OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES
OF CLASS A COMMON STOCK
AND CLASS B COMMON STOCK
OF
U.S. FRANCHISE SYSTEMS, INC.
AT
$5.00 NET PER SHARE
BY
USFS ACQUISTION CO.
A WHOLLY OWNED SUBSIDIARY OF
PRITZKER FAMILY BUSINESS INTERESTS
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THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, NOVEMBER 1, 2000, UNLESS THE OFFER IS EXTENDED.
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October 3, 2000
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
We have been appointed by USFS Acquisition Co., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of Pritzker family business interests
("Parent"), to act as Dealer Manager in connection with its offer to purchase
all outstanding shares of Class A Common Stock, par value $0.01 per share, and
Class B Common Stock, par value $0.01 per share (collectively, the "Shares"), of
U.S. Franchise Systems, Inc., a Delaware corporation (the "Company"), at a
purchase price of $5.00 per Share, net to the seller in cash, without interest
thereon (the "Purchase Price"), upon the terms and subject to the conditions set
forth in the Offer to Purchase dated October 3, 2000 (the "Offer to Purchase")
and the related Letter of Transmittal (which, as amended or supplemented from
time to time, together constitute the "Offer") enclosed herewith.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN
THE OFFER TO PURCHASE) A NUMBER OF SHARES THAT, TOGETHER WITH THE SHARES OWNED
BY THE PURCHASER, SDI, INC., HSA PROPERTIES, INC., MERIDIAN ASSOCIATES, L.P. AND
THEIR AFFILIATES, WOULD CONSTITUTE A MAJORITY OF THE OUTSTANDING SHARES AS OF
THE DATE THE SHARES ARE ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER AND (2) THE
EXPIRATION OR TERMINATION OF THE WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED. SEE "INTRODUCTION" AND "THE
TENDER OFFER--CONDITIONS TO THE OFFER" OF THE OFFER TO PURCHASE.
For your information and for forwarding to your clients for which you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. The Offer to Purchase dated October 3, 2000;
2. The Letter of Transmittal for your use and for the information of
your clients in accepting the Offer and tendering Shares (including
instructions and Substitute Form W-9);
3. A copy of the Company's Solicitation/Recommendation Statement on
Schedule 14D-9 which has been filed by the Company with the Securities and
Exchange Commission;
4. A form of letter that may be sent to your clients for whose accounts
you hold Shares registered in your name or in the name of your nominee, with
space for obtaining such clients' instructions with regard to the Offer;
5. Notice of Guaranteed Delivery to be used to accept the Offer if the
Shares and all other required documents cannot be delivered to SunTrust
Bank, as Depositary for the Offer, prior to the Expiration Date, or if the
procedure for book-entry transfer cannot be completed on a timely basis;
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
7. A return envelope addressed to the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON NOVEMBER 1, 2000, UNLESS THE OFFER IS EXTENDED.
The Offer is being made pursuant to the Acquisition Agreement dated as of
September 18, 2000 (the "Acquisition Agreement"), by and among the Company,
SDI, Inc., Meridian Associates, L.P. and HSA Properties, Inc., pursuant to
which, following the consummation of the Offer and subject to the satisfaction
or waiver of certain conditions, the Purchaser will be merged with and into the
Company, with the Company surviving the merger as a majority owned subsidiary of
the Parent (the "Merger"). In the Merger, each outstanding Share (other than
Shares owned by the Purchaser) will be converted into the right to receive $5.00
per Share, net to the Seller in cash, without interest, as set forth in the
Acquisition Agreement and described in the Offer to Purchase.
The Board of Directors of the Company, based on the recommendation of the
independent directors of the Board, has (1) approved and adopted the Acquisition
Agreement and approved the Offer, the Merger and the related transactions, (2)
determined that the Offer and the Merger are fair to the Company's stockholders
(other than certain affiliated stockholders described in the Offer to Purchase)
and (3) recommends that the Company's stockholders accept the Offer and tender
their Shares pursuant to the Offer.
In order to accept the Offer, (1) a properly completed, and duly executed
Letter of Transmittal (or a facsimile thereof), including any required signature
guarantees, or, in the case of a book entry transfer, an Agent's Message (as
defined in Instruction 2 to the Letter of Transmittal), (2) either
certificate(s) representing the tendered Shares or confirmation of book-entry
transfer of the Shares and (3) any other documents required by the Letter of
Transmittal should be sent to the Depositary prior to the Expiration Date, in
accordance with the instructions set forth on the Offer to Purchase and the
Letter of Transmittal.
Any holder who desires to tender Shares and whose Share certificate(s) are
not immediately available or cannot be delivered to the Depositary prior to the
Expiration Date or who cannot comply with the procedure for book-entry transfer
described in the Offer to Purchase on a timely basis or who cannot deliver any
required documents to the Depositary prior to the Expiration Date, may tender
such Shares by following the procedure for guaranteed delivery set forth in "The
Tender Offer--Procedure for Tendering Shares--Guaranteed Delivery" of the Offer
to Purchase.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker, dealer or other person for soliciting tenders of Shares pursuant to the
Offer. The Purchaser will, however, upon request, reimburse you for reasonable
and customary handling and mailing expenses incurred by you in forwarding any of
the enclosed materials relating to the Offer to your customers that beneficially
own Shares held by you as a nominee or in a fiduciary capacity. The Purchaser
will pay all stock transfer taxes applicable to its purchase of Shares pursuant
to the Offer, except as provided in the Offer to Purchase and the Letter of
Transmittal.
Any questions or requests for assistance you have regarding the Offer may be
directed to, and additional copies of the enclosed materials may be obtained
from, the undersigned or Georgeson
Shareholder Communications Inc., the Information Agent for the Offer, at their
respective addresses and telephone numbers set forth on the back cover of the
Offer to Purchase.
Very truly yours,
Georgeson Shareholder Securities Corporation
Enclosures
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE
APPOINTMENT OF YOU OR ANY OTHER PERSON AS AN AGENT OF THE PURCHASER, PARENT, THE
COMPANY, THE DEPOSITARY OR THE INFORMATION AGENT, OR AUTHORIZE YOU OR ANY OTHER
PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN
CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE
STATEMENTS CONTAINED HEREIN.