▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & CO.
INVESTMENT BANKERS
September 4, 1997
Board of Directors
National Picture & Frame Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Members of the Board:
National Picture & Frame Company (the "Company"), NPF Holding
Corporation ("Parent"), NPF Acquisition Corporation ("Buyer") and wholly owned
subsidiary of Parent, and Colonnade Capital, L.L.C. ("Colonnade") have entered
into an Agreement and Plan of Merger dated as of September 4, 1997 (the
"Agreement") pursuant to which Buyer will make a tender offer (the "Offer") for
any and all shares of the Company's common stock (the "Shares") for
consideration of $12.00 per share in cash. Following consummation of the Offer,
Buyer will merge with and into the Company (the "Merger"), each remaining Share
will be converted into the right to receive $12.00 in cash, and the Company will
become a wholly owned subsidiary of Parent.
We have been requested by the Board of Directors of the Company to
render our opinion with respect to the fairness, from a financial point of view,
to the Company's shareholders of the consideration to be received in the Offer
and the Merger.
In arriving at our opinion, we have, among other things:
(i) reviewed the financial terms and conditions of the
Agreement;
(ii) analyzed certain historical business and financial
information relating to the Company, including publicly
available information concerning the Company;
(iii) reviewed certain financial forecasts and other data
provided to us by the management of the Company relating to
its business;
(iv) conducted discussions with members of the senior management
of the Company with respect to its business and prospects;
(v) reviewed public information with respect to certain other
companies in lines of businesses we believe to be generally
comparable to the business of the Company;
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ - PHONE 704/▇▇▇-▇▇▇▇ -
FAX 704/▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & CO.
INVESTMENT BANKERS
Board of Directors
National Picture & Frame Company
September 4, 1997
Page 2
(vi) reviewed the financial terms of certain business
combinations involving companies in lines of business we
believe to be generally comparable to the business of the
Company;
(vii) reviewed the historical stock prices and trading volumes of
the Shares; and
(viii) conducted such other financial studies, analyses, and
investigations as we deemed appropriate.
In connection with our review, we have relied upon the accuracy and
completeness of the foregoing financial and other information, and have not
assumed any responsibility for any independent verification of such information
or any independent valuation or appraisal of any of the assets or liabilities of
the Company. With respect to the financial projections, we have assumed that
they have been reasonably prepared and reflect the best current estimates and
judgments of the Company's management as to the future financial performance of
the Company. We assume no responsibility for and express no view as to such
forecasts or the assumptions on which they are based. In arriving at our
opinion, we have conducted only a limited physical inspection of the properties
and facilities of the Company and have not made or obtained any evaluations or
appraisals of the assets or liabilities of the Company.
Further, our opinion is necessarily based on economic, monetary,
market, and other conditions as in effect on, and the information made available
to us as of, the date hereof.
In rendering our opinion, we have assumed that the Offer and the Merger
will be consummated on the terms described in the Agreement that we reviewed,
without any waiver of any material terms or conditions by the Company.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co. is an investment banking firm that is
involved on an ongoing basis in the valuation of businesses and their securities
in connection with mergers, acquisitions, divestitures, leveraged buyouts, and
private placements of debt and equity securities.
We have acted as financial advisor to the Board of Directors of the
Company in connection with the Offer and the Merger. In connection with our
engagement, we solicited from independent parties indications of interest in a
possible acquisition of the Company, received proposals, and held preliminary
discussions with certain interested parties prior to the date of the Agreement.
We have received an advisory fee and will receive an additional fee for our
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & CO.
INVESTMENT BANKERS
Board of Directors
National Picture & Frame Company
September 4, 1997
Page 3
services which is contingent upon the consummation of the Offer. In addition,
the Company has agreed to indemnify us for certain liabilities that may arise
out of the rendering of this opinion.
Our engagement and the opinion expressed herein are solely for the
benefit of the Company's Board of Directors and are not on behalf of, and are
not intended to confer rights or remedies upon Parent, Buyer, Colonnade, any
shareholders of the Company or Parent, or any other person. This opinion is not
intended to be and does not constitute a recommendation to any shareholder of
the Company as to whether to accept the consideration proposed in the Offer. It
is understood that this letter may not be disclosed or otherwise referred to
without our prior consent.
Based upon our analysis and subject to the foregoing, it is our opinion
that, as of the date hereof, the consideration to be offered to the shareholders
of the Company pursuant to the Offer and the Merger is fair to such shareholders
from a financial point of view.
Sincerely,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & CO.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇
-----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇
RGC:sbg