and will cause its subsidiaries and its and their respective employees, officers and directors to, and will instruct and use its reasonable best efforts to cause each of its and their respective other representatives to, (1) cease and cause to be terminated any discussions or negotiations with any third party that would be prohibited by the non-solicitation provisions of the merger agreement and cease providing any further information with respect to the Company or any acquisition proposal to any such third party or its or their representatives; (2) terminate all access granted to any such third party and its or their representatives to any physical or electronic data room (or any other diligence access); and (3) within two business days following the execution of the merger agreement, request in writing the prompt return or destruction of all non-public information concerning the Company and its subsidiaries theretofore furnished to any such person with whom a confidentiality agreement with respect to an acquisition proposal was entered into at any time within the five-month period immediately preceding the date of the merger agreement.

No Solicitation Exceptions

Notwithstanding the foregoing, the Company and Parent also agreed that, at any time prior to the time the Company’s stockholders adopt the merger agreement, in response to an unsolicited bona fide written

 

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acquisition proposal received after the date of the merger agreement that did not result from a breach of the non-solicitation provisions of the merger agreement, the Company may, or may authorize its representatives to:

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provide information in response to a request by a third party who has made an unsolicited bona fide written acquisition proposal if the Company receives from such third party so requesting such information a customary confidentiality agreement; provided that:

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such confidentiality agreement need not prohibit the making, or amendment, of an acquisition proposal; and

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the Company will substantially concurrently disclose (and, if applicable, provide copies of) any such information to Parent to the extent not previously disclosed or provided; or

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engage or participate in any discussions or negotiations with any third party that has made such an unsolicited bona fide written acquisition proposal,

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if and only to the extent that, in each such case referred to in clauses (1) and (2) above, the Board (acting on the recommendation of the Special Committee), or the Special Committee determines in good faith based on the information then available and after consultation with its financial advisor and outside legal counsel that such acquisition proposal either constitutes a superior proposal (as defined below) or is reasonably likely to result in a superior proposal.

Notwithstanding anything contrary in the merger agreement, the Company, directly or indirectly through one or more of its representatives, may, before the receipt of stockholder approval, seek clarification from (but not engage in negotiations or provide non-public information to) any third party that has made an acquisition proposal solely to clarify and understand the terms and conditions of such proposal to provide adequate information for the Board or Committee to make an informed determination.

The merger agreement defines the term “superior proposal” to mean a bona fide written acquisition proposal (with references to 15% being deemed to be replaced with references to 50%) by a person or group (other than the affiliated stockholders or any of their respective affiliates) that (1) was not the result of a breach of the non-solicitation provisions of the merger agreement and (2) either the Board or the Special Committee determines in good faith, after consultation with its financial advisor and outside legal counsel and after taking into account the certainty and timing of closing, financing arrangements and the form, amount and timing of payment of consideration of such proposal, the person or group making such proposal and such other legal, financial, regulatory and all other relevant aspects of such proposal, as the Board or Committee deems in good faith relevant, would, if consummated, result in a transaction that is more favorable from a financial point of view to the Company’s stockholders than the merger and the other transactions contemplated by the merger agreement.

The Company agrees to promptly (and, in any event, within 24 hours) notify Parent in writing if any inquiries, proposals, indications of interest or offers with respect to an acquisition proposal are received by, any information is requested from, or any discussions or negotiations are sought to be initiated or continued with, it or any of its representatives indicating, in connection with such notice, the material terms and conditions of any inquiry, proposal (including, for the avoidance of doubt, the form and amount of consideration and proposed financing arrangements), or offer (including the identity of the third party making such inquiry, proposal, indication of interest or offer and, if applicable, copies of any written request, inquiry, proposal, offer, indication of interest or offer, including proposed agreements, commitment letters and any other written communications, but excluding, for the avoidance of doubt, drafts of agreements to the extent they do not constitute or form a part of the acquisition proposal or request) and thereafter to keep Parent informed, on a prompt basis (and, in any event, within 24 hours), of the status and terms of any such proposal, inquiry, indication of interest or offer (including any amendments thereto and any new, amended or revised written materials relating thereto provided to the Company and its representatives) and the status of any such discussions or negotiations.

No Change of Recommendation

The merger agreement provides that (subject to certain exceptions described below) neither the Board nor the Special Committee will (1) withhold, withdraw, qualify or modify (in a manner adverse to Parent),

 

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or publicly propose or resolve to withhold, withdraw, qualify or modify (in a manner adverse to Parent), the Company recommendation (it being understood that it will be considered a modification adverse to Parent that is material if (a) any acquisition proposal structured as a tender or exchange offer is commenced and the Board, including the Special Committee, fails to publicly recommend against acceptance of such tender or exchange offer by the holders of shares of Company common stock within 10 business days of commencement thereof pursuant to Rule 14d-2 of the Exchange Act or (b) any acquisition proposal is publicly announced and the Board or the Special Committee fails to issue a public press release within 10 business days of such public announcement reaffirming the Company recommendation or stating that the Company recommendation has not been changed); (2) authorize, adopt, approve, endorse, recommend, or publicly declare advisable (or publicly propose to do any of the foregoing), any acquisition proposal; (3) fail to include the Company recommendation in the proxy statement; or (4) except as expressly permitted by, and after compliance with certain provisions of the merger agreement, approve or recommend, or declare advisable or propose to enter into, or cause or permit the Company to enter into, any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, joint venture agreement, share exchange agreement or other similar definitive agreement with respect to any acquisition proposal (other than a customary confidentiality agreement) (any of the foregoing, a “change of recommendation”).

No Change of Recommendation Exceptions

Superior Proposal

Notwithstanding the foregoing, the Company and Parent also agreed that, prior to the time the stockholders of the Company adopt the merger agreement, in response to an unsolicited bona fide written acquisition proposal that did not arise from a breach of the non-solicitation obligations set forth in the merger agreement, either the Board (acting on the recommendation of the Special Committee) or the Special Committee may effect a change of recommendation (or terminate the merger agreement in order to enter into an alternative acquisition proposal providing for a superior proposal, in which case the Company will be required to pay a termination fee of $105,000,000 to Parent, as described in the section of this proxy statement entitled “The Merger Agreement — Termination”), if, prior to taking such action, (1) the Board (acting on the recommendation of the Special Committee) or the Special Committee, as applicable, determines in good faith, after consultation with its financial advisor and outside legal counsel, that such acquisition proposal is a superior proposal, and (2) the Company complies with certain procedures that, among other things, require the Company to provide Parent with four business days’ notice that the Company has received such proposal, as described below.

Change of Recommendation or Termination Procedures

The Company further agreed that the Board (acting on the recommendation of the Special Committee) or the Special Committee will not make a change of recommendation in response to an acquisition proposal (or terminate the merger agreement in order to enter into an alternative acquisition proposal providing for a superior proposal, in which case the Company will be required to pay a termination fee of $105,000,000 to Parent), unless:

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the Company notifies Parent in writing at least four business days in advance (which we refer to as, as may be extended, the “notice period”) that it has received such proposal, specifying material terms and conditions of the proposal and providing copies of the most recent versions of all relevant documents relating to such proposal, and that the Board or Committee, as applicable, intends to change its recommendation or terminate the merger agreement, and during such four business day period, the Company will (and will cause its representatives to) be reasonably willing and available to participate in good faith negotiations with Parent and its representatives should Parent propose to make adjustments or revisions to the terms and conditions of the merger agreement, the financing letters and/or the limited guarantee; and

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•

the Board (acting on the recommendation of the Special Committee), or the Special Committee, as applicable, takes into account any adjustments or revisions to the merger agreement, the financing letters, the support agreement and/or the limited guarantee committed to by Parent in writing, if any, and any other information offered by Parent in response to such notice, and has determined in

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good faith, after consultation with its financial advisor and outside legal counsel, that the acquisition proposal remains a superior proposal.

Note, however, that in the event of any change to the financial terms of, or any other material amendment or material modification to, any superior proposal, the Company will deliver a new written notice to Parent and will comply with the procedure described in this section, except that the notice period is reduced to three business days.

Intervening Events

Notwithstanding the foregoing, the Company and Parent also agreed that, prior to the time the stockholders of the Company adopt the merger agreement, in response to an intervening event that occurs or arises after the date of the merger agreement, the Board (acting on the recommendation of the Special Committee) or Committee may effect a change of recommendation if, prior to taking such action, (1) the Board (acting on the recommendation of the Special Committee) or the Special Committee, as applicable, determines in good faith, after consultation with its financial advisor and outside legal counsel, that the failure to take such action would be reasonably likely to be inconsistent with its fiduciary obligations to the Company’s stockholders under applicable law and (2) the Company gives four business days’ prior notice to Parent that the Company has determined that an intervening event has occurred or arisen and that the Company intends to effect a change of recommendation, and after giving such notice and prior to effecting such change of recommendation, the Company must negotiate (and must cause its representatives to negotiate) in good faith with Parent and its representatives (to the extent Parent wants to negotiate) to make such adjustments or revisions to the terms and conditions of the merger agreement, the financing letters and/or the limited guarantee in response thereto, and at the end of the four business day period, prior to taking action to effect a change of recommendation, the Board (acting on the recommendation of the Special Committee) or the Special Committee takes into account any adjustments or revisions to the terms and conditions of the merger agreement, the financing letters, the support agreement and/or the limited guarantee proposed by Parent in writing and any other information offered by Parent in response to such notice, and determines in good faith, after consultation with its financial advisor and outside legal counsel, that the failure to effect a change of recommendation in response to such intervening event would be reasonably likely to be inconsistent with the fiduciary obligations owed to the Company’s stockholders under applicable law.

An “intervening event” means any material change, effect, event, occurrence or development that was not known or reasonably foreseeable by the Special Committee as of the date of the merger agreement (or, if known or reasonably foreseeable, only the portion of such change, effect, event, occurrence or development of which the magnitude or material consequences were not known or reasonably foreseeable by the Special Committee as of the date of the merger agreement); provided, however, that in no event will (1) the receipt, existence or terms of an actual or possible acquisition proposal or any matter relating thereto or the consequences thereof; (2) any change, in and of itself, in the price or trading volume of the shares of Company common stock (it being understood that the underlying facts giving rise or contributing to such change may be taken into account in determining whether there has been an intervening event, to the extent otherwise permitted by this definition); or (3) the fact, in and of itself, that the Company exceeds (or fails to meet) internal or published projections or guidance or any matter relating thereto or of consequence thereof (it being understood that the underlying facts giving rise or contributing to such change may be taken into account in determining whether there has been an intervening event, to the extent otherwise permitted by this definition), constitute or be deemed to contribute to an intervening event.

Stockholders Meeting

The Company has agreed to take, in accordance with applicable law and its certificate of incorporation and bylaws, all action necessary to convene a meeting of its stockholders, to be duly called and held as promptly as reasonably practicable after clearance of this proxy statement by the SEC (and in no event later than the 35th day following the first mailing of the proxy statement without the written consent of Parent), for the purpose of considering and voting on the approval of the merger agreement by the affirmative vote of both (1) the majority of the outstanding shares and (2) the majority of the unaffiliated shares, in each case assuming a quorum is present. The transaction is structured to require the approval of a majority of security holders unaffiliated with CD&R; however, the transaction is not structured to require approval of a

 

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majority of all security holders unaffiliated with the Company because, although the votes of CD&R and its affiliates are excluded, the votes of our directors (other than the CD&R designees on the Board) and officers are included. The Company has agreed that the Board will recommend adoption of the merger agreement to the Company’s stockholders, subject to the provisions of the merger agreement discussed above under “The Merger Agreement — No Solicitation of Acquisition Proposals; Board Recommendation Changes.”

CD&R Vote

Concurrently with the execution of the merger agreement on March 5, 2022, the CD&R Stockholders, who collectively own approximately 49% of the issued and outstanding shares of Company common stock, entered into a voting and support agreement with the Company and, solely for the purposes described therein, CD&R Fund X, in connection with the transactions contemplated by the merger agreement (as described in the section of this proxy statement entitled “Voting and Support Agreement”). Pursuant to the voting and support agreement, the CD&R Stockholders agreed to, and to cause their applicable affiliates to, affirmatively vote or execute consents with respect to all shares of Company common stock owned by them as follows, unless the Board (acting upon the recommendation of the Special Committee) or the Special Committee has made a change of recommendation that amounts to a recommendation against the Merger Agreement Proposal and that has not been rescinded or withdrawn (in which case the CD&R Stockholders will be permitted to vote their shares of Company common stock in any manner they choose in their sole discretion):

•

in favor of (1) the merger and the adoption of the merger agreement; (2) each of the other actions contemplated by the merger agreement or necessary or desirable in furtherance of the merger and the other transactions contemplated by the merger agreement; and (3) the adjournment of any meeting of the Company’s stockholders in accordance with the merger agreement; and

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against any action or agreement that would reasonably be expected to result in any of the conditions to the consummation of the merger under the merger agreement not being fulfilled.

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Filings; Other Actions; Notification

The Company, Parent and Merger Sub will cooperate with each other and use their respective reasonable best efforts to:

•

consummate and make effective the merger and the other transactions contemplated by the merger agreement as promptly as reasonably practicable;

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•

obtain from any governmental authority any consents, licenses, permits, waivers, approvals, authorizations, clearances or orders advisable or required to be obtained by Parent or the Company or any of their respective controlled affiliates as promptly as reasonably practicable, including under the antitrust laws;

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•

avoid or defend against any proceeding by any governmental authority, in connection with the authorization, execution and delivery of the merger agreement, the merger or any other transactions contemplated by the merger agreement;

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•

as promptly as reasonably practicable, and in any event within 10 business days after the date of the merger agreement, make all necessary filings under the HSR Act, and as promptly as reasonably practicable submit all other notifications, filings and registrations required or advisable under the antitrust laws, and thereafter promptly make an appropriate response to any additional information and documentary material that may be requested pursuant to any antitrust law; and

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as promptly as reasonably practicable, make any other required or advisable registrations, declarations, submissions and filings with respect to the transactions contemplated by the merger agreement required under the Exchange Act, any other applicable federal or state securities laws, and any other applicable law.

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In addition, subject to the terms of the merger agreement, if any objections are asserted with respect to the merger or any other transactions contemplated by the merger agreement under the HSR Act or any other

 

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applicable antitrust laws, or if any lawsuit or other proceeding, whether judicial or administrative, is instituted (or threatened to be instituted), including any proceeding by a governmental authority or private party, challenging the merger or any other transactions contemplated by the merger agreement as violative of any antitrust law or which would otherwise prohibit or materially impair or delay in connection with any antitrust law the consummation of the merger and any other transactions contemplated by the merger agreement, each of the Company and Parent have agreed to use (and to cause their respective subsidiaries to use) their respective reasonable best efforts to resolve any objections.

In furtherance of the foregoing, Parent will, so as to enable the closing to occur as promptly as practicable, propose, negotiate, commit and effect, by consent decree, hold separate order, or otherwise to (1) sell, divest, dispose of or otherwise hold separate (including by establishing a trust or otherwise), any of the businesses, assets or properties of Parent, the Company or their respective subsidiaries and (2) otherwise take or commit to take actions that after the closing would limit Parent’s, the Company’s or any of its subsidiaries’ freedom of action with respect to, or its ability to operate and/or retain any of the businesses, assets or properties of Parent, the Company or any of their respective subsidiaries; provided, however, that Parent and the Company will not be required to take or agree to take any such actions unless it is binding on or otherwise applicable to Parent or the Company only from and after the effective time and that Parent will not be required to take any such actions as it relates to any affiliate of Parent (other than Merger Sub, the Company and their respective subsidiaries).

Financing; Cooperation with Debt Financing

Pursuant to the merger agreement, each of Parent and Merger Sub have agreed to use their reasonable best efforts to take, or cause to be taken, all actions and do, or cause to be done, all things necessary, proper or advisable to consummate and obtain the financing on the terms (including the market “flex” provisions) set forth in the financing letters (or on other terms and conditions are acceptable to Parent, subject to the prohibited financing modifications) no later than the closing date, and to cause their respective affiliates to do the same. This includes using reasonable best efforts to (1) maintain in effect and comply with the financing letters and, to the extent entered into prior to the closing, the definitive agreements relating to the financing (the “definitive financing agreements”) in a timely and diligent manner (subject to Parent’s or Merger Sub’s right to replace, restate, supplement, modify, assign, substitute, waive or amend the financing letters in accordance with the merger agreement), (2) negotiate and enter into the definitive financing agreements with respect to the debt financing in accordance with the debt commitment letters (or on other terms and conditions that are acceptable to Parent, subject to the prohibited financing modifications, defined below), (3) satisfy on a timely basis, or obtain a waiver of, all conditions applicable to and within the control of Parent and Merger Sub in the financing letters and the definitive financing agreements, as applicable, (4) consummate the financing and cause the financing sources, CD&R Fund X and the other applicable persons to fund the financing at the closing, (5) enforce its rights under the financing letters and the definitive financing agreements, as applicable, and (6) otherwise comply with Parent’s and Merger Sub’s covenants and other obligations under the financing letters and the definitive financing agreements, as applicable.

In the event that all conditions contained in the financing letters or the definitive financing agreements, as applicable, (other than the consummation of the merger and those conditions that are to be satisfied or waived at closing) have been satisfied, Parent will use its reasonable best efforts to cause the financing sources and CD&R Fund X to comply with their respective obligations thereunder, including to fund the financing, including by enforcing its rights under the financing letters, if necessary. Notwithstanding anything to the contrary in the merger agreement, nothing contained in the foregoing will require either Parent or Merger Sub to seek the equity financing from any source other than CD&R Fund X, or in any amount in excess of that contemplated by the equity commitment letters, or incur or pay any fees to obtain a waiver of any term of the debt commitment letters or pay any material fees that are, in the aggregate, in excess of those contemplated by the equity commitment letter or the debt commitment letters. Without limiting the generality of the foregoing, to the extent necessary in order to consummate the closing on the closing date, Parent will deliver a pre-marketing notification (as defined in the debt commitment letters) and exercise its rights to reallocate the commitments as among the facilities contemplated by the debt commitment letters.

Parent and Merger Sub have agreed that prior to the closing date, they will not, without the prior written consent of the Company, agree to or permit any termination of or amendment, replacement, supplement or

 

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modification, or any waiver of, any provision or remedy under, the financing letters or the definitive financing agreements, as applicable, if doing so would (1) reduce the aggregate amount of the financing (including by increasing the amount of fees to be paid or original issue discount as compared to the fees and original issue discount contemplated by the debt commitment letters on the date of the merger agreement unless the amount of the debt financing or equity financing is increased by a corresponding amount) such that Holdings, Parent or Merger Sub would not have sufficient available funds necessary to pay the required amounts (as described in the section of this proxy statement entitled “Special Factors — Financing of the Merger”), (2) impose new or additional (or adversely modify any existing) conditions to the consummation of any portion of the financing, in each case, in a manner that would reasonably be expected to make the funding of the financing less likely to occur or prevent, hinder or delay the closing, (3) adversely impact the ability of either Parent or Merger Sub to enforce its rights against other parties to the financing letters or, to the extent entered into prior to the Closing, the definitive financing agreements, or (4) otherwise reasonably be expected to prevent or hinder or materially delay the closing (clauses (1) through (4), collectively, the “prohibited financing modifications”). Notwithstanding the foregoing, any amendment, supplement or modification to effectuate any market “flex” terms contained in the debt commitment letters and/or redacted fee letters provided as of the date hereof or to add or replace lenders, lead arrangers, bookrunners, syndication agents or other similar entities (or titles with respect to such entities) thereto are permitted under the merger agreement and will not require written consent of the Company. Parent has agreed to promptly deliver to the Company copies of any written amendment, modification, supplement, consent or waiver to or under any financing letter, any related redacted fee letter or, to the extent entered into prior to the closing, the definitive financing agreements promptly upon execution thereof.

Parent has agreed to, upon the Company’s reasonable request, keep the Company informed on a reasonably prompt basis and in reasonable detail of the status of its efforts to arrange the debt financing and provide to the Company copies of the material definitive documents for the debt financing. Parent and Merger Sub have agreed to give the Company prompt written notice of, and, subject to applicable legal privilege or confidentiality obligations, and provide any information reasonably requested by the Company relating to (1) any material breach, default, termination, cancellation or repudiation by any party to any of the financing letters or, to the extent entered into prior to the closing, the definitive financing agreements, of which Parent or Merger Sub becomes aware, (2) the receipt by Parent or Merger Sub of any written notice or communication from any financing source or any party to the equity commitment letter with respect to any (a) material breach, default, termination, cancellation or repudiation by any party to any of the financing letters (or, to the extent entered into prior to the closing, any definitive financing agreements) of any provisions thereof or (b) material dispute or disagreement between Parent and any financing sources or among any parties to any of the financing letters or any definitive document related to the financing, in each case regarding the financing, and (3) the occurrence of an event or development that could reasonably be expected to adversely impact the ability of Parent or Merger Sub to obtain all or any portion of the financing necessary to fund the required amounts on the closing date.

If all or any portion of the debt financing becomes unavailable on the terms and conditions contemplated by the debt commitment letters (other than (1) as a sole result of the Company’s breach of the merger agreement or (2) if and for so long as the Company is in breach of its obligations under the merger agreement and such breach would be the sole cause of certain conditions to the obligations of the parties to the merger agreement not to be satisfied) and such portion is necessary to fund the required amounts on the closing date, (a) Parent will promptly notify the Company in writing of such unavailability and the reason therefor and (b) Parent and Merger Sub will use their reasonable best efforts to arrange and obtain, as promptly as practicable, alternative financing from the same or alternative sources in an amount sufficient, together with the remaining available Financing to fund the required amounts on the closing date (“alternative debt financing”); provided that Parent will not be required to arrange or obtain any alternative debt financing having terms and conditions that are less favorable to Parent and Merger Sub (or their respective affiliates) than the terms and conditions set forth in the debt commitment letters and the redacted fee letters. References to the “financing” herein include the financing contemplated by the financing letters as permitted to be amended, modified, supplemented, waived or replaced by the foregoing and any alternative debt financing.

The Company has agreed to use its reasonable best efforts to provide customary cooperation to Parent and Merger Sub in connection with the debt financing, and to cause its subsidiaries and their respective

 

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representatives to provide such cooperation. Such cooperation may include (1) providing Parent and Merger Sub with the required information; (2) participation in investor and lender meetings, presentations, road shows, due diligence sessions, drafting sessions, and sessions with ratings agencies in connection with the contemplated debt financing or any high-yield bond issuance in lieu of all or part of such debt financing; (3) assistance in preparing materials for rating agency presentations, offering documents, private placement memoranda, bank information memoranda, syndication memoranda, offering memoranda, lender presentations, confidential information memoranda, and other customary marketing documents in connection with the debt financing or high-yield bond issuance in lieu of all or part of such debt financing; (4) assistance with the financing sources’ due diligence and providing customary officer certificates and authorization letters in connection with the debt financing; (5) assistance in connection with Parent’s preparation of pro forma financial statements of the Company; (6) assistance in the preparation, execution and delivery of pledge and security documents, other definitive financing documents, closing certificates and related documents in connection with the debt financing or high-yield bond issuance in lieu of all or part of such debt financing; (7) provision of all documentation and other information reasonably requested under applicable “know your customer” and anti-money laundering rules and regulations, and providing certification regarding beneficial ownership; (8) helping to ensure that syndication efforts for the debt financing or any high-yield bond issuance benefit from the Company’s existing lending and banking relationships; (9) cooperating with Parent’s efforts to obtain consents, landlord waivers and estoppels, non-disturbance agreements, non-invasive environmental assessments, legal opinions, surveys, and title insurance; (10) taking certain actions reasonably requested to permit the consummation of the debt financing or any high-yield bonds in lieu thereof; (11) causing applicable auditors to furnish customary comfort letters and consents and attend accounting due diligence and drafting sessions; (12) granting to the lenders in respect of the debt financing reasonable access to the Company’s properties, rights, assets, and cash management and accounting systems; and (13) furnishing field examinations, collateral audits and asset appraisals and surveys.

Notwithstanding the foregoing, (1) in no event will the Company or any of its subsidiaries be required to provide any such cooperation to the extent it interferes unreasonably with the ongoing operations of the Company and its subsidiaries; (2) no obligation of the Company or its subsidiaries or any of their respective representatives on account of the debt financing will be effective until the closing date, except in the case of certain customary certificates, authorization letters and representation letters; (3) in no event will the Company or its subsidiaries be required to pay any commitment or other fee, enter into any definitive agreement or agree to provide any indemnity in connection with the financing that is effective prior to the closing date; (4) the Company will not be required to perform any action that would conflict with or violate the Company’s or any of its subsidiaries’ organizational documents or any applicable laws or result in, prior to the closing date, the contravention of any material contract to which the Company or its subsidiaries is a party; (5) neither the Company or its subsidiaries nor any director, officer or employee thereof will be required to pass resolutions or consents to approve or authorize the execution of the debt financing (except those which are subject to the occurrence of the closing passed by directors or officers continuing in their positions following the closing), or execute any document or contract (except in the case of certain certificates, authorization letters and representation letters) prior to the occurrence of the closing in connection with the debt financing; (6) none of the Company or its subsidiaries or any of their respective representatives will be required to disclose or provide any information in connection with the financing that is subject to attorney-client privilege or could result in the disclosure of any trade secrets or the violation of any confidentiality obligation; (7) subject to certain limited exceptions, none of the Company or its subsidiaries or any of their respective representatives will be required to prepare or deliver any financial information in a form not customarily prepared by the Company or its subsidiaries in the ordinary course of their business, any financial information with respect to a fiscal period that has not yet ended or any pro forma financial information or projections; (8) none of the Company or its subsidiaries or any of their respective representatives will be required to deliver any legal opinion in connection with the debt financing; (9) none of the Company or its subsidiaries or any of their respective representatives will be required to take any action that would cause the Company or any of its subsidiaries to breach any representation, warranty, covenant or agreement in the merger agreement; and (10) none of the Company or its subsidiaries or any of their respective Representatives will be required to take any action that could reasonably be expected to cause any director, officer or employee or stockholder of the Company or any of its subsidiaries to incur personal liability.

Parent and Merger Sub have agreed to reimburse and indemnify Company for certain expenses and damages incurred in connection with the Company’s cooperation with the debt financing, in the event the closing will not occur.

 

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Employee Benefits Matters

Parent has agreed that each employee of the Company or its subsidiaries as of immediately prior to the closing date of the merger who continues to be employed with the Company or its subsidiaries immediately following the closing date of the merger (each such employee, a “Continuing Employee”) will, (1) during the period commencing on the closing date of the merger and ending on the first anniversary thereof (or the date of termination of employment of the relevant Continuing Employee, if sooner), be provided with (a) a base salary or base wage no less than the base salary or base wage provided to such Continuing Employee by the Company or its subsidiaries immediately prior to the effective time of the merger and (b) an annual target cash bonus opportunity that is no less favorable than the annual target cash bonus opportunity as in effect for such Continuing Employee immediately prior to the effective time of the merger and (2) during the period commencing on the closing date of the merger and ending on December 31, 2022 (or the date of termination of employment of the relevant Continuing Employee, if sooner), be provided with employee benefits (excluding equity or equity-based, defined benefit pension, post-employment welfare and nonqualified deferred compensation benefits) that are substantially comparable in the aggregate to the employee benefits (subject to the same exclusions) provided to such Continuing Employee immediately prior to the effective time of the merger (excluding, unless otherwise required by applicable law, equity or equity-based compensation, long-term incentives, defined benefit pension, nonqualified deferred compensation and retiree or post-termination welfare benefits). Additionally, Parent has agreed that each Continuing Employee who experiences a severance-qualifying termination of employment within 12 months following the closing date of the merger will be provided with severance payments and benefits no less favorable than those that would have been provided to such Continuing Employee upon such a qualifying termination under the applicable severance policy or individual employment, severance or separation agreement or other arrangement in effect immediately prior to the effective time of the merger, under circumstances that would have given the Continuing Employee a right to severance payments and benefits under such plan, agreement or arrangement.

Parent has agreed to use commercially reasonable efforts to cause (1) any pre-existing conditions or limitations and eligibility waiting periods under any group health plans of Parent or its affiliates in which Continuing Employees participate in the year in which the closing date of the merger occurs to be waived with respect to the Continuing Employees and their eligible dependents to the extent such conditions or limitations were waived or satisfied under the corresponding benefit plan; (2) the amount of eligible expenses incurred by each Continuing Employee and his or her eligible dependents during the portion of the plan year ending on the closing date of the merger that were credited to deductible and maximum out-of-pocket co-insurance requirements under the group health benefit plans to be credited for purposes of satisfying the corresponding deductible and maximum out-of-pocket co-insurance requirements under the corresponding benefit plans of Parent and its affiliates for the applicable plan year; and (3) any of its (or its affiliates’) employee benefit plans (including disability pay continuation plans) in which the Continuing Employees are entitled to participate to take into account for purposes of eligibility, vesting (other than with respect to future equity awards) and future vacation benefit accrual thereunder, service by such Continuing Employees to the Company or any of its subsidiaries or predecessors as if such service were with Parent, to the same extent and for the same purpose as such service was credited under a comparable benefit plan, in each case, except to the extent it would result in a duplication of compensation benefits.

The Company was permitted to determine the final amounts payable under the Company’s annual bonus plans in respect of the 2021 fiscal year in accordance with the terms of the applicable bonus plan, and paid such amounts in the ordinary course of business at such time annual bonuses have historically been paid by the Company.

Under the merger agreement, the parties to the merger agreement acknowledge and agree that the transactions contemplated by the merger agreement will not constitute a “change in control,” “change of control” or term or concept of similar import of the Company and its subsidiaries under the terms of any employee benefit plans, agreements or arrangements.

 

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Conditions to the Merger

The respective obligations of the Company, Parent and Merger Sub to effect the merger are subject to the satisfaction or waiver at or prior to the effective time of the merger of the following conditions:

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the adoption of the merger agreement, and the approval of the merger and the other transactions contemplated by the merger agreement, by the affirmative vote of both (1) the majority of the outstanding shares and (2) the majority of the unaffiliated shares (the “requisite Company stockholder approvals”), have been obtained;

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any notification and waiting period requirements applicable to the consummation of the merger under the HSR Act has expired or been terminated and the approvals, clearances or expirations of waiting periods under the other specified antitrust laws have been obtained or deemed obtained as a result of the expiry of applicable waiting periods; and

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no court or other governmental authority has enacted, announced, issued, promulgated, enforced or entered any law or order (whether temporary, preliminary or permanent) that restrains, enjoins, renders illegal or otherwise prohibits the consummation of the merger.

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The obligations of Parent and Merger Sub to effect the merger are also subject to the satisfaction or waiver by Parent at or prior to the effective time of the merger of the following additional conditions:

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the representations and warranties of the Company regarding the absence of a material adverse effect since January 1, 2022 and the absence of a default or event of default under the existing credit documents must be true and correct as of date of the merger agreement and will be true and correct as of the closing date of the merger;

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the representations and warranties of the Company regarding certain aspects of its capital structure are true and correct as of the date of the merger agreement and will be true and correct as of the closing date (except to the extent that any such representation or warranty expressly speaks as of a particular date or period of time, in which case as of such particular date or period of time), except for any inaccuracies that would result in no more than a de minimis increase in the aggregate amount of the merger consideration and the aggregate amount to be paid in respect of Company’s equity awards pursuant to the merger agreement;

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the representations and warranties of the Company regarding certain aspects of its capital structure, the organization, good standing and qualification, corporate authority, approval and fairness, inapplicability of certain takeover statutes and disclosure of broker’s and finder’s fees must be true and correct in all material respects as of the date of the merger agreement and will be true and correct as of the closing date of the merger (other than such representations and warranties that expressly speak as of a particular date or period of time, which must be so true and correct as of such specific date);

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the Company’s other representations and warranties set forth in the merger agreement (disregarding all qualifications relating to materiality or material adverse effect or any similar standard or qualification) must be true and correct as of the date of the merger agreement and will be true and correct as of the closing date of the merger (except to the extent that any such representation and warranty that expressly speaks as of a particular date or period of time, in which case such representation or warranty must be true and correct as of such specific date), except as have not had, and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect;

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the Company must have performed in all material respects all obligations required to be performed by the Company under the merger agreement at or prior to the closing date of the merger; and

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Parent and Merger Sub must have received from the Company a certificate signed by the Chief Executive Officer or Chief Financial Officer of the Company, certifying that all of the above conditions have been satisfied.

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The Company’s obligation to effect the merger is also subject to the satisfaction or waiver by the Company at or prior to the effective time of the merger of the following additional conditions:

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Parent’s and Merger Sub’s representations and warranties set forth in the merger agreement must be true and correct as of the date of the merger agreement and will be true and correct as of the closing date of the merger (except to the extent that any such representation and warranty that expressly speaks as of a particular date or period of time, in which case such representation or warranty must be true and correct as of such specific date), except as would not, individually or in the aggregate, reasonably be expected to prevent the ability of Parent or Merger Sub to consummate the merger and deliver the merger consideration in accordance with the merger agreement;

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each of Parent and Merger Sub must have performed in all material respects all obligations required to be performed by Parent and Merger Sub under the merger agreement at or prior to the closing of the merger; and

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the Company must have received a certificate executed by an executive officer of Parent certifying that all of the above conditions have been satisfied.

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Termination

The Company and Parent may, by mutual written consent, terminate the merger agreement and any other transactions contemplated by the merger agreement and abandon the merger at any time prior to the effective time of the merger.

The merger agreement may also be terminated and the merger abandoned at any time prior to the effective time of the merger, as follows:

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by either Parent or the Company, if:

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