<PAGE>
EXHIBIT (a)(1)(i)
CAREY INTERNATIONAL LOGO
August 3, 2000
Dear Stockholders:
On behalf of the Board of Directors of Carey International, Inc. (the
"Company"), I am pleased to inform you that on July 19, 2000 the Company
entered into a definitive Agreement and Plan of Merger (the "Merger
Agreement") with Limousine Holdings, LLC ("Parent"), Aluwill Acquisition Corp.
("Acquisition Company"), a subsidiary of Parent, and Eranja Acquisition Sub,
Inc., affiliates of Chartwell Investments II LLC, a New York private-equity
firm, and Ford Motor Company, pursuant to which the Company and Acquisition
Company have today commenced a tender offer to purchase all of the outstanding
shares (the "Shares") of the Company's common stock at $18.25 per Share in
cash without interest (the "Offer").
Your Board of Directors has unanimously approved the Merger Agreement and
the transactions contemplated thereby, including the Offer and the Merger (as
defined below), and has determined that the Offer and the Merger are
advisable, fair to and in the best interests of the stockholders of the
Company. Your Board of Directors unanimously recommends that stockholders
accept the Offer and tender their Shares in accordance with its terms.
In arriving at its recommendation, the Board of Directors gave careful
consideration to the factors described in the enclosed Offer to Purchase
(which has been filed with the Securities and Exchange Commission), including,
among other things, (i) the recommendation of a special committee composed of
outside members of the Board and the opinion dated July 15, 2000 of Friedman
Billings Ramsey & Co., Inc., the financial advisor to the special committee of
the Board, that, as of such date and subject to the assumptions, limitations
and qualifications set forth in the opinion, the $18.25 per Share cash
consideration to be received by the holders of Shares in the Offer and the
Merger is fair to such holders (other than certain management holders) from a
financial point of view and (ii) the opinion dated July 15, 2000 of Benedetto,
Garland & Company, Inc., the financial advisor to the Board, that, as of such
date and subject to the assumptions, limitations and qualifications set forth
in the opinion, the $18.25 per Share cash consideration to be received by the
holders of Shares in the Offer and the Merger is fair to such holders (other
than certain management holders) from a financial point of view.
Consummation of the Offer is subject to, among other things, (i) at least
5,216,072 Shares, which number of Shares constitutes a majority of the Shares
outstanding (including the Shares issuable upon exercise of certain
outstanding options and warrants), being validly tendered and not withdrawn
prior to the expiration of the Offer and (ii) receipt of funds from lenders to
the Company and Acquisition Company and Parent's capital contribution to
Acquisition Company sufficient to, among other things, purchase the Shares
tendered in the Offer.
Following the successful completion of the Offer, upon approval by a
stockholder vote, if required, Acquisition Company or Eranja Acquisition Sub,
Inc. will be merged with and into the Company (the "Merger"), and all Shares
not purchased pursuant to the Offer or in related transactions will be
converted into the right to receive $18.25 per Share in cash without interest
(except any Shares as to which the holder has properly exercised appraisal
rights).
In order to facilitate your review of the Offer we are attaching the Offer
to Purchase and various materials relating to the Offer, including a Letter of
Transmittal, which are necessary for tendering your Shares in the Offer. These
documents state the terms and conditions of the Offer and provide instructions
on how to tender your Shares. I urge you to read these documents carefully in
making your decision on whether to tender your Shares pursuant to the Offer.
Very truly yours,
/s/ Vincent A. Wolfington
Vincent A. Wolfington
Chairman of the Board and
Chief Executive Officer
<PAGE>
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
of
CAREY INTERNATIONAL, INC.
at
$18.25 Net Per Share
by
ALUWILL ACQUISITION CORP.
and by
CAREY INTERNATIONAL, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
AUGUST 31, 2000, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED
AS OF JULY 19, 2000 (THE "MERGER AGREEMENT"), BY AND AMONG CAREY
INTERNATIONAL, INC. ("CAREY INTERNATIONAL"), LIMOUSINE HOLDINGS, LLC
("PARENT"), ALUWILL ACQUISITION CORP. ("ACQUISITION COMPANY") AND ERANJA
ACQUISITION SUB, INC. THE BOARD OF DIRECTORS OF CAREY INTERNATIONAL HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER (AS DEFINED HEREIN) AND THE MERGER (AS DEFINED
HEREIN), AND HAS DETERMINED THAT THE OFFER AND THE MERGER ARE ADVISABLE, FAIR
TO, AND IN THE BEST INTERESTS OF THE STOCKHOLDERS OF CAREY INTERNATIONAL. THE
BOARD OF DIRECTORS OF CAREY INTERNATIONAL UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT THERETO.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST
5,216,072 SHARES, WHICH NUMBER OF SHARES CONSTITUTES A MAJORITY OF THE SHARES
OUTSTANDING (INCLUDING FOR THESE PURPOSES SHARES ISSUABLE UPON THE EXERCISE OF
COMPANY OPTIONS (AS DEFINED HEREIN) BY PERSONS WHO HAVE NOT AGREED TO ENTER
INTO OPTION EXERCISE AGREEMENTS (AS DEFINED HEREIN) AFTER GIVING EFFECT TO THE
CANCELLATION OF ANY SHARES PURCHASED BY CAREY INTERNATIONAL) AND (2) CAREY
INTERNATIONAL AND/OR ACQUISITION COMPANY HAVING RECEIVED OR HAVING AVAILABLE
THE PROCEEDS FROM THE FINANCING CONTEMPLATED BY THE FINANCING COMMITMENT
LETTERS (AS DEFINED HEREIN) AND THE PROCEEDS FROM THE CAPITAL CONTRIBUTION (AS
DEFINED HEREIN), INCLUDING, BUT NOT LIMITED TO, PROCEEDS SUFFICIENT TO (A)
FINANCE THE PURCHASE OF THE SHARES THAT CAREY INTERNATIONAL AND ACQUISITION
COMPANY ARE AGREEING TO PURCHASE PURSUANT TO THE OFFER, (B) PAY THE MERGER
CONSIDERATION (AS DEFINED HEREIN) PURSUANT TO THE MERGER, (C) PURCHASE CERTAIN
SECURITIES OF CAREY INTERNATIONAL PURSUANT TO THE CAREY PURCHASE AGREEMENTS
(AS DEFINED HEREIN), (D) REPAY OUTSTANDING INDEBTEDNESS OF CAREY INTERNATIONAL
AND ITS SUBSIDIARIES AND (E) PAY THE FEES AND EXPENSES REQUIRED TO BE PAID IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT. THE
OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS DESCRIBED IN THIS OFFER TO
PURCHASE AND IN THE RELATED LETTER OF TRANSMITTAL.
<PAGE>
IMPORTANT
If you wish to tender all or any part of the shares of common stock
registered in your name, you should carefully follow the instructions
described in "THE TENDER OFFER -- Procedures for Tendering Shares," including
completing a Letter of Transmittal in accordance with the instructions in the
Letter of Transmittal and delivering it, along with your share certificates
and any other required items, to United States Trust Company of New York, the
Depositary. If your shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee and you desire to tender your
shares, you should contact the nominee and request that the nominee tender the
shares for you.
Any stockholder who desires to tender shares and whose certificates for such
shares are not immediately available or cannot be delivered to the Depositary
or who cannot comply with the procedure for book-entry transfer or whose other
required documents cannot be delivered to the Depositary by the expiration of
the offer, must tender the shares pursuant to the guaranteed delivery
procedure set forth in "THE TENDER OFFER -- Procedures for Tendering Shares."
To tender shares properly, you must validly complete the Letter of
Transmittal. You may request additional copies of this Offer to Purchase, the
Letter of Transmittal or the Notice of Guaranteed Delivery from D.F. King &
Co., Inc., which is acting as the Information Agent, at its address and
telephone numbers set forth on the back cover of this Offer to Purchase.
WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR BEHALF
AS TO WHETHER YOU SHOULD TENDER OR REFRAIN FROM TENDERING YOUR SHARES IN THIS
OFFER. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR
TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU
WITH INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFER
OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE RELATED LETTER
OF TRANSMITTAL. IF ANYONE MAKES ANY RECOMMENDATION OR GIVES ANY INFORMATION OR
REPRESENTATION, YOU MUST NOT RELY UPON THAT RECOMMENDATION, INFORMATION OR
AUTHORIZATION AS HAVING BEEN AUTHORIZED BY THE OFFERORS.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of this transaction or passed upon the
fairness or merits of this transaction or upon the accuracy or adequacy of the
disclosure contained in this document. Any representation to the contrary is
unlawful and a criminal offense.
ii
<PAGE>
SUMMARY TERM SHEET
This summary term sheet highlights certain information from this offer to
purchase. To understand the offer fully and for a more complete description of
the terms of the offer, we urge you to read carefully this entire offer to
purchase and the related letter of transmittal. We have included page
references parenthetically to direct you to a more complete description of the
topics in this summary.
Questions and Answers About the Offer and the Merger
Q:Who is offering to buy my securities? (Page 1)
A: Aluwill Acquisition Corp. (which we refer to in this section as
Acquisition Company), and Carey International, Inc. (which we refer to in
this section as Carey International) are making a joint offer to purchase
your securities. However, you will only tender your shares to a single
depositary which will receive payment from either Acquisition Company or
Carey International. VIP Holdings, LLC, VIP Holdings II, LLC, VIP Holdings
III, LLC, Limousine Holdings, LLC and Acquisition Company are all newly
formed entities created by Chartwell Investments II LLC to effect the
transactions described in this offer to purchase. Ford Motor Company is an
investor in and affiliate of Limousine Holdings, LLC.
In the event that the shares tendered in the offer, plus shares acquired
by Acquisition Company from (1) Carey International and (2) certain
members of management of Carey International, constitute greater than 90%
of the outstanding shares, Acquisition Company will purchase all tendered
shares. If this requirement is not met, but all of the conditions to the
Offer have been waived or met, Acquisition Company will purchase up to
5,232,876 shares and Carey International will purchase all shares tendered
in excess of those shares purchased by Acquisition Company.
Q:What are the classes and amounts of securities sought in the offer? (Page 1)
A: We are offering to purchase all of the outstanding shares of Carey
International's common stock, or any lesser number of shares that
stockholders properly tender in the offer, assuming the conditions to the
offer are met.
Q:How much are the bidders offering to pay me and what is the form of payment?
(Page 1)
A: We are offering to pay you $18.25 per share in cash, without interest.
Q:Do the bidders have the financial resources to pay me for my shares? (Page
46)
A: We expect we will have sufficient funds to purchase the tendered shares.
We have entered into commitment letters with senior secured financing,
subordinated debt financing and equity financing sources. In these
commitment letters, the financing sources have committed, subject to
certain conditions that we believe are customary, including the execution
of definitive agreements, to provide all financing necessary to purchase
all shares that are tendered in the offer. The offer, however, is
conditioned upon our obtaining these funds, and there is the possibility
that we will not obtain these funds due to the various conditions in the
commitment letters not being met.
Q: Is the financial condition of the bidders relevant to my decision on
whether to tender in the offer? (Page 64)
A: No. We do not believe that the financial condition of any bidder is
important to your decision since we are paying you cash for your shares
and we are offering to purchase all outstanding shares of Carey
International's common stock.
Q: When does the offer expire? (Page 55)
A: The offer expires on August 31, 2000, at 5:00 p.m., New York City time,
unless we extend it. If you cannot deliver everything that is required in
order to make a valid tender by that time, you may be able to use a
guaranteed delivery procedure. This procedure is described later in this
offer to purchase.
iii
<PAGE>
Q: Can the offer be extended and under what circumstances? (Page 55)
A: Yes, we may extend the offer at any time, subject to the terms of the
merger agreement. However, we cannot assure you that the offer will be
extended or, if extended, for how long. If we extend the offer, we will
make a public announcement of the new expiration date not later than 9:00
a.m., New York City time, on the day after the day on which the offer was
scheduled to expire.
Q: How do I tender my shares? (Page 57)
A: If you hold your shares "of record" (meaning you hold stock certificates
issued in your name), you can tender your shares by sending the enclosed
letter of transmittal to United States Trust Company of New York at the
address listed on the enclosed letter of transmittal. The letter of
transmittal must be received by United States Trust Company of New York
not later than the time and date on which the offer expires.
If your broker holds your shares in "street name" for you, you must call
your broker and instruct him or her to tender your shares.
If your share certificates are not immediately available for delivery to
United States Trust Company of New York, you must comply with the
guaranteed delivery procedure described in the offer prior to the date the
offer expires.
If you have any questions, you should contact the information agent or
your broker for assistance.
Q: What is the purpose of the offer? (Page 22)
A: Our offer to purchase your securities is one part of a multi-step
transaction that will result in Limousine Holdings, LLC owning
approximately 92.0% of the outstanding shares of common stock of Carey
International, and certain members of management of Carey International
owning approximately 8.0%. As a result of this transaction, Carey
International will no longer be a publicly-traded company.
Q: What are the most significant conditions to the offer? (Page 68)
A: Our obligation to pay for any tendered shares depends upon a number of
conditions, including:
. There being validly tendered and not withdrawn prior to the expiration
of the offer at least 5,216,072 shares.
. Obtaining sufficient equity and debt financing: (1) to purchase the
shares tendered in the offer, (2) to pay for any non-tendered shares in
the merger, (3) to pay for any securities of Carey International to be
acquired pursuant to the various agreements executed in connection with
the merger agreement, (4) to repay certain outstanding indebtedness of
Carey International and (5) to pay for the various fees and expenses
incurred in connection with the merger and the offer.
. There being no legal action pending, threatened or taken that might
adversely affect the offer or the merger.
. There being no breach of any representation or warranty in the merger
agreement by Carey International that would have a material adverse
effect on Carey International.
Q: Until what time can I withdraw previously tendered shares? (Page 59)
A: You may withdraw your tendered shares at any time before 5:00 p.m., New
York City time, on August 31, 2000 or, if the offer is extended, the last
day of the period for which it is extended. In addition, if we have not
agreed by October 1, 2000 (or such later date as may apply if the offer is
extended) to accept your shares for payment, you can withdraw them at any
time until we accept shares for payment.
Q: How do I withdraw previously tendered shares? (Page 59)
A: You can withdraw shares that you have already tendered by sending a
written notice of withdrawal to United States Trust Company of New York
while you still have the right to withdraw the shares.
iv
<PAGE>
Q: What does my board of directors think of the offer? (Page 10)
A: Your board of directors, based upon the unanimous recommendation of an
independent special committee of the board of directors, has unanimously
approved the merger agreement, the offer and the merger and has determined
that the offer and the merger are advisable, fair to, and in the best
interests of the stockholders of Carey International. Your board of
directors unanimously recommends that stockholders accept the offer and
tender their shares.
Q: How did my board of directors make sure the price per share I will receive
in the offer and subsequent merger is fair? (Page 14)
A: The board of directors formed a special committee consisting of four
independent directors to evaluate and negotiate the terms of the merger
agreement. The special committee independently selected and retained a
financial advisor to assist it in the negotiation, and received the
written opinion from its financial advisor, Friedman Billings Ramsey &
Co., Inc., dated July 15, 2000, on which the special committee relied, to
the effect that as of that date, the $18.25 per share you will receive in
the offer and the subsequent merger is fair to you from a financial point
of view. A complete copy of the Friedman Billings Ramsey & Co., Inc.
opinion is attached as Exhibit A to this offer to purchase. Your board of
directors also received and relied upon a written opinion, dated July 15,
2000, from Benedetto, Gartland & Company, Inc. to the effect that, as of
that date and based on and subject to the assumptions, limitations and
qualifications set forth in the opinion, the $18.25 per share cash
consideration to be received by holders of Carey International's common
stock in the offer and the subsequent merger was fair to such holders,
from a financial point of view. A complete copy of the Benedetto, Gartland
& Company, Inc. opinion is attached as Exhibit B to this offer to
purchase.
Q: Will Carey International continue as a public company? (Page 23)
A: No. Because we are purchasing Carey International's common stock in a
tender offer and intend to engage in a merger that will result in the
securities of Carey International being held by less than 300 persons of
record, this offer is considered the first step in a going-private
transaction.
Q: Will the tender offer be followed by a merger if all common shares are not
tendered in the offer? (Page 22)
A. Yes. If the number of shares tendered in the offer, plus the number of
shares acquired by Acquisition Company pursuant to various agreements
entered into in connection with the merger agreement, constitute greater
than 90% of the outstanding shares, the merger will occur immediately
following the purchase of the tendered shares. If this requirement is not
met, but all of the conditions to the offer have been waived or met, Carey
International will call a stockholders meeting to approve the merger.
Since, at that time, Acquisition Company will own more than 50% of the
outstanding shares of Carey International's common stock, stockholder
approval of the merger will be assured.
If we complete the merger, stockholders who did not tender their shares in
the offer will receive $18.25 per share in cash (or any higher price per
share that is paid in the offer) in the merger in exchange for each share
of Carey International's common stock that they own.
It is a condition to our obligation to consummate the merger that we have
available the funds contemplated by the financing commitment letters
necessary to pay for the shares not tendered into the offer. The
availability of the financing for the merger is subject to the
satisfaction of several conditions, including the condition that no
material adverse change has occurred in the financial condition or
prospects of Carey International. You should be aware that, if it is
necessary to call a stockholders meeting to approve the merger and the
conditions to the financing are not met at the time the merger is approved
by the stockholders, the merger will not be consummated and stockholders
will not receive $18.25 per share in cash for the shares not tendered in
the offer. If you want to avoid this possibility, you should not wait for
the merger and the stockholders meeting (if one is held), and should
tender your shares in the Offering.
v
<PAGE>
Q: If I decide not to tender, how will the offer affect my shares? (Page 22)
A: Stockholders who do not tender their shares in the offer will receive in
the merger, if it takes place, unless they perfect their appraisal rights
under Delaware law, the same amount of cash per share that they would have
received had they tendered their shares in the offer.
Q: What is the market value of my shares as of a recent date? (Page 60)
A: On June 27, 2000, the last full trading day before Carey International
announced it was in negotiations regarding a possible acquisition of Carey
International, the reported closing sale price for one share of Carey
International's common stock was $11.5625 per share. On July 18, 2000, the
last full trading day before we announced the offer and merger, the
reported closing sale price for one share of Carey International's common
stock on the Nasdaq National Market was $14.50. On August 1, 2000, the
penultimate trading day before we commenced the offer, the reported
closing sale price for one share of Carey International's common stock on
the Nasdaq National Market was $17.9531. We advise you to obtain a recent
quotation for the common stock in deciding whether to tender your shares.
Q: If I object to the price being offered, will I have appraisal rights?
(Page 24)
A: You will not have appraisal rights in the offer, but you will have
appraisal rights in the subsequent merger. You may elect not to tender
your shares in the offer, not vote in favor of the merger, comply with the
requirements of Delaware law to perfect your available appraisal rights
and have the "fair value" of your shares paid to you following the
completion of the appraisal process in the Delaware courts.
Q: Who can I talk to if I have questions about the tender offer?
A: If you have more questions about the tender offer, you should contact:
D.F. KING & CO., INC.
Banks and Brokers Call Collect:
(212) 269-5550
All Others Please Call Toll-Free:
(800) 628-8510
vi
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE OFFER AND THE MERGER..................... iii
INTRODUCTION............................................................. 1
SPECIAL FACTORS.......................................................... 5
1. Background of the Transaction; Contacts with Carey International...... 5
2. Recommendation of the Board of Directors of Carey International;
Fairness of the Offer and the Merger.................................. 10
3. Opinion of the Board's Financial Advisors............................. 14
4. Purpose and Structure of the Transaction.............................. 22
5. Plans for Carey International after the Transaction................... 23
6. Rights of Stockholders in the Offer and the Merger.................... 24
7. The Merger Agreement and Related Documents............................ 26
8. Interests of Certain Persons in the Transaction....................... 43
9. Financing of the Transaction.......................................... 46
10. Certain United States Federal Income Tax Consequences................ 52
11. Fees and Expenses.................................................... 53
THE TENDER OFFER......................................................... 55
1. Terms of the Offer.................................................... 55
2. Acceptance for Payment and Payment for Shares......................... 56
3. Procedures for Tendering Shares....................................... 57
4. Withdrawal Rights..................................................... 59
5. Price Range of Shares................................................. 60
6. Dividends and Distributions........................................... 60
7. Certain Information Concerning Carey International.................... 61
8. Certain Information Concerning Chartwell, Holdings, Parent and
Acquisition Company................................................... 64
9. Certain Information Concerning Ford................................... 65
10. Source and Amount of Funds........................................... 67
11. Effect of the Offer on the Market for the Common Stock; Exchange Act
Registration......................................................... 67
12. Conditions to the Offer.............................................. 68
13. Certain Legal Matters; Regulatory Approvals.......................... 70
14. Fees and Expenses.................................................... 72
15. Miscellaneous........................................................ 72
</TABLE>
Schedule I--Information Concerning the Directors, Executive Officers and
Certain Stockholders of Carey International
Schedule II--Information Concerning the Directors and Executive Officers of
Holdings, Parent and Acquisition Company
Schedule III--Information Concerning the Directors and Executive Officers of
Ford Motor Company
Schedule IV--Information Statement Pursuant to Section 14(f) of the Securities
Exchange Act of 1934 and Rule 14f-1 Promulgated Thereunder
Exhibit A --Opinion of Friedman Billings Ramsey & Co., Inc.
Exhibit B--Opinion of Benedetto, Gartland & Company, Inc.
Exhibit C--Section 262 of the Delaware General Corporation Law
vii
<PAGE>
To the Holders of Common Stock of
Carey International, Inc.
INTRODUCTION
Aluwill Acquisition Corp., a Delaware corporation ("Acquisition Company"),
and Carey International, Inc., a Delaware corporation ("Carey International"),
hereby offer to purchase any and all of the issued and outstanding shares of
common stock, par value $0.01 per share, of Carey International (the "Shares"
or "Common Stock"), and the associated Preferred Share Purchase Rights (the
"Rights") issued pursuant to the Rights Agreement, dated as of June 20, 2000,
between Carey International and Computershare Trust Company, Inc., as Rights
Agent, as amended on July 19, 2000 (the "Rights Agreement"), at a price of
$18.25 per Share in cash (such amount or any greater amount per Share paid in
the offer being referred to as the "Offer Price"), without interest thereon,
on the terms and subject to the conditions set forth in this Offer to Purchase
and in the related letter of transmittal (the "Letter of Transmittal") (which,
as each may be amended and supplemented from time to time, together constitute
the "Offer"). See "THE TENDER OFFER -- Conditions to the Offer." For the
purposes of the Offer, Acquisition Company and Carey International are
collectively referred to as the "Offerors." VIP Holdings, LLC, a Delaware
limited liability company, VIP Holdings II, LLC, a Delaware limited liability
company, and VIP Holdings III, LLC, a Delaware limited liability company
(collectively, "Holdings"), Limousine Holdings, LLC, a Delaware limited
liability company ("Parent"), and Acquisition Company, a wholly-owned
subsidiary of Parent, are all newly formed entities, which were created by
Chartwell Investments II LLC ("Chartwell") to effect the transactions referred
to herein. Chartwell is an advisor to, and manager of, private equity funds
that invest in growth financings and buy-outs of middle market companies. Ford
Motor Company ("Ford"), an investor in and affiliate of Parent, designs and
manufactures cars, trucks and automotive components, and sells them throughout
the world. Unless the context otherwise requires, all references to Shares or
Common Stock shall include the associated Rights.
The Offer is a joint tender offer by Acquisition Company and Carey
International to purchase at the Offer Price all Shares tendered pursuant to
the Offer, assuming the conditions to the Offer (the "Offer Conditions") are
met, with Acquisition Company to pay for and purchase no fewer than 4,931,506
Shares. In the event that the Shares tendered in the Offer, plus the Shares
acquired by Acquisition Company pursuant to the Carey Purchase Agreements (as
defined below), including Shares issued upon the exercise of Company Options
(as defined below), would constitute greater than 90% of the outstanding
Shares (the "Short Form Requirement") and permit the Merger (as defined below)
to be effected pursuant to Section 253 of the Delaware General Corporation Law
(the "DGCL"), Acquisition Company will purchase all tendered Shares. If the
number of tendered Shares, plus the Shares to be acquired by Acquisition
Company pursuant to the Carey Purchase Agreements (as defined below)
(including Shares issued upon the exercise of Company Options), would not
result in the Short Form Requirement being met, but all of the Offer
Conditions have been waived or met, Acquisition Company will purchase up to
5,232,876 Shares and Carey International will purchase all Shares tendered in
excess of those Shares purchased by Acquisition Company.
Stockholders whose Shares are registered in their own name and who tender
directly to United States Trust Company of New York, as depositary (the
"Depositary"), will not be obligated to pay brokerage fees or commissions or,
except as set forth in Instruction 6 of the Letter of Transmittal, stock
transfer taxes on the purchase of Shares by the Offerors pursuant to the
Offer. Carey International will pay all charges and expenses incurred in
connection with the Offer by the Depositary and by D.F. King & Co., Inc., as
information agent (the "Information Agent"). See "SPECIAL FACTORS -- Fees And
Expenses" and "THE TENDER OFFER -- Fees and Expenses."
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of July 19, 2000 (the "Merger Agreement"), by and among Carey
International, Parent, Acquisition Company and Eranja Acquisition Sub, Inc., a
Delaware corporation and wholly-owned subsidiary of Acquisition Company
("Acquisition Company Sub"). The Merger Agreement provides that, among other
things, as promptly as practicable after
1
<PAGE>
consummation of the Offer and the satisfaction or waiver of the other
conditions contained in the Merger Agreement, Acquisition Company or
Acquisition Company Sub will be merged with and into Carey International (the
"Merger"), with Carey International continuing as the surviving corporation
(the "Surviving Corporation"). At the effective time of the Merger (the
"Effective Time"), each Share issued and outstanding immediately prior to the
Effective Time (other than Shares held by Acquisition Company, Shares in the
treasury of Carey International, Shares held by holders who perfect their
appraisal rights in accordance with the DGCL, and certain Shares held by
certain members of management of Carey International (the "Management
Investors")), will, by virtue of the Merger and without any action on the part
of the holder thereof, be canceled and be converted into the right to receive
an amount per share (the "Merger Consideration") equal to the Offer Price,
without interest.
As of July 24, 2000, there were 9,848,729 Shares issued and outstanding, no
Shares held in the treasury of Carey International, no shares of preferred
stock issued and outstanding and 1,918,427 Shares issuable upon the exercise
of outstanding options granted under Carey International's stock option plans
("Plan Options"), all of which have an exercise price that is less than the
Offer Price), and 6,450 Shares issuable upon the exercise of outstanding
warrants other than Plan Options (collectively, the "Other Options" and,
together with the Plan Options, the "Company Options").
The Offer is conditioned upon, among other things, (1) there being validly
tendered and not withdrawn prior to the expiration of the Offer at least
5,216,072 Shares, which number of Shares constitutes a majority of the Shares
outstanding (including for these purposes Shares issuable upon the exercise of
Company Options by persons who have not agreed to enter into Option Exercise
Agreements (as defined herein) after giving effect to the cancellation of any
Shares purchased by Carey International) (the "Minimum Condition") and (2)
Carey International and/or Acquisition Company having received or having
available the proceeds from the financing contemplated by the Financing
Commitment Letters (as defined herein) and the proceeds from the Capital
Contribution (as defined herein) (the "Financing"), including, but not limited
to, proceeds sufficient to (A) finance the purchase of the Shares that Carey
International and Acquisition Company are agreeing to purchase pursuant to the
Offer, (B) pay the Merger Consideration pursuant to the Merger, (C) purchase
securities of Carey International pursuant to the Carey Purchase Agreements
(as defined herein), (D) repay outstanding indebtedness of Carey International
and its subsidiaries, and (E) pay the fees and expenses required to be paid in
connection with the transactions contemplated by the Merger Agreement (the
"Receipt of Funds Condition"). The Offer is also conditioned upon the
satisfaction of certain other conditions described in "THE TENDER OFFER --
Conditions of the Offer." The Short Form Requirement is not a condition to
the Offer.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including the approval of the Merger Agreement by the
requisite vote of Carey International's stockholders if the Short Form
Requirement is not met and satisfaction of the Receipt of Funds Condition.
Concurrently with the execution of the Merger Agreement, and as an
inducement to Acquisition Company and Parent to enter into the Merger
Agreement, (i) certain holders (the "Option Holders") of Plan Options have
agreed to enter into Option Exercise/Cancellation Agreements with Acquisition
Company (the "Option Exercise Agreements"), pursuant to which, among other
matters, the Option Holders will agree (1)(A) to exercise all of their Plan
Options immediately prior to the Effective Time and, upon the request of
Acquisition Company, to sell to Acquisition Company all of the Shares issued
upon such exercise (collectively, the "Option Exercise Shares") for
consideration equal to the Offer Price per Share, or (B) if Acquisition
Company does not so request, to exercise their Plan Options immediately prior
to the Effective Time and to hold the Option Exercise Shares for conversion in
the Merger into the right to receive cash and shares of the Surviving
Corporation as provided in the Merger Agreement, and (2) not to tender Shares
(other than Option Exercise Shares) into the Offer unless requested to do so
by Acquisition Company, and (ii) Carey International has granted to
Acquisition Company an option (the "Acquisition Company Option") pursuant to a
Stock Option Agreement (the "Stock Option Agreement") to acquire from Carey
International in certain circumstances a sufficient number of Shares (the
"Acquisition Company Option Shares") that, when taken together with all other
outstanding Shares to be
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acquired by Acquisition Company pursuant to the Offer and the Option Exercise
Agreements (such agreements, together with the Stock Option Agreement, the
"Carey Purchase Agreements"), allow the Short Form Requirement to be met.
The Offer, the consummation of the transactions contemplated by the Carey
Purchase Agreements, the Carey International/Acquisition Company Loan
Agreement (as defined herein) and the Merger are sometimes collectively
referred to herein as the "Transaction."
In the event that the number of Shares tendered pursuant to the Offer, plus
the Shares purchased by Acquisition Company pursuant to the Carey Purchase
Agreements (including Shares issued upon the exercise of Company Options),
would be sufficient to satisfy the Short Form Requirement, Acquisition Company
will purchase all Shares tendered pursuant to the Offer and consummate the
Merger immediately thereafter. If a lesser number of Shares are tendered
pursuant to the Offer, then, assuming all of the Offer Conditions have been
waived or met, (i) Acquisition Company will purchase up to 5,232,876 of the
Shares tendered and Carey International will purchase the balance of the
Shares tendered pursuant to the Offer and (ii) Carey International will call a
stockholders meeting after the closing of the Offer to approve the Merger.
The terms and conditions of the Merger Agreement and the Carey Purchase
Agreements are more fully described in "SPECIAL FACTORS -- The Merger
Agreement and Related Documents."
Subject to the perfection of appraisal rights under the DGCL, Shares not
tendered in the Offer (other than Shares held by Acquisition Company, Shares
in the treasury of Carey International and certain Shares held by Management
Investors) will be cancelled in the Merger and converted into the right to
receive the Merger Consideration, without interest.
Stockholders who hold their Shares at the time of the Merger and who fully
comply with the statutory appraisal procedures set forth in the DGCL, the
relevant provisions of which are attached to this Offer to Purchase as Exhibit
C, will be entitled to perfect their appraisal rights under the DGCL and have
the fair value of their Shares (which may be more than, equal to, or less than
the Merger Consideration) judicially determined and paid to them in cash
pursuant to the procedures prescribed by the DGCL. No appraisal or dissenters
rights are available to stockholders in connection with the Offer. See
"SPECIAL FACTORS -- Rights of Stockholders in the Offer and the Merger."
Carey International's Board of Directors (the "Board"), based upon the
unanimous recommendation of an independent special committee of the Board (the
"Special Committee"), unanimously (i) approved the Merger Agreement and the
transactions contemplated thereby, including the Offer and the Merger, (ii)
determined that the Offer and the Merger are advisable, fair to, and in the
best interests of the stockholders of Carey International and (iii) recommends
that Carey International's stockholders accept the Offer and tender their
Shares pursuant to the Offer.
The Board formed the Special Committee consisting of four independent
directors to evaluate and negotiate the terms of the Merger Agreement. The
Special Committee independently selected and retained a financial advisor to
assist it in the negotiation. The Special Committee received from its
financial advisor, Friedman Billings Ramsey & Co., Inc. ("FBR"), a written
opinion (the "FBR Opinion"), dated July 15, 2000, on which the Special
Committee relied, to the effect that, as of that date and based on and subject
to the assumptions, limitations and qualifications set forth in such opinion,
the $18.25 per Share cash consideration to be received in the Offer and the
Merger by the holders of Shares was fair from a financial point of view.
Benedetto, Gartland & Company, Inc. ("BGC"), financial advisor to the Board,
also has delivered to the Board its written opinion (the "BGC Opinion"), dated
July 15, 2000, to the effect that, as of that date and based on and subject to
the assumptions, limitations and qualifications set forth in such opinion, the
$18.25 per Share cash consideration to be received in the Offer and the Merger
by holders of Shares was fair from a financial point of view. A copy of the
FBR Opinion and a copy of the BGC Opinion, each of which sets forth the
assumptions made, matters considered and limits of the review by FBR and BGC,
respectively, in connection
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with such opinions, are attached to this Offer to Purchase as Exhibit A and
Exhibit B, respectively. Holders of Shares are urged to read each opinion
carefully in its entirety.
Pursuant to the Senior Credit Facility Commitment Letter, dated as of July
19, 2000, among Carey International, Acquisition Company and the lenders
signatory thereto from time to time (the "Lenders"), First Union National
Bank, as Administrative Agent and a Lender ("First Union"), and Fleet National
Bank, as Syndication Agent and a Lender (the "Senior Credit Facility
Commitment Letter"), the Lenders, subject to certain conditions, including the
execution of definitive agreements, have committed to provide to Carey
International a $160.0 million senior secured credit facility (the "Senior
Credit Facility"). The Senior Credit Facility will be composed of (i) $100.0
million of term loans to be divided into two primary tranches of $40.0 million
and $60.0 million, (ii) $25.0 million of revolving credit facilities and (iii)
$35.0 million of acquisition facilities. Pursuant to the Senior Sub Note
Commitment Letter, dated as of July 19, 2000, among Acquisition Company, First
Union Investors, Inc. and GarMark Partners, L.P. (together, the "Senior Sub
Note Purchasers") (the "Senior Sub Note Commitment Letter"), the Senior Sub
Note Purchasers have committed, subject to certain conditions, including the
execution of definitive agreements, to purchase $40.0 million of senior
subordinated notes of Carey International (the "Senior Sub Notes"). The Senior
Credit Facility Commitment Letter and the Senior Sub Note Commitment Letter
are together referred to herein as the "Financing Commitment Letters." A
portion of the proceeds from the financing contemplated by the Financing
Commitment Letters will be loaned by Carey International to Acquisition
Company (if the Short Form Requirement is met) pursuant to the terms of a Loan
Agreement to be entered into between Carey International and Acquisition
Company (the "Carey International/Acquisition Company Loan Agreement"). The
remainder of the funds necessary for Acquisition Company to consummate the
transactions contemplated by the Merger Agreement and the Carey Purchase
Agreements will be in the form of a capital contribution from Parent to
Acquisition Company of $98.5 million (the "Capital Contribution"). The
Offerors believe that the proceeds, if obtained, as contemplated from the
Senior Credit Facility, Senior Sub Notes and the Capital Contribution will be
sufficient to satisfy the Receipt of Funds Condition. See "SPECIAL FACTORS --
Financing of the Transaction" and "THE TENDER OFFER -- Conditions to the
Offer."
This Offer to Purchase and the Letter of Transmittal contain important
information which should be read carefully before any decision is made with
respect to the Offer.
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SPECIAL FACTORS
1. Background of the Transaction; Contacts with Carey International.
In October 1999, members of the Board expressed concern regarding the lack
of recognition that Wall Street investors and analysts were giving to micro
and small cap companies, in general, and the undervaluation and volatility of
the trading price of the Common Stock, in particular. Management expressed its
belief that the trading price of the Common Stock on the Nasdaq National
Market did not adequately reflect the financial performance and prospects of
Carey International and that this lack of recognition persisted despite Carey
International's consistent record of strong financial performance. Management
did not believe that market conditions were likely to change in the near term.
The Board discussed whether Carey International should explore strategic
initiatives as a means to enhance stockholder value.
At a telephonic meeting of the Board held on December 21, 1999, Vincent A.
Wolfington, Carey International's Chairman and Chief Executive Officer,
recommended that Carey International engage an investment banker to advise it
on possible strategic initiatives, including strategic investments from third
parties and a possible sale of Carey International as means of enhancing
stockholder value. The Board unanimously authorized Carey International to
engage BGC to serve as Carey International's financial advisor to assist it in
exploring strategic alternatives. On December 31, 1999, Carey International
formally engaged BGC.
Beginning in January 2000, BGC began the process of identifying candidates
that might be interested in acquiring or making a strategic investment in
Carey International. BGC concluded, based upon Carey International's position
in the chauffeured vehicle services industry and Carey International's
knowledge about other companies in the industry, that it was unlikely that a
company in the chauffeured vehicle services industry would be interested in or
capable of completing such a transaction with Carey International. Over the
next month, BGC contacted 16 companies and institutions to inquire about their
interest in discussing a possible transaction with Carey International. Three
of the entities contacted, one of which was Chartwell, expressed interest in
exploring a possible transaction and entered into confidentiality agreements
with Carey International. Management from Carey International was acquainted
with Chartwell as a result of an informational meeting that was held between
representatives of Carey International and Chartwell in April 1999. No
proposals were made or due diligence performed as a result of that meeting.
At a meeting of the Board held on January 21, 2000, M. William Benedetto
from BGC briefed the Board on the process BGC was undertaking on behalf of
Carey International, including a list of the parties contacted and the level
of interest expressed by those parties. He reviewed possible strategic
alternatives for enhancing stockholder value and expressed the view, based
upon his preliminary analysis, that the most viable method of enhancing
stockholder value was a leveraged buyout of Carey International by a financial
buyer. The Board requested that management and BGC continue to explore various
methods of enhancing stockholder value.
From January 22 through March 14, 2000, various members of senior management
made presentations to Chartwell and the two other entities that had entered
into confidentiality agreements regarding Carey International, its business,
markets, assets, employees, financial position, financial results and
prospects. On behalf of Carey International, BGC delivered information to the
three entities to assist them in their evaluation of Carey International.
During this period, one of the interested entities elected to discontinue its
evaluation.
On March 2, 2000, Mr. Wolfington contacted senior management of Ford to
discuss Ford's interest in either making a strategic investment in Carey
International or in participating in a going private transaction. Discussions
between management of Carey International and Ford continued from time to time
during March and April 2000.
At a meeting of the Board held on March 23, 2000, Mr. Benedetto updated the
Board on developments since the last Board meeting. He reviewed with the Board
certain information regarding Chartwell and the other party that had indicated
a strong interest in Carey International and stated that Chartwell and the
other party were continuing their due diligence. He also reviewed the
methodologies that would be used in the valuation of
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Carey International. The Board engaged in a lengthy discussion with Mr.
Benedetto regarding the relative benefits to the stockholders of a sale of
Carey International in a leveraged buyout transaction and a private equity
investment in Carey International by a strategic investor. Thereafter, the
other party referred to above joined the meeting and made a presentation to
the Board expressing its preliminary interest in a leveraged buyout of Carey
International.
At a meeting of the Board held on April 3, 2000, Mr. Benedetto again updated
the Board and reported on his most recent discussions with Chartwell and the
other interested party, both of whom had completed their preliminary due
diligence. He reported that both parties were attempting to resolve a number
of issues including Carey International's first quarter operating results and
Carey International's continuing investment in its information technology
systems. Mr. Wolfington stated that Ford had expressed an interest in
exploring a strategic investment in Carey International or in participating in
an acquisition of Carey International as a minority stockholder.
On April 4, 2000, Carey International announced that while it reported
strong first quarter revenues, its first quarter operating results were below
analysts' estimates. Carey International also reported in its press release
that it had previously retained BGC to examine strategic alternatives in order
to enhance stockholder value. The closing price of the Common Stock on the
Nasdaq National Market declined from $17.06 on April 4, 2000, before the
announcement, to $9.56 on April 5, 2000, after the announcement.
At a meeting of the Board held on April 12, 2000, Mr. Wolfington reported to
the Board on his meetings with representatives of Ford. He also updated the
Board on the continuing interest of Chartwell and the other interested party.
He advised the Board that the parties had requested additional meetings with
management to discuss Carey International's first quarter operating results
and other issues. The Board reviewed the opportunities available to Carey
International for enhancing stockholder value in light of the recent
significant decline in the trading price of the Common Stock following the
announcement of Carey International's first quarter operating results.
At a meeting of the Board held on May 3, 2000, Mr. Wolfington reported to
the Board on the follow-up meetings and the due diligence sessions with
Chartwell and the other interested party and on meetings that management had
held with Ford. Mr. Benedetto reviewed with the Board his valuation analysis
of Carey International. He also reported that a valuation of between $14 and
$15 per Share in cash was being considered by the other interested party in a
possible leveraged buyout of Carey International. Thereafter, representatives
of Chartwell made a presentation to the Board in which they expressed their
preliminary interest in proposing a leveraged buyout transaction at between
$17 and $18 per Share in cash. (Chartwell had initially proposed a range of
$16 to $18 per Share to Mr. Benedetto, but increased the bottom of the range
to $17 per share after conversations with Mr. Benedetto). Representatives of
Chartwell reviewed the possible structure of the transaction and the
requirement that Carey International's current management continue with Carey
International. They also outlined the conditions relating to a possible
transaction including the need to conduct more extensive due diligence before
making a final proposal. After the representatives of Chartwell left the
meeting, the Board concluded that while Chartwell's proposal was superior to
the expression of interest from the other party, Chartwell should be asked to
consider a higher price range and clarify other aspects of the proposed
transaction. The Board also discussed the advisability of adopting a
stockholder rights plan and the need to consider adoption of a stockholder
rights plan at its next meeting.
On May 4, 2000, Chartwell informed Mr. Benedetto that Chartwell would
increase its preliminary price range to between $18 and $19 per Share in cash.
On May 11, 2000, Messrs. Benedetto and Wolfington met with representatives of
Chartwell to discuss the structure of a possible leveraged buyout transaction
and the scope and terms of management's continuing role with Carey
International after the consummation of a transaction.
At a meeting of the Board held on May 12, 2000, Mr. Benedetto reported on
his recent discussions with Chartwell and the other interested party and
reviewed their preliminary proposals and preliminary price ranges with the
Board. Mr. Wolfington updated the Board on recent discussions with Ford as a
possible strategic investor. Mr. Benedetto reviewed with the Board Chartwell's
need to undertake a final due diligence investigation before making a final
proposal and Chartwell's request that Carey International agree to pay up to
$1.5 million
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of its due diligence expenses in the event that Carey International elected
not to pursue a transaction with Chartwell. The Board viewed with concern
Chartwell's insistence on such a significant reimbursement of expenses in
light of the price range and the number of details regarding a transaction
that had yet to be resolved, including, financing.
After lengthy discussion, the Board concluded that it was in the best
interests of Carey International and its stockholders not to pursue a sale of
Carey International based upon Chartwell's preliminary proposal and expense
reimbursement requirement. The Board also concluded that the proposed
preliminary price range of the other interested party was not sufficient to
warrant further investigation. The Board instructed Mr. Benedetto to inform
the parties of these decisions. The Board, however, authorized management to
continue to explore a possible strategic investment by Ford as an alternative
to a possible sale. Following presentations by Carey International's legal
counsel, Nutter, McClennen & Fish, LLP ("Nutter McClennen"), and by BGC, the
Board of Directors adopted the Rights Agreement and the dividend of rights
thereunder to Carey International's stockholders of record on July 2, 2000.
On May 10, 2000, Ford signed a confidentiality agreement with Carey
International and commenced its due diligence investigation, including a
series of due diligence meetings with Carey International's management from
May 10 through May 23, 2000. During this period, Carey International's
management discussed with Ford the nature of Ford's involvement in a possible
transaction with Carey International, including either a strategic investment
in Carey International or participating in an acquisition of Carey
International as a minority investor. During this period, management of Carey
International also renewed discussions with Chartwell and Chartwell proposed
modifying and clarifying its preliminary proposal.
At a meeting of the Board on June 2, 2000, Messrs. Benedetto and Wolfington
reported on additional discussions that had taken place with Chartwell. As a
result of those discussions, Chartwell had revised its preliminary proposal.
The revised proposal included more details on the capital structure, financing
commitments and initiatives for retention of management. The revised proposal
also reduced, from $1.5 million to $333,000, the amount of due diligence
expenses for which Carey International would be required to reimburse
Chartwell in certain circumstances. Mr. Wolfington reported that
representatives of Ford were in discussions with Chartwell about participating
with Chartwell in a possible acquisition of Carey International. The Board
concluded that it was in the best interests of Carey International and its
stockholders to encourage a final joint proposal from Chartwell and Ford and
authorized the execution by Carey International of an expense reimbursement
agreement with Chartwell. On June 2, 2000, Carey International entered into an
agreement with Chartwell, which provided that Carey International would
reimburse up to $333,000 of Chartwell's due diligence expenses in the event
that Carey International declined to proceed with a transaction with
Chartwell, provided that on or before July 1, 2000 Chartwell presented a
definitive final proposal for the acquisition of Carey International at a
price per share of $18 to $19 per Share in cash. Thereafter, Chartwell and
Ford commenced their final due diligence investigation of Carey International.
At a meeting of the Board held on June 19, 2000, Mr. Wolfington advised the
Board that Ford and Chartwell had substantially completed their due diligence
investigation and would likely make a final joint proposal, on or before June
26, 2000, for the acquisition of Carey International in a leveraged buyout
transaction. Mr. Benedetto reported on his discussions with Chartwell and Ford
and on the broad parameters of the joint proposal, including management's
participation in the transaction. In light of management's proposed
involvement in the possible transaction, the Board appointed the Special
Committee composed of independent directors, Robert W. Cox, Nicholas J. St.
George, Joseph V. Vittoria and Dennis I. Meyer, to negotiate and determine if
a proposed transaction with Chartwell and Ford would be in the best interests
of Carey International and its stockholders. Upon the advice of the members of
the Special Committee, the Board also approved the engagement of the services
of FBR to act as financial advisor to the Special Committee in connection with
the possible transaction.
On June 20, 2000, Akin, Gump, Strauss, Hauer & Feld, L.L.P. ("Akin Gump")
provided Nutter McClennen with a first draft of the Merger Agreement providing
for: (i) a joint tender offer by Carey International and Acquisition Company
for all outstanding Shares (other than certain Shares held by the Management
Investors)
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followed by a merger; (ii) the rollover of certain Shares by the Management
Investors, including Mr. Wolfington; (iii) conditions to closing the tender
offer, including the tender of more than 50% of the outstanding Shares; (iv)
the right of Acquisition Company to extend unilaterally the tender offer for
certain periods; (v) restrictions on Carey International's ability to address
acquisition proposals after the execution of the Merger Agreement; (vi)
several events requiring the payment of a termination fee and reimbursement of
expenses and (vii) the grant of an option pursuant to a Stock Option Agreement
under which Acquisition Company, subject to the closing of the tender offer,
could acquire a sufficient number of shares of Common Stock to enable it to
effect a short form merger under Section 253 of the DGCL (the "Short Form
Merger").
Telephonic meetings of the Special Committee were held on June 22 and June
23, 2000, at which the Special Committee and Nutter McClennen reviewed the
initial draft of the Merger Agreement and negotiated the terms and conditions
of the proposed transaction with representatives of Chartwell and Akin Gump.
A meeting of the Special Committee was held on June 26, 2000 at the offices
of Mr. Meyer, the Chairman of the Special Committee, at Baker & McKenzie in
Washington, DC with two members of the Special Committee participating by
conference telephone. Representatives of Nutter McClennen reviewed the status
of negotiations, the terms of the Merger Agreement and the Carey Purchase
Agreements, and the various resolved and unresolved issues, including
Chartwell's request for a termination fee of approximately $11.7 million and
unlimited expense reimbursement in the event that the Merger Agreement was
terminated in certain circumstances. Representatives of FBR reviewed their
methodology for evaluating the proposed transaction and provided their
preliminary analysis as to the fairness of the transaction, assuming a price
of $18 to $19 per Share. Mr. Wolfington was invited to join the meeting to
respond to questions from the members of the Special Committee and FBR
regarding Chartwell's proposal and the terms of management's participation in
the transaction. Representatives of BGC then joined the meeting and presented
BGC's methodology for evaluating the proposed transaction and BGC's
preliminary analysis as to the fairness of the proposed transaction assuming a
price range of $18 to $19 per Share. Thereafter, representatives of Chartwell
joined the meeting and presented the final terms of their definitive offer for
Carey International including a price of $18 per Share in cash. After
negotiations between the Special Committee and Chartwell, Chartwell agreed to
(i) increase its offer to $18.25 per Share and (ii) reduce the termination fee
to $7.5 million and limit the amount of reimbursable expenses to $3.0 million
in the event that the transactions contemplated by the Merger Agreement were
not completed for certain reasons. The representatives of Chartwell stated
that the definitive offer was subject to receiving final commitment letters
and term sheets from their financing sources, including Ford, all of which
were expected to be received on the following day. On June 27, 2000, Akin Gump
provided revised drafts of the Merger Agreement.
On June 27, 2000, a meeting of the Special Committee was convened at the
offices of Baker & McKenzie to consider Chartwell's final proposal. Nutter
McClennen reviewed the revised terms of the Merger Agreement and the Carey
Purchase Agreements, and the various resolved and unresolved issues. FBR
reviewed in detail with the Special Committee its analysis of the transaction
represented by the final proposal and orally expressed its view that the price
of $18.25 per Share in cash was fair from a financial point of view to Carey
International's stockholders. FBR stated its willingness to issue to the
Special Committee its written opinion to that effect. BGC also reviewed in
detail its analysis of the transaction represented by the final proposal and
orally expressed its view that the price of $18.25 per Share was fair from a
financial point of view to Carey International's stockholders. BGC also stated
that it was prepared to issue to the Board its written opinion as to the
fairness of the transaction. After discussion and analysis, the Special
Committee unanimously determined that the final offer and the proposed terms
and conditions of the Merger Agreement and the Carey Purchase Agreements, and
the Offer and the Merger, were advisable, fair to and in the best interests of
Carey International's stockholders, and unanimously recommended that the Board
accept Chartwell's proposal and approve the Merger Agreement, subject to the
receipt of detailed commitment letters from Chartwell's financing sources
satisfactory to the Special Committee and satisfactory resolution of the
remaining unresolved issues.
On June 27, 2000, immediately following the conclusion of the meeting of the
Special Committee, the Board met to receive the report and recommendation of
the Special Committee as well as the preliminary oral
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opinion and draft report of BGC. The Board unanimously approved acceptance of
the report and the recommendation of the Special Committee. Upon the request
of Chartwell for the opportunity to update the Special Committee on the
financing commitments, the meeting of the Board was adjourned and the meeting
of the Special Committee was reconvened. Representatives from Chartwell
provided the Special Committee with a draft of the Senior Credit Facility
Commitment Letter and indicated that they were awaiting a final commitment
from Ford with respect to its portion of the Capital Contribution. More
significantly, however, the representatives reported that there was a delay in
obtaining a subordinated debt financing commitment. After discussion, the
Special Committee advised Chartwell that the Special Committee was prepared to
continue negotiations with Chartwell and postpone its final approval of the
transaction if a final offer with definitive financing commitments was
received by July 14, 2000.
On June 29, 2000, Carey International issued its press release regarding
Carey International's second quarter operating results and included in the
press release a statement that it was in negotiations regarding a possible
acquisition of Carey International and that it did not intend to comment
further on the negotiations until a definitive agreement was reached or
negotiations were terminated.
From June 28 through July 14, 2000, the Special Committee, Chartwell and
their respective legal counsel negotiated the final terms of the Merger
Agreement and the Carey Purchase Agreements. At a meeting of the Board held on
July 7, 2000, representatives of Chartwell advised the Board that they had
received verbal commitments from a subordinated debt financing source and that
they expected to receive definitive commitment letters from the Lenders, the
Senior Sub Note Purchasers and Ford in the next few days. On July 13, 2000,
Nutter McClennen distributed to members of the Board (including the Special
Committee) updated copies of the Merger Agreement and the Carey Purchase
Agreements, proposed resolutions regarding the transaction, copies of the
Financing Commitment Letters, and FBR's final Board presentation book and
draft fairness opinion.
A special joint meeting of the Special Committee and the full Board was held
by conference telephone on July 15, 2000. Mr. Meyer provided a general
overview of the transaction and its status. Mr. Meyer and Nutter McClennen
provided a detailed summary of the terms of the Financing Commitment Letters
that had been received by Chartwell from its Lenders and Senior Sub Note
Purchasers and the terms of Ford's commitment letter. FBR presented its final
report and analysis on the transaction and stated that it was prepared to
issue to the Special Committee its written opinion to the effect that the
$18.25 per Share in cash to be received by the stockholders in the Offer and
the Merger is fair to such holders (other than the Management Investors) from
a financial point of view. BGC also presented its final report and analysis
and confirmed that it, too, was prepared to issue its written opinion
concerning the fairness of the transaction. Nutter McClennen then provided a
detailed summary of the terms of the Merger Agreement and the Carey Purchase
Agreements and reviewed the proposed Board resolutions. Nutter McClennen
reported that the material unresolved issues had been resolved except for
issues concerning the rollover of the Management Investors' equity interest.
After discussion and analysis, the Special Committee unanimously determined
that the Offer and the Merger and the terms and provisions of the Merger
Agreement and the Carey Purchase Agreements were advisable, fair to and in the
best interests of Carey International and its stockholders, and unanimously
recommended to the Board that it approve the transaction subject to resolution
of all remaining issues and approval by the Chairman of the Special Committee
or another member of the Special Committee and by the President or Chief
Executive Officer of Carey International. The full Board, after receiving the
recommendation of the Special Committee, unanimously determined that the
Merger Agreement and the Carey Purchase Agreements and the Merger and Offer
were advisable, fair to and in the best interests of Carey International and
the stockholders and unanimously recommended to the stockholders that they
accept the Offer and tender their Shares, and approve the Merger and the
Merger Agreement, subject to the terms of the Merger Agreement and subject to
final approval of any remaining issues by the Chairman of the Special
Committee or another member of the Special Committee and the President or
Chief Executive Officer of Carey International.
On July 19, 2000, legal counsel to Chartwell and Carey International
resolved the remaining open issues and documentation and, following approval
by a member of the Special Committee and Carey International's Chief Executive
Officer, the parties executed the Merger Agreement and other agreements
contemplated thereby.
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On July 19, 2000, Carey International issued a press release announcing the
execution of the Merger Agreement.
On August 1, 2000, the Special Committee and the Board unanimously ratified
the Merger Agreement as executed.
2. Recommendation of the Board of Directors of Carey International; Fairness
of the Offer and the Merger.
The Special Committee of the Board of Directors
In evaluating the Offer and the Merger, the Special Committee relied upon
its knowledge of the business, financial condition and prospects of Carey
International as well as the advice of financial advisors and legal counsel.
In reaching its decision to recommend the Merger Agreement and the
transactions contemplated thereby, including the Offer and the Merger, to the
full Board, the Special Committee considered a number of factors, including
the following:
(i) Market Price and Premium. The Special Committee considered the
historical market prices and recent trading activity of the Shares,
including the fact that the $18.25 per Share cash consideration to be paid
in the Offer and the Merger represents a substantial premium over the
trading price of the Shares prior to the announcement on June 29, 2000 that
Carey International was in negotiations regarding a possible acquisition of
Carey International. The Special Committee also considered the significant
decline in Carey International's Common Stock price that followed the
announcement on April 4, 2000 of its results for the first fiscal quarter
and the length of time that could be expected to pass before the effect of
the decline is reversed.
(ii) Current Business Strategy and Future Prospects. The Special
Committee considered the business, financial condition, results of
operation, current business strategy and future prospects of Carey
International, and, in particular, the fact that Carey International's
ability to grow through strategic acquisitions is limited by the
historically volatile and recently low trading price of the Shares. The
Special Committee reviewed the anticipated capital requirements of Carey
International for acquisitions and enhancement of its information
technology systems. The Special Committee also recognized that as long as
Carey International is perceived as an industry consolidator and industry
consolidators continue to be undervalued by investors, the trading price of
the Shares may suffer correspondingly.
(iii) Special Committee Formation and Arm's-Length Negotiations. The
Special Committee considered the fact that the Merger Agreement and the
transactions contemplated thereby were the product of arm's-length
negotiations among Acquisition Company, Parent and the Special Committee
(and their respective advisors) and the fact that the Special Committee
consists of four independent directors who are not employed by or
affiliated with Carey International (except in their capacities as
directors of Carey International).
(iv) Offer Price and Merger Consideration. The Special Committee
concluded, based on its negotiations with Acquisition Company and Parent,
that the Offer Price and Merger Consideration represent the highest price
that Acquisition Company and Parent would be willing to pay for the Shares.
This determination was the result of the Special Committee's personal
participation in the negotiations with Acquisition and Parent, as well as
the advice of the Special Committee's advisors, in an attempt to obtain the
highest possible price.
(v) Fairness Opinion of Friedman Billings Ramsey & Co., Inc. The Special
Committee considered the advice and the financial presentation of FBR that
it has received since June 19, 2000, and FBR's final financial report and
oral opinion delivered at the meeting of the Special Committee held on July
15, 2000, which was subsequently confirmed in writing on July 15, 2000,
that, as of the date of the FBR Opinion and subject to the assumptions,
limitations and qualifications set forth in the FBR Opinion, the $18.25 per
Share cash consideration to be received in the Offer and the Merger by the
holders of Shares (other than the Management Investors) was fair to such
holders from a financial point of view.
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The full text of the FBR Opinion is attached to this Offer to Purchase as
Exhibit A. The summary of the FBR Opinion set forth in this Offer to
Purchase is qualified in its entirety by reference to the full text of the
FBR Opinion. Carey International's stockholders are urged to read the FBR
Opinion in its entirety for the procedures followed, assumptions made,
other matters considered and limits of the review by FBR in connection with
its opinion. The FBR Opinion was prepared for the Special Committee and was
directed only to the fairness from a financial point of view, as of the
date thereof, of the consideration to be received the holders of Shares
(other than the Management Investors) in the Offer and the Merger. The FBR
Opinion does not constitute a recommendation to any of Carey
International's stockholders as to whether such stockholder should tender
his or her Shares or how such stockholder should vote on the Merger, should
any such vote be required.
(vi) Ability to Consider Alternative Transactions. The Special Committee
considered the terms of the Merger Agreement, including (a) the provision
providing that the Board is permitted, if the Board determines in good
faith that it would be inconsistent with the Board's fiduciary duties to
Carey International stockholders, to furnish or provide access to
information concerning Carey International to, and engage in discussions
and negotiate with, third parties who make a bona fide unsolicited request
or inquiry that the Board reasonably determines may lead to an acquisition
proposal that the third party is capable of consummating in a timely manner
that would be more favorable from a financial point of view than the Offer
and the Merger and (b) the ability of the Board, in the exercise of its
fiduciary duties, to terminate the Merger Agreement in order to permit
Carey International to enter into an alternative transaction with a third
party. The Board did not consider the $7.5 million termination fee and up
to $3.0 million of expenses that would be payable to Parent in the event
that the Board exercises its fiduciary termination right to be a material
impediment to a superior proposal from a third party.
(vii) Transaction Structure. The Special Committee considered the fact
that the transaction is structured as an immediate cash tender for all of
the outstanding Shares, which gives Carey International's stockholders the
opportunity to obtain cash for all of their Shares at the earliest possible
time, and the fact that the consideration to be paid in the Offer and the
Merger is the same.
(viii) Receipt of Commitment Letters. The Special Committee considered
the fact that Acquisition Company and Carey International had received
definitive commitment letters from debt and equity financing sources to
arrange, fund and administer the necessary financing for the Offer and the
Merger.
(ix) Few Regulatory Approvals Required. The Special Committee considered
the fact that relatively few regulatory approvals or consents are required
to consummate the Offer and the Merger and the favorable prospects for
receiving such approvals and consents.
(x) Availability of Dissenters' Rights. The Special Committee considered
the fact that dissenters' appraisal rights will be available under Delaware
law with respect to the Merger.
(xi) Projected Financial Performance and Related Risk and
Uncertainties. The Special Committee considered the financial projections
prepared by Carey International's management. See "THE TENDER OFFER --
Certain Information Concerning Carey International -- Financial
Projections."
(xii) Discussions Regarding Sale of Carey International. The Special
Committee considered BGC's work on behalf of Carey International in
identifying possible acquirors of Carey International as well as the
efforts of management of Carey International from time to time to find
potential financial and strategic acquirors who would be interested in a
transaction that would result in a premium to the stockholders similar to
that being offered in the Transaction.
(xiii) Management Investors' Role in Transaction. The Special Committee
considered the financial stake that the Management Investors would have in
both the Transaction and in the future growth of Carey International.
(xiv) Possible Decline in Market Price of Common Stock. The Special
Committee considered the possibility that if a merger transaction with
Acquisition Company and Parent is not consummated and Carey
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International remained a publicly-owned corporation, the price that might
be received by the holders of the Shares in the open market or in a future
transaction might be less than the $18.25 per Share to be received by
stockholders in connection with the Offer and the Merger.
(xv) Thin Trading Market in Common Stock and Market Capitalization. The
Special Committee considered the relatively thin trading market of the
Common Stock. The Special Committee also considered the fact that as a
small or micro cap company, Carey International has limited prospects for
creating significant institutional interest in its Common Stock. The
Special Committee noted, in particular, the recent loss of coverage of
Carey International by a number of analysts and the recent removal of the
Common Stock from the Russell 2000 Index.
(xvi) Management. The Special Committee considered the effect on Carey
International and the trading price of the Shares, of Carey International's
possible inability to retain key management and the anticipated retirement
of Carey International's President.
In addition to the factors listed above, the Special Committee considered
the fact that the consummation of the Offer and the Merger would eliminate the
possibility of Carey International's stockholders (other than Parent and the
Management Investors) participating in any future growth in the value of Carey
International. The Special Committee concluded that this loss of opportunity
was appropriately reflected in the $18.25 per Share to be paid in the Offer
and Merger.
The Special Committee also considered the potential risks of the Offer and
the Merger, including (1) the fact that the fees and expenses required to be
paid by Carey International by the terms of the Merger Agreement upon
termination of the Merger Agreement for certain reasons would make it more
costly for another potential bidder to propose an acquisition of Carey
International on a basis that would be superior to that contemplated by the
Merger Agreement, and (2) the possibility that the conditions set forth in the
Financing Commitment Letters to the obligations of the financing sources to
provide the funding necessary to consummate the Offer and the Merger may not
be fulfilled or waived.
The Board of Directors
In reaching its decision to approve the Merger Agreement and the
transactions contemplated thereby, the full Board considered and relied upon
the conclusions and the unanimous recommendation of the Special Committee that
the full Board approve the Merger Agreement and the transactions contemplated
thereby, including the Offer and the Merger, and the considerations referred
to above as having been taken into account by the Special Committee, as well
as the Board's own familiarity with Carey International's business, financial
condition and prospects and the advice of financial advisors and legal
counsel.
The Board also considered advice and the financial presentations of BGC that
it has received since January 2000 and BGC's final financial report and oral
opinion delivered at the July 15, 2000 meeting of the Board, which was
subsequently confirmed in writing on July 15, 2000, that, as of the date of
the BGC Opinion and subject to the assumptions, limitations and qualifications
set forth in the BGC Opinion, the $18.25 per Share cash consideration to be
received in the Offer and the Merger by the holders of Shares (other than the
Management Investors) was fair to such holders from a financial point of view.
The full text of the BGC Opinion is attached to this Offer to Purchase as
Exhibit B. The summary of the BGC Opinion set forth in this Offer to Purchase
is qualified in its entirety by reference to the full text of the BGC Opinion.
Carey International's stockholders are urged to read the BGC Opinion in its
entirety for the procedures followed, assumptions made, other matters
considered and limits of the review by BGC in connection with its opinion. The
BGC Opinion was prepared for the full Board and was directed only to the
fairness from a financial point of view, as of the date thereof, of the
consideration to be received by the holders of Shares (other than the
Management Investors) in the Offer and the Merger. The BGC Opinion does not
constitute a recommendation to any of Carey International's stockholders as to
whether
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such stockholder should tender his Shares or how such stockholder should vote
on the Merger, should any such vote be required.
In light of the number and variety of factors that the Special Committee and
the Board considered in connection with their evaluation of the Offer and the
Merger, neither the Special Committee nor the Board found it practicable to
quantify or otherwise assign relative weights to the foregoing factors, and,
accordingly, neither the Special Committee nor the Board did so. In addition,
individual members of the Special Committee and the Board may have given
different weights to different factors. The Special Committee and the Board
viewed their positions and recommendations as being based on the totality of
the information presented to and considered by it.
The Board believes that the Offer and the Merger are procedurally fair
because, among other things: (i) the Special Committee consisted of
independent directors appointed by the Board to represent the interests of
Carey International's stockholders other than the Management Investors; (ii)
the Special Committee retained its own independent financial advisor, FBR, to
assist it in evaluating the proposed transaction and provide it with financial
advice; (iii) the Management Investors retained independent legal counsel to
assist them in the negotiation of certain agreements between the Management
Investors and Acquisition Company; and (iv) the $18.25 per Share cash
consideration and the other terms and conditions of the Merger Agreement
resulted from active arm's-length negotiations among the Special Committee,
Acquisition Company and Parent, and their respective advisors. The Board
believes that sufficient procedural safeguards to ensure fairness of the
Transaction and to permit the Special Committee to represent effectively the
interests of the holders of the Shares (other than the Management Investors)
were present, and, therefore, there was no need to retain any additional
unaffiliated representative to act on behalf of the holders of the Shares in
view of (1) the unaffiliated status of the members of the Special Committee
and the retention by the Special Committee of its own independent financial
advisor and (2) the fact that the Special Committee is a mechanism well
recognized under Delaware law to ensure fairness in transactions of this type.
Under the DGCL, a plan of merger requires the affirmative vote of at least a
majority of all outstanding shares entitled to vote thereon in order to be
adopted. The Board and the Special Committee recognize that the Merger is not
structured to require the approval of the holders of the outstanding Shares
after the closing of the Offer other than Acquisition Company and the
Management Investors. In addition, the Board and the Special Committee
recognize that if the Offer is consummated, Acquisition Company and the
Management Investors will have sufficient voting power to approve the Merger
without the affirmative vote of any other stockholders of Carey International.
Consummation of the Offer, however, is conditioned upon, among other things,
the Minimum Condition, which may not be waived by Carey International and
Parent without the consent of the Special Committee. Finally, pursuant to the
Merger Agreement, consummation of the Offer is a condition to the Merger.
Neither Carey International nor Acquisition Company has made any provisions
in connection with the Offer and the Merger to grant unaffiliated stockholders
of Carey International access to Carey International's corporate records, or
to obtain counsel or appraisal services at the expense of either Carey
International or Acquisition Company.
The Board of Directors, after receiving the unanimous recommendation of the
Special Committee, (1) has unanimously approved the Merger Agreement and the
transactions contemplated thereby, including the Offer and the Merger, (2) has
determined that the Offer and the Merger are advisable, fair to and in the
best interests of Carey International's stockholders (other than the
Management Investors) and (3) recommends that Carey International's
stockholders accept the Offer and tender their Shares pursuant to the Offer.
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3. Opinion of the Board's Financial Advisors.
Opinion of FBR
Pursuant to an engagement letter dated June 21, 2000, the Board, upon the
advice of members of the Special Committee, retained FBR to act as financial
advisor to the Special Committee in the determination of the fairness of the
proposed Transaction.
On July 15, 2000, FBR delivered to Carey International's Special Committee
its oral opinion, subsequently confirmed in writing as of July 15, 2000, that
as of such date and subject to the various assumptions and limitations set
forth therein, that the consideration to be received by the non-affiliated
stockholders of Carey International and certain members of Carey
International's management, pursuant to the Merger Agreement, was fair from a
financial point of view. The amount of such consideration was determined by
negotiations conducted by the Special Committee and not by recommendations
from FBR. No limitations were imposed by the Special Committee on FBR with
respect to the investigations made or procedures followed in rendering its
opinion. FBR was not requested to, nor did it advise Carey International with
respect to alternatives to the Merger or Carey International's underlying
decision to proceed with or effect the Offer or the Merger.
The full text of FBR's written opinion to the Special Committee is attached
to this Offer to Purchase as Exhibit A and is incorporated herein by reference
and should be read carefully and in its entirety in connection with this
Offer. FBR's opinion is directed to the Special Committee and does not
constitute a recommendation to any stockholder as to how such stockholder
should vote with respect to the Merger. FBR's opinion addresses only the
financial fairness of the consideration to be received by certain holders of
Shares pursuant to the Merger Agreement and does not address the relative
merits of, or any alternatives to, the Merger Agreement or the Board's
decision to proceed with or effect the Offer or the Merger. In furnishing its
opinion, FBR did not admit that it is an expert within the meaning of the term
"expert" as used in the Securities Act of 1933, as amended (the "Securities
Act"), nor did it admit that its opinion constitutes a report or valuation
within the meaning of the Securities Act, and statements to such effect are
included in the FBR's opinion.
In exchange for FBR's services, Carey International agreed to pay to FBR
$400,000 plus reasonable out-of-pocket expenses and fees (including attorneys'
fees) incurred by FBR for services rendered by it in connection with the
Transaction and its delivery of the FBR Opinion, and Carey International
agreed to indemnify FBR in connection with the services that it provided.
Set forth below is a further summary of the FBR Opinion, which is qualified
in its entirety by the full text of the FBR Opinion attached to this Offer to
Purchase as Exhibit A.
For purposes of its opinion, FBR:
. Reviewed Carey International's Annual Report on Form 10-K for the fiscal
year ended November 30, 1999;
. Reviewed Carey International's Quarterly Report on Form 10-Q for the
fiscal quarter ended February, 29, 2000;
. Reviewed Carey International's unaudited quarterly results for the
fiscal quarter ended May 31, 2000;
. Reviewed Carey International's Proxy Statement dated May 26, 1999;
. Conducted discussions with certain members of management of Carey
International concerning the financial condition, results of operations,
financial forecasts, business and prospects of Carey International;
. Conducted discussions with PricewaterhouseCoopers LLP, Carey
International's auditor, concerning the condition of Carey
International's accounting controls and financial statements;
. Reviewed market prices and trading activity for the Common Stock for the
period December 22, 1997 through July 11, 2000;
. Compared the results of operations and financial condition of Carey
International with those of certain publicly-traded companies that FBR
deemed to be reasonably comparable to Carey International;
. Reviewed the financial terms, to the extent publicly available, of
certain acquisition transactions that FBR deemed to be reasonably
comparable to the Transaction;
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. Reviewed the Merger Agreement and related documents; and
. Performed such other analyses and reviewed and analyzed such other
information as FBR deemed appropriate.
In rendering its opinion, FBR did not assume responsibility for
independently verifying, and did not independently verify, any financial or
other information concerning Carey International furnished to it by Carey
International, or the publicly-available financial and other information
regarding Carey International and other comparable public companies. FBR
assumed that all such information is accurate and complete and has no reason
to believe otherwise. FBR relied on certain assumptions, conveyed by Carey
International's management, pertaining to the Financing to be used to
consummate the Transaction. FBR further relied on the assurances of management
of Carey International that they are not aware of any facts that would make
such financial or other information relating to such entities inaccurate or
misleading. With respect to financial forecasts for Carey International
provided to FBR by Carey International's management, FBR has assumed, for
purposes of its opinion, that the forecasts were prepared on reasonable bases
reflecting the best available estimates and judgments of such management at
the time of preparation as to the future financial and operating performance
of Carey International. FBR assumed that there was no undisclosed material
change in Carey International's assets, financial condition, result of
operations, business or prospects since February 29, 2000, and has relied upon
Carey International's Annual Report on Form 10-K for the fiscal year ended
November 30, 1999 as a representation of Carey International's financial
position and operating results through that date. FBR was not requested to,
and did not, undertake an independent appraisal of the assets or liabilities
of Carey International nor was FBR furnished with any such appraisals. FBR's
conclusions and opinion are necessarily based upon economic, market and other
conditions and the information made available to FBR as of the date of its
opinion. FBR expressed no opinion on matters of a legal, regulatory, tax or
accounting nature related to the Offer or the Merger.
FBR based its opinion on economic, monetary and market and other conditions
as in effect on, and the information made available to FBR as of, the date of
its opinion. Accordingly, although subsequent developments may affect its
opinion, FBR has not assumed any obligation to update, revise or reaffirm its
opinion.
Set forth below is a brief summary of the report dated July 11, 2000
presented by FBR to the Special Committee on July 15, 2000 in connection with
its opinion.
Comparable Company Analysis
Based on public and other available information, FBR calculated the
multiples of enterprise value (defined as equity value plus debt less cash and
cash equivalents) to latest twelve months ("LTM") revenue, earnings before
interest, taxes, depreciation and amortization ("EBITDA"), and earnings before
interest and taxes ("EBIT"), and equity value to LTM net income, for ten
companies in the travel services/transportation and consolidator industries.
Such analysis for the travel services/transportation industry indicated the
following enterprise value to LTM revenue, EBITDA and EBIT, and equity value
to net income multiples: an average LTM revenue multiple mean of 0.8x and a
median of 0.6x; LTM EBITDA multiple mean of 7.0x and a median of 6.8x; LTM
EBIT multiple mean of 10.0x and a median of 9.1x; and LTM net income multiple
mean of 10.0x and a median of 10.4x. Such analysis for companies with an
enterprise value of $500 million or less for the travel
services/transportation industry indicated the following multiples: an average
LTM revenue multiple mean of 0.5x and a median of 0.5x; LTM EBITDA multiple
mean of 7.7x and a median of 7.7x; LTM EBIT multiple mean of 8.7x and a median
of 8.7x; and LTM net income multiple mean of 9.6x and a median of 9.6x. FBR
noted that the enterprise value of the consideration to be received by Carey
International's stockholders in connection with the Transaction implied LTM
multiples of 1.0x LTM revenue, 7.7x LTM EBITDA and 10.3x LTM EBIT. FBR also
noted that the equity value of the consideration to be received by Carey
International's stockholders in connection with the Transaction implied a LTM
multiple of 15.7x net income.
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Such analysis for the consolidator industry indicated the following
enterprise value to LTM revenue, EBITDA, EBIT and equity value to net income
multiples: an average LTM revenue multiple mean of 1.0x and a median of 0.7x;
LTM EBITDA multiple mean of 7.1x and a median of 7.1x; LTM EBIT multiple mean
of 8.6x and a median of 9.3x; and LTM net income multiple mean of 9.8x and a
median of 9.0x. Such analysis for companies with an enterprise value of $500
million or less for the consolidator industry indicated the following
enterprise value to LTM revenue, EBITDA, EBIT and equity value to net income
multiples: an average LTM revenue multiple mean of 0.4x and a median of 0.3x;
LTM EBITDA multiple mean of 5.4x and a median of 5.3x; LTM EBIT multiple mean
of 5.1x and a median of 4.9x; and LTM net income multiple mean of 4.7x and a
median of 3.5x. FBR noted that the enterprise value of the consideration to be
received by Carey International's stockholders in connection with the
Transaction implied LTM multiples of 1.0x LTM revenue, 7.7x LTM EBITDA and
10.3x LTM EBIT. FBR also noted that the equity value of the consideration to
be received by Carey International's stockholders in connection with the
Transaction implied a LTM multiple of 15.7x net income.
Comparable Transactions Analysis
Based on public and other available information, FBR calculated the
multiples of enterprise value LTM revenue, EBITDA and EBIT, and equity value
to LTM net income, for 18 target companies in the travel
services/transportation and consolidator industries in transactions that have
been consummated, or that were announced and are pending, since January 1,
1998. Such analysis yielded the following enterprise value to LTM revenue,
EBITDA and EBIT and equity value to net income multiples: an average LTM
revenue multiple mean of 1.2x and a median of 1.0x; LTM EBITDA multiple mean
of 7.4x and a median of 5.8x; LTM EBIT multiple mean of 13.6x and a median of
12.3x; and LTM net income multiple mean of 23.2x and a median of 18.9x. Such
analysis for companies with an enterprise value of $500 million or less
yielded the following enterprise value to LTM revenue, EBITDA and EBIT and
equity value to net income multiples: an average LTM revenue multiple mean of
0.9x and a median of 0.8x; LTM EBITDA multiple mean of 6.7x and a median of
5.8x; LTM EBIT multiple mean of 12.5x and a median of 11.3x; and LTM net
income multiple mean of 23.1x and a median of 18.5x. FBR noted that the
enterprise value of the consideration to be received by Carey International's
stockholders in connection with the Transaction implied LTM multiples of 1.0x
LTM revenue, 7.7x LTM EBITDA and 10.3x LTM EBIT. FBR also noted that the
equity value of the consideration to be received by Carey International's
stockholders in connection with the Transaction implied a LTM multiple of
15.7x net income.
Premiums Paid Analysis
FBR reviewed the consideration paid per share versus the target's share
price on certain dates prior to the transaction in the 18 comparable
transactions. FBR calculated the premiums paid in these transactions over the
applicable stock price of the target company one day, one week and four weeks
prior to the announcement of the acquisition offer. Such analysis indicated
average premiums of 34.5%, 39.8% and 42.5%, respectively, and median premiums
of 32.6%, 38.5% and 42.5%, respectively. Such analysis for companies with an
enterprise value of $500 million or less indicated average premiums of 38.7%,
38.4% and 48.6%, respectively and median premiums of 37.9%, 38.5% and 50.0%,
respectively. FBR noted that the premiums implied in connection with the
Transaction were 29.8%, 31.5% and 104.2%, respectively, for the period one
day, one week and four weeks prior to July 8, 2000.
Discounted Cash Flow Analysis
FBR applied a discounted cash flow analysis to the financial cash flow
forecasts in both a base case and a high case for Carey International for the
years 2000 through 2004, as estimated by Carey International's management. In
conducting this analysis, FBR first calculated the present values of the
forecasted cash flows. Second, FBR estimated the present value of the
aggregate value of Carey International at the end of 2004 by applying
multiples to Carey International's estimated 2004 EBITDA, which multiples
ranged from 5.0x to 8.0x. These cash flows and aggregate values were
discounted to present values using discount rates ranging from 15%
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to 25%. This analysis indicated a range of current equity values of Carey
International from $9.66 to $28.22 for the base case and $11.03 to $34.54 for
the high case. Discounted cash flow analysis is a widely-used valuation
methodology but it relies on numerous assumptions, including assets and
earnings growth rates, terminal values and discount rates. The analysis is not
necessarily reflective of the actual values of Carey International.
Leveraged Buyout Analysis
FBR applied a leveraged buyout analysis to the financial cash flow forecasts
in both a base case and a high case for Carey International for the years 2000
through 2004, as estimated by management. FBR further analyzed the cases by
allowing the sources of funding (debt in scenario 1 and equity in scenario 2)
to fluctuate to accommodate purchase prices of $18.25, $19.00 and $20.00 per
Share. Such analysis indicated that the projected internal rates of return
("IRRs") to the equity sponsor, assuming an exit in 2003, were 38.2%, 36.6%,
and 34.4% at $18.25, $19.00 and $20.00 per share, respectively, in the base
case scenario 1. The IRRs were 47.6%, 46.3%, and 44.5% at $18.25, $19.00 and
$20.00 per share, respectively, in the high case scenario 1. The IRRs to the
equity sponsor, assuming an exit in 2004, were 35.1%, 34.1% and 32.8% at
$18.25, $19.00 and $20.00 per share, respectively, in the base case scenario
1. The IRRs were 43.8%, 43.0%, and 41.9% at $18.25, $19.00 and $20.00 per
share, respectively, in the high case scenario 1. The IRRs to the equity
sponsor, assuming an exit in 2003, were 38.2%, 34.2% and 29.5% at $18.25,
$19.00 and $20.00 per share, respectively, in the base case scenario 2. The
IRRs were 47.6%, 43.4% and 38.7% at $18.25, $19.00 and $20.00 per share,
respectively, in the high case scenario 2. The IRRs to the equity sponsor,
assuming an exit in 2004, were 35.1%, 32.1% and 28.5% at $18.25, $19.00 and
$20.00 per share, respectively, in the base case scenario 2. The IRRs were
43.8%, 40.6% and 37.0% at $18.25, $19.00 and $20.00 per share, respectively,
in the high case scenario 2.
In performing its analyses, FBR made numerous assumptions with respect to
industry performance, general business and economic conditions, and other
matters, many of which are beyond the control of Carey International. The
analyses performed by FBR are not necessarily indicative of actual values or
actual future results, which may be significantly more or less favorable than
those suggested by such analyses. Such analyses were prepared solely as part
of FBR's analysis of the fairness, from a financial point of view, of the
consideration to be received by the holders of Shares pursuant to the Merger
Agreement and were provided to the Special Committee in connection with the
delivery of FBR's opinion. The analyses do not purport to be appraisals or to
reflect the prices at which a company might actually be sold or the prices at
which any securities may trade at any time in the future.
As described above, the FBR Opinion and FBR's presentations to the Special
Committee were among the many factors taken into consideration by the Special
Committee in making its determination to recommend that the Board approve the
Merger Agreement.
In the ordinary course of its business, FBR actively trades the equity
securities of Carey International for its own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities.
Opinion of BGC
On July 15, 2000, BGC rendered its oral and written opinion to the Board
that, as of such date, and based on assumptions and qualifications set forth
in its presentation, the consideration to be received pursuant to the terms of
the Merger Agreement by the holders of Shares, other than the Management
Investors, was fair, from a financial point of view.
The full text of the BGC Opinion, which states the procedures followed,
assumptions made, matters considered and limitations on the review undertaken,
is attached to this Offer to Purchase as Exhibit B and is incorporated by
reference into this Offer to Purchase. The summary of the BGC Opinion below is
qualified by reference to its text. Carey International stockholders are urged
to read the BGC Opinion carefully in its entirety. The BGC Opinion was
directed to the Board for its information regarding their consideration of the
transactions contemplated by the Merger Agreement and relates only to the
fairness,
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from a financial point of view, of the cash consideration to be received by
the holders of Shares, other than the Management Investors, pursuant to the
Merger Agreement. The BGC Opinion does not address any other aspect of the
Transaction, does not address Carey International's underlying business
decision to effect the Transaction, does not constitute a recommendation to
the Board, and does not constitute a recommendation to any stockholder as to
any matter relating to the Transaction.
Although BGC evaluated the fairness, from a financial point of view, of the
cash consideration to be received by the holders of Shares, other than the
Management Investors, in the Transaction, the cash consideration itself was
determined by Carey International and Chartwell through arm's-length
negotiations and was not based on any recommendations by BGC, although BGC
provided advice to Carey International from time to time during the course of
such negotiations. Carey International's decision to enter into the Merger
Agreement was solely the decision of its Board. Carey International did not
provide specific instructions to, or place any limitations on, BGC regarding
the procedures to be followed or factors to be considered by BGC in performing
its analyses or rendering its opinion.
In arriving at its opinion, BGC:
. Reviewed a draft dated July 14, 2000 of the Merger Agreement in
substantially the form to be executed by Carey International;
. Reviewed publicly available business and financial information relating
to Carey International, including Carey International's Annual Report on
Form 10-K for the fiscal year ended November 30, 1999 and Carey
International's Quarterly Reports on Form 10-Q for the periods ended
February 29, 2000 and May 31, 2000;
. Reviewed certain publicly available business and financial information
relating to Carey International;
. Reviewed certain operating and financial information, including
projections, provided to or discussed with BGC by management of Carey
International related to Carey International and its prospects;
. Met with certain members of Carey International's senior management to
discuss its business, operations, historical and projected financial
results and future prospects;
. Reviewed the historical stock prices, valuation parameters and trading
volume of the Common Stock;
. Reviewed publicly available financial data, stock market performance
data and valuation parameters of companies whose operation BGC
considered generally relevant in evaluating Carey International;
. Reviewed the terms of recent selected mergers and acquisitions which BGC
deemed generally relevant in evaluating the Offer and the Merger;
. Performed discounted cash flow analyses based on the projections for
Carey International furnished to BGC; and
. Considered such other information and conducted other studies, analyses,
inquiries and investigations as BGC deemed appropriate.
In rendering its opinion, BGC relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available
to it from public sources that was provided to it by Carey International or
that was otherwise reviewed by BGC and assumed that Carey International is not
aware of any information prepared by it or its advisors that might be material
to the BGC opinion that has not been made available to BGC. With respect to
the financial projections supplied to BGC, BGC relied on the representations
that such projections had been reasonably prepared on the basis reflecting the
best currently available estimates and judgments of the management of Carey
International as to the future operating and financial performance of Carey
International. BGC did not assume any responsibility for making an independent
evaluation of any assets or liabilities or for making any independent
verification of the information reviewed by BGC.
BGC was advised by representatives of Carey International, and therefore
assumed, that the final terms of the Merger Agreement would not vary
materially from those stated in the drafts reviewed by BGC, as updated
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<PAGE>
by discussions with representatives of Carey International. BGC assumed, with
Carey International's consent, that, in all respects material to BGC's
analysis, the representations and warranties contained in the Merger Agreement
were true and correct, the conditions to the Offer and the Merger would be met
and the Offer and the Merger would be consummated on the terms and conditions
contemplated in the Merger Agreement.
BGC acted as advisor to the Board in connection with the Offer and the
Merger and will receive a fee for such services, including the rendering of
its opinion, a significant portion of which is contingent upon consummation of
the Offer. BGC's opinion was addressed to the Board. BGC acknowledged that the
Special Committee retained FBR to provide an opinion exclusively to the
Special Committee. It is currently estimated that the fee payable by Carey
International to BGC, upon the consummation of the Transaction, will be
approximately $2.4 million. In addition, Carey International has agreed to
indemnify BGC and related parties against liabilities, including liabilities
under the federal securities laws, relating to or arising out of BGC's
engagement.
In preparing its opinion to the Board, BGC performed a variety of financial
and comparative analyses, including those described below. The summary of
BGC's analyses is not a complete description of the analyses underlying its
opinion. The preparation of an opinion is a complex process involving various
judgments and determinations as to the most appropriate and relevant
assumptions and financial analyses and the application of those methods to the
particular circumstances. As a result, BGC's opinion is not necessarily
susceptible to partial analysis or summary description. In arriving at its
opinion, BGC made qualitative judgments as to the significance and relevance
of each analysis and factor considered by it and did not attribute particular
weight to any one analysis or factor. BGC did not form an opinion as to
whether any individual analysis or factor, positive or negative, considered in
isolation, supported or failed to support its opinion. BGC believes, however,
that taking into account the totality of all of the factors which it
considered and its analyses performed in connection with its opinion and
ascribing appropriate qualitative significance and relevance to each of those
factors and analyses collectively supported its determination as to the
fairness of the Offer Price and Merger Consideration from a financial point of
view. Accordingly, BGC believes that its analyses must be considered as a
whole and that selecting portions of its analyses and factors or of the
summary described below or focusing on information presented in BGC's report,
without considering all analyses and factors or the narrative description of
the analyses, could create a misleading or incomplete view of the processes
underlying its analyses and opinion.
In arriving at its opinion, BGC did not perform or obtain any independent
evaluation or appraisal of the assets or liabilities, contingent or otherwise,
of Carey International, nor was BGC furnished with any evaluations or
appraisals. During the course of its engagement, BGC was asked by the Board to
solicit indications of interest from various third parties regarding a
potential transaction with Carey International, and BGC considered the results
of those solicitations in rendering its opinion. BGC's opinion was necessarily
based on information available to it, and financial, economic, market and
other conditions as they existed and could be evaluated on the date of its
opinion. Although subsequent developments may affect its opinion, BGC does not
have any obligation to update, revise or reaffirm its opinion.
The following is a summary of the material analyses underlying BGC's opinion
dated July 15, 2000, delivered to the Board in connection with the Transaction
contemplated by the Merger Agreement. The financial analyses summarized below
include information presented in tabular format. In order to fully understand
BGC's financial analyses, the tables must be read together with the text of
each summary. The tables alone do not constitute a complete description of the
financial analyses. Considering the data set forth in the tables below without
considering the full narrative description of the financial analyses,
including the methodologies and assumptions underlying the analyses, could
create a misleading or incomplete view of BGC's financial analyses.
Comparison to Selected Public Companies
BGC compared the financial and stock market performance data of Carey
International to corresponding data of 11 selected public companies in the
transportation services industry. BGC compared enterprise values, calculated
as equity value plus debt, preferred stock and minority interests less cash
and cash equivalents, of the selected companies and Carey International as
multiples of latest 12 months sales, earnings before interest, taxes,
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depreciation and amortization ("EBITDA"), and earnings before interest and
taxes ("EBIT"). BGC also compared stock prices of the selected companies and
Carey International as multiples of estimated calendar years 2000 and 2001
earnings per share, commonly referred to as the "P/E ratio". This analysis
indicated the following multiples for the selected companies based on their
latest 12 months sales, EBITDA and EBIT, and estimated calendar years 2000 and
2001 earnings per share, as compared to corresponding multiples for Carey
International and multiples for Carey International implied by the Offer Price
and Merger Consideration of $18.25 per Share:
<TABLE>
<CAPTION>
Enterprise Value as a Multiple
of Latest Twelve Months P/E Ratios
-------------------------------- ---------------
Sales EBITDA EBIT CY2000E CY2001E
---------- --------------------- ------- -------
<S> <C> <C> <C> <C> <C>
7/14/00 Median of Public
Comparables................. 0.7x 7.1x 9.7x 11.6x 9.6x
7/14/00 Stock Price (Carey
International)(1)........... 0.9x 6.5x 8.8x 11.1x 9.0x
7/14/00 Stock Price (Carey
International)(2)........... NA NA NA 10.2x 9.5x
6/28/00 Stock Price (Carey
International)(1)........... 0.7x 5.1x 6.8x 7.9x 6.3x
6/28/00 Stock Price (Carey
International)(2)........... NA NA NA 7.2x 6.7x
Offer Price (Carey Interna-
tional)(1).................. 1.0x 7.6x 10.2x 13.6x 10.9x
Offer Price (Carey Interna-
tional)(2).................. NA NA NA 12.5x 11.6x
</TABLE>
--------
(1) Earnings per share based on publicly available research analysts'
estimates.
(2) Earnings per share based on Carey International estimated financial data.
Multiples were based on the prices for the public comparables as of July 14,
2000, the trading day prior to the delivery of BGC's opinion; the price of
Carey International on July 14, 2000, the trading day prior to the delivery of
BGC's opinion; the price of Carey International on June 28, 2000, the trading
day prior to the announcement by Carey International that it was in
negotiations regarding a possible acquisition of Carey International; and the
per Share Merger Consideration and Offer Price of $18.25.
Estimated financial data for the selected companies and Carey International
were based on publicly available information and research analysts' estimates
and, in the case of Carey International, Carey International estimated
financial data.
BGC chose the selected companies because BGC believed they have general
business, operating and financial characteristics similar to those of Carey
International. However, BGC noted that none of the selected companies
described above is directly comparable to Carey International. Accordingly,
BGC did not rely solely on the mathematical results of the analysis but also
made qualitative judgments concerning differences in financial and operating
characteristics of Carey International and the selected companies that could
affect the values of each.
Hypothetical Future Stock Price Analysis
BGC performed a hypothetical future stock price analysis on Carey
International based on estimated financial data for calendar years 2000
through 2004 provided to BGC by Carey International. This analysis was based
on two sets of assumptions provided by Carey International to BGC, one in
which Carey International generated internal revenue growth of 8% and acquired
$40 million of revenue annually and another in which Carey International
generated internal revenue growth of 12% and acquired $60 million of revenue
annually. Using estimates of earnings per share for calendar years 2000 and
2004, based on this estimated financial data and assumed multiple of price to
earnings of 12.8x, which BGC believed to be a reasonable estimate of price to
earnings for Carey International based upon the trading range of Carey
International as of July 14, 2000, and applying appropriate discount rates,
this analysis indicated the following: an 8% internal annual revenue growth
and the addition of $40 million of acquired revenue annually would imply a
present value of hypothetical future stock price of $15.82 to $17.81 per
Share; and a 12% internal annual revenue growth and the addition of $40
million of acquired revenue annually would imply a present value of
hypothetical future stock price of $14.94 to $17.60 per Share.
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<PAGE>
Discounted Cash Flow Analysis
BGC performed a discounted cash flow analysis on Carey International in
order to estimate the present value of the unlevered after-tax free cash flows
that Carey International could produce on a stand-alone basis. BGC analyzed
estimated free cash flows for calendar years 2000 through 2004, based on two
sets of assumptions, one in which Carey International generated internal
revenue growth of 8% and acquired $40 million of revenue annually and another
in which Carey International generated internal revenue growth of 12% and
acquired $60 million of revenue annually based on estimates provided by Carey
International. Ranges of terminal values for the discounted cash flows were
estimated using multiples of terminal year 2004 EBITDA of 5.5x to 7.5x, which
were believed to represent a reasonable estimate of the range of multiples of
EBITDA based upon Carey International's margins and growth prospects at the
end of the projected period. BGC then discounted to present value the free
cash flow streams and terminal values at appropriate discount rates. These
discount rates were based on Carey International's estimated weighted average
cost of capital. This analysis indicated the following per share equity
reference ranges after adjustment for net debt and option proceeds: an 8%
internal annual revenue growth and the addition of $40 million of acquired
revenue annually would imply a present value of discounted cash flows of
$14.91 to $15.79 per Share; and a 12% internal annual revenue growth and the
addition of $60 million of acquired revenue annually would imply a present
value of discounted cash flows of $16.32 to $17.27 per Share.
Selected Mergers and Acquisitions Analysis
Using publicly available information, BGC analyzed the purchase prices and
implied transaction multiples proposed to be paid, at the time of
announcement, in seven selected merger and acquisition transactions in the
business and transportation services industries.
BGC compared transaction values, calculated as the amount proposed to be
paid, at the time of announcement, in each transaction for the equity of the
target company, plus total debt, preferred stock and minority interests, less
cash and cash equivalents, of the selected transactions and as multiples of
latest 12 months EBITDA and EBIT, as well as equity values, calculated as the
amount proposed to be paid, at the time of announcement, in each transaction
for the equity of the target company, of the selected transactions and the
merger as multiples of the latest 12 months net income. All multiples for the
selected transactions were based on financial information available at the
time of the announcement of the relevant transaction and data for the latest
12 months reflected data for the 12 months preceding the date of announcement
of the transaction. This analysis indicated the following multiples of
transaction values for the selected merger and acquisition transactions based
on their latest 12 months EBITDA, EBIT and net income: 5.4x, 8.3x and 14.8x,
respectively, as compared to the following corresponding multiples for Carey
International implied by the Merger Consideration and Offer Price of $18.25
per share based upon its latest 12 months EBITDA, EBIT and net income: 7.6x,
10.2x and 15.4x, respectively.
No company or transaction used in the above analysis is directly comparable
to Carey International or the Merger. Accordingly, BGC did not rely solely on
the mathematical results of the analysis but also made qualitative judgments
concerning differences in financial and operating characteristics of the
companies and other factors that could affect the acquisition value of the
companies and Carey International.
Other Analyses
BGC conducted other analyses that it deemed appropriate, including, among
others, reviewing historical stock performance for Carey International and
historical and estimated financial and operating data for Carey International.
The analyses performed by BGC, particularly those based on estimates, are
not necessarily indicative of actual values or actual future results, which
may be significantly more or less favorable than results suggested by those
analyses. In addition, analyses relating to the value of businesses or
securities do not purport to be
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<PAGE>
appraisals or to reflect the prices at which businesses or securities actually
may be sold. Accordingly, BGC's analyses are inherently subject to substantial
uncertainty. The analyses were prepared solely as part of BGC's analysis for
the Board of the fairness, from a financial point of view, of the cash
consideration to be received in the Merger by the holders of the common stock
of Carey International, other than the Management Investors.
4. Purpose and Structure of the Transaction.
The purpose of the Transaction is to enable Parent to acquire substantially
all the equity interest in Carey International in a transaction in which the
holders of Shares (other than Acquisition Company and the Management Investors
(with respect to certain of their Shares)) are entitled to have their equity
interest in Carey International purchased or extinguished in exchange for cash
in the amount of $18.25 per Share. The Offer, which is the first step in the
Transaction, is structured as a joint tender offer by Acquisition Company and
Carey International to purchase, at the Offer Price, all Shares validly
tendered and not withdrawn pursuant to the Offer. Pursuant to the Merger
Agreement, Acquisition Company has agreed to pay for and purchase all Shares
tendered pursuant to the Offer, provided that the Short Form Requirement is
met. If the Short Form Requirement is not met, but all of the Offer Conditions
have been waived or met, then Acquisition Company will purchase up to
5,232,876 Shares and Carey International will purchase the balance of the
Shares tendered pursuant to the Offer. The second step in the Transaction is
for Acquisition Company to purchase, if it so elects, Shares pursuant to the
Carey Purchase Agreements. All Shares purchased will be at a per Share price
equal to the Offer Price (determined on an as exercised basis with respect to
the Company Options, less any exercise price thereof). The third step in the
Transaction, the Merger, will be consummated as soon as practicable following
the consummation of the Offer and the transactions contemplated by the Carey
Purchase Agreements and is structured to merge Acquisition Company or
Acquisition Company Sub with and into Carey International so that Carey
International is the Surviving Corporation.
Pursuant to the Merger, each then outstanding Share (other than Shares held
by Acquisition Company, certain Shares held by the Management Investors,
Shares held in the treasury of Carey International or held by stockholders who
perfect any applicable appraisal rights under the DGCL) will be converted into
the right to receive the Merger Consideration (without interest), which is
equal to the Offer Price. In connection with the Merger, certain Shares and
Company Options held by Management Investors will be converted or rolled over
into common stock of the Surviving Corporation. Pursuant to the Merger, the
Shares purchased by Carey International or Acquisition Company pursuant to the
Offer will be cancelled with no consideration paid therefor, and certain
Shares held by the Management Investors will be converted into common stock of
the Surviving Corporation. The capital stock of Acquisition Company, if the
Short Form Requirement is met, or Acquisition Company Sub, if the Short Form
Requirement is not met, will be converted into the right to receive common
stock and preferred stock (the "Carey Preferred Stock") of the Surviving
Corporation. Upon consummation of the Merger, approximately 92.0% of the
common stock of the Surviving Corporation will be owned by Parent or a
subsidiary thereof and approximately 8.0% will be owned by the Management
Investors. The Senior Sub Note Purchasers will receive detachable warrants
(the "Warrants"), with an exercise price of $.01 per share, sufficient to
provide the Senior Sub Note Purchasers with 5.25% of the common stock of the
Surviving Corporation on a fully-diluted basis.
As described above, the Board has approved the Merger and the Merger
Agreement and the transactions contemplated thereby in accordance with the
DGCL. Under the DGCL, the approval of the Board and, if the Short Form
Requirement is not met, the affirmative vote of the holders of a majority of
the outstanding Shares, is required to approve and adopt the Merger Agreement
and the transactions contemplated thereby, including the Merger. If the Short
Form Requirement is met, Acquisition Company will be able to effect the Merger
pursuant to a Short Form Merger under Section 253 of the DGCL without any
action by any stockholder of Carey International. In such event, Acquisition
Company intends to effect a Short Form Merger as promptly as practicable
following the purchase of Shares in the Offer.
In the event that the Short Form Requirement is not met, Carey International
has agreed to convene a meeting of its stockholders as soon as practicable
following the consummation of the Offer for the purpose of
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<PAGE>
adopting the Merger Agreement and has agreed, subject to the terms of the
Merger Agreement, to include in any proxy or information statement required
for such meeting a recommendation of the Board that Carey International's
stockholders vote in favor of the adoption of the Merger Agreement. The
consummation of the Merger is subject to certain conditions, including the
satisfaction of the Receipt of Funds Condition. If (1) the Minimum Condition
is satisfied and (2) the Shares are purchased in the Offer by Acquisition
Company and, if necessary, Carey International, a favorable vote to approve
the Merger will be assured since Acquisition Company will own more than a
majority of the Shares entitled to vote thereon.
5. Plans for Carey International after the Transaction.
Pursuant to the terms of the Merger Agreement, Carey International,
Acquisition Company, Acquisition Company Sub and Parent intend to effect the
Merger in accordance with the Merger Agreement as soon as practicable
following completion of the Offer. Following the closing of the Offer, the
Board will be reconstituted to consist of Vincent A. Wolfington, Michael J.
Rolland, Jeffrey R. Larsen, W. Gray Hudkins, Robert W. Cox, Dennis I. Meyer,
James C. Schroer and Elizabeth S. Acton. Except for Don R. Dailey, a director
and President of Carey International who is resigning from those positions and
becoming a consultant to Carey International, the Board and the officers of
the Surviving Corporation following the Effective Time will be the Board and
the officers of Carey International immediately prior to the Effective Time.
See "SPECIAL FACTORS -- The Merger Agreement and Related Documents."
It is currently expected that the business and operations of the Surviving
Corporation will be continued substantially as they are currently being
conducted by Carey International. Except as otherwise indicated in this Offer
to Purchase or as contemplated by the Merger Agreement or the Financing
Commitment Letters, none of the Offerors has any present plans or proposals
involving Carey International that relate to or would result in an
extraordinary corporate transaction such as a merger, reorganization or
liquidation, or a sale or transfer of a material amount of Carey
International's assets, or any material change in Carey International's
present dividend policy, indebtedness or capitalization, or any other material
change in Carey International's corporate structure or business. However,
after the Merger, the Surviving Corporation's management and board of
directors will review proposals or may propose the acquisition or disposition
of assets or other changes in the Surviving Corporation's business, corporate
structure, capitalization, businesses, management, operations or dividend
policy that they consider to be in the best interests of the Surviving
Corporation and its stockholders.
Upon consummation of the Merger, Parent or a subsidiary thereof will own
approximately 92.0% of the outstanding common stock of the Surviving
Corporation and the Management Investors will own approximately 8.0%. Parent
and the Management Investors will be entitled to all benefits resulting from
their ownership of all the shares of Carey International, including all income
generated by Carey International's operations and any future increase in Carey
International's value. Similarly, Parent and the Management Investors will
also bear the risk of losses generated by Carey International's operations and
any future decrease in the value of Carey International after the Merger.
Subsequent to the Merger, no other stockholder, other than the Senior Sub Note
Purchasers upon exercise of the Warrants and employees pursuant to an option
plan to be adopted by the Surviving Corporation, will have the opportunity to
participate in the earnings and growth of Carey International or will have a
right to vote on corporate matters. Similarly, such stockholders will not face
the risk of losses generated by Carey International's operations or any
decrease in the value of Carey International after the consummation of the
Transaction.
The Shares are currently traded on the Nasdaq National Market. Following the
consummation of the Transaction, the Shares will no longer be quoted on the
Nasdaq National Market. In addition, the registration of the Shares under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), will be
terminated. Accordingly, following the consummation of the Transaction, there
will be no public market for the Shares. Moreover, Carey International will no
longer be required to file periodic reports with the Securities and Exchange
Commission (the "Commission") under the Exchange Act, and will no longer be
required to comply with the proxy rules of Regulation 14A promulgated under
Section 14 of the Exchange Act. In addition, Carey
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International's officers, directors and ten percent stockholders will be
relieved of the reporting requirements and restrictions on "short-swing"
trading contained in Section 16 of the Exchange Act with respect to the
Shares. See "THE TENDER OFFER -- Effect of the Offer on the Market for the
Common Stock; Exchange Act Registration."
It is expected that, if the Transaction is not consummated, Carey
International will continue to be managed under the general direction of the
Board, and will continue as an ongoing business.
6. Rights of Stockholders in the Offer and the Merger.
No dissenters' or appraisal rights are available to stockholders in
connection with the Offer. If the Merger is consummated, however, record
stockholders of Carey International who have neither validly tendered their
Shares nor voted in favor of the Merger will have certain rights under the
DGCL to an appraisal of, and to receive payment in cash of the fair value of,
their Shares (the "Appraisal Shares"). Stockholders who perfect appraisal
rights by complying with the procedures set forth in Section 262 of the DGCL
("Section 262"), a copy of which is attached to this Offer to Purchase as
Exhibit C, will have the fair value of their Appraisal Shares (exclusive of
any element of value arising from the accomplishment or expectation of the
Merger) determined by the Delaware Court of Chancery and will be entitled to
receive from the Surviving Corporation a cash payment equal to such fair
value. Any such judicial determination of the fair value of Shares could be
based upon any valuation method or combination of methods the court deems
appropriate. The value so determined could be more or less than the Offer
Price and Merger Consideration. In addition, stockholders who invoke appraisal
rights may be entitled to receive payment of a fair rate of interest from the
Effective Time on the amount determined to be the fair value of the Appraisal
Shares. The preservation and exercise of appraisal rights require strict
adherence to the applicable provisions of the DGCL.
Under Section 262, if the Merger is submitted to a vote of Carey
International's stockholders at a meeting thereof, then Carey International
must, not less than 20 days prior to the meeting held for the purpose of
obtaining stockholder approval of the Merger, notify each of Carey
International's stockholders entitled to appraisal rights that such rights are
available. If the Merger is accomplished by a Short Form Merger, Carey
International, either before the Effective Time or within ten days thereafter,
must notify each of the stockholders entitled to appraisal rights of the
Effective Time and that appraisal rights are available. In either case, the
notice must include a copy of Section 262.
If the Merger is not a Short Form Merger, a holder of Appraisal Shares
wishing to exercise appraisal rights will be required to deliver to Carey
International before the taking of the vote on the Merger or within 20 days
after the date of mailing the notice described in the preceding paragraph, a
written demand for appraisal of such holder's Appraisal Shares. A holder of
Appraisal Shares wishing to exercise such holder's appraisal rights must be
the record holder of such Appraisal Shares on the date the written demand for
appraisal is made and must continue to hold of record such Appraisal Shares
through the Effective Time. Accordingly, a holder of Appraisal Shares who is
the record holder of Appraisal Shares on the date the written demand for
appraisal is made, but who thereafter transfers such Appraisal Shares prior to
the Effective Time, will lose any right to appraisal with respect to such
Appraisal Shares.
If the Merger is a Short Form Merger, a holder of Appraisal Shares wishing
to exercise appraisal rights will be required to deliver to Carey
International, within 20 days after the date of mailing the notice by Carey
International described above, a written demand for appraisal of such holder's
Appraisal Shares.
A demand for appraisal must be executed by or on behalf of the stockholder
of record and must reasonably inform Carey International of the identity of
the stockholder of record and that such stockholder intends thereby to demand
an appraisal of such Appraisal Shares.
A person having a beneficial interest in Appraisal Shares that are held of
record in the name of another person, such as a broker, fiduciary, depository
or other nominee, will have to act to cause the record holder to
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<PAGE>
follow the requisite steps properly and in a timely manner to perfect
appraisal rights. If the Appraisal Shares are owned of record by a person
other than the beneficial owner, including a broker, fiduciary (such as a
trustee, guardian or custodian), depositary or other nominee, the written
demand for appraisal rights must be executed by or for the record owner. If
Appraisal Shares are owned of record by more than one person, as in joint
tenancy or tenancy in common, the demand will have to be executed by or for
all joint owners. An authorized agent, including an agent for two or more
joint owners, may execute a demand for appraisal for a stockholder of record,
provided that the agent identifies the record owner and expressly discloses,
when the demand is made, that the agent is acting as agent for the record
owner. If a stockholder owns Appraisal Shares through a broker who in turn
holds the Appraisal Shares through a central securities depository nominee
such as CEDE & Co., a demand for appraisal of such Appraisal Shares will have
to be made by or on behalf of the depository nominee and must identify the
depository nominee as the record holder of such Appraisal Shares.
A record holder, such as a broker, fiduciary, depository or other nominee,
who holds Appraisal Shares as a nominee for others, will be able to exercise
appraisal rights with respect to the Appraisal Shares held for all or less
than all of the beneficial owners of those Appraisal Shares as to which such
person is the record owner. In such case, the written demand must set forth
the number of Shares covered by the demand. Where the number of Shares is not
expressly stated, the demand will be presumed to cover all Appraisal Shares
outstanding in the name of such record owner.
Within 120 days after the Effective Time, but not thereafter, Carey
International or any stockholder who has complied with the statutory
requirements summarized above and who is otherwise entitled to appraisal
rights may file a petition in the Delaware Court of Chancery demanding a
determination of the fair value of such holders' Appraisal Shares. There is no
present intention on the part of Acquisition Company to file an appraisal
petition on behalf of Carey International, and stockholders who seek to
exercise appraisal rights should not assume that Carey International will file
such a petition or that Carey International will initiate any negotiations
with respect to the fair value of Appraisal Shares. Accordingly, it will be
the obligation of the stockholders seeking appraisal rights to initiate all
necessary action to perfect any appraisal rights within the time prescribed in
Section 262. Within 120 days after the Effective Time, any stockholder who has
theretofore complied with the provisions of Section 262 will be entitled, upon
written request, to receive from Carey International a statement setting forth
the aggregate number of Shares not voting in favor of the Merger (if
applicable) and with respect to which demands for appraisal were received as
well as the number of holders of such Shares. Such statement must be mailed
within ten days after the written request therefor has been received by Carey
International, or within ten days after expiration of the period for delivery
of demands, whichever is later.
If a petition for appraisal is timely filed, after a hearing on such
petition the Delaware Court of Chancery will determine the stockholders
entitled to appraisal rights and will appraise the fair value of their
Appraisal Shares, exclusive of any element of value arising from the
accomplishment or expectation of the Merger, together with a fair rate of
interest, if any, to be paid upon the amount determined to be the fair value
from the Effective Time.
The costs of the proceeding may be determined by the Delaware Court of
Chancery and taxed upon the parties as the Delaware Court of Chancery deems
equitable under the circumstances. However, costs do not include attorneys'
fees or expert witness fees. Upon application of a stockholder, the Delaware
Court of Chancery may also order all or a portion of the expenses incurred by
any stockholder, including reasonable attorneys' fees and the fees and
expenses of experts, to be charged pro rata against the value of all of the
Appraisal Shares entitled to appraisal.
At any time within 60 days after the Effective Time, any stockholder will
have the right to withdraw its demand for appraisal and to accept the Merger
Consideration. After this period, the stockholder may withdraw such holder's
demand for appraisal only with the written consent of the Surviving
Corporation. If any stockholder who properly demands appraisal of such
holder's Appraisal Shares under Section 262 fails to perfect, or effectively
withdraws or loses such holder's right to appraisal as provided in the DGCL,
the Appraisal Shares of
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<PAGE>
such stockholder will be converted into the right to receive the Merger
Consideration. A stockholder will fail to perfect, or effectively lose or
withdraw, such stockholder's right to appraisal if, among other things, no
petition for appraisal is filed within 120 days after the Effective Time or if
the stockholder delivers to Carey International a written withdrawal of such
stockholder's demand for appraisal within 60 days after the Effective Time.
Several decisions by Delaware courts have held that in certain circumstances
a controlling stockholder of a corporation involved in a merger has a
fiduciary duty to other stockholders that requires that the merger be fair to
other stockholders. In determining whether a merger is fair to minority
stockholders, Delaware courts have considered, among other things, the type
and amount of the consideration to be received by the stockholders and whether
there was fair dealing among the parties. The Delaware Supreme Court stated in
two cases, Weinberger v. UOP, Inc. and Rabkin v. Philip A. Hunt Chemical
Corp., that the remedy ordinarily available to minority stockholders in a
cash-out merger is the appraisal right described above. However, a damages
remedy or injunctive relief may be available if a merger is found to be the
product of procedural unfairness, including fraud, misrepresentation or other
misconduct.
The foregoing summary of the rights of dissenting stockholders under the
DGCL does not purport to be a complete statement of the procedures to be
followed by stockholders desiring to exercise any appraisal rights available
under the DGCL. The preservation and exercise of appraisal rights require
strict adherence to the applicable provisions of the DGCL. A copy of Section
262 of the DGCL is attached to this Offer to Purchase as Exhibit C, and the
foregoing summary is qualified in its entirety by reference to Exhibit C.
7. The Merger Agreement and Related Documents.
The following is a summary of the material terms of the Merger Agreement and
related documents. The summary is qualified in its entirety by reference to
the Merger Agreement and such related documents, all of which are incorporated
herein by reference and have been included as exhibits to the Schedule TO
filed with the Commission. The Merger Agreement and such related documents may
be inspected at, and copies may be obtained from, the same places and in the
manner set forth in "THE TENDER OFFER -- Certain Information Concerning Carey
International."
The Merger Agreement.
The Offer. The Merger Agreement requires the Offerors to commence the Offer
on or prior to the tenth business day following public announcement of the
Offer; however, the parties to the Merger Agreement agreed to waive this
requirement and commence this Offer on the eleventh business day following
public announcement of the Offer. The obligation of the Offerors to commence
the Offer and to accept for payment, and to pay for, any Shares of Common
Stock tendered pursuant to the Offer, is subject to the satisfaction of the
Offer Conditions which are set forth below the caption "THE TENDER OFFER --
Conditions of the Offer." Parent may waive certain of the Offer Conditions
without the prior consent of Carey International or Acquisition Company. Carey
International and Acquisition Company have agreed that, except as provided
below, without the prior written consent of Parent, no changes may be made to
the Offer that (i) increase or decrease the Offer Price or change the
consideration payable pursuant to the Offer, (ii) decrease the number of
Shares subject to the Offer, (iii) amend or waive the Offer Conditions, (iv)
impose any additional conditions or amend any other term of the Offer or (v)
extend the expiration date of the Offer (the "Expiration Date"). Under the
terms of the Merger Agreement, Carey International and Acquisition Company
shall, upon request of Parent, extend the Offer if, at the then scheduled
Expiration Date, any of the Offer Conditions have not been satisfied or waived
until the earlier of (i) the later of (A) 20 business days after the initial
Expiration Date and (B) such later date that is ten business days after Carey
International terminates certain third party discussions permitted under the
Merger Agreement or (ii) such time as all such conditions shall have been
satisfied or waived; provided, however, if Parent or Acquisition Company has
materially breached the Merger Agreement, Carey International is permitted,
but not required, to extend the Offer. In addition, each of Carey
International and Acquisition Company has the right by mutual agreement to
extend the Offer beyond the initial Expiration Date. In addition to the
foregoing, provided that
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Carey International reasonably believes that the Minimum Condition will be
satisfied within ten business days, Parent and Acquisition Company shall, if
requested by Carey International, extend the Offer until the earlier of (i)
the date which is ten business days after the initial Expiration Date and (ii)
such time as the Minimum Condition is satisfied and the other Offer Conditions
are satisfied or waived. If at the scheduled Expiration Date, or at the end of
any extension thereof, all of the Offer Conditions have been satisfied, the
Offerors are required to immediately accept and promptly pay for all Shares
tendered (assuming the Minimum Condition is met). See "THE TENDER OFFER --
Terms of the Offer."
The term "Expiration Date" means 5:00 p.m., New York City time, on August
31, 2000 unless and until the Offerors, in their sole discretion (but subject
to the terms of the Merger Agreement), shall extend the period of time during
which the Offer is open, in which event the term "Expiration Date" shall mean
the latest time and date at which the Offer, as so extended by the Offerors,
shall expire.
The Merger Agreement also provides that, subject to the terms and conditions
provided therein, Carey International and Acquisition Company will each use
their commercially reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, and to assist and cooperate with the
other parties to the Merger Agreement in doing, all necessary, proper or
advisable things under applicable laws and regulations to consummate the
Offer.
Board Representation. The Merger Agreement provides that, immediately upon
the purchase of Shares pursuant to the Offer and from time to time thereafter
until the Effective Time, Acquisition Company shall be entitled to designate
such number of directors equal to the greater of (a) a majority of the Board
and (b) the product of (i) the number of directors on the Board and (ii) the
percentage that the number of Shares owned by Acquisition Company bears to the
number of Shares outstanding less the number of Independent Directors (as
defined below). Carey International has agreed, upon request by Acquisition
Company, to increase promptly the size of the Board or use its reasonable
efforts to secure the resignations, or the removal, of such number of
directors as is necessary to enable Acquisition Company's designees to be
elected to the Board and to cause Acquisition Company's designees to be so
elected. Carey International's obligations to appoint Acquisition Company's
designees to the Board are subject to Section 14(f) of the Exchange Act and
the rules promulgated thereunder (Schedule IV to this Offer to Purchase
contains the information required under Rule 14f-1 promulgated under the
Exchange Act). In addition, the Merger Agreement requires Carey International
to have at all times prior to the Effective Time at least two members on the
Board who were members of the Board on the date of the Merger Agreement and
who are not employees of Carey International (the "Independent Directors").
Following the election of the designees of Acquisition Company to the Board,
but prior to the Effective Time, any permitted termination of the Merger
Agreement by Carey International, any amendment of the Merger Agreement or
Carey International's certificate of incorporation or by-laws requiring action
by the Board, any extension of time for the performance of any of the
obligations or other acts of Parent, and any waiver of compliance with any of
the agreements or conditions contained in the Merger Agreement must by
authorized by a majority of the Independent Directors as well as a majority of
all Board members.
The Merger. The Merger Agreement provides that, subject to the terms and
conditions set forth in the Merger Agreement and the applicable provisions of
the DGCL, Acquisition Company (or Acquisition Company Sub if the Short Form
Requirement is not met) will be merged with and into Carey International at
the Effective Time and the separate existence of Acquisition Company, or
Acquisition Company Sub, if applicable, will cease, and Carey International
will be the Surviving Corporation. All of the properties, rights, privileges,
powers and franchises of Carey International and Acquisition Company or
Acquisition Company Sub, if applicable, will vest in Carey International as
the Surviving Corporation, and all debts, liabilities and duties of Carey
International and Acquisition Company, or Acquisition Company Sub, if
applicable, will become the debts, liabilities and duties of Carey
International as the Surviving Corporation. Subject to the provisions of the
Merger Agreement and applicable provisions of the DGCL, the closing of the
Merger will occur promptly following the satisfaction or, to the extent
permitted under the Merger Agreement, waiver of the conditions to the Merger
set forth in the Merger Agreement.
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Effect on Capital Stock of Carey International. At the Effective Time: (a)
each Share that is owned by Acquisition Company or is owned by Carey
International as treasury stock shall be automatically cancelled and retired
and no consideration shall be delivered in exchange therefor; (b) each Share,
other than Shares held by Carey International, Acquisition Company,
stockholders who perfect any applicable appraisal rights under the DGCL and
certain Shares held by the Management Investors, shall be converted into the
right to receive, in cash, the Offer Price per Share without interest; and (c)
certain Shares held by the Management Investors shall be converted into the
right to receive .1825 fully paid and nonassessable shares of common stock of
Surviving Corporation per Share, and, upon such conversion, shall be
cancelled.
Effect on the Capital Stock of Acquisition Company and Acquisition Company
Sub. At the Effective Time, the issued and outstanding capital stock of
Acquisition Company, if the Short Form Requirement is met, or Acquisition
Company Sub, if the Short Form Requirement is not met, shall be converted into
the right to receive (i) 705,000 fully paid and nonassessable shares of common
stock of the Surviving Corporation and (ii) 28,000 fully paid and assessable
shares of Carey Preferred Stock. The Carey Preferred Stock shall (i) rank
senior to the common stock of the Surviving Corporation with respect to
dividend distributions and distributions upon the liquidation or winding up of
the Surviving Corporation; (ii) be entitled to receive cumulative dividends at
the annual rate of 12.7%, payable in kind at the election of the Surviving
Corporation; (iii) be subject to mandatory redemption on the date that is six
months after the maturity of the Senior Sub Notes; (iv) have no voting rights,
except as provided under Delaware law; and (v) be convertible immediately upon
the consummation of a qualifying initial public offering at the price per
share in such offering.
Payment of Offer Price and Merger Consideration. The Merger Agreement
requires that prior to the commencement of the Offer, Carey International and
Acquisition Company shall appoint a United States bank or trust company to act
as payment agent (the "Payment Agent") for the payment of the Offer Price and
the Merger Consideration. Prior to the payment time thereof, Carey
International and Acquisition Company are required to deposit with the Payment
Agent in a separate fund established for the benefit of the holders of Shares,
for payment upon surrender of the certificates for exchange in accordance with
(i) the Offer to Purchase, in the case of the Offer, and (ii) the Merger
Agreement, in the case of the Merger, through the Payment Agent (in the case
of the Offer, the "Offer Fund," and in the case of the Merger, the "Merger
Fund" and together with the Offer Fund, the "Payment Fund"), immediately
available funds in amounts necessary to make the payments to holders of
Shares. The Payment Agent shall pay the Offer Price out of the Offer Fund and
the Merger Consideration out of the Merger Fund.
As soon as reasonably practicable after the Effective Time, the Surviving
Corporation or the Payment Agent shall mail to each holder of record of a
certificate or certificates (the "Certificates"), which immediately prior to
the Effective Time represented outstanding Shares of Common Stock, entitled to
receive the Merger Consideration ("Cashed Out Shares") or Shares to be
converted into the right to receive shares of the Surviving Corporation
("Exchange Shares"): (i) a form of letter of transmittal which shall (x)
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Payment Agent; (y) contain a representation in a form reasonably satisfactory
to Parent as to the good and marketable title of the Shares held by such
holder free and clear of liens of any kind; and (z) contain such other
customary provisions as Carey International and Parent may reasonably specify;
and (ii) instructions for use in surrendering such Certificates and receiving
the aggregate Merger Consideration, in respect thereof (or the shares of the
Surviving Corporation, in the case of Exchange Shares). Upon the surrender of
each Certificate for Cashed Out Shares and subject to applicable withholding,
the Payment Agent shall (subject to applicable abandoned property, escheat and
similar laws) pay the holder of such Certificate the Merger Consideration
multiplied by the number of Shares formerly represented by such Certificate,
and such Certificate shall forthwith be cancelled. Upon the surrender of each
Certificate for Exchange Shares, the Surviving Corporation shall exchange any
Exchange Shares for shares of the Surviving Corporation and such Certificate
shall forthwith be cancelled. Until so surrendered, each such Certificate
(other than Certificates representing Dissenting Shares) shall represent
solely the right to receive the aggregate Merger Consideration or shares of
the Surviving Corporation relating thereto. No interest or dividends shall be
paid or accrued on the Merger Consideration. If the Merger
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Consideration or shares of the Surviving Corporation are to be delivered to
any person other than the person in whose name the Certificate formerly
representing such Shares is registered, it is a condition to receiving the
Merger Consideration or shares of the Surviving Corporation that the
Certificate so surrendered be properly endorsed or otherwise be in proper form
for transfer and that the person surrendering such Certificates pay to the
Payment Agent, or Carey International, in the case of Exchange Shares, any
transfer or other taxes required by reason of the payment of the Merger
Consideration or shares of the Surviving Corporation to a person other than
the registered holder of the Certificate surrendered, or establish to the
satisfaction of the Payment Agent or Carey International, as applicable, that
such tax has been paid or is not applicable. The Payment Agent is entitled to
deduct and withhold from the consideration otherwise payable pursuant to the
Merger Agreement to any stockholder or option holder of Carey International
such amounts as Carey International reasonably and in good faith determines
are required to be deducted and withheld with respect to the making of such
payment under the Internal Revenue Code of 1986, as amended (the "Code"), or
any provision of state, local or foreign tax law.
Treatment of Stock Options. The Merger Agreement provides that all options,
warrants or other rights to acquire Shares outstanding under any stock option
plan or agreement that have not been exercised pursuant to an Option Exercise
Agreement (as discussed below), and are outstanding immediately prior to the
Effective Time shall be canceled at the Effective Time and in exchange
therefor, each holder of a cancelled Plan Option will receive an amount in
cash equal to product of (i) the excess, if any, of the Merger Consideration
over the per Share exercise price thereof and (ii) the number of Shares
subject thereto, in full settlement of Carey International's (and the
Surviving Corporation's) obligations under each Plan Option. To the extent
that the per Share exercise price of any Plan Option equals or exceeds the
Merger Consideration, at the Effective Time, such Plan Option will be
cancelled and the holder of such Plan Option will not receive or be entitled
to receive any consideration from Acquisition Company or the Surviving
Corporation. All amounts payable in respect of Plan Options shall be subject
to all applicable withholding of taxes.
Stockholder Meeting. The Merger Agreement provides that, in accordance with
applicable law and provided that the Short Form Requirement has not been met,
Carey International, acting through the Board of Directors and after the
closing of the Offer, shall (i) as soon as practicable after the purchase of
Shares pursuant to the Offer, call, give notice of, convene and hold a special
meeting of its stockholders (the "Stockholder Meeting") for the purpose of
considering and voting on the Merger and Merger Agreement, (ii) file with the
Commission a proxy statement or information statement relating to the Merger
Agreement and the Merger, and (iii) unless taking such action would be
inconsistent with the fiduciary duties of the Board, recommend to Carey
International's stockholders the approval of the Merger Agreement. Carey
International will use its reasonable efforts to solicit from the stockholders
of Carey International proxies in favor of the approval and adoption of the
Merger Agreement and the transactions contemplated thereby. Parent has agreed
to vote or cause to be voted all the Shares then owned by it, Acquisition
Company or any other of its subsidiaries in favor of the Merger at the
Stockholder Meeting. Notwithstanding the foregoing, if the Short Form
Requirement is met, Acquisition Company, Acquisition Company Sub, Carey
International and Parent have agreed to take all actions necessary to effect
the Merger as a Short Form Merger pursuant to Section 253 of the DGCL, without
a meeting of Carey International's stockholders.
Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties thereto. These include
representations and warranties by Carey International with respect to (i) the
due organization, existence and the qualification, good standing, corporate
power and authority of Carey International and its subsidiaries; (ii) delivery
and accuracy of certain corporate documents and records; (iii) the
capitalization of Carey International and its subsidiaries; (iv) the due
authorization, execution, and delivery of the Merger Agreement and the Stock
Option Agreement and the authorization of the consummation of the transactions
contemplated thereby, and the validity and enforceability of the Merger
Agreement and the Stock Option Agreement; (v) certain agreements entered into
by Carey International relating to its indebtedness and the employment of
certain Carey International employees; (vi) subject to certain exceptions and
limitations, the absence of consents and approvals necessary for consummation
by Carey International of the Offer and Merger and the absence of any
violations, breaches or defaults which would result from compliance by Carey
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International with any provision of the Merger Agreement; (vii) subject to
certain exceptions and limitations, the compliance by Carey International and
its subsidiaries with all applicable foreign, federal, state or local laws,
statutes, ordinances, rules, regulations, orders, judgments, rulings and
decrees of any foreign, federal, state or local judicial, legislative,
executive, administrative or regulatory body or authority, or any court,
arbitration, board or tribunal; (viii) compliance by Carey International with
the Securities Act and the Exchange Act and the reports and financial
information required to be filed thereunder since June 2, 1997; (ix) certain
recent financial information of Carey International and its subsidiaries; (x)
subject to certain exceptions and limitations, the absence of certain
liabilities of Carey International and its subsidiaries; (xi) subject to
certain exceptions and limitations, the absence of pending or (to the
knowledge of Carey International) threatened claims, actions, suits or
proceedings; (xii) certain tax matters; (xiii) certain employee benefit and
ERISA matters; (xiv) certain environmental matters; (xv) the absence of
certain changes or effects since November 30, 1999 which could result in a
material adverse effect; (xvi) the patents, trademarks and other intellectual
property of Carey International and its subsidiaries; (xvii) the real property
owned and leased by Carey International and its subsidiaries; (xviii) state
takeover statutes; (xix) broker's fees; (xx) the BGC Opinion and the FBR
Opinion; (xxi) the stockholder vote required for the Merger; (xxii) title to
and condition of tangible assets of Carey International and its subsidiaries;
(xxiii) certain material contracts of Carey International and its
subsidiaries, including non-compete agreements; (xxiv) year 2000 compliance
issues; (xxv) compliance with applicable laws; (xxvi) Carey International's
accounts receivable; (xxvii) customers, independent operators and licensees of
Carey International and its subsidiaries; (xxviii) certain labor and
employment matters; (xxix) certain fees and expenses in connection with the
transactions contemplated by the Merger Agreement; (xxx) subject to certain
limitations, the possession by Carey International and its subsidiaries of
necessary franchises, authorizations, licenses, permits, easements, variances,
exemptions, consents, registrations, approvals and orders; (xxxi) certain
insurance policy matters; (xxxii) product warranty and liability; and (xxxiii)
transactions with affiliates.
Parent and Acquisition Company also have made certain representations and
warranties in the Merger Agreement, including with respect to (i) the due
incorporation, existence, good standing and power and authority of Acquisition
Company, Acquisition Company Sub and Parent; (ii) the due authorization,
execution and delivery of the Merger Agreement and the authorization of the
consummation of the transactions contemplated thereby, and the validity and
enforceability of the Merger Agreement; (iii) the absence of consents and
approvals necessary for consummation of the transactions contemplated by the
Merger Agreement by Parent, Acquisition Company and Acquisition Company Sub
and the absence of any violations, breaches or defaults which would result
from compliance by Parent, Acquisition Company and Acquisition Company Sub
with any provision of the Merger Agreement; (iv) broker fees; (v) the
sufficiency of funds available to Parent and Acquisition Company for the
consummation of the Offer and the Merger; and (vi) absence of any material
misstatements or omissions made by Parent, Acquisition Company and Acquisition
Company Sub in this Offer to Purchase, the Schedule TO and the exhibits
thereto.
Conduct Until the Merger. Carey International has agreed that from the date
of the Merger Agreement until the earlier of the date the Shares are purchased
in the Offer or the termination of the Merger Agreement, unless Parent has
consented in writing thereto, Carey International will, and will cause each of
its subsidiaries to: (i) conduct its operations according to its ordinary and
usual course of business consistent with past practice and (ii) use its
commercially reasonable efforts to preserve in all material respects its
business organization and its existing relationships with its customers,
suppliers, employees, independent operators, licensees and business
associates.
Carey International also has agreed that from the date of the Merger
Agreement until the earlier of the date the Shares are purchased in the Offer
or the termination of the Merger Agreement, unless Parent has consented in
writing thereto, Carey International will not, and will not permit any of its
subsidiaries to:
(a) amend its certificate of incorporation or by-laws;
(b) acquire, sell, lease or dispose of any assets in excess of $500,000,
other than in the ordinary and usual course of business and consistent with
past practice or acquire any chauffeured vehicle service businesses that
involve, in the aggregate, total consideration in excess of $5.0 million
(provided, that Parent
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shall be notified not later than ten business days prior to any such
acquisition or the execution of any binding agreement to make any such
acquisition, without regard to the amount of consideration involved);
(c) incur or modify any funded indebtedness, other than in the ordinary
and usual course of business and consistent with past practice;
(d) issue, reissue or sell or authorize the issuance, reissuance or sale
of (i) any shares of capital stock (other than issuances of Shares in
respect of any exercise of Company Options outstanding on the date of the
Merger Agreement), (ii) any shares convertible into or exchangeable for
capital stock, (iii) any rights, calls, commitments, warrants or options to
acquire any shares of capital stock, or shares convertible into or
exchangeable for capital stock, or (iv) stock appreciation, phantom stock
or profit participation rights;
(e) declare, set aside or pay any dividend or make any other distribution
or payment with respect to any shares of its capital stock (other than such
payments between Carey International and its wholly-owned subsidiaries and
certain other exceptions);
(f) split, combine, subdivide, reclassify or, directly or indirectly,
redeem, purchase or otherwise acquire, recapitalize or reclassify, or
propose to redeem or purchase or otherwise acquire, any shares of its
capital stock or liquidate in whole or in part;
(g) except as required by law (i) enter into, amend or extend any
employment, collective bargaining, severance or termination agreement, (ii)
grant any increase in severance or termination pay to, any officers,
directors or employees, (iii) increase the compensation of any of its
directors or officers, or increase the compensation of any other employees
outside the ordinary course of business consistent with past practice, (iv)
adopt, amend, modify, or terminate any bonus, profit-sharing, incentive,
severance, or other plan, contract, or commitment for the benefit of any of
its directors, officers, and employees (or take any such action with
respect to any other employee benefit plan agreement or arrangement), or
(v) make any other change in employment terms for any of its directors,
officers, and employees;
(h) (i) except as may be required or contemplated by the Merger
Agreement, assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other person or entity (other than Carey International's
wholly-owned subsidiaries), except in the ordinary and usual course of
business and consistent with past practices, (ii) make any loans, advances
or capital contributions to, or investments in, any other person or entity
(other than to its wholly-owned subsidiaries), other than in the ordinary
and usual course of business or (iii) make capital expenditures (either
commitments or payments) in excess of an aggregate of $1.0 million with
respect to new projects (with certain exceptions);
(i) change any accounting methods, principles or practices materially
affecting its assets, liabilities or business, except insofar as may be
required by a change in generally accepted accounting principles;
(j) make any material tax election or settle or compromise any material
income tax liability;
(k) settle or compromise any claim (including any arbitration) or
litigation involving payments by Carey International or its subsidiaries in
excess of $100,000 individually, or $250,000 in the aggregate, which is not
subject to insurance reimbursement;
(l) enter into any contract (or series of related contracts) either
involving more than $250,000 or outside the ordinary course of business
consistent with past practice;
(m) postpone the payment of accounts payable and other liabilities
outside the ordinary course of business consistent with past practice;
(n) enter into any transaction with any affiliate;
(o) authorize or permit any exercise of Company Options pursuant to a
cashless exercise or by issuance of a note in payment of the exercise
price, except immediately prior to the closing of the Merger or to the
extent that the instruments or agreements giving rise to Company Options
expressly permit the holder to elect such method of payment without any
further consent of Carey International; or
(p) authorize or agree in writing or otherwise to take any of the
foregoing actions.
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Access to Information. Under the Merger Agreement, from the date of the
Merger Agreement until the earlier of the termination of the Agreement or the
Effective Time, Carey International has agreed, and has agreed to cause its
subsidiaries and their respective officers, directors, employees, agents and
advisors to, (i) provide Parent and Acquisition Company and their
representatives access, upon reasonable notice and during normal business
hours, to the offices and other facilities and to the books, records,
financial statements and other documents and materials relating to the
financial condition, assets and liabilities of Carey International and its
subsidiaries and permit Parent and Acquisition Company to make such
inspections thereof as they may reasonably require, (ii) at Parent's expense,
furnish Parent and Acquisition Company, to the extent available, with such
information with respect to the business of Carey International and its
subsidiaries as Parent and Acquisition Company may from time to time
reasonably request and (iii) confer and consult with representatives of Parent
and Acquisition Company on operational and financial matters and the general
status of ongoing business operations of Carey International as Parent and
Acquisition Company may reasonably request, provided, however, that all
requests for such access, inspection, information or consultations shall be
made through specified officers of Carey International (or such other persons
as such specified officers shall designate). Parent and Acquisition Company
have agreed to hold all information furnished by or on behalf of Carey
International or any of its subsidiaries in confidence.
Filings; Further Assurances. Each of the parties to the Merger Agreement has
agreed to use its reasonable best efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by the Merger Agreement. The parties
also have agreed that if at any time after the Effective Time any other action
is necessary or desirable to carry out the purposes of the Merger Agreement,
each shall take or cause to be taken all such necessary action, including,
without limitation, the execution and delivery of such further instruments and
documents as may be reasonably requested by the other party for such purposes
or otherwise to consummate and make effective the transactions contemplated in
the Merger Agreement. The parties have also agreed that, prior to the
Effective Time, each shall promptly inform the other party of any event or
circumstance relating to either Carey International or Acquisition Company or
Parent or any of their respective subsidiaries which should be set forth in an
amendment to this Offer to Purchase and promptly take all steps necessary to
cause this Offer to Purchase as so corrected to be filed with the Commission
and to be disseminated to the shareholders of Carey International, in each
case as to the extent required by applicable law.
Consents. The Merger Agreement requires each of Parent, Acquisition Company,
Acquisition Company Sub and Carey International to use its commercially
reasonable best efforts to obtain as promptly as practicable all consents from
any person or entity required in connection with the consummation of the Offer
and the Merger. If required, Parent, Acquisition Company, Acquisition Company
Sub and Carey International will take all actions necessary to file as soon as
practicable all notifications, filings, and other documents required to obtain
all consents or waivers, including, without limitation, under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and to
respond as promptly as practicable to any inquiries received from the Federal
Trade Commission, the Antitrust Division of the Department of Justice (the
"DOJ") and any other governmental entity for additional information or
documentation in connection with the Offer or the Merger.
Publicity. The Merger Agreement requires that the initial press releases
with respect to the execution of the Merger Agreement shall be acceptable to
Parent and Carey International and that so long as the Merger Agreement is in
effect, neither Carey International, Parent nor any of their respective
affiliates shall issue or cause the publication of any press release with
respect to the Offer, the Merger or the Merger Agreement without the prior
consultation of the other parties, except as may be required by law.
Employee Matters. The Merger Agreement requires that the Surviving
Corporation shall honor, in accordance with their terms, and shall make
required payments when due under, all employee benefit plans or agreements
maintained or contributed to by Carey International or any of its subsidiaries
(including, but not limited to, employment, incentive and severance agreements
and arrangements), that are applicable with respect to any employee, director
or stockholder of Carey International or any of its subsidiaries (whether
current, former
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or retired) or their beneficiaries. After the date of the Merger Agreement,
employees of Carey International will not have the opportunity to purchase
additional Shares from Carey International except pursuant to the exercise of
outstanding Plan Options.
No Solicitation. Under the Merger Agreement, Carey International may not,
and may not authorize or permit any of its subsidiaries or any of its or its
subsidiaries' officers, directors, employees or agents to, directly or
indirectly, solicit, participate in or initiate discussions or negotiations
with, or provide any non-public information to any person or entity (other
than Parent, Acquisition Company or any of their affiliates or
representatives) (a "Third Person") concerning any proposal or inquiry
relating to any merger, consolidation, tender offer, exchange offer, sale of
all or substantially all of Carey International's assets, sale of shares of
capital stock or similar business combination transaction involving Carey
International or any principal operating or business unit of Carey
International or its subsidiaries (an "Acquisition Proposal"). In the event
that, after the date of the Merger Agreement and prior to the purchase of the
Shares pursuant to the Offer, the Board receives an unsolicited written
Acquisition Proposal and the Board determines, in good faith and after
consultation with its financial advisors and legal counsel, that the failure
to do so would be inconsistent with the Board's fiduciary duties to Carey
International's stockholders under applicable law, the Board is permitted to
do any or all of the following: (a) withdraw, modify or change the Board's
approval or recommendation of the Merger Agreement, the Offer or the Merger,
(b) approve or recommend to Carey International's stockholders an Acquisition
Proposal, (c) engage in discussions and negotiations with respect to an
Acquisition Proposal and (d) terminate the Merger Agreement. The Board may
not, however, take any action described in clauses (a)-(d) above until after
the Board has given Parent written notice stating the Board's proposed conduct
and setting forth certain information with respect to such Acquisition
Proposal.
The Board also is permitted, after notice to Parent, to furnish information
to a Third Person that has made a bona fide Acquisition Proposal that the
Board reasonably determines may lead to a Superior Proposal (as defined below)
and that was not solicited in violation of the Merger Agreement, provided
that, with respect to any person or entity that is not currently party to a
confidentiality agreement with Carey International, such person or entity has
executed an agreement with confidentiality, standstill and other provisions
substantially similar to those then in effect between Carey International and
Parent. For purposes of the Merger Agreement, "Superior Proposal" means any
proposal made by a Third Person to acquire, directly or indirectly, for
consideration consisting of cash and/or securities, all of the equity
securities of Carey International entitled to vote generally in the election
of directors or all or substantially all of the assets of Carey International,
if and only if, the Board reasonably determines (after consultation with its
financial advisors and counsel) (i) that the proposed transaction would be
more favorable from a financial point of view to its stockholders than the
Offer and the Merger and the transactions contemplated by the Merger
Agreement, taking into account at the time of determination any changes to the
terms of the Merger Agreement which as of that time had been proposed by
Parent, and (ii) that the person or entity making such Acquisition Proposal is
capable of consummating such Acquisition Proposal in a timely manner (based
upon, among other things, the availability of financing and the degree of
certainty of obtaining financing, the expectation of obtaining required
regulatory approvals and the identity and background of such person or
entity).
Nothing contained in the Merger Agreement prohibits Carey International or
its Board from taking and disclosing to Carey International's stockholders a
position with respect to a tender or exchange offer by a Third Person pursuant
to Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or from making
such disclosure to Carey International's stockholders or otherwise which, in
the judgment of the Board after consultation with its legal counsel, is
necessary under applicable law or the rules of any stock exchange or if
failure so to disclose would be inconsistent with its fiduciary duties to
Carey International's stockholders under applicable law.
The Merger Agreement requires Carey International to promptly, but in any
event within three business days, advise Parent in writing of any Acquisition
Proposal or any inquiry regarding the making of an Acquisition Proposal,
including any request for information, the material terms and conditions of
such request, Acquisition
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Proposal or inquiry and the identity of the person or entity making such
request, Acquisition Proposal or inquiry. The Merger Agreement requires Carey
International to keep Parent reasonably informed of the status and details,
including any amendments or proposed amendments, of any such request,
Acquisition Proposal or inquiry.
The Merger Agreement provides that if, within ten business days after giving
notice to Parent of discussions or negotiations relating to an Acquisition
Proposal, Carey International has not terminated such discussions or
negotiations, Parent may terminate the Merger Agreement if it has provided
Carey International with at least 48 hours prior written notice to terminate
the Merger Agreement (a "Failure to Terminate Negotiations").
Indemnification and Insurance. Under the Merger Agreement, Parent and
Acquisition Company agree that for a period of six years from the Effective
Time, the Surviving Corporation will maintain all rights to indemnification
now existing in favor of the current or former directors, officers, employees
and fiduciaries of Carey International as provided in Carey International's
certificate of incorporation and by-laws or otherwise in effect under any
agreement on the date of the Merger Agreement. In addition, under the Merger
Agreement, Parent and Acquisition Company agree that the certificate of
incorporation and by-laws of the Surviving Corporation and its subsidiaries
shall contain the provisions with respect to exculpation and indemnification
set forth in Carey International's or its subsidiaries' certificates of
incorporation and by-laws on the date of the Merger Agreement and that such
provisions shall not be amended, repealed or otherwise modified for a period
of six years after the date the Shares are accepted for purchase by
Acquisition Company or Carey International in the Offer (the "Acceptance
Date") in any manner that would adversely affect the rights thereunder of
individuals who at any time prior to the Effective Time were directors or
officers of Carey International in respect of actions or omission occurring at
or prior to the Effective Time (including, without limitation, the
transactions contemplated by the Merger Agreement), unless such modification
is required by law.
The Merger Agreement requires each of the Surviving Corporation and its
subsidiaries to at all times exercise the powers granted to it by its
certificate of incorporation, its by-laws, and by applicable law to indemnify
and hold harmless to the fullest extent permitted by applicable law present or
former directors, officers, employees and fiduciaries and agents of Carey
International or its subsidiaries against any threatened or actual claim,
action, suit, proceeding or investigation made against them arising from their
service in such capacities (or service in such capacities for another
enterprise at the request of Carey International or any of its subsidiaries)
prior to and including the Effective Time, including, without limitation, with
respect to matters relating to the Merger Agreement.
The Merger Agreement also requires the Surviving Corporation to provide, for
not less than six years from the Effective Time, Carey International's current
and former directors and officers an insurance and indemnification "tail"
policy with respect to matters occurring prior to the Effective Time that is
no less favorable than Carey International's existing policy or, if
substantially equivalent insurance coverage is not available, the best
coverage that is similar thereto, provided that the Surviving Corporation is
not required to pay a premium in excess of 150% of the last annual premium
paid by Carey International prior to the date of the Merger Agreement and,
provided further that, if the Surviving Corporation is unable to obtain such
insurance for such premium, it will obtain as much coverage as possible for a
premium equal to such maximum amount.
Matters Relating to the Financing Agreements. Under the Merger Agreement,
Carey International has agreed that Parent is primarily responsible for any
negotiations with respect to any definitive financing agreements; provided,
however, that (i) Carey International shall have received prior notice of, and
shall be kept reasonably informed of the ongoing status of, any such
negotiations, (ii) Carey International shall take all such actions as are
reasonably requested by Parent in connection with any such negotiations, and
(iii) Parent shall conduct any such negotiations reasonably and in good faith.
The Merger Agreement requires Parent to use its commercially reasonable
efforts to close the Financing on terms consistent with the Financing
Commitment Letters. The Merger Agreement requires Carey International and
Parent to use commercially reasonable efforts to satisfy on or before the
expiration of the Offer all requirements of the Financing Commitment Letters
or any definitive financing agreements which are conditions to drawing the
cash proceeds thereunder.
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Upon receipt by either Carey International or Parent, or any of their
respective affiliates, of any written or oral communication to the effect that
any lender is contemplating not providing the Financing or is terminating or
canceling or modifying in any material respect the Financing Commitment
Letters or any definitive financing agreements, or that the Financing is
unlikely to be obtained, the Merger Agreement requires that Carey
International or Parent, as the case may be, to communicate promptly such
event to the other party and provide such other party with a true and complete
copy of any such written communication.
Company Expenses. The Merger Agreement provides that, prior to the Effective
Time, Carey International shall not, without the prior written consent of
Parent and, after the closing of the Offer but prior to the Effective Time,
without the approval of a majority of the Independent Directors (if the effect
thereof would be detrimental to the stockholders of Carey International) (i)
amend, terminate or otherwise modify or waive any provision of any waiver and
debt satisfaction agreement set forth on a schedule to the Merger Agreement,
or any agreement relating to any Company Expenses (as defined below)
(together, "Expense Agreements") or agreements relating to the Financing, or
enter into any new agreements which are the subject thereof, or (ii) incur or
pay certain expenses in connection with the Offer and Merger (the "Company
Expenses") the result of which would cause the Company Expenses to exceed the
aggregate limit of those expenses represented by Carey International (the
"Company Expense Cap").
Survival of Representations, Warranties and Agreements. The Merger Agreement
provides that the representations, warranties and agreements in the Merger
Agreement shall survive the closing of the Offer and the Merger, provided,
that, no stockholder of Carey International or any of its subsidiaries, nor
any stockholder, partner, officer, director, employee, agent or representative
of any of the foregoing, shall have any liability for any breach or inaccuracy
of any of the representations and warranties of Carey International.
Conditions to the Merger. The respective obligations of each party under the
Merger Agreement to effect the Merger are subject to the satisfaction at or
prior to the Effective Time of the following conditions: (i) the closing of
the Offer shall have occurred; (ii) the approval by Carey International's
stockholders of the Merger and Merger Agreement shall have been obtained, if
required by applicable law; (iii) all necessary waiting periods applicable to
the Merger under the HSR Act shall have expired or been earlier terminated;
(iv) no temporary restraining order, preliminary or permanent injunction or
other order issued by any governmental entity or other legal restraint or
prohibition preventing the consummation of the Merger shall be in effect;
provided, however, that prior to invoking this condition, the party so
invoking this condition has complied with its obligations described in
"Consents" above and has used its reasonable best efforts to lift or remove
such order, injunction, restraint or prohibition; and (v) the Receipt of Funds
Condition shall have been met.
Termination. The Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after the
stockholders of Carey International approve the Merger at the Stockholders'
Meeting:
(a) By mutual written consent of Carey International, Parent and
Acquisition Company.
(b) By either Carey International, on the one hand, or Parent, on the
other hand, if any governmental entity issues an order or takes any other
action, in each case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by the Merger Agreement and such
order becomes final and nonappealable.
(c) By Carey International, acting through the Board, prior to the
purchase of Shares pursuant to the Offer if it receives an unsolicited
written Acquisition Proposal and the Board determines, in good faith and
after consultation with its financial advisor and legal counsel, that the
failure to terminate would be inconsistent with the Board's fiduciary
duties to Carey International's stockholders under applicable law and has
complied with all applicable terms of the Merger Agreement, including the
payment of the Termination Fee (as defined below) and confirmation of its
agreement to pay expenses of Parent and its affiliates.
(d) By Carey International (acting through the Board):
(i) in the event that the Offer (as it may be extended) expires or is
terminated in accordance with its terms without any Shares being
purchased thereunder; provided, that, the failure of Carey
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International to fulfill any obligation under the Merger Agreement has
not been the cause of, or resulted in, the failure to purchase Shares
pursuant to the Offer; or
(ii) if, prior to the closing of the Offer, there is a breach or
failure to perform on the part of Acquisition Company, Acquisition
Company Sub or Parent of any of their representations, warranties,
covenants or agreements contained in the Merger Agreement and such
breach or failure to perform has a material adverse effect on the
ability of Acquisition Company, Acquisition Company Sub or Parent to
consummate the Offer or the Merger, and, with respect to any such
breach or failure to perform that is reasonably capable of being
remedied within the time periods set forth below, the breach or failure
to perform is not remedied prior to the earlier of (x) ten days after
Carey International has furnished Parent with written notice of such
breach or failure to perform or (y) two business days prior to the date
on which the Offer expires (as it may be extended).
(e) By Acquisition Company or Parent:
(i) if prior to the Acceptance Date the Board (x) shall withdraw,
modify or change its approval or favorable recommendation so that it is
not in favor of the Merger Agreement, the Offer or the Merger or shall
have resolved to do any of the foregoing, (y) shall approve or have
recommended to Carey International's stockholders an Acquisition
Proposal, or (z) takes any public position or makes any disclosure to
Carey International's stockholders which has the effect of doing any of
the foregoing;
(ii) (x) if Carey International shall have materially breached any of
its obligations under the Merger Agreement relating to an Acquisition
Proposal or (y) upon a Failure to Terminate Negotiations;
(iii) in the event that the Offer (as it may be extended) expires or
is terminated in accordance with its terms without any Shares being
purchased thereunder; provided, that, the failure of Parent to fulfill
any obligation under this Agreement has not been the cause of, or
resulted in, the failure to purchase Shares pursuant to the Offer; or
(iv) if (A) prior to the closing of the Offer, the representations
and warranties of Carey International set forth in the Merger Agreement
shall not be true and accurate in all respects, in each instance as of
the date of consummation of the Offer as though made on or as of such
date and the effect thereof is a Company Material Adverse Effect (as
defined below), or (B) prior to the closing of the Offer, Carey
International shall have breached or failed to perform or comply in any
material respect with any obligation, agreement or covenant required by
the Merger Agreement to be performed or complied with by it, and, with
respect to any such breach or failure to perform that is reasonably
capable of being remedied within the time periods set forth below, the
breach or failure to perform is not remedied prior to the earlier of
(x) ten days after Parent has furnished Carey International with
written notice of such breach or failure to perform or (y) two business
days prior to the date on which the Offer expires (as it may be
extended), and the effect thereof is a Company Material Adverse Effect;
or (C) prior to the closing of the Offer, Carey International shall
have incurred or shall have agreed to incur, or in the reasonable
judgment of Parent, Carey International is likely to incur, Company
Expenses in excess of the Company Expense Cap; or (D) as of the closing
of the Offer, there are any (1) shares of capital stock or other voting
securities of Carey International, (2) securities of Carey
International convertible into or exchangeable for shares of capital
stock or voting securities of Carey International, (3) options,
warrants, rights, calls, exchange rights, restricted stock, other stock
based compensation awards, or other rights to acquire or commitments
from Carey International, or obligations of Carey International to
issue, any capital stock, voting securities or securities convertible
into or exchangeable for capital stock or voting securities of Carey
International or (4) stock appreciation, phantom stock, or profit
participation rights with respect to Carey International (the items in
clauses (1), (2), (3) and (4) being referred to collectively as the
"Company Securities") outstanding other than Shares that are issued and
outstanding as of the date of the Merger Agreement (and that are
disclosed in the Merger Agreement) and Shares that are issued after the
date of the Merger Agreement pursuant to Company Options existing as of
the date of the Merger Agreement (and that are disclosed in the Merger
Agreement) (such other Company Securities, collectively, "Undisclosed
Securities"); or (E) as of the closing of the Offer, the actual
aggregate strike price of Company Options is less than the
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aggregate strike price set forth in a schedule attached to the Merger
Agreement; provided, however, that with respect to the matters set
forth in clauses (C), (D) and (E), Parent and Acquisition Company will
not have the right to terminate the Merger Agreement pursuant to such
clauses unless the sum of (x) the amount, if any, that Company Expenses
exceed the Company Expense Cap, plus (y) the value (based on the Offer
Price per share less any purchase price that must be paid with respect
to the acquisition of such Undisclosed Securities) of any Undisclosed
Securities, plus (z) the amount, if any, by which the actual aggregate
strike price of Company Options is less than the aggregate strike price
of Company Options set forth in a schedule to the Merger Agreement is
greater than $500,000.
For purposes of the Merger Agreement, the term "Company Material Adverse
Effect" means any event, change, occurrence, effect, fact or circumstance
(except for events, changes, occurrences, effects, facts or circumstances
resulting (i) from general economic or financial market conditions, (ii)
actions taken by any party in accordance with the Merger Agreement or (iii)
public announcements relating to the transactions contemplated by the Merger
Agreement, or conditions previously disclosed to Parent in the Merger
Agreement) having, or which could reasonably be expected to have, a material
adverse effect on (a) the ability of Carey International to perform its
material obligations under the Merger Agreement or to consummate the
transactions contemplated thereby or (b) the business, results of operations,
condition (financial or otherwise), assets, liabilities (actual or
contingent), properties, or cash flows of Carey International and its
subsidiaries, taken as a whole.
Fees, Expenses and Other Payments; Effect of Termination. Except as
otherwise described in the following paragraphs or as otherwise provided in
the Merger Agreement or in any Expense Agreements, the Merger Agreement
requires all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants and other out-of-
pocket expenses, incurred or to be incurred by the parties to the Merger
Agreement in connection with the Offer, the Merger and the Merger Agreement,
to be borne solely and entirely by the party which has incurred such costs and
expenses. The Merger Agreement provides, however, that each of Carey
International and Parent shall pay one-half of (i) any fee payable pursuant to
the HSR Act, and (ii) all costs and expenses related to the filing, printing
and mailing of this Offer to Purchase, the Schedule TO and the proxy statement
or information statement required to be filed with the Commission to
consummate the Merger.
The Merger Agreement requires Carey International to pay to Parent $7.5
million (the "Termination Fee") plus the Parent Expenses (as defined below)
not to exceed $3.0 million in the event that the Merger Agreement is
terminated (i) by Carey International if Carey International receives an
Acquisition Proposal and the Board determines it would be inconsistent with
its fiduciary duties not to terminate the Merger Agreement or (ii) by Parent
due to: (a) the Board withdrawing, modifying or changing its approval or
favorable recommendation of the Offer (except, in certain circumstances, as a
result of the failure to obtain the Financing), (b) the Board recommending an
Acquisition Proposal to its stockholders or taking any public position or
making any disclosure to Carey International's stockholders which has the
effect of doing any of the foregoing or (c) Carey International materially
breaching its no solicitation covenant.
In addition, the Merger Agreement requires Carey International to pay the
Termination Fee and Parent Expenses (as defined below) to Parent upon the
consummation of a Third Party Transaction (as defined below), in the event
that (1) Carey International enters into a definitive agreement with respect
to a Third Party Transaction within one year of termination of the Merger
Agreement with a Third Person or any of its affiliates and other persons or
entities acting in concert with them and an Acquisition Proposal had been
publicly disclosed prior to the termination of the Merger Agreement and (2)
the Merger Agreement is terminated either (a) by Carey International pursuant
to the Offer expiring or terminating in accordance with its terms without any
Shares being purchased thereunder as a result of the Minimum Condition failing
to be satisfied by the Expiration Date as it may have been extended (other
than as a result of a material or willful breach by Parent or Acquisition
Company of their obligations under the Merger Agreement), or (b) by Parent
pursuant to the Offer expiring or terminating in accordance with its terms
without any Shares being purchased thereunder as a result of the Minimum
Condition failing to be satisfied by the Expiration Date of the Offer as it
may have been extended (other than as
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a result of a breach by Carey International of its no solicitation
obligations) or if (A) prior to the closing of the Offer, the representations
and warranties of Carey International set forth in the Merger Agreement shall
not be true and accurate in all respects, and the effect thereof is a Company
Material Adverse Effect, or (B) prior to the closing of the Offer, Carey
International shall have breached or failed to perform or comply in any
material respect with any obligation, agreement or covenant required by the
Merger Agreement to be performed or complied with by it, and, with respect to
any such breach or failure to perform that is reasonably capable of being
remedied within the time periods set forth below, the breach or failure to
perform was not remedied prior to the earlier of (x) ten days after Parent
furnished Carey International with written notice of such breach or failure to
perform or (y) two business days prior to the Expiration Date (as same may be
extended in accordance with the Merger Agreement), and the effect thereof is a
Company Material Adverse Effect; or (C) prior to the closing of the Offer,
Carey International shall have incurred or shall have agreed to incur, or in
the reasonable judgment of Parent Carey International is likely to incur,
Company Expenses in excess of the Company Expense Cap; or (D) as of the
closing of the Offer, there are any Undisclosed Securities; or (E) as of the
closing of the Offer, the actual aggregate strike price of Company Options is
less than the aggregate strike price set forth in a schedule attached to the
Merger Agreement; provided, however, that with respect to the matters set
forth in clauses (C), (D) and (E), Parent and Acquisition Company will not
have the right to terminate the Merger Agreement pursuant to such clauses
unless the sum of (x) the amount, if any, that Company Expenses exceed the
Company Expense Cap, plus (y) the value (based on the Offer Price per share
less any purchase price that must be paid with respect to the acquisition of
such Undisclosed Securities) of any Undisclosed Securities, plus (z) the
amount, if any, by which the actual aggregate strike price of Company Options
is less than the aggregate strike price of Company Options set forth in a
schedule to the Merger Agreement is greater than $500,000.
For purposes of the Merger Agreement, the term "Third Party Transaction"
means (1) a merger, consolidation or other business combination with a Third
Person or any of its affiliates and other persons or entities acting in
concert with them (collectively, a "Third Party Acquirer"), (2) the sale or
transfer to such Third Party Acquirer of, or the acquisition of beneficial
ownership by such Third Party Acquirer of, 40% or more of Company Securities,
or (3) the sale or transfer of 40% or more (in market value) of the assets of
Carey International and its subsidiaries on a consolidated basis, to any such
Third Party Acquirer.
The Merger Agreement also requires Carey International to pay the
Termination Fee to Parent or if the Merger Agreement is terminated by Parent
or Acquisition Company upon a Failure to Terminate Negotiations and, within
one year after such a termination, Carey International enters into a Third
Party Transaction with any person or entity (or any other person or entity
acting in concert with such person or entity) with whom Carey International
was holding discussions or negotiations at the time of termination of the
Merger Agreement.
In addition, the Merger Agreement requires Carey International, upon a
Failure to Terminate Negotiations or in the event that the Merger Agreement is
terminated (a) by Carey International or Parent because Carey International or
Parent has been advised by the Financing sources that they will not provide
the Financing contemplated by the Financing Commitment Letters as a result of
a material breach of the Merger Agreement by Carey International (in the case
of breaches of representations and warranties only if such breaches would
individually or in the aggregate have a Company Material Adverse Effect) or
(b) by Parent if (A) prior to the closing of the Offer, the representations
and warranties of Carey International set forth in the Merger Agreement shall
not be true and accurate in all respects, and the effect thereof is a Company
Material Adverse Effect, or (B) prior to the closing of the Offer, Carey
International shall have breached or failed to perform or comply in any
material respect with any obligation, agreement or covenant required by the
Merger Agreement to be performed or complied with by it, and, with respect to
any such breach or failure to perform that is reasonably capable of being
remedied within the time periods set forth below, the breach or failure to
perform was not remedied prior to the earlier of (x) ten days after Parent
furnished Carey International with written notice of such breach or failure to
perform or (y) two business days prior to the Expiration Date (as same may be
extended in accordance with the Merger Agreement), and the effect thereof is a
Company Material Adverse Effect; or (C) prior to the closing of the Offer,
Carey International shall have incurred or shall have agreed to incur, or in
the reasonable judgment of Parent Carey International is likely to incur,
Company Expenses in excess of the Company Expense
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Cap; or (D) as of the closing of the Offer, there are any Undisclosed
Securities; or (E) as of the closing of the Offer, the actual aggregate strike
price of Company Options is less than the aggregate strike price set forth in
a schedule attached to the Merger Agreement; provided, however, that with
respect to the matters set forth in clauses (C), (D) and (E), Parent and
Acquisition Company will not have the right to terminate the Merger Agreement
pursuant to such clauses unless the sum of (x) the amount, if any, that
Company Expenses exceed the Company Expense Cap, plus (y) the value (based on
the Offer Price per share less any purchase price that must be paid with
respect to the acquisition of such Undisclosed Securities) of any Undisclosed
Securities, plus (z) the amount, if any, by which the actual aggregate strike
price of Company Options is less than the aggregate strike price of Company
Options set forth in a schedule to the Merger Agreement is greater than
$500,000, to pay to Parent all actual and reasonably documented expenses
incurred by or on behalf of Parent, its members or Acquisition Company in
connection with or in anticipation of the Offer, the Merger, the Merger
Agreement and the consummation of the transactions contemplated by the Merger
Agreement (including all fees and expenses of outside counsel, experts,
Financing sources, investment bankers, accountants and consultants incurred by
Parent in connection with or related to the due diligence, authorization,
preparation, negotiation, execution and performance of the transactions
contemplated by the Merger Agreement (the "Parent Expenses") not to exceed
$3.0 million.
In the Merger Agreement, Carey International acknowledges that, at any time
after the Effective Time, Parent may cause Carey International to pay or
reimburse or cause to be paid or reimbursed in cash all expenses incurred by
or on behalf of Parent relating to the Offer and the Merger, including a
transaction fee payable to Chartwell.
The Stock Option Agreement.
Grant of Stock Option. Pursuant to the Stock Option Agreement and subject to
the terms and conditions thereof, Carey International granted to Acquisition
Company the Acquisition Company Option to purchase the Acquisition Company
Option Shares at the Offer Price.
Exercise of Stock Option. The Stock Option Agreement provides that, subject
to the conditions set forth in the Stock Option Agreement and any additional
requirements of law, the Acquisition Company Option may be exercised by
Acquisition Company, in whole but not in part, at any one time after the
occurrence of a Top-Up Exercise Event (as defined below) and prior to the Top-
Up Termination Date (as defined below) and that Acquisition Company will
exercise the Acquisition Company Option if the results thereof would permit
the Short Form Requirement to be met (subject to applicable Nasdaq National
Market rules). For the purpose of the Stock Option Agreement, a "Top-Up
Exercise Event" occurs on the day of the closing of the Offer; provided that
Acquisition Company has accepted for payment pursuant to the Offer Shares
satisfying the Minimum Condition, and the "Top-Up Termination Date" occurs
upon the first to occur of the following: (i) the Effective Time; (ii) the
date which is five business days after the occurrence of a Top-Up Exercise
Event (or such later date on which the closing of the purchase of the
Acquisition Company Option Shares may be consummated pursuant to the Stock
Option Agreement); and (iii) the termination of the Merger Agreement.
Conditions to Closing. The Stock Option Agreement provides that the
obligation of Carey International to deliver Acquisition Company Option Shares
upon the exercise of the Acquisition Company Option is subject to the
following conditions: (i) all waiting periods, if any, under the HSR Act
applicable to the issuance of the Acquisition Company Option Shares have
expired or have been terminated; (ii) there being no injunction or other final
non-appealable judgment by a court of competent jurisdiction preventing or
prohibiting the exercise of the Acquisition Company Option or the delivery of
the Acquisition Company Option Shares; and (iii) such exercise not violating
the Nasdaq National Market rules then applicable to Carey International.
Representations and Warranties. The Stock Option Agreement contains various
representations and warranties of the parties thereto, including
representations by Carey International as to Carey International's corporate
organization, authority relative to the Stock Option Agreement and authority
to issue the Acquisition Company Option Shares, the absence of any conflicts
and the making or obtaining of all applicable filings and consents.
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Covenants of Carey International. Pursuant to the Stock Option Agreement,
Carey International has agreed (i) that it will not, by charter amendment or
through reorganization, consolidation, merger, dissolution or sale of assets,
or by any other voluntary act, avoid or seek to avoid the observance or
performance of any covenants, stipulations or conditions to be observed or
performed by Carey International pursuant to the Stock Option Agreement and
(ii) promptly to take all actions as may from time to time be required in
order to permit Acquisition Company to exercise the Acquisition Company Option
and Carey International to issue the Acquisition Company Option Shares
pursuant thereto.
Management Agreements.
In connection with entering into the Merger Agreement, Carey International
plans to enter into an employment agreement with Vincent A. Wolfington, Carey
International's Chairman and Chief Executive Officer, and into a consulting
agreement with Don R. Dailey. The agreements will replace the prior agreements
between Carey International and those executives.
Wolfington Employment Agreement. Carey International and Mr. Wolfington plan
to enter into a four-year employment agreement providing for Mr. Wolfington's
continued employment as Carey International's Chairman and Chief Executive
Officer. The agreement will provide that both Mr. Wolfington and one other
individual designated by him will be elected to the board of directors of Cary
International. The term of the agreement will commence upon the closing of the
Merger and will automatically be extended from year to year thereafter, unless
terminated by either party by giving notice at least 120 days prior to the end
of the initial term or any renewal term. Mr. Wolfington's initial base salary
will be set at $500,000 per year. He will also be eligible to participate in
Carey International's bonus plan, provided, however, that he will be entitled
to a minimum bonus to be agreed upon. Mr. Wolfington will also be entitled to
receive the same benefits as he is currently entitled to or as may be added
from time to time.
Under the terms of the agreement, Mr. Wolfington will receive, at the
closing of the Merger, an option to acquire 6% of the common stock of Carey
International at an exercise price per share equal to the fair market value of
Carey International common stock on the date of the grant. The option will
vest as to 33 1/3% of the option shares on the date of the grant and as to an
additional 22.22% of the option shares on each of the first, second and third
anniversaries of the grant. The option will also vest in full upon the
termination of Mr. Wolfington's employment (i) by Carey International without
"cause" (as defined in the agreement); (ii) upon his death or disability;
(iii) by Mr. Wolfington for "good reason" (as defined in the agreement); or
(iv) upon a "liquidity event" (as defined in the agreement). Carey
International will maintain adequate life insurance for the benefit of Mr.
Wolfington to pay the aggregate exercise price of the option in the event of
his death.
Mr. Wolfington will rollover his current equity ownership in Carey
International into a common equity interest in Carey International, as the
Surviving Corporation, in accordance with a letter agreement with Acquisition
Company. Carey International will also make a $4.0 million non-recourse loan
available to Mr. Wolfington which will be secured by his equity interest in
Carey International. The loan will bear interest equal to the cost of funds in
the Term Loans (as defined herein), which will accrue annually but will not be
paid until the loan matures. The loan will mature on the earlier of (i) the
end of the lock-up period following an initial public offering when Mr.
Wolfington can freely sell his shares; (ii) the sale of substantially all of
the assets or common stock of Carey International; or (iii) the termination of
Mr. Wolfington's employment for cause. The loan may be prepaid without penalty
at any time.
In the event Mr. Wolfington's employment agreement is terminated by Carey
International without "cause" or by Mr. Wolfington for "good reason," Mr.
Wolfington will be entitled to receive (a) salary continuation at his annual
base salary then in effect for the remaining term of the agreement or three
years, whichever is longer; and (b) continuation of health benefits available
to him under the terms of applicable benefit plans and programs in which he
participates for the remaining term of the agreement or three years, whichever
is longer. In the event the agreement is terminated upon Mr. Wolfington's
disability, Mr. Wolfington will be entitled to salary continuation and
continuation of benefits available to him under the terms of the applicable
benefit plans and
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programs in which he participates on the termination until he becomes eligible
for disability income under Carey International's long-term disability income
plan. In the event the agreement is terminated upon Mr. Wolfington's death,
his beneficiary will be entitled to receive a lump sum equal to the remaining
base salary to which he would have been entitled had he remained employed
through the current term. In the event the agreement is terminated because of
Carey International's failure to renew it, Carey International will be
required to pay Mr. Wolfington his base salary for two years following his
termination.
Mr. Wolfington will be deemed to terminate his employment agreement with
"good reason" in the event there is: (a) any material adverse change in his
job title, status or responsibility including diminution of duties; (b) any
reduction in his base salary, unless he agrees to such reduction; (c) a
material breach of the employment agreement by Carey International; (d) a
relocation of Mr. Wolfington's primary place of employment, without his
consent, to a location more than 50 miles away; (e) the failure by Carey
International to continue in effect any benefit, retirement or compensation
plan in which Mr. Wolfington participates, or the taking by Carey
International of any action that would adversely affect his participation in
or reduce his benefits under any such plans or deprive him of any fringe
benefit or prerequisite; (f) the failure of Carey International to obtain an
assumption and agreement to perform the employment agreement by a successor to
Carey International; or (g) a "change in control" of Carey International (as
defined in the agreement).
The agreement will contain standard non-competition and non-solicitation
clauses that apply during the period of Mr. Wolfington's employment and for a
period of three years thereafter. If, however, Mr. Wolfington is terminated
due to Carey International's failure to renew the agreement, the non-
competition and non-solicitation clauses will apply for two years following
his termination. The agreement will also provide that during the term of the
agreement and following the termination of his employment, Mr. Wolfington may
not disclose any confidential information or trade secrets without Carey
International's written consent (other than information that becomes public
knowledge by means other than Mr. Wolfington's breach of the confidentiality
provision or as otherwise may be required by legal process). Mr. Wolfington
must return all Carey International property upon the termination of his
employment. The agreement will provide that any intellectual property
developed by Mr. Wolfington during the term of his employment will be sole and
exclusive property of Carey International. It will also provide that Carey
International will indemnify Mr. Wolfington against damages and expenses in
connection with any action or proceeding to which he is made or threatened to
be made a party by reason of the fact that he is an employee or director of
Carey International (with certain specified exceptions). The new agreement
will supersede and replace the existing employment agreement between Mr.
Wolfington and Carey International.
Dailey Retirement and Consulting Agreement. Carey International and Don R.
Dailey plan to enter into a retirement and consulting agreement providing for
Mr. Dailey's retirement and provision of consulting services to Carey
International. The term of the agreement will commence upon the closing of the
Merger and continue until the earlier of (a) the third anniversary of its
commencement; (b) Mr. Dailey's termination for cause; or (c) Mr. Dailey's
death. Mr. Dailey will be paid consulting fees of $200,000 during the first
year, $150,000 during the second year and $100,000 during the third year of
the agreement (or a pro rata amount thereof in the event of an earlier
termination of the agreement).
During the term of the agreement, Mr. Dailey will be reimbursed for all
travel and related expenses incurred during the performance of his duties.
During the term of the agreement, Mr. Dailey will be provided with health and
life insurance benefits on an enhanced basis from those he currently receives.
Carey International may satisfy part of this obligation with respect to health
insurance by paying Mr. Dailey's COBRA continuation coverage premiums. During
the term of the agreement, Mr. Dailey will also be entitled to receive the
same automobile allowance, including insurance, and use of Carey
International's car service as he currently receives. Mr. Dailey will not,
however, be permitted to participate in any of Carey International's employee
benefit plans unless their express terms provide eligibility for consultants
and Mr. Dailey meets the eligibility criteria.
The agreement will provide that in consideration of a payment of $50,000,
during the term of the agreement and for one year thereafter, Mr. Dailey will
not directly or indirectly compete with Carey International without
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the prior written consent of Carey International. The agreement will also
contain a standard non-solicitation clause that will apply during the term of
the agreement and for a period of one year thereafter. The agreement will also
provide that during the term of the agreement and following the termination of
his services, Mr. Dailey may not disclose any confidential information or
trade secrets without Carey International's written consent and that he must
return all Carey International property upon the termination of his services.
Option Exercise Agreements.
In connection with the Merger Agreement and in addition to the employment
and severance agreements discussed above, Carey International, Acquisition
Company and the following officers and directors of Carey International who
own Company Options (the "Option Holders") have agreed to enter into Option
Exercise Agreements: Vincent A. Wolfington, Don R. Dailey, Richard A. Anderson
Jr., David H. Haedicke, Gary L. Kessler, Devin J. Murphy, Sally A. Snead, Guy
C. Thomas, Eugene S. Willard and John C. Wintle.
Exercise of Options and Sale of Option Shares. Pursuant to the Option
Exercise Agreements, each Option Holder will agree that immediately prior to
the Effective Time of the Merger, such Option Holder will exercise all Company
Options granted to the Option Holder that have a per Share exercise price (the
"Exercise Price") less than the Offer Price (the "In-the-Money Options") and
upon consummation of the Offer, if requested by Acquisition Company, sell to
Acquisition Company the shares issued upon exercise of the In-the-Money
Options. The aggregate Exercise Price the Option Holder will pay for the
Shares issued to the Option holder upon exercise of the In-the-Money-Options
will be paid in the form of (i) a cash payment in an amount equal to the
product of (a) the number of Option Exercise Shares and (b) the par value of
such Option Exercise Shares (the "Cash Exercise Price") and (ii) a promissory
note in a principal amount equal to the number of Option Exercise Shares
multiplied by the Exercise Price minus the Cash Exercise Price. Acquisition
Company will pay for the Option Exercise Shares with a promissory note in a
principal amount equal to the product of the Offer Price multiplied by the
number of Option Exercise Shares purchased.
Cancellation of Options. Pursuant to the Option Exercise Agreements, Carey
International will, upon consummation of the Merger, cancel all of the Option
Holders' Company Options that are not In-the-Money Options (the "Out-of-the-
Money Options") and all remaining In-the-Money-Options, if any. In exchange
for agreeing to the cancellation of such Company Options, each Option Holder
will receive a cash payment equal to the product, for each Company Option, of
(a) the Offer Price less the Exercise Price per Share for each Company Option
cancelled and (b) the number of Shares subject to such Company Option.
Agreement to Tender Shares. Unless otherwise requested to do so by
Acquisition Company, each Option Holder will agree not to tender pursuant to
the Offer any Shares (other than Option Exercise Shares) owned by such Option
Holder. In the event that an Option Holder is so requested by Acquisition
Company, each Option Holder will agree to validly tender (and not to withdraw)
pursuant to and in accordance with the terms of the Offer (provided that the
Offer is commenced and not amended in a manner adverse to such Option Holder),
not later than the Expiration Date, the Shares (other than Option Exercise
Shares) owned by such Option Holder.
Waiver and Release. By executing the Option Exercise Agreements, each Option
Holder will acknowledge the effects of and consent to the exercise and/or
cancellation of Company Options, and upon exercise and/or cancellation of
Company Options waive all rights and benefits associated with Company Options.
Each Option Holder will also unconditionally release and discharge Carey
International, Acquisition Company, Parent and their respective directors,
officers, employees, agents and assigns from all liabilities arising or in any
way related to the plans or Company Options.
Representations, Warranties and Covenants. The Option Exercise Agreements
contain various representations, warranties and covenants of the parties
thereto, including representations by each Option Holder as to the Option
Holder's ownership of Company Options and the Shares, authority relative to
the Option Exercise Agreements, the absence of any conflicts and the absence
of any encumbrances on the Option Holder's securities. Each Option Holder will
also agree not to transfer any of the Option Holder's securities, not to grant
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any proxies or enter into any voting agreements with respect to the Option
Holder's securities, not to take any action inconsistent with the
representations or warranties in the Option Exercise Agreements and not to
acquire any of Carey International's securities. In addition, each Option
Holder will waive any appraisal rights with respect to the Merger.
Management Consulting Agreements.
Carey International and Chartwell intend to enter into a ten-year management
consulting agreement (the "Carey International/Chartwell Management Consulting
Agreement") pursuant to which Chartwell will provide Carey International with
management consultant and advisory services. The term of the agreement will
commence on the date of the closing of the Merger Agreement and continue
through the period ending on the tenth anniversary of such date. The agreement
will automatically renew for additional one-year terms unless Carey
International gives Chartwell notice that it will not review the agreement at
least 60 business days prior to the date on which the agreement would have
otherwise renewed. Chartwell will perform all consultant and advisory services
as an independent contractor to Carey International and the agreement will in
no way prohibit Chartwell from engaging in other activities, whether or not
competitive with any business of Carey International.
As compensation for the services provided under the agreement, Carey
International will pay Chartwell a fee equal to the greater of (i) $650,000
and (ii) 2% of Carey International's consolidated EBITDA for each fiscal year
of Carey International during the term of the agreement. In addition, Carey
International will be required to reimburse Chartwell for all out-of-pocket
costs and expenses reasonably incurred by Chartwell in connection with the
provision of services under the agreement. The agreement may be terminated at
Carey International's option upon 30 days prior notice to Chartwell. In such
event, Carey International will be required, within five business days, to pay
Chartwell an amount equal to the amount of compensation Chartwell would have
received under the agreement, had the agreement not been terminated until the
date on which it would have expired, had it not renewed.
Carey International and Ford also will enter into a ten-year management
consulting agreement. The material terms of the agreement will be
substantially identical to the Carey International/Chartwell Management
Consulting Agreement except that (i) Ford will receive a fee of $250,000 for
each fiscal year of Carey International during the term of the agreement and
(ii) the agreement will terminate on such date that Ford no longer has all of
its common stock investment in Parent.
8. Interests of Certain Persons in the Transaction.
In considering the recommendations of the Board, the stockholders should be
aware that certain directors and officers of Carey International have
interests in the Transaction different from those of stockholders generally
which may present such persons with certain potential conflicts of interest.
These interests are described below.
Equity Participation by Directors and Executive Officers of Carey
International. As of July 24, 2000, the directors and executive officers of
Carey International, as a group, beneficially owned an aggregate of 312,534
outstanding Shares (representing 3.2% of the then outstanding Shares) as more
fully described on Schedule I hereto. All such directors and executive
officers whose Shares are tendered in the Offer or are purchased pursuant to
the Option Exercise Agreements will receive in the Transaction the same per
Share consideration for their Shares as the public stockholders will receive
for their Shares in the Offer and the Merger. In the aggregate, the directors
and executive officers of Carey International (other than, with respect to the
Management Investors, the amount of their outstanding Shares that will be
converted or rolled over into common stock of the Surviving Corporation), will
be entitled to receive approximately $3,872,121 in cash for their outstanding
Shares upon consummation of the Transaction.
As of July 24, 2000, the directors and executive officers of Carey
International, as a group, had Company Options to acquire an aggregate of
1,375,363 Shares. All directors and executive officers of Carey International
are entitled to receive in the Transaction the same net consideration for such
Company Options as if they exercised such Company Options and tendered them in
the Offer. In the aggregate, the directors and executive officers of Carey
International (other than, with respect to the Management Investors, the
amount from their
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Company Options that will be rolled over into shares of the Surviving
Corporation), will be entitled to receive approximately $4,137,470 (before any
withholding taxes) for their Company Options upon consummation of the
Transaction.
The Management Investors, consisting of Vincent A. Wolfington, Richard A.
Anderson, Jr., David H. Haedicke, Gary L. Kessler, Devin J. Murphy, Sally A.
Snead, Guy C. Thomas, Eugene S. Willard and John C. Wintle, will have certain
of their Shares (including Shares acquired upon the exercise of Company
Options) converted pursuant to the Merger Agreement into common stock of the
Surviving Corporation or will rollover the consideration to be received in
respect of their Company Options to purchase common stock of the Surviving
Corporation equaling a total of approximately 8.0% of the Surviving
Corporation. Mr. Wolfington will convert 100,363 currently outstanding Shares
plus 167,539 Shares acquired (net of exercise price) upon the exercise of
Company Options (or rollover the consideration to be received in respect of
such Shares) into shares of the Surviving Corporation. The eight other
Management Investors will convert an aggregate of 42,967 Shares acquired (net
of exercise price) upon the exercise of Company Options (or rollover the
consideration to be received in respect of such Shares) into common stock of
the Surviving Corporation. The Management Investors have the right prior to
the closing of the Offer to elect to increase the number of Shares that will
be converted or rolled over into common stock of the Surviving Corporation. If
they elect to do so, the number of Shares (including Shares acquired upon the
exercise of Company Options) presented above as being converted or rolled over
would increase. The Management Investors will receive certain stockholder
rights with regard to common stock of the Surviving Corporation and will be
subject to standard obligations customarily provided for in similar
transactions including calls, puts upon termination for cause or without good
reason, rights of first refusal and registration rights.
Change of Control Payments. Messrs. Wolfington and Dailey each will be
entitled to receive $1.25 million within ten days after the closing of the
Offer pursuant to change of control provisions in their respective employment
agreements with Carey International dated as of May 12, 2000. In the event
that the payment of this amount to either officer would be subject to the
excise tax imposed by Section 4999 of the Code, or any interest or penalties
with respect to such excise tax, Messrs. Wolfington and Dailey will be
entitled to receive an additional "gross-up" payment in an amount such that,
after payment by the officer of all taxes (including any interest or penalties
imposed with respect to such taxes), including any excise tax imposed by the
gross-up payment, the officer will retain a net amount equal to the excise tax
imposed (and any interest and penalties) upon the payment. Messrs. Haedicke,
Murphy, Thomas, Willard and Wintle and Ms. Snead are entitled to receive an
aggregate of $1.2 million within ten days following the closing of the Offer
pursuant to change of control agreements with Carey International dated May
12, 2000. If by reason of Section 280G of the Code, the change of control
payment to any of these executive officers exceeds the amount which can be
deducted by Carey International, such payment shall be reduced to the maximum
which can be deducted by Carey International.
Additional Option-Related Compensation. Messrs. Anderson, Haedicke, Kessler,
Murphy, Thomas, Willard and Wintle and Ms. Snead will receive an aggregate of
$1.5 million following the Effective Time of the Merger as compensation for
Plan Options that the Compensation Committee of the Board intended to grant on
May 3, 2000, but was unable to do so without stockholder approval increasing
the number of Shares available for grant under plans in which officers are
eligible to participate.
Fee to Special Committee Members. The Board appointed the Special Committee,
composed of its independent directors, Messrs. Cox, Meyer, St. George and
Vittoria, to negotiate the terms of the Merger Agreement and the Transaction
and determine if the Merger Agreement and the Transaction are in the best
interests of Carey International and its stockholders. As compensation for
their services on the Special Committee, each of the four members thereof will
receive a fee of $50,000 following the Effective Time of the Merger.
Directors' Deferred Compensation Plan. As of July 24, 2000, an aggregate of
13,344 phantom Shares had accumulated under Carey International's deferred
compensation plan for directors for the benefit of Messrs. Cox, Meyer, St.
George and Vittoria. Unless the directors request to be paid the value of
their phantom Shares account in cash prior to the Effective Time and Carey
International approves that request, the phantom Shares accumulated
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in the accounts of Messrs. Cox, Meyer, St. George and Vittoria will be
converted into the right to receive an aggregate of $243,528 at the Effective
Time. See Schedule IV--"Compensation of Directors."
Option Repricing and Acceleration. In order to satisfy a condition to
Acquisition Company's execution of the Merger Agreement, on July 15, 2000 the
Board accelerated, effective immediately before the execution of the Merger
Agreement, the vesting of all previously unvested Company Options held by the
executive officers (including the Management Investors) and all other holders
of unvested Company Options (which did not include any members of the Special
Committee) with the effect that all Company Options that were not previously
fully exercisable became so. In all, Company Options to purchase Shares held
by executive officers that were not previously exercisable became fully
exercisable immediately before the execution of the Merger Agreement. On May
3, 2000, the Compensation Committee of the Board repriced Company Options to
purchase 346,147 Shares, at exercise prices ranging from $10.50 to $19.25 per
Share, to $8.25, the market price at the date of repricing. With the exception
of one executive officer's Company Option to purchase 10,000 Shares and one
non-executive officer Management Investor's Company Option to purchase 10,000
Shares, no Company Options held by executive officers or Management Investors
were repriced in May 2000.
Legal Services Provided by Director. Certain legal services are provided to
Carey International from time to time by the law firm of Baker & McKenzie, of
which Mr. Meyer is currently a partner. Since December 1, 1999, Carey
International has paid or accrued the payment to Baker & McKenzie of
approximately $345,000 for legal services.
Post-Effective Time Compensation. Following the Effective Time, select
members of the management group of Carey International, as determined by the
Board and a representative selected by Parent, will participate in an annual
bonus pool plan maintained by Carey International. Participants will be
allocated a certain percentage of the bonus pool on an annual basis. Such
bonus pool shall consist of 2% of Carey International's of stock options to
management annual EBITDA.
In addition, following the Effective Time, Carey International will
establish a stock option plan, pursuant to which Carey International will
reserve 10% of its outstanding stock for grant of stock options to management
(in addition to two options to be granted to Mr. Wolfington to purchase 6% of
its outstanding stock). It is anticipated that 50% of the options granted to
the management group (other than Mr. Wolfington) shall vest ratably over a
four year period. The remaining 50% of such options will vest only if
Chartwell achieves at least a 28% net internal rate of return ("IRR") on its
total investment in Carey International ("Performance Options"). However, if
the IRR is at least 25%, but less than 26%, 25% of the Performance Options
shall vest; if the IRR is at least 26%, but less than 27%, 50% of the
Performance Options shall vest; and if the IRR is at least 27%, but less than
28%, 75% of the Performance Options shall vest.
In connection with entering into the Merger Agreement, Carey International
plans to enter into an employment agreement with Mr. Wolfington and into a
consulting agreement with Mr. Dailey. The agreements will replace the prior
agreements between Carey International and those executives. See "SPECIAL
FACTORS -- The Merger and Related Documents -- Management Agreements."
Intent to Tender. To Carey International's knowledge, after reasonable
inquiry, all of the directors and executive officers of Carey International
who own Shares intend to tender their Shares in the Offer, except that those
executive officers who are parties to the Option Exercise Agreements will
tender their shares pursuant to the terms of those agreements.
Indemnification. Under the Merger Agreement, Parent and Acquisition Company
agree that for a period of six years from the Effective Time, the Surviving
Corporation will maintain all rights to indemnification now existing in favor
of the current or former directors, officers, employees and fiduciaries of
Carey International as provided in Carey International's certificate of
incorporation and by-laws or otherwise in effect under any agreement on the
date of the Merger Agreement. In addition, under the Merger Agreement, Parent
and Acquisition Company agree that the certificate of incorporation and by-
laws of the Surviving Corporation and its
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subsidiaries shall contain the provisions with respect to exculpation and
indemnification set forth in Carey International's or its subsidiaries'
certificates of incorporation and by-laws on the date of the Merger Agreement
and that such provisions shall not be amended, repealed or otherwise modified
for a period of six years after the Acceptance Date in any manner that would
adversely affect the rights thereunder of individuals who at any time prior to
the Effective Time were directors or officers of Carey International in
respect of actions or omission occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by the Merger
Agreement), unless such modification is required by law.
The Merger Agreement requires each of the Surviving Corporation and its
subsidiaries to at all times exercise the powers granted to it by its
certificate of incorporation, its by-laws, and by applicable law to indemnify
and hold harmless to the fullest extent permitted by applicable law present or
former directors, officers, employees and fiduciaries and agents of Carey
International or its subsidiaries against any threatened or actual claim,
action, suit, proceeding or investigation made against them arising from their
service in such capacities (or service in such capacities for another
enterprise at the request of Carey International or any of its subsidiaries)
prior to and including the Effective Time, including, without limitation, with
respect to matters relating to the Merger Agreement.
The Merger Agreement also requires the Surviving Corporation to provide, for
not less than six years from the Effective Time, Carey International's current
and former directors and officers with an insurance and indemnification "tail"
policy with respect to matters occurring prior to the Effective Time that is
no less favorable than Carey International's existing policy or, if
substantially equivalent insurance coverage is not available, the best
coverage that is similar thereto, provided that the Surviving Corporation is
not required to pay a premium in excess of 150% of the last annual premium
paid by Carey International prior to the date of the Merger Agreement and
provided further that, if the Surviving Corporation is unable to obtain such
insurance for such premium, it will obtain as much coverage as possible for a
premium equal to such maximum amount.
Board's Awareness of Potential Conflicts of Interest. The Board was aware of
the actual and potential conflicts of interest described above and considered
them along with the other matters described under "SPECIAL FACTORS --
Recommendation of the Board of Directors of Carey International; Fairness of
the Offer and the Merger" and "SPECIAL FACTORS -- The Merger Agreement and
Related Documents."
9. Financing of the Transaction.
The Offerors estimate that the total amount of funds required to purchase
all Shares validly tendered pursuant to the Offer, to consummate the Merger,
to acquire all securities of Carey International pursuant to the Carey
Purchase Agreements, to refinance approximately $35.2 million of existing
indebtedness of Carey International and its subsidiaries, and to pay all
related costs and expenses will be approximately $255.0 million. The Offerors
expect to obtain these funds from borrowings by Carey International under the
Senior Credit Facility, the issuance by Carey International of the Senior Sub
Notes and the capitalization of Acquisition Company through the Capital
Contribution of $98.5 million by Parent. Parent will obtain $53.5 million of
the funds for the Capital Contribution from Holdings and $45.0 million from
Ford.
Senior Credit Facility.
It is expected that a definitive agreement for the Senior Credit Facility
will be entered into with the Lenders based on the following terms set forth
in the Senior Credit Facility Commitment Letter. The Senior Credit Facility
will be composed of (i) a 5 1/2 year $25.0 million revolving credit facility
(the "Revolving Credit Facility"); (ii) a $40.0 million 5 1/2 year amortizing
term loan facility (the "A Term Loan"); (iii) a $60.0 million 6 1/2 year
amortizing term loan facility (the "B Term Loan" and, together with the A Term
Loan, the "Term Loans"); and (iv) a $35.0 million 5 1/2 year acquisition
facility (the "Acquisition Facility," and, together with the Term Loans and
the Revolving Credit Facility, the "Facilities").
Except in the event that the Short Form Requirement is not met, the Term
Loans must be drawn in full in a single draw on the date of the initial
funding of the Facilities and may only be used to refinance directly or
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indirectly existing debt and finance the Offer and the costs, fees and
expenses associated therewith. The aggregate principal of the Term Loans may,
at the option of the Lenders, be increased by an amount of up to $10.0 million
in order to provide additional funding to refinance indebtedness incurred
under Carey International's existing credit facility for acquisitions. The
Term Loans are to be repaid on a quarterly basis with annual principal
reductions as described below. To the extent repaid, Term Loans may not be
reborrowed.
Borrowings under the Revolving Credit Facility after the closing of the
Offer may be used to fund the Merger, to refinance existing debt, for working
capital and other general corporate needs of Carey International and its
subsidiaries, including the funding of acquisitions. Under certain conditions,
borrowings under the Revolving Credit Facility may be used to fund payments to
dissenting stockholders in the Merger. The Revolving Credit Facility will be
made available to Carey International in the form of revolving credit loans
(the "Revolving Loans") with sublimits available thereunder for letters of
credit and swingline loans.
Borrowings under the Acquisition Facility may be used to fund acquisitions
by Carey International and its subsidiaries and will be available on a
delayed-draw basis. Amounts repaid under the Acquisition Facility may not be
reborrowed.
Interest Rate and Fees. Until ten days after Carey International delivers to
the administrative agent its financial statements for the fiscal quarter
ending after the closing of the Senior Credit Facility (the "Senior Credit
Facility Closing Date"), the Revolving Credit Facility, the Acquisition
Facility and the A Term Loan will bear interest at a rate per annum equal to,
at Carey International's election, (i) the applicable LIBOR rate, plus a
margin equal to 3.50%, or (ii) the higher of (a) First Union's prime
commercial lending rate as announced from time to time or (b) the federal
funds rate plus 0.50% (such higher rate, the "Base Rate"), plus a margin equal
to 2.0%. The B Term Loan will bear interest at a rate per annum equal to, a
floating rate equal to, at Carey International's election, (i) the applicable
LIBOR rate, plus a margin equal to 4.0%, or (ii) the Base Rate plus a margin
equal to 2.5%.
Upon Carey International's delivery to the administrative agent of its
financial statements for the fiscal quarter ending after the Senior Credit
Facility Closing Date, the applicable margins for each of the Facilities will
be adjusted based on Carey International's consolidated financial performance
for the trailing four quarters most recently ended.
From and after ten days after the delivery of Carey International's
financial statements for the fiscal quarter following the Senior Credit
Facility Closing Date, the Revolving Credit Facility, the Acquisition Facility
and the A Term Loan will bear interest at a rate per annum equal to, at Carey
International's election, (i) the applicable LIBOR rate, plus a margin ranging
from 2.75% to 3.75%, based on Carey International's consolidated financial
performance for the trailing four quarters most recently ended, or (ii) the
Base Rate, plus a margin ranging from 1.25% to 2.25%, based on Carey
International's consolidated financial performance for the trailing four
quarters most recently ended. The B Term Loan will bear interest at a rate per
annum equal to, at Carey International's election, (i) the applicable LIBOR
rate, plus a margin ranging from 3.75% to 4.25%, based on Carey
International's consolidated financial performance for the trailing four
quarters most recently ended, or (ii) the Base Rate, plus a margin ranging
from 2.25% to 2.75%, based on Carey International's consolidated financial
performance for the trailing four quarters most recently ended.
If there is a continuing event of default under the Senior Credit Facility,
the applicable interest rates and letter of credit fees shall be increased by
two percent per annum above the rates of interest or the rate of the letter of
credit fees otherwise applicable, and all outstanding obligations shall bear
interest at this default rate, as applicable.
Carey International will pay certain fees in connection with the Senior
Credit Facility, including, without limitation, (i) arrangement fees, (ii)
agency fees, (iii) letter of credit fees and (iv) commitment fees. The
commitment fees will accrue on the unutilized total commitments under the
Senior Credit Facility at a per annum rate of 0.50% and 0.75% for the
Revolving Credit Facility and the Acquisition Facility, respectively.
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Commitment fees will accrue on the unutilized total commitments under the Term
Loans at a per annum rate of 0.50% until the earlier to occur of (i) the
Effective Date or (ii) September 30, 2000. After such date, the per annum rate
shall be 1.0%
Scheduled Amortization. The A Term Loans will amortize quarterly over 5 1/2
years with 30.0% of the total amortization occurring over the first three
years, and increasing pursuant to a schedule with 70.0% of the total
amortization occurring over the last 2 1/2 years of the A Term Loan. The B
Term Loan will amortize quarterly over 6 1/2 years with 5.5% of the total
amortization occurring over the first 5 1/2 five years and 94.5% of the total
amortization occurring in the last year of the B Term Loan. The Acquisition
Facility will amortize quarterly over 5 1/2 years with no annual amortization
in the first two years, 30.0% of the total amortization occurring over the
third and fourth years and 70.0% of the total amortization occurring in the
last 1 1/2 years of the Acquisition Facility.
Mandatory Prepayments. Subject to certain standard exceptions, mandatory
prepayments of the Facilities will be required to be made (i) with 75% of all
excess cash flow, which percentage will be reduced to 50% whenever the
leverage ratio of Carey International is less than a level to be agreed upon,
(ii) with 100% of certain permitted new debt or equity issuances (net of
commissions, expenses and other costs), (iii) with 100% of permitted asset
sales (net of commissions, expenses and other costs) (other than the sale of
inventory in the ordinary course and certain other exceptions), and (iv)
subject to exceptions for repairs and replacements, all net insurance proceeds
or other awards payable in connection with the loss, destruction or
condemnation of any assets of Carey International or any of its subsidiaries.
Conditions Precedent to Closing of Senior Credit Facility. The availability
of the Senior Credit Facility will be subject to the satisfaction of
conditions precedent typical for this type of facility, including, but not
limited to, the following: (i) the administrative agent shall be satisfied
that all of the obligations to prior lenders (other than miscellaneous
indebtedness acceptable to the administrative agent) will be repaid in full
from the proceeds of the Term Loans and the initial Revolving Loan and all
liens in favor of prior lenders will be terminated immediately upon such
payment (with certain agreed exceptions for existing indebtedness), (ii) all
necessary material governmental and third party waivers, consents and
approvals in connection with the Senior Credit Facility and the Offer shall
have been obtained and remain in effect, (iii) there shall not have occurred
since November 30, 1999, (a) any material adverse change in the condition
(financial or otherwise), operations, properties, prospects or business of
Carey International and its subsidiaries, or (b) any event, condition or state
of facts that could reasonably be expected to have such a material adverse
change, (iv) each of the loans under the Senior Credit Facility shall have
been rated by a nationally recognized rating agency, (v) the Offer and each of
the other transactions contemplated thereby (other than the Merger unless the
Short Form Requirement has been met) shall have been consummated or will be
contemporaneously consummated on the closing date, (vi) Acquisition Company
shall have received at least $105.5 million of equity on terms acceptable to
the administrative agent and Carey International shall have issued the Senior
Sub Notes, (vii) there shall have been no material change in loan syndication,
financial or capital market conditions that, in the judgment of the
administrative agent, would impair the syndication of the loans, (viii) the
administrative agents shall be satisfied that the aggregate purchase price for
all of the issued and outstanding Shares of Carey International acquired
pursuant to the Offer and the Merger will not exceed $220.0 million (before
giving effect to proceeds to Carey International from the exercise of options
and warrants), and the purchase price for any Share shall not exceed $18.25,
(ix) the administrative agent shall be satisfied that the aggregate fees and
expenses of Parent and Acquisition Company payable in connection with the
Transaction will not exceed an amount reasonably acceptable to the
administrative agreement, and (x) in the event the Short Form Requirement is
not met, Acquisition Company shall have accepted for payment and acquired
tendered Shares representing not less than 50.1% of the aggregate voting power
of all outstanding shares of Carey International entitled to vote in
connection with the approval of the Merger.
Guaranty. All obligations of Carey International under the Senior Credit
Facility will be unconditionally guaranteed by Parent and each of Carey
International's direct and indirect current and future domestic subsidiaries
(collectively, the "Guarantors").
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Security. The obligations of Carey International and the Guarantors under
the Senior Credit Facility will be secured by a first priority perfected
security interest (subject to certain permitted liens agreed upon) in (i) 100%
of the capital stock of Carey International owned by Parent and each direct
and indirect current and future subsidiary (65% of such subsidiary's capital
stock in the case of foreign subsidiaries) of Carey International and (ii) all
other available assets of Carey International and each Guarantor, other than
exceptions customary for transactions of this type.
Representations and Warranties. The Senior Credit Facility will contain
representations and warranties customary for this type of facility, including
without limitation representations and warranties regarding organization and
power, absence of violation of organizational documents, other agreements and
applicable laws, absence of material litigation, obtaining of government
approvals, subsidiaries, payment of taxes, authorization and enforceability of
the credit documents, full disclosure, margin securities, ERISA matters,
solvency, accuracy of financial statements, absence of material adverse
change, title to and sufficiency of assets, real estate, intellectual
property, governmental permits and licenses, insurance, compliance with laws,
environmental matters, validity and perfection of security interests, and
material contracts.
Financial Covenants. The Senior Credit Facility will contain financial
covenants customary for transactions of this type including, but not limited
to, the following: (i) a maximum total leverage ratio, (ii) a maximum senior
leverage ratio, (iii) a maximum fixed charge coverage ratio, (iv) a maximum
interest coverage ratio, and (v) a minimum annual capital expenditures.
Other Covenants. The Senior Credit Facility will contain covenants typical
for this type of facility. Such covenants include, but are not limited to, the
following: (i) restrictions on indebtedness and liens (including negative
pledges), (ii) restrictions on consolidations, mergers, acquisitions and
dispositions of assets and sale-leaseback transactions, (iii) restrictions on
joint ventures, acquisitions and other investments, (iv) restrictions on
dividends, redemptions and distributions with respect to capital stock and
redemptions and prepayments of subordinated debt, (v) restrictions on
transactions with affiliates, (vi) restrictions on changes in lines of
business (including any change in the passive status of Parent), (vii)
restrictions on amendments to subordinated debt and equity documents, and
(viii) restrictions on other negative pledges, changes in accounting policies
and changes in fiscal year.
Events of Default. The Senior Credit Facility will contain events of default
typical for these types of facilities. Such events of default include, but are
not limited to, the following: (i) non-payment of amounts under the Senior
Credit Facility, (ii) any material misrepresentation in any of the agreements
related to the Senior Credit Facility, (iii) covenant defaults, (iv) cross-
defaults to other material indebtedness, (v) judgment liens or ERISA events,
(vi) insolvency or bankruptcy proceedings, and (vii) a change of control of
Carey International, in each case, subject to specified grace periods,
exceptions and/or thresholds.
Subordinated Note Agreement.
It is expected that a definitive agreement for the purchase of the Senior
Sub Notes (the "Subordinated Note Agreement") will be entered into based on
the following terms set forth in the Senior Sub Note Commitment Letter. Under
the terms of the Subordinated Note Agreement, the Senior Sub Note Purchasers
will agree to purchase $40.0 million in original principal amount of Carey
International's 17% Senior Sub Notes which will mature seven years from the
Senior Sub Note Closing (as defined below). The proceeds from the Senior Sub
Notes may only be used to finance the Offer and the Merger, to refinance
existing debt, to provide general working capital, to provide capital for
general corporate purposes and to pay any fees and expenses incurred in
connection with these matters. Upon the purchase of the Senior Sub Notes, the
Warrants will be issued to the Senior Sub Note Purchasers, which Warrants
shall be sufficient to provide the Senior Sub Note Purchasers with 5.25% of
the common stock of Carey International on a fully-diluted basis.
The Senior Sub Notes will be subordinated in right of payment to the
indebtedness under the Senior Credit Facility and will be senior in right of
payment to all other subordinated debt of Carey International and its
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domestic subsidiaries. The Senior Sub Notes will be guaranteed by any direct
parent or holding company of Carey International and by all current and future
domestic subsidiaries of Carey International.
Interest. Interest on the Senior Sub Notes will accrue at a rate of 17% per
annum payable quarterly, in arrears, up to 3.5% of which may be paid in kind
at the option of Carey International, and the remainder of which shall be paid
in cash.
Mandatory Redemption. Carey International will redeem the full principal
amount of the Senior Sub Notes, plus any accrued interest and the appropriate
redemption premium amount, upon the earlier to occur of any of the following:
(i) the maturity of the Senior Sub Notes, (ii) a sale of all or substantially
all of Carey International's assets or (iii) an acceleration following an
event of default under the Subordinated Note Agreement. Mandatory redemptions
will be subject to the premiums set forth in the "Optional Redemption" section
set forth below.
Offer to Purchase. Carey International will make an offer to redeem (i) the
full principal amount of the Senior Sub Notes, plus any accrued interest and
the appropriate redemption premium amount, upon the occurrence of a change of
control (to be defined), or (ii) subject to exceptions to be agreed upon, in
the event of the sale of any equity or equity-linked securities of Carey
International or an asset sale, the principal amount of the Senior Sub Notes,
plus any accrued interest, and the appropriate redemption premium amount, to
the extent that the net proceeds in either of such events set forth in this
clause (ii) are not used to permanently repay indebtedness under the
Facilities. Such redemptions will be subject to the premiums set forth in the
Optional Redemption section set forth below, provided, however, that if such
redemptions occur after the second anniversary of the closing date of the Sub
Note purchase (the "Senior Senior Sub Note Closing"), the redemption price
shall be equal to 101% of the principal amount of the Senior Sub Notes being
redeemed, plus accrued and unpaid interest to the date of redemption.
Optional Redemption. The Senior Sub Notes may be redeemed at the option of
Carey International, in whole and not in part, upon not less than 30 days and
not more than 60 days' notice, at a redemption price equal to (i) 100% of the
principal amount of the Senior Sub Notes being redeemed plus two years
interest, less interest paid as of the date of redemption, if the redemption
date occurs prior to the second anniversary of the Senior Sub Note Closing;
(ii) 104% of the principal amount of the Senior Sub Notes being redeemed if
the redemption date occurs from the second anniversary of the Senior Sub Note
Closing to the third anniversary of the Senior Sub Note Closing; (iii) 102% of
the principal amount of the Senior Sub Notes being redeemed if the redemption
date occurs from the third anniversary of the Senior Sub Note Closing to the
fourth anniversary of the Senior Sub Note Closing; and (iv) 100% of the
principal amount of the Senior Sub Notes being redeemed at any time
thereafter, plus in each case accrued and unpaid interest to the redemption
date.
Conditions Precedent to Purchase of the Senior Sub Notes. The Senior Sub
Note Purchasers' obligations to purchase the Senior Sub Notes in connection
with the closing of the Offer are subject to satisfaction of conditions
precedent typical for this type of facility, including the following: (i) all
of the conditions precedent to the consummation of the Offer being satisfied
in all material respects, (ii) the Offer being consummated concurrently with
the sale of the Senior Sub Notes, (iii) the outstanding indebtedness of Carey
International and its subsidiaries being refinanced concurrently with the sale
of the Senior Sub Notes, (iv) Acquisition Company having purchased shares of
Carey International's common stock for an aggregate purchase price not to
exceed $220.0 million, (v) Parent having made an equity contribution to
Acquisition Company of not less than $97.0 million, (vi) Acquisition Company
owning not less than 50.1% of Carey International's outstanding common stock
after giving effect to the Offer and the other transactions contemplated by
the Merger Agreement (other than the Merger), (vii) the Senior Credit Facility
being in full force and effect, and (viii) there not having occurred, since
November 30, 1999, (a) any material adverse change in the condition (financial
or otherwise), operations, properties or business of Carey International and
its subsidiaries, or (b) any event, condition or state of facts that could
reasonably be expected to have such a material adverse change, (ix) the Senior
Sub Note Purchasers being satisfied that the aggregate purchase price for all
of the issued and outstanding Shares of Carey International acquired pursuant
to the Offer and the Merger will not exceed $220.0 million (before giving
effect
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to proceeds to Carey International from the exercise of options and warrants),
and the purchase price for any Share not exceeding $18.25, (x) the Senior Sub
Notes Purchasers being satisfied that the aggregate fees and expenses of
Parent and Acquisition Company, payable in connection with the Transaction
will not exceed an amount reasonably acceptable to the Senior Sub Note
Purchasers, and in the event the Short Form Requirement is not met,
Acquisition Company having accepted for payment and acquired tendered Shares
representing not less than 50.1% of the aggregate voting power of all
outstanding Shares of Carey International entitled to vote in connection with
the approval of the Merger, and (xi) certain other conditions customary for
financings of this type.
Representations and Warranties. The Subordinated Note Agreement will contain
representations and warranties customary for financing of this type. These
representations and warranties address subjects including, but not limited to,
the following: (i) taxes, (ii) environmental matters, (iii) financial
condition, (iv) solvency, (v) litigation, and (vi) employee benefit plans.
Covenants. The Senior Sub Notes will contain customary covenants for
financings of this type, that, among other things, will limit the ability of
Carey International and its subsidiaries to incur debt, create liens, pay cash
dividends on or repurchase capital stock, enter into agreements prohibiting
the creation of liens or restricting the ability of a subsidiary to pay money
or transfer assets to Carey International, enter into certain transactions
with affiliates, dispose of certain assets and engage in mergers and
consolidations.
Financial Covenants. The Senior Sub Notes will contain financial covenants
customary for transactions of this type including, but not limited to: (i) a
maximum total leverage ratio, (ii) a minimum fixed change coverage ratio,
(iii) a minimum interest coverage ratio, and (iv) a maximum annual capital
expenditures.
Events of Default. The Senior Sub Notes will contain events of default
typical for these types of financings. Such events of default include without
limitation: (i) failure to pay any principal, interest or fees when due
(subject to grace periods to be agreed upon); (ii) breach of covenants with
customary grace periods for certain affirmative covenants; (iii) material
incorrectness when made of any representation or warranty; (iv) default under
material indebtedness (other than the Senior Credit Facility); (v)
acceleration of any amounts due under the Senior Credit Facility as a result
of a default thereunder; (vi) breaches of material contracts; (vii) bankruptcy
or insolvency; (viii) judgments or uninsured losses in excess of agreed upon
amounts; (ix) certain ERISA events; and actual or asserted invalidity of
guarantee documents.
Warrants. The Warrants will be exercisable at an exercise price of $.01 per
share at any time, in whole or in part, after the issuance and will have a
term of ten years.
The Warrants will also provide for:
(i) customary weighted average anti-dilution protection for issuances of
equity securities below fair market value (subject to agreed upon
exceptions) and other customary equity rights satisfactory to the Senior
Sub Note Purchasers;
(ii) pre-emptive rights for the Senior Sub Note Purchasers and their
respective affiliates on any sale of equity or equity linked securities by
Carey International (subject to customary exceptions);
(iii) co-sale rights on any private sale of equity securities of Carey
International (subject to customary exceptions);
(iv) put rights exercisable at the conclusion of year seven and call
rights exercisable at the conclusion of year eight, in each case for fair
market value (subject to customary exceptions);
(v) cashless exercise;
(vi) piggy-back registration rights; and
(vii) board observation rights for two observers for the Warrant holders
plus a monitoring fee of $50,000 per annum to be allocated pro rata among
the Senior Sub Note Purchasers.
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Capital Contribution.
Ninety-eight million five hundred thousand dollars of the funds necessary
for Acquisition Company to fund the transactions contemplated by the Merger
Agreement and the Carey Purchase Agreements will be in the form of the Capital
Contribution from Parent. Parent will receive the funds necessary for the
Capital Contribution from a capital contribution from Holdings of $53.5
million and from Ford of $45.0 million. Holdings will be capitalized with
$53.5 million of equity provided by investment funds sponsored by affiliates
of Chartwell and certain other institutions.
The commitments of Ford and the investment funds affiliated with Chartwell
to make the capital contribution to Parent are subject to conditions customary
to this type of transaction, including the negotiation and execution of
definitive agreements, obtaining all necessary consents and regulatory
approvals, the availability of all other funds necessary to complete the
Transaction and no material adverse change having occurred in the business,
condition or prospects of Carey International.
After the Transaction, Holdings will own approximately 75.9% of the common
stock of Parent and Ford will own approximately 24.1%. Ford also will own all
of the outstanding shares of a class of preferred stock with terms
substantially similar to the Carey Preferred Stock.
Company/Acquisition Company Loan Agreement.
A portion of the proceeds contemplated by the Financing Commitment Letters
will be loaned by Carey International to Acquisition Company (if the Short
Form Requirement is met) pursuant to the terms of the Carey
International/Acquisition Company Loan Agreement. Interest shall accrue on the
principal amount of the Carey International/Acquisition Company Loan Agreement
at 10% per annum. The entire unpaid principal balance and all interest thereon
is due and payable in the event the Merger Agreement is terminated. The entire
principal balance and all interest thereon will be deemed paid in full
immediately following consummation of the Merger.
The Offer is conditioned upon, among other things, the Receipt of Funds
Condition. See "THE TENDER OFFER -- Conditions to the Offer." The Offerors
believe that the proceeds, if obtained, from the Senior Credit Facility, the
Senior Sub Notes and the Capital Contribution will be sufficient to satisfy
the Receipt of Funds Condition. The Offerors, however, do not have any
alternative financing arrangements or plans to obtain sufficient funds to
purchase the Shares tendered in the Offer and to consummate the Merger if they
are unable to obtain funds from the Senior Credit Facility, the Senior Sub
Notes and the Capital Contribution.
10. Certain United States Federal Income Tax Consequences.
The following is a general summary of certain U.S. federal income tax
consequences of the Offer and the Merger relevant to beneficial holders whose
Shares are purchased pursuant to the Offer or whose Shares are converted into
the right to receive cash in the Merger. This discussion is for general
information only and does not purport to consider all aspects of U.S. federal
income taxation that may be relevant to holders of Shares. The summary is
based on the provisions of the Code, applicable current and proposed United
States Treasury Regulations issued thereunder, judicial authority and
administrative rulings and practice, all of which are subject to change,
possibly with retroactive effect, at any time and, therefore, the following
statements and conclusions could be altered or modified. The discussion does
not address holders of Shares in whose hands Shares are not capital assets,
nor does it address holders who hold Shares as part of a hedging, "straddle,"
conversion or other integrated transaction, or who received Shares upon
conversion of securities or exercise of warrants or other rights to acquire
Shares or pursuant to the exercise of employee stock options or otherwise as
compensation, or to holders of Shares who are in special tax situations (such
as insurance companies, tax-exempt organizations, financial institutions,
qualified plans, individual retirement accounts, United States expatriates or
non-U.S. persons). Furthermore, the discussion does not address the tax
treatment of holders who perfect appraisal rights in the Merger, nor does it
address any aspect of foreign, state or local taxation or estate and gift
taxation.
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Because individual circumstances may differ, each holder of Shares should
consult such holder's own tax advisor to determine the applicability of the
rules discussed below to such stockholder and the particular tax effects of
the Offer and the Merger, including the application and effect of state, local
and other income tax laws.
The receipt of cash for Shares pursuant to the Offer or the Merger will be a
taxable transaction for federal income tax purposes under the Code (and also
may be a taxable transaction under applicable state, local, foreign and other
income tax laws). In general, for federal income tax purposes, a holder of
Shares will recognize gain or loss in an amount equal to the difference
between its adjusted tax basis in the Shares sold pursuant to the Offer or
converted into the right to receive cash in the Merger and the amount of cash
received therefor. Gain or loss must be determined separately for each block
of Shares (i.e., Shares acquired at the same cost in a single transaction)
sold pursuant to the Offer or converted to cash in the Merger. Such gain or
loss will be capital gain or loss and will be long-term gain or loss if, on
the date of sale (or, if applicable, the Effective Time), the Shares were held
for more than one year.
Under the United States federal income tax backup withholding rules,
payments in connection with the Offer or the Merger may be subject to "backup
withholding" at a rate of 31%. To avoid backup withholding, each tendering
stockholder, unless an exemption applies, must provide the Depositary with
such stockholder's correct taxpayer identification number and certify that
such stockholder is not subject to such backup withholding by completing the
Substitute Form W-9 included in the Letter of Transmittal. Backup withholding
is not an additional tax. Rather, the tax liability of persons subject to
backup withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund may be obtained from
the Internal Revenue Service. Refunds are not available from Carey
International. Certain persons generally are entitled to exemption from backup
withholding, including corporations, financial institutions and certain
foreign individuals. Each stockholder should consult with such holder's own
tax advisor as to such holder's qualification for exemption from backup
withholding and the procedure for obtaining such exemption.
All stockholders surrendering Shares pursuant to the Offer should complete
and sign the main signature form and the Substitute Form W-9 included as part
of the Letter of Transmittal to provide the information and certification
necessary to avoid backup withholding (unless an applicable exemption exists
and is proved in a manner satisfactory to Acquisition Company and the
Depositary). Noncorporate foreign stockholders should complete and sign the
main signature form and a Form W-8, Certificate of Foreign Status, a copy of
which may be obtained from the Depositary, in order to avoid backup
withholding. See Instruction 12 to the Letter of Transmittal.
11. Fees and Expenses.
Except as otherwise provided herein, all fees and expenses incurred in
connection with the Transaction, the Merger Agreement and the other
transactions contemplated thereby will be paid by the party incurring such
fees and expenses, except that each of Carey International and Parent will pay
one-half of (i) any fee payable pursuant to the HSR Act, and (ii) all costs
and expenses relating to the filing, printing and mailing of this Offer to
Purchase, the Schedule TO and any proxy statement or information statement
required to be filed with the Commission to consummate the Merger.
Carey International has engaged BGC as financial advisor in connection with
the Transaction, and will pay to BGC approximately $2.4 million upon
consummation of the Transaction plus reasonable out-of-pocket expenses and
fees (including attorneys' fees) incurred by BGC for services rendered by it
in connection with the consummation of the Transaction. Carey International
has agreed to indemnify BGC against certain liabilities in connection with the
Transaction, including certain liabilities under the federal securities laws.
The fees and expenses of BGC are also described in "SPECIAL FACTORS -- Opinion
of the Board's Financial Advisors."
The Special Committee also has engaged FBR as financial advisor in
connection with the Transaction. In exchange for FBR's services, Carey
International agreed to pay to FBR $400,000 plus reasonable out-of-pocket
expenses and fees (including attorneys' fees) incurred by FBR for services
rendered by it in connection with the
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Transaction and its delivery of the FBR Opinion, and Carey International
agreed to indemnify FBR in connection with the services that it provided.
Acquisition Company and Chartwell will enter into a letter agreement (the
"Chartwell Fee Agreement") pursuant to which Acquisition Company is, and
immediately following the effectiveness of the Merger, Carey International
will be, obligated to pay Chartwell an advisory fee equal to 1% of the total
capitalization of Acquisition Company and Carey International (including the
funded debt under the Senior Credit Facility, the Senior Sub Notes and the
Capital Contribution), plus reimbursement for fees and expenses (including
attorneys' fees) incurred with respect to the Transaction, in cash upon
consummation of the Transaction.
The Offerors have retained D.F. King & Co., Inc. to act as the Information
Agent in connection with the Offer. The Information Agent may contact holders
of Shares by mail, telephone, facsimile, telegraph and personal interview and
may request brokers, dealers and other nominee stockholders to forward Offer
materials to beneficial owners. The Information Agent will receive reasonable
and customary compensation for services relating to the Offer and will be
reimbursed for certain reasonable out-of-pocket expenses. Carey International
also has agreed to indemnify the Information Agent against certain liabilities
and expenses in connection with the Offer, including certain liabilities under
the federal securities laws.
United States Trust Company of New York has been retained by the Offerors to
act as the Depositary in connection with the Offer. The Depositary has not
been retained to make solicitations or recommendations in its role as
Depositary. The Depositary will receive reasonable and customary compensation
for services relating to the Offer and will be reimbursed for certain
reasonable out-of-pocket expenses. Carey International has also agreed to
indemnify the Depositary against certain liabilities and expenses in
connection with the Offer, including certain liabilities under the federal
securities laws.
The following table presents the estimated fees and expenses to be incurred
by the Offerors in connection with the Offer and the Merger:
<TABLE>
<S> <C>
Financing Fees.................................................. $ 4,800,000
Financial Advisors Fees and Expenses............................ 5,300,000
Legal Fees and Expenses......................................... 2,575,000
Accounting and Other Professional Fees and Expenses............. 800,000
Printing and Mailing............................................ 150,000
Filing Fees..................................................... 43,000
Depositary Fees................................................. 15,000
Information Agent Fees.......................................... 15,000
Miscellaneous................................................... 1,300,000
-----------
Total......................................................... $14,998,000
===========
</TABLE>
Except as set forth above, the Offerors will not pay any fees or commissions
to any broker or dealer or any other person for soliciting tenders of Shares
pursuant to the Offer. Brokers, dealers, commercial banks and trust companies
will, upon request only, be reimbursed by the Offerors for customary mailing
and handling expenses incurred by them in forwarding material to their
customers. Assuming consummation of the Offer and the Merger, Carey
International is responsible for all of the foregoing fees and expenses.
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THE TENDER OFFER
1. Terms of the Offer.
Upon the terms and subject to the Offer Conditions (including, if the Offer
is extended or amended, the terms and conditions of any extension or
amendment), either Acquisition Company, or Acquisition Company and Carey
International will accept for payment and pay for any and all Shares validly
tendered prior to the Expiration Date and not withdrawn in accordance with the
procedures set forth in "THE TENDER OFFER -- Withdrawal Rights" as soon as
practicable after the Expiration Date. The term "Expiration Date" means 5:00
p.m., New York City time, on August 31, 2000 unless and until the Offerors, in
their sole discretion (but subject to the terms of the Merger Agreement),
shall have extended the period of time during which the Offer is open, in
which event the term "Expiration Date" shall mean the latest time and date at
which the Offer, as so extended by the Offerors, shall expire.
The Offer is subject to the Offer Conditions, which include, among other
things, the Minimum Condition and the Receipt of Funds Condition. Such
conditions are set forth in "THE TENDER OFFER -- Conditions to the Offer." If
the Offer Conditions are not satisfied or waived or any of the events
specified in "THE TENDER OFFER -- Conditions to the Offer" have occurred or
are determined by the Offerors to have occurred prior to the Expiration Date,
the Offerors may either, subject to the terms of the Merger Agreement, extend
the Offer or terminate the Offer. If the Offerors terminate the Offer, they
shall not accept for payment any Shares and return all tendered Shares to
tendering stockholders.
Carey International and Acquisition Company have agreed that, without the
prior written consent of Parent, no change may be made to the Offer by Carey
International or the Acquisition Company that (i) decreases the number of
Shares subject to the Offer, (ii) increases or decreases the Offer Price or
changes the form of consideration payable pursuant to the Offer, (iii) amends
or waives the Offer Conditions in any manner, (iv) imposes any additional
conditions or amends any other term of the Offer or (v) extends the expiration
date of the Offer beyond the Expiration Date.
The Offerors, in their sole discretion, but subject to the terms of the
Merger Agreement, may extend, delay, terminate or amend the Offer, in any
manner at any time prior to the Expiration Date. Any such extension, delay,
termination or amendment will be followed, as promptly as practicable, by
public announcement thereof, with such announcement in the case of an
extension to be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date in accordance with
the public announcement requirements of Rule 14e-l of the Exchange Act.
Subject to applicable law (including Rules 14d-4(c), 14d-6(d) and 14e-1 under
the Exchange Act, which require that material changes be promptly disseminated
to stockholders in a manner reasonably designed to inform them of such
changes) and without limiting the manner in which Carey International may
choose to make any public announcement, Carey International will have no
obligation to publish, advertise or otherwise communicate any such public
announcement other than by issuing a press release to the Dow Jones News
Service or as otherwise may be required by applicable law.
If the Offerors make a material change in the terms of the Offer or the
information concerning the Offer, or if they waive a material Offer Condition,
the Offerors will extend the Offer to the extent required by Rules 14d-4(c),
14d-6(d) and 14e-1 under the Exchange Act. Pursuant to these rules, the
minimum period during which an offer must remain open following material
changes in the terms of the offer or information concerning the offer, other
than a change in price or a change in the percentage of securities sought,
will depend upon the facts and circumstances then existing, including the
relative materiality of the changed terms or information. With respect to a
change in price or a change in the percentage of securities sought, a minimum
period of ten business days is generally required to allow for adequate
dissemination to stockholders and investor response.
During any extensions of the Offer by the Offerors, all Shares previously
tendered and not withdrawn will remain subject to the Offer. Tendering
stockholders will continue to have the right to withdraw any tendered Shares
during such extension. See "THE TENDER OFFER -- Withdrawal Rights." Under no
circumstances will interest be paid on the purchase price for tendered Shares,
whether or not the Offer is extended.
55
<PAGE>
This Offer to Purchase, the Letter of Transmittal and other relevant
materials will be mailed to record holders of Shares whose names appear on
Carey International's list of stockholders and will be furnished, for
subsequent transmittal to beneficial owners of Shares, to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the
names of whose nominees, appear on Carey International's list of stockholders
or, where applicable, who are listed as participants in the security position
listing of The Depository Trust Company.
2. Acceptance for Payment and Payment for Shares.
Upon the terms and subject to the Offer Conditions (including, if the Offer
is extended or amended, the terms and conditions of the Offer as so extended
or amended), the Offerors will purchase, by accepting for payment, and will
pay for, all Shares validly tendered prior to the Expiration Date (and not
properly withdrawn in accordance with "THE TENDER OFFER -- Withdrawal Rights")
as soon as practicable after the Expiration Date, with Acquisition Company
agreeing to accept for payment and pay for all Shares validly tendered,
provided that the Shares validly tendered (and not withdrawn) pursuant to the
Offer plus the Shares acquired by Acquisition Company pursuant to the Carey
Purchase Agreements meet the Short Form Requirement. If the foregoing
requirement is not met, but all Offer Conditions are met, Acquisition Company
has agreed to accept for payment and pay for up to 5,232,876 Shares validly
tendered and Carey International has agreed to accept for payment and pay for
all Shares validly tendered in excess of those Shares purchased by Acquisition
Company, in each case as promptly as practicable after the Expiration Date.
Subject to applicable rules of the Commission and the terms of the Merger
Agreement, the Offerors expressly reserve the right, in their discretion, to
delay acceptance for payment of, or payment for, Shares in order to comply, in
whole or in part, with any applicable law. See "THE TENDER OFFER -- Terms of
the Offer," and "THE TENDER OFFER -- Certain Legal Matters; Regulatory
Approvals."
The reservation by the Offerors of the right to delay the acceptance or
purchase of, or payment for, the Shares is subject to the provisions of Rule
14e-1(c) under the Exchange Act, which requires the Offerors to pay the
consideration offered or to return the Shares deposited by, or on behalf of,
stockholders, promptly after the termination or withdrawal of the Offer.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after such Shares are validly tendered and not properly withdrawn
prior to the Expiration Date. See "THE TENDER OFFER -- Procedures for
Tendering Shares" for a complete discussion of how Shares can be validly
tendered.
For purposes of the Offer, the Offerors will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn if, as and when the applicable Offeror gives oral or written notice
to the Depositary of its acceptance for payment of such Shares. Upon the terms
and subject to the conditions of the Offer, payment for Shares accepted
pursuant to the Offer will be made by deposit of the purchase price therefor
with the Depositary, which will act as agent for tendering stockholders for
the purpose of receiving payments from the Offerors and transmitting payments
to such tendering stockholders whose Shares have been accepted for payment.
Under no circumstances will interest on the Offer Price for Shares be paid
by the Offerors, regardless of any delay in making such payment or extension
of the Expiration Date.
If any validly tendered Shares are not accepted for payment for any reason
pursuant to the terms and conditions of the Offer, or if the certificates for
tendered Shares are submitted evidencing more Shares than are tendered,
certificates evidencing Shares not purchased will be returned, without
expense, to the tendering stockholder, or such other person or entity as the
tendering stockholder shall specify in the Letter of Transmittal, as promptly
as practicable following the expiration, withdrawal or termination of the
Offer. In the case of Shares tendered by book-entry transfer into the
Depositary's account at The Depositary Trust Company (the "Book-Entry Transfer
Facility") pursuant to the procedures set forth in "THE TENDER OFFER --
Procedures for Tendering Shares," such Shares will be credited to such
account at the Book-Entry Transfer Facility as promptly as practicable
following the expiration, withdrawal or termination of the Offer.
56
<PAGE>
If, prior to the Expiration Date, the Offerors increase the consideration to
be paid per Share pursuant to the Offer, the Offerors will pay such increased
consideration for all such Shares purchased pursuant to the Offer, whether or
not such Shares were tendered prior to such increase in consideration.
Subject to the terms of the Merger Agreement, Parent, Acquisition Company
and Acquisition Company Sub each reserve the right to assign to one or more of
Parent's directly or indirectly wholly-owned subsidiaries, the right to
purchase all or any portion of the Shares tendered pursuant to the Offer, but
any such assignment will not relieve Parent, Acquisition Company and
Acquisition Company Sub of their obligations under the Offer and will in no
way prejudice the rights of tendering stockholders to receive payment for
Shares validly tendered and accepted for payment pursuant to the Offer.
3. Procedures for Tendering Shares.
Valid Tender of Shares. In order for Shares to be validly tendered pursuant
to the Offer, a stockholder must, prior to the Expiration Date, either (i)
deliver to the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase (a) a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) with any required
signature guarantees or an Agent's Message (as defined below) in connection
with a book-entry transaction, (b) the certificates representing Shares to be
tendered (the "Certificates") or timely confirmation of a book-entry transfer
of Shares into the Depositary's account at the Book-Entry Transfer Facility
and (c) any other documents required to be included with the Letter of
Transmittal under the terms and subject to the conditions thereof and of this
Offer to Purchase, (ii) cause such stockholder's broker, dealer, commercial
bank or trust company to tender applicable Shares pursuant to the procedures
for book-entry transfer described below or (iii) comply with the guaranteed
delivery procedures described below.
The method of delivery of Certificates, the Letter of Transmittal and all
other required documents, including delivery through the Book-Entry Transfer
Facility, is at the option and risk of the tendering stockholder, and the
delivery will be deemed made only when actually received by the Depositary. If
delivery is by mail, registered mail with return receipt requested, properly
insured, is recommended. In all cases, sufficient time should be allowed to
ensure timely delivery.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Shares by (i) causing such
securities to be transferred in accordance with the Book-Entry Transfer
Facility's procedures into the Depositary's account and (ii) causing the
Letter of Transmittal to be delivered to the Depositary by means of an Agent's
Message. Although delivery of Shares may be effected through book-entry
transfer, either the Letter of Transmittal (or a manually signed facsimile
thereof), properly completed and duly executed, together with any required
signature guarantees, or an Agent's Message in lieu of the Letter of
Transmittal, and any other required documents, must, in any case, be
transmitted to and received by the Depositary prior to the Expiration Date at
one of its addresses set forth on the back cover of this Offer to Purchase, or
the tendering stockholder must comply with the guaranteed delivery procedures
described below. Delivery of the Letter of Transmittal and any other documents
or instructions to the Book-Entry Transfer Facility in accordance with the
Book-Entry Transfer Facility's procedures does not constitute delivery to the
Depositary.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of
the confirmation of a book-entry transfer of Shares into the Depositary's
account at the Book-Entry Transfer Facility, which states that the Book-Entry
Transfer Facility has received an express acknowledgment from a participant in
the Book-Entry Transfer Facility tendering the Shares that such participant
has received and agrees to be bound by the terms of the Letter of Transmittal
and that the Offerors may enforce such agreement against such participant.
Signature Guarantee. All signatures on a Letter of Transmittal must be
guaranteed by a member in good standing of the Securities Transfer Agents
Medallion Program, or by any other firm that is a bank, broker, dealer,
57
<PAGE>
credit union or savings association (each of the foregoing being referred to
as an "Eligible Institution" and collectively as "Eligible Institutions"),
unless the Shares tendered thereby are tendered (i) by the registered holder
of Shares (which term, for the purposes of this document, shall include any
participant in the Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of Shares) who has not completed the
box labeled "Special Delivery Instructions" or the box labeled "Special
Payment Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution. See Instruction 1 to the Letter of Transmittal.
If a Certificate is registered in the name of a person other than the signer
of the Letter of Transmittal, or if payment is to be made, or a Certificate
not accepted for payment or not tendered is to be returned to, a person other
than the registered holder(s), then the Certificate must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on the Certificate, with the
signature(s) on such certificate or stock powers guaranteed as described
above. See Instruction 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Certificates are not immediately available or
time will not permit all required documents to reach the Depositary on or
prior to the Expiration Date or the procedures for book-entry transfer cannot
be completed on a timely basis, such Shares may nevertheless be tendered if
all the following guaranteed delivery procedures are duly complied with:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Carey International, is
received by the Depositary as provided below prior to the Expiration Date;
and
(iii) the certificates for (or a Book-Entry Confirmation with respect to)
all tendered Shares in proper form for transfer, together with a properly
completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof) with any required signature guarantee (or, in the case
of a book-entry transfer, an Agent's Message) and any other documents
required by such Letter of Transmittal, are received by the Depositary
within three Trading Days after the date of execution of the Notice of
Guaranteed Delivery. A "Trading Day" is any day on which the Nasdaq
National Market is open for business.
Any Notice of Guaranteed Delivery may be delivered by hand, transmitted by
facsimile transmission or mailed to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
Tender Constitutes an Agreement. The valid tender of Shares pursuant to one
of the procedures described above will constitute a binding agreement between
the tendering stockholder and the Offerors on the terms and subject to the
conditions of the Offer.
Determination of Validity. All questions as to the validity, form,
eligibility (including, but not limited to, time of receipt) and acceptance
for payment of any tendered Shares pursuant to any of the procedures described
above will be determined by the Offerors, in their sole discretion, whose
determination will be final and binding on all parties. The Offerors reserve
the absolute right to reject any or all tenders of any Shares determined by
them not to be in proper form or if the acceptance for payment of, or payment
for, such Shares may, in the opinion of Carey International's counsel, be
unlawful. The Offerors also reserve the absolute right, in their sole
discretion, to waive any of the Offer Conditions (subject to the terms of the
Merger Agreement) or any defect or irregularity in any tender with respect to
Shares of any particular stockholder, whether or not similar defects or
irregularities are waived in the case of other stockholders. No tender of
Shares will be deemed to have been validly made until all defects and
irregularities have been cured or waived. None of the Offerors or any of their
respective affiliates, the Depositary, the Information Agent or any other
person or entity will be under any duty to give any notification of any
defects or irregularities in tenders or incur any liability for failure to
give any such notification.
58
<PAGE>
The Offerors' interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be
final and binding.
Appointment as Proxy. By executing a Letter of Transmittal (or delivering an
Agent's Message) as set forth above, a tendering stockholder irrevocably
appoints the Offerors' designees as such stockholder's attorney-in-fact and
proxy, with full power of substitution, to vote in such manner as such
attorney-in-fact and proxy (or any substitute thereof) shall deem proper in
its sole discretion, and to otherwise act (including pursuant to written
consent) to the full extent of such stockholder's rights with respect to the
Shares tendered by such stockholder and accepted for payment by the Offerors
(and any and all dividends, distributions, rights or other securities issued
in respect of such Shares on or after July19, 2000). All such proxies shall be
considered coupled with an interest in the tendered Shares and shall be
irrevocable. This appointment will be effective if, when, and only to the
extent that, the Offerors accept such Shares for payment pursuant to the
Offer. Upon such acceptance for payment, all prior proxies given by such
stockholder with respect to such Shares and other securities will, without
further action, be revoked, and no subsequent proxies may be given (and, if
given, will not be deemed effective). The designees of the Offerors will, with
respect to the Shares and other securities for which the appointment is
effective, be empowered to exercise all voting and other rights of such
stockholder as they in their sole discretion may deem proper at any annual,
special, adjourned or postponed meeting of Carey International's stockholders,
by written consent in lieu of any such meeting or otherwise. The Offerors
reserve the right to require that, in order for Shares to be deemed validly
tendered, immediately upon the Offeror's acceptance for payment of such
Shares, such Offeror must be able to exercise all rights (including, without
limitation, all voting rights) with respect to such Shares and receive all
dividends and distributions.
Backup Withholding. Under United States federal income tax law, the amount
of any payments made by the Depositary to stockholders (other than corporate
and certain other exempt stockholders) pursuant to the Offer may be subject to
backup withholding tax at a rate of 31%. To avoid such backup withholding tax
with respect to payments made pursuant to the Offer, a non-exempt, tendering
stockholder must provide the Depositary with such stockholder's correct
taxpayer identification number and certify under penalties of perjury that
such stockholder is not subject to backup withholding tax by completing the
Substitute Form W-9 included as part of the Letter of Transmittal. If backup
withholding applies with respect to a stockholder or if a stockholder fails to
deliver a completed Substitute Form W-9 to the Depositary or otherwise
establish an exemption, the Depositary is required to withhold 31% of any
payments made to such stockholder. See "SPECIAL FACTORS -- Certain United
States Federal Income Tax Consequences" and the information set forth under
the heading "Important Tax Information" contained in the Letter of
Transmittal.
4. Withdrawal Rights.
Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn at any time prior to the Expiration Date and,
unless theretofore accepted for payment by the Offerors pursuant to the Offer,
may also be withdrawn at any time after October 1, 2000, or at such later time
as may apply if the Offer is extended.
If the Offerors extend the Offer, are delayed in their acceptance for
payment of Shares or are unable to accept Shares for payment pursuant to the
Offer for any reason, then, without prejudice to the Offerors' rights under
the Offer, the Depositary may, nevertheless, on behalf of the Offerors, retain
tendered Shares, and such Shares may not be withdrawn except to the extent
that tendering stockholders are entitled to withdrawal rights as described
below. Any such delay will be an extension of the Offer to the extent required
by law.
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Depositary at its address set
forth on the back cover of this Offer to Purchase. Any such notice of
withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn, and the name of the
registered holder of such Shares, if different from that of the person who
tendered such Shares. If Certificates evidencing Shares to be withdrawn have
been delivered or otherwise identified to the Depositary, then, prior to the
physical release of such Certificates, the serial numbers shown on
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<PAGE>
such Certificates must be submitted to the Depositary and the signature(s) on
the notice of withdrawal must be guaranteed by an Eligible Institution, unless
such Shares have been tendered for the account of an Eligible Institution.
Shares tendered pursuant to the procedure for book-entry transfer as set forth
in "THE TENDER OFFER -- Procedures for Tendering Shares" may be withdrawn only
by means of the withdrawal procedures made available by the Book-Entry
Transfer Facility, must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares and must
otherwise comply with the Book-Entry Transfer Facility's procedures.
Withdrawals of tendered Shares may not be rescinded without the Offerors'
consent and any Shares properly withdrawn will thereafter be deemed not
validly tendered for purposes of the Offer. All questions as to the form and
validity (including time of receipt) of notices of withdrawal will be
determined by the Offerors in their sole discretion, which determination will
be final and binding. None of the Offerors or any of their affiliates, the
Depositary, the Information Agent or any other person will be under any duty
to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification.
Any Shares properly withdrawn may be re-tendered at any time prior to the
Expiration Date by following any of the procedures described in "THE TENDER
OFFER -- Procedures for Tendering Shares."
5. Price Range of Shares.
The market for the Shares is the Nasdaq National Market. The ticker symbol
for the Shares is "CARY." The following table sets forth, for the periods
indicated, the high and low sales prices per share of Common Stock on the
Nasdaq National Market:
<TABLE>
<CAPTION>
High Low
------- ------
<S> <C> <C>
1998:
First Quarter................................................ $19.000 13.750
Second Quarter............................................... 26.500 18.125
Third Quarter................................................ 29.875 15.500
Fourth Quarter............................................... 18.250 12.250
1999:
First Quarter................................................ 22.125 13.813
Second Quarter............................................... 20.000 13.250
Third Quarter................................................ 25.250 17.750
Fourth Quarter............................................... 25.375 19.625
2000:
First Quarter................................................ 27.000 15.313
Second Quarter............................................... 19.375 6.500
Third Quarter (through August 1, 2000)....................... 18.00 13.75
</TABLE>
On June 27, 2000, the last full trading day before Carey International
announced it was in negotiations regarding a possible acquisition of Carey
International, the reported closing sale price for one Share of Common Stock
was $11.5625. On July 18, 2000, the last full trading day prior to the public
announcement of the Offer and the execution of the Merger Agreement, the
reported closing sales price of the Common Stock on the Nasdaq National Market
was $14.50 per Share. On August 1, 2000, the penultimate trading day prior to
the date of this Offer to Purchase, the last reported sales price of the
Common Stock on the Nasdaq National Market was $17.9531 per Share.
Stockholders are urged to obtain current market quotations for the Common
Stock.
6. Dividends and Distributions.
Carey International has not paid any dividends with respect to the Shares at
any time during the past two years. Pursuant to the Merger Agreement, without
Parent's written consent, Carey International will not, and will cause each of
its subsidiaries not to, (i) issue, reissue, sell or authorize the issuance,
reissuance or sale of any
60
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Company Securities other than the issuance of Shares pursuant to the exercise
of Company Options outstanding, on the date of the Merger Agreement; (ii)
effect any stock split or combine, subdivide, reclassify or, directly or
indirectly, redeem, purchase or otherwise acquire, recapitalize or reclassify
or propose to redeem or purchase or otherwise acquire, any shares of its
capital stock or any of its other shares or liquidate in whole or in part; or
(iii) declare, set aside or pay any dividend or make any other distribution
with respect to any shares of its capital stock (other than dividends between
Carey International and any wholly-owned subsidiaries).
7. Certain Information Concerning Carey International.
The information concerning Carey International contained in this Offer to
Purchase, including financial information, has been furnished by Carey
International or has been taken from or is based upon publicly available
documents and records on file with the Commission and other public sources.
None of Holdings, Parent, Acquisition Company or the Information Agent or any
of their affiliates assumes any responsibility for the accuracy or
completeness of the information concerning Carey International contained in
such documents and records or for any failure by Carey International to
disclose events which may have occurred or may affect the significance or
accuracy of any such information but which are unknown to them.
Carey International is a Delaware corporation. The address of Carey
International's principal executive offices is 4530 Wisconsin Avenue, N.W.,
Fifth Floor, Washington, D.C. 20016. The telephone number of Carey
International at such offices is (202) 895-1200. Carey International is one of
the world's largest chauffeured vehicle service companies, providing services
through a worldwide network of owned and operated companies, licensees and
affiliates serving 480 cities in 75 countries. The "Carey" brand name has
represented quality chauffeured vehicle services since the 1920's. Carey
International owns and operates its service providers in Boston, Chicago,
Detroit, Hartford, Indianapolis, Jacksonville, London, Los Angeles, Miami, New
York, Paris, Philadelphia, San Francisco, Stamford, Washington, D.C. and West
Palm Beach. In addition, Carey International generates revenues from licensing
the "Carey" name and providing central reservation, billing and sales and
marketing services to its licensees. Carey International's worldwide network
also includes affiliates in locations in which Carey International has neither
owned and operated companies nor licensees.
Historical Financial Information. Certain financial information relating to
Carey International is hereby incorporated by reference to (i) the audited
financial statements for Carey International's 1999 and 1998 fiscal years set
forth in Part II of Carey International's Annual Report on Form 10-K for the
fiscal year ended November 30, 1999 filed with the Commission on February 28,
2000 (the "1999 10-K"); and (ii) the three month and six month fiscal periods
ended May 31, 2000 set forth in Part I of Carey International's Quarterly
Report on Form 10-Q for the quarter ended May 31, 2000 filed with the
Commission on July 17, 2000. These reports may be inspected at, and copies may
be obtained from, the same places and in the manner set forth below.
Set forth below is certain selected consolidated financial information
relating to Carey International and its subsidiaries, which has been derived
from the financial statements contained in the 1999 10-K. More comprehensive
financial information is included in these reports and other documents filed
by Carey International with the Commission. The financial information that
follows is qualified in its entirety by reference to these reports and other
documents, including the financial statements and related notes contained
therein.
61
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Fiscal Year Fiscal Year
Ended Ended
November 30, November 30,
1998 1999
------------ ------------
<S> <C> <C>
OPERATING DATA:
Net revenue......................................... $123,218 $191,058
Operating income.................................... 13,565 20,952
Net income.......................................... 8,351 11,767
Basic net income per share.......................... 0.97 1.23
Diluted net income per share........................ 0.92 1.17
BALANCE SHEET DATA:
(At End of Period)
Total assets........................................ 129,212 178,137
Total liabilities................................... 39,073 73,485
Stockholders' equity................................ 90,139 104,652
Book value per share................................ 10.44 10.91
Ratio of earnings to fixed charges.................. 17.11 12.39
</TABLE>
Financial Projections. Carey International does not, as a matter of course,
make public forecasts or projections as to financial performance.
Nevertheless, certain projections were prepared by Carey International's
management in connection with Chartwell's due diligence review of Carey
International (the "Management Projections"). In addition, Carey International
assisted Chartwell in preparing financing projections for possible lenders so
as to enable Chartwell to obtain the Financing (the "Financing Projections"
and, together with the Management Projections, the "Projections"). The
Projections also were made available to the Board, the Special Committee, BGC
and FBR.
The Projections below do not reflect any of the effects of the Offer, the
Merger or other changes that may in the future be deemed appropriate
concerning Carey International and its assets, business, operations,
properties, policies, corporate structure, capitalization and management in
light of the circumstances then existing. Carey International believes that
the assumptions upon which the Projections are based were reasonable at the
time the Projections were prepared, given the information known by management
of Carey International.
The Projections below were not prepared with a view to public disclosure or
in compliance with published guidelines of the Commission regarding
projections or the guidelines established by the American Institute of
Certified Public Accountants regarding projections.
The Projections, while presented with numerical specificity, are based on
myriad estimates and assumptions and involve judgments with respect to, among
other things, future economic and competitive conditions, inflation rates and
future business conditions. These estimates and assumptions may not be
realized and are inherently subject to significant business, economic and
competitive uncertainties, many of which are beyond the control of Carey
International. Additionally, this information, except as otherwise indicated,
does not reflect revised prospects for Carey International's business, changes
in general business and economic conditions, or any other transaction or event
that has occurred or that may occur and that was not anticipated at the time
such information was prepared. Therefore, there can be no assurance that the
projections below will prove to be reliable estimates of probable future
performance. It is quite likely that actual results will vary materially from
these estimates. In light of the uncertainties inherent in projections of any
kind, the inclusion of projections in this Offer should not be regarded as a
representation by any party that the estimated results will be realized. There
can be no assurances in this regard. The projections were not prepared in
accordance with generally accepted accounting principles and were not audited
or reviewed by any independent accounting firm, nor did any independent
accounting firm perform any other services with respect to these projections.
62
<PAGE>
Management Projections
<TABLE>
<CAPTION>
Fiscal Year Ended November 30,
----------------------------------
2000 2001 2002 2003 2004
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Revenue...................................... $261.6 $307.5 $373.3 $444.4 $521.1
Gross profit................................. 92.6 108.9 132.2 157.3 184.5
EBITDA....................................... 38.3 45.1 54.7 65.1 76.4
EBIT......................................... 28.9 32.9 41.1 50.1 60.7
Net income................................... 14.9 16.2 20.6 26.0 32.6
</TABLE>
Financing Projections
<TABLE>
<CAPTION>
Fiscal Year Ended November 30,
---------------------------------------------------------------------
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue................. $240.5 $301.9 $366.2 $433.0 $496.6 $563.5 $632.1 $694.5 $758.9 $825.5
Gross profit............ 78.2 101.2 122.4 145.4 167.6 190.3 213.5 234.3 255.8 277.7
EBITDA.................. 35.3 45.7 56.7 68.6 81.5 95.3 109.4 121.0 132.7 144.5
EBIT.................... 25.0 31.9 40.9 52.4 64.3 76.7 89.3 100.4 112.7 123.9
Net income.............. NA 2.4 7.6 14.4 21.9 30.3 38.7 49.2 61.4 68.8
</TABLE>
Prior Public Offering. On May 7, 1998 Carey International made an
underwritten public offering of 1,450,000 Shares (including underwriters'
option shares) at a price to the public of $22.00 per Share and received
aggregate proceeds from the offering, net of underwriting discount, of
$30,145,500.
Certain Other Information. Except as set forth in this Offer to Purchase,
neither Carey International, any of its affiliates nor, to the best knowledge
of Carey International, any of the persons listed on Schedule I, or any
associate or majority owned subsidiary of any of the foregoing, beneficially
owns or has a right to acquire any Shares, and neither Carey International,
nor, to the best of knowledge of Carey International, any of the persons or
entities referred to above, or any of the respective executive officers,
directors or subsidiaries of any of the foregoing, has effected any
transaction in the Shares during the past 60 days.
Except as set forth in this Offer to Purchase, neither Carey International,
any of its affiliates nor, to the best knowledge of Carey International, any
of the persons listed on Schedule I, has any contracts, arrangements,
understandings or relationships with any other person or entity with respect
to any securities of Carey International, including, but not limited to, any
contract, arrangement understanding or relationship concerning the transfer or
the voting of any securities of Carey International, joint ventures, loan or
option arrangements, puts or calls, guarantees of loans, guarantees against
loss or the giving or withholding of proxies.
Except as set forth in this Offer to Purchase, neither Carey International,
any of its affiliates, nor, to the best knowledge of Carey International, any
of the persons listed on Schedule I, has had, since the second fiscal year
preceding the date of this Offer to Purchase, any business relationships or
transactions with Carey International or any of its executive officers,
directors or affiliates that would be required to be reported under the rules
of the Commission. Except as set forth in this Offer to Purchase, since the
second fiscal year preceding the date of this Offer to Purchase there have
been no contracts, negotiations or transactions between Carey International,
any of its affiliates or, to the best knowledge of Carey International, any of
the persons listed on Schedule I, and Carey International or its affiliates
concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, election of directors or a sale or other transfer
of a material amount of assets.
During the last five years, neither Carey International, any of its
affiliates nor, to the best knowledge of Carey International, any of the
persons listed on Schedule I hereto, have been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or was a
party to a civil proceeding of a judicial or
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administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting activities subject to, federal or state
securities laws or finding any violation of such laws.
Certain information concerning the directors, executive officers and certain
stockholders of Carey International is set forth in Schedule I hereto.
Available Information. Carey International is subject to the informational
filing requirements of the Exchange Act and is required to file reports, proxy
statements and other information with the Commission relating to its business,
financial condition and other matters. Information as of particular dates
concerning Carey International's directors and officers, their remuneration,
options granted to them, the principal holders of Carey International's
securities and any material interests of such persons in transactions with
Carey International is required to be disclosed in certain reports filed with
the Commission and proxy statements distributed to Carey International's
stockholders and filed with the Commission. These reports, proxy statements
and other information should be available for inspection at the public
reference facilities of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the regional offices of the Commission located at Seven
World Trade Center, Suite 1300, New York, NY 10048 and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, IL 60661. Copies of this material
may also be obtained by mail, upon payment of the Commission's customary fees,
from the Commission's principal office at 450 Fifth Street, N.W., Washington,
D.C. 20549. The Commission also maintains a website on the internet at
http://www.sec.gov that contains reports, proxy statements and other
information relating to Carey International which have been filed via the
Commission's EDGAR System.
8. Certain Information Concerning Chartwell, Holdings, Parent and Acquisition
Company.
Acquisition Company is a Delaware corporation and each of Parent, VIP
Holdings, LLC, VIP Holdings II, LLC and VIP Holdings III, LLC is a Delaware
limited liability company. Each such entity was organized in connection with
the Offer and Merger and has not carried on any significant activities other
than in connection with the Offer and Merger. Until immediately prior to the
time Acquisition Company purchases Shares pursuant to the Offer, it is not
anticipated that any of Acquisition Company, Parent or Holdings will have any
significant assets or liabilities or engage in any significant activities
other those incident to its formation and capitalization and the transactions
contemplated by the Offer and the Merger. Chartwell is a Delaware limited
liability company that is an advisor to, and manager of, private equity funds
which invest in growth financings and buyouts of middle market companies.
The principal offices of Chartwell, Acquisition Company, Parent and Holdings
are located at 717 Fifth Avenue, 23rd Floor, New York, New York 10022. The
telephone number of Chartwell, Acquisition Company, Parent and Holdings at
such location is (212) 521-5500.
Except as set forth in this Offer to Purchase, neither Chartwell,
Acquisition Company, Parent, Holdings nor, to the best knowledge of Chartwell,
Acquisition Company, Parent and Holdings, any of the persons listed on
Schedule II, or any associate or majority owned subsidiary of any of the
foregoing, beneficially owns or has a right to acquire any Shares, and neither
Chartwell, Acquisition Company, Parent, Holdings nor, to the best of knowledge
of Chartwell, Acquisition Company, Parent and Holdings any of the persons or
entities referred to above, or any of the respective executive officers,
directors or subsidiaries of any of the foregoing, has effected any
transaction in the Shares during the past 60 days.
Except as set forth in this Offer to Purchase, neither Chartwell,
Acquisition Company, Parent nor Holdings has any contracts, arrangements,
understandings or relationships with any other person or entity with respect
to any securities of Carey International, including, but not limited to, any
contract, arrangement understanding or relationship concerning the transfer or
the voting of any securities of Carey International, joint ventures, loan or
option arrangements, puts or calls, guarantees of loans, guarantees against
loss or the giving or withholding of proxies.
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Except as set forth in this Offer to Purchase, neither Chartwell,
Acquisition Company, Parent, Holdings, any of their affiliates, nor, to the
best knowledge of Chartwell, Acquisition Company, Parent and Holdings, any of
the persons listed on Schedule II, has had, since the second fiscal year
preceding the date of this Offer to Purchase, any business relationships or
transactions with Carey International or any of its executive officers,
directors or affiliates that would be required to be reported under the rules
of the Commission. Except as set forth in this Offer to Purchase, since the
second fiscal year preceding the date of this Offer to Purchase there have
been no contracts, negotiations or transactions between Chartwell, Acquisition
Company, Parent and Holdings, any of their affiliates or, to the best
knowledge of Chartwell, Acquisition Company, Parent and Holdings, any of the
persons listed on Schedule II, and Carey International or its affiliates
concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, election of directors or a sale or other transfer
of a material amount of assets.
During the last five years, neither Chartwell, Acquisition Company, Parent,
Holdings nor, to the best knowledge of Chartwell, Acquisition Company, Parent
and Holdings, any of the persons listed on Schedule II hereto, have been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting activities subject to, federal or state
securities laws or finding any violation of such laws.
Certain information concerning the directors and executive officers of
Chartwell, Holdings, Parent and Acquisition Company is set forth in Schedule
II hereto.
Available Information. Each of Chartwell, Acquisition Company, Parent and
Holdings is a privately-held company and is generally not the subject of the
information filing requirements of the Exchange Act, and is generally not
required to file reports, proxy statements and other information with the
Commission relating to its businesses, financial condition and other matters.
However, pursuant to Rule 14d-3 under the Exchange Act, Chartwell, Acquisition
Company, Parent and Holdings filed with the Commission a Schedule TO, together
with exhibits, including this Offer to Purchase and the Merger Agreement,
which provides certain additional information with respect to the Offer and
regarding Chartwell, Acquisition Company, Parent and Holdings. The Schedule TO
and any amendments thereto, including exhibits, should be available for
inspection and copies should be obtainable at the public reference facilities
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of
such information should also be obtainable (i) by mail, upon payment of the
Commission's customary charges, by writing to the Commission's principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional
offices of the Commission located at Seven World Trade Center, Suite 1300, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and (ii) by accessing the Commission's website on the
Internet at http://www.sec.gov.
9. Certain Information Concerning Ford.
Ford is a Delaware corporation that designs and manufactures cars, trucks
and automotive components, and sells them throughout the world.
The principal offices of Ford are located at One American Road, Dearborn,
Michigan 48126. The telephone number of Ford at such location is (313) 322-
3000.
Except as set forth in this Offer to Purchase, neither Ford nor, to the best
knowledge of Ford, any of the persons listed on Schedule III, or any associate
or majority owned subsidiary of any of the foregoing, beneficially owns or has
a right to acquire any Shares, and neither Ford nor, to the best of knowledge
of Ford, any of the persons or entities referred to above, or any of the
respective executive officers, directors or subsidiaries of any of the
foregoing, has effected any transaction in the Shares during the past 60 days.
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John L. Thorton, a member of the Board of Directors of Ford, is the
President and Co-Chief Operating Officer of The Goldman Sachs Group, Inc.
("Goldman Sachs"). During the period May 1, 2000 through July 26, 2000,
Goldman Sachs' records indicate that in the ordinary course of business, as
broker/dealer on behalf of its clients, or for purposes of its own principal
activities, it has bought and sold Shares. During this period, as
broker/dealer on behalf of its clients, it bought approximately 63,418 Shares
at prices ranging from $8.33 per Share to $14.626 per Share, and sold
approximately 26,600 Shares at prices ranging from $7.312 per Share to $18.00
per Share. During this period, for purposes of its own principal activities
(for example, marketmaking or hedging) it has bought approximately 3,027
Shares at prices ranging from $9.06 per Share to $14.76 per Share, and sold
approximately 3,027 Shares at prices ranging from $9.03 per Share to $14.56
per Share.
Except as set forth in this Offer to Purchase, Ford has not had any
contracts, arrangements, understandings or relationships with any other person
or entity with respect to any securities of Carey International, including,
but not limited to, any contract, arrangement understanding or relationship
concerning the transfer or the voting of any securities of Carey
International, joint ventures, loan or option arrangements, puts or calls,
guarantees of loans, guarantees against loss or the giving or withholding of
proxies.
Ford and Carey International have had a multi-faceted business relationship
for many years involving joint marketing efforts, vehicle purchases, vehicle
financing and leasing, and vehicle customization.
Ford and Carey International are parties to a joint marketing and
advertising agreement pursuant to which Ford reimburses Carey International
for joint marketing and advertising expenses ranging annually between
approximately $550,000 and $1.3 million and Carey International places Lincoln
products in its advertisements. Ford also provides to Carey International two
demonstrator vehicles per year to promote Ford products. Carey International's
approximate annual benefit from each vehicle is approximately $15,000. In
addition, Ford hosts a dinner during Carey International's annual meeting for
its licensees at an annual cost of approximately $20,000.
Carey International purchased through the Ford dealer network approximately
400 vehicles in the 1999 model year and approximately 340 vehicles to date in
the 2000 model year at an average price per vehicle of approximately $39,000.
Carey International's independent operators, licensees and affiliates, which
own and operate a majority of the vehicles in the Carey International network,
also purchase vehicles through the Ford dealer network. Many of these vehicle
purchases are made under Ford incentive programs that are made available to
Carey International and other chauffeured vehicle service providers. Many of
the vehicles purchased by Carey International and its licensees, affiliates
and independent operators are a special edition of the Lincoln Town Car that
Ford developed for Carey International as a part of Ford's Mass Customization
Program.
CLI Fleet, Inc. ("CLI Fleet") is a privately-held finance company formed for
the purpose of providing financing to the chauffeured vehicle service
industry. Many of Carey International's independent operators obtain vehicle
leasing from CLI Fleet. Ford Credit provides financing to CLI Fleet through a
$30 million wholesale lease line of credit. CLI Fleet currently has
approximately $17 million in outstanding loans to Ford Motor Credit Company, a
wholly-owned subsidiary of Ford, under this program. Ford Credit also has
approximately $4.1 million in mortgage loans outstanding to CLI Fleet to cover
three parcels of real property owned by CLI Fleet, which CLI Fleet leases to
Carey International. Carey International holds non-voting shares of CLI Fleet
preferred stock. Under the terms of an agreement with CLI Fleet, Carey
International has an exclusive option to purchase all the outstanding shares
of common stock of CLI Fleet for a purchase price equal to the greater of
$187,500 or CLI Fleet's liquidating value as determined by an independent
appraisal.
Except as set forth in this Offer to Purchase, neither Ford, any of its
affiliates, nor, to the best knowledge of Ford, any of the persons listed on
Schedule III, has had, since the second fiscal year preceding the date of this
Offer to Purchase, any business relationships or transactions with Carey
International or any of its executive officers, directors or affiliates that
would be required to be reported under the rules of the Commission. Except as
set forth in this Offer to Purchase, since the second fiscal year preceding
the date of this Offer to Purchase there have been no contracts, negotiations
or transactions between Ford, any of its affiliates or, to the best knowledge
of Ford, any of its persons listed on Schedule III, and Carey International or
its affiliates concerning
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a merger, consolidation or acquisition, tender offer or other acquisition of
securities, election of directors or a sale or other transfer of a material
amount of assets.
During the last five years, neither Ford nor, to the best knowledge of Ford,
any of the persons listed on Schedule III hereto, have been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
was a party to a civil proceeding of a judicial or administrative body
competent jurisdiction and as a result of such proceeding was or is subject to
a judgment, decree or final order enjoining future violations of, or
prohibiting activities subject to, federal or state securities laws or finding
any violation of such laws.
Certain information concerning the directors and executive officers of Ford
is set forth in Schedule III hereto.
Available Information. Ford is subject to the information and reporting
requirements of the Exchange Act and in accordance therewith is obligated to
file reports and other information with the Commission relating to its
business, financial condition and other matters. Information, as of particular
dates, concerning Ford's directors and officers, their remuneration, stock
options granted to them, the principal holders of Ford's securities, any
material interests of such persons in transactions with Ford and other matters
is required to be disclosed in proxy statements distributed to Ford's
stockholders and filed with the Commission. Such reports, proxy statements and
other information should be available for inspection at the public reference
room at the Commission's offices at 450 Fifth Street, N.W., Washington, D.C.
20549. Copies should also be obtainable (i) by mail, upon payment of the
Commission's customary charges, by writing to its principal office at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the
Commission located at Seven World Trade Center, Suite 1300, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and (ii) by accessing the Commission's website at
http://www.sec.gov.
10. Source and Amount of Funds.
The Offer is conditioned upon the Offerors receiving the Capital
Contribution and the proceeds contemplated by the Financing Commitment Letters
necessary to purchase all of the outstanding Shares pursuant to the Offer, to
pay the Merger Consideration, to refinance approximately $35.2 million of
existing indebtedness of Carey International and its subsidiaries, to purchase
the securities to be sold pursuant to the Carey Purchase Agreements and to pay
related fees and expenses. The total amount of funds necessary to accomplish
the foregoing is expected to be approximately $255.0 million. The Offerors
will obtain such funds from borrowings by Carey International under the Senior
Credit Facility, the proceeds from the issuance of the Senior Sub Notes by
Carey International and the Capital Contribution. See "SPECIAL FACTORS --
Financing of the Transaction" for a more complete discussion of how the
Offerors intend to finance the Offer and the Merger.
The margin regulations promulgated by the Board of Governors of the Federal
Reserve System place restrictions on the amount of credit that may be extended
for the purposes of purchasing margin stock, including if such credit is
secured directly or indirectly by margin stock. The Offerors believe that the
financing of the acquisition of the Shares pursuant to the Merger and the
Offer will be in full compliance with the margin regulations.
11. Effect of the Offer on the Market for the Common Stock; Exchange Act
Registration.
Market for Shares. The purchase of Shares pursuant to the Offer will reduce
the number of Shares that might otherwise trade publicly and could adversely
affect the liquidity and market value of the remaining Shares held by the
public.
Stock Quotation. The Shares are traded on the Nasdaq National Market. The
Shares might no longer be eligible for quotation on the Nasdaq National Market
if, among other things, the number of Shares publicly held were less than
750,000, their number of round lot holders of at least 100 Shares were less
than 400 or the
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aggregate market value of the publicly held Shares was less than $5.0 million.
Shares held directly or indirectly by any director or officer of Carey
International and by any person who is the beneficial owner of more than 10%
of the Shares outstanding are not considered to be publicly held for this
purpose. If the Shares were no longer eligible for inclusion in the Nasdaq
National Market, they may nevertheless continue to be included in the Nasdaq
Stock Market unless, among other things, the public float was less than
500,000 Shares, there were fewer than 300 round lot holders of the Shares or
the market value of the public float was less than $1.0 million. According to
Carey International, as of July 24, 2000, there were 435 holders of record of
Shares (not including beneficial holders of Shares in street name), and there
were 9,848,729 Shares outstanding.
If the Shares were to cease to be quoted on the Nasdaq National Market, the
market for the Shares could be adversely affected. It is possible that the
Shares would be traded or quoted on other securities exchanges or in the over-
the-counter market, and that price quotations would be reported by such
exchanges, or through other sources. The extent of the public market for the
Shares and the availability of such quotations would, however, depend upon the
number of stockholders of the Shares remaining at such time, the interest in
maintaining a market in the Shares on the part of securities firms, the
possible termination of registration of the Shares under the Exchange Act, as
described below, and other factors.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Such registration under the Exchange Act may be terminated upon
application of Carey International to the Commission if the Shares are neither
listed on a national securities exchange nor held by 300 or more holders of
record. Termination of registration under the Exchange Act would substantially
reduce the information required to be furnished by Carey International to its
stockholders and to the Commission and would make certain provisions of the
Exchange Act no longer applicable to Carey International, such as the short-
swing profit recovery provisions of Section 16(b) of the Exchange Act, the
requirement of furnishing a proxy statement pursuant to Section 14(a) of the
Exchange Act in connection with stockholders' meetings, the related
requirement of furnishing an annual report to stockholders and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions. Furthermore, the ability of "affiliates" of Carey
International and persons holding "restricted securities" of Carey
International to dispose of such securities pursuant to Rule 144 promulgated
under the Securities Act may be impaired. Carey International intends to apply
for termination of registration of the Common Stock under the Exchange Act as
soon after the consummation of the Offer as the requirements for such
termination are met.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will be delisted from all stock exchanges and the registration of
the Shares under the Exchange Act will be terminated following the
consummation of the Merger.
Margin Regulations. The Shares are currently "margin securities," as such
term is defined under the regulations of the Federal Reserve Board, which has
the effect, among other things, of allowing brokers to extend credit on the
collateral of the Shares. Depending upon factors similar to those described
above regarding listing and market quotations, it is possible that, following
the Offer, the Shares would no longer constitute "margin securities" for the
purposes of the margin regulations of the Federal Reserve Board and therefore
could no longer be used as collateral for loans made by brokers. In any event,
the Shares will cease to be "margin securities" if registration of the Shares
under the Exchange Act is terminated.
12. Conditions to the Offer.
Notwithstanding any other provision of the Offer, and subject to the
provisions of the Merger Agreement, the Offerors are not required to accept
for payment or, subject to any applicable rules and regulations of the
Commission (including those relating to the obligation of the Offerors to pay
for, or return tendered Shares promptly after termination or withdrawal of the
Offer), pay for any Shares pursuant to the Offer, and the Offerors may delay
their acceptance for payment of or, subject to the restriction referred to
above, payment for, any tendered Shares, and, subject to the provisions of the
Merger Agreement, the Offerors may amend or terminate the Offer and not accept
for payment any tendered Shares, if: (a) any applicable waiting period or
approval under
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the HSR Act and any applicable foreign antitrust law, regulation or rule has
not expired or been terminated or obtained, (b) the Minimum Condition has not
been satisfied, (c) the Offerors have not received or do not have available
the proceeds of the financing contemplated by the Financing Commitment Letters
or others financing which is on terms substantially similar to those set forth
in the Financing Commitment Letters, including but not limited to funds
sufficient to: (i) purchase the Shares tendered pursuant to the Offer, (ii)
pay the Option Exercise Agreements, (iii) pay the Merger Consideration
pursuant to the Merger, (iv) repay Carey International's existing outstanding
indebtedness and (v) pay the fees and expenses required to be paid in
connection with the transactions contemplated by the Merger Agreement, (d)
after consultation with a nationally recognized law firm, either of the
Offerors is not reasonably satisfied that the Merger Agreement is and the
Option Exercise Agreements are then in full force and effect, or (e) at any
time on or after the date of the Merger Agreement and prior to the acceptance
of Shares for payment pursuant to the Offer, any of the following events shall
occur:
(a) there shall be instituted or pending or threatened by any
governmental entity any suit, action or proceeding which (i) seeks to
impose material limitations on the ability of the Offerors to pay for or
purchase some or all of the Shares pursuant to the Offer or the Merger or
renders either of the Offerors unable to accept for payment, pay for or
purchase some or all of the Shares pursuant to the Offer or the Merger,
(ii) seeks to restrain or prohibit the making or consummation of the Offer
or the Merger or the performance of any of the transactions contemplated by
the Merger Agreement, (iii) seeks to obtain from any Offeror any damages
(including damages against any Offeror's directors or officers for which
they may seek indemnification from a Offeror that would reasonably be
expected to have a Company Material Adverse Effect, or (iv) challenges the
acquisition by the Offerors of any Shares pursuant to the Offer;
(b) there shall have been any statute, rule, regulation, judgment, order
or injunction promulgated, entered, enforced, enacted or issued by any
governmental entity applicable to the Offer or the Merger other than the
application of the waiting period provision of the HSR Act to the Offer or
the Merger which is reasonably likely to result, directly or indirectly, in
any of the consequences referred to in clauses (i) through (iv) of
paragraph (a) above;
(c) the Merger Agreement shall have been terminated in accordance with
its terms;
(d) the representations and warranties of Carey International set forth
in the Merger Agreement shall not be true and accurate in all respects, in
each instance as of the date of consummation of the Offer as though made on
or as of such date (except for those representations and warranties that
address matters only as of a particular date or only with respect to a
specific period of time which need only be true and accurate as of such
date or with respect to such period), and the effect thereof, either
individually or in the aggregate, is a Company Material Adverse Effect, or
Carey International shall have breached or failed to perform or comply in
any material respect with any obligation, agreement or covenant required by
the Merger Agreement to be performed or complied with by it, and, with
respect to any such breach or failure to perform that is reasonably capable
of being remedied within the time periods set forth below, the breach or
failure to perform is not remedied prior to the earlier of (x) ten days
after Parent has furnished Carey International with written notice of such
breach or failure to perform or (y) two business days prior to the date on
which the Offer expires (as it may be extended in accordance with the
Merger Agreement);
(e) the Offerors shall not have received by the Expiration Date such
certificates of officers of Carey International and/or opinions of
nationally recognized valuation and/or appraisal firms (in form and
substance reasonably satisfactory to the Offerors) as their respective
Boards may reasonably require, substantially to the effect that the value
of Carey International's assets shall exceed its liabilities following the
consummation of the Offer and the Merger and that the Offer and the Merger
shall not impair Carey International's capital within the meaning of
Section 160 of the DGCL or impair the ability of Carey International to pay
its obligations as they come due;
(f) there shall have occurred (i) any general suspension of trading in
securities on the New York Stock Exchange, which suspension or limitation
shall continue for at least three consecutive trading days, (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States
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(whether or not mandatory), (iii) a commencement of a war, armed
hostilities or other international or national calamity directly involving
the United States that would reasonably be expected to have a material
adverse impact on the capital markets of the United States, (iv) any
limitation (whether or not mandatory) by any United States governmental
entity on the extension of credit generally by banks or other lending
institutions, which limitation would materially affect the ability of the
banks named in the Financing Commitment Letters to provide financing on
terms substantially similar to those set forth in the Financing Commitment
Letters, and (v) a decline of at least 30% in the Standard & Poor's 500
Index from the close of business on the date of the Merger Agreement; or
(g) the failure of Parent to make the Capital Contribution to Acquisition
Company.
which, in the judgment of either Offeror, subject to the terms of the Merger
Agreement and regardless of the circumstances giving rise to any such
condition, makes it inadvisable to proceed with the Offer or with such
acceptance for payment, purchase of, or payment for Shares.
These conditions are for the sole benefit of the Offerors, and, subject to
the provisions of the Merger Agreement, may be waived by them at any time. The
failure by the Offerors at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any right, and each such right shall be deemed
an ongoing right which may be asserted at any time and from time to time.
13. Certain Legal Matters; Regulatory Approvals.
General. Except as otherwise disclosed herein, the Offerors are not aware of
(i) any license or regulatory permit that appears to be material to the
business of Carey International and its subsidiaries, taken as a whole, that
might be adversely affected by the acquisition of Shares by the Offerors
pursuant to the Offer or the Merger or otherwise or (ii) any material approval
or other action by any governmental, administrative or regulatory agency or
authority, domestic or foreign, that would be required for the acquisition or
ownership of Shares by the Offerors as contemplated herein. Should any such
approval or other action be required, the Offerors currently contemplate that
they would seek such approval or action. The Offerors' obligation under the
Offer to accept for payment and pay for Shares is subject to certain
conditions. See "THE TENDER OFFER -- Conditions to the Offer." Although,
except as described in this Offer to Purchase, the Offerors do not currently
intend to delay the acceptance for payment of Shares tendered pursuant to the
Offer pending the outcome of any such matter, there can be no assurance that
any such approval or action, if needed, would be obtained or would be obtained
without substantial conditions, that adverse consequences might not result to
the business of Carey International or that certain parts of the businesses of
Carey International might not have to be disposed of in the event that such
approvals were not obtained or any other actions were not taken such approval
or other action. If certain types of adverse action are taken with respect to
the matters discussed below, the Offerors could decline to accept for payment,
or pay for, any Shares tendered. See "THE TENDER OFFER -- Conditions to the
Offer" for certain conditions to the Offer, including conditions with respect
to government actions.
State Takeover Laws. Carey International is incorporated under the laws of
the State of Delaware. In general, Section 203 of the DGCL prevents an
"interested stockholder" (generally a person who owns or has the right to
acquire 15% or more of a corporation's outstanding voting stock, or an
affiliate or associate thereof) from engaging in a "business combination"
(defined to include mergers and certain other transactions) with a Delaware
corporation for a period of three years following the date such person became
an interested stockholder unless, among other things, prior to the date the
interested stockholder became an interested stockholder, the board of
directors of the corporation approved either the business combination or the
transaction in which the interested stockholder became an interested
stockholder. Carey International has represented to Parent and Acquisition
Company in the Merger Agreement that the Board has taken all necessary action
so that the restrictions contained in Section 203 of the DGCL applicable to a
"business combination" will not apply to the execution, delivery or
performance of the Merger Agreement, the Offer, the Merger or the transactions
contemplated by the Merger Agreement.
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A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In Edgar v. Mite Corp., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover Statute, which, as a matter of state securities law, made takeovers
of corporations meeting certain requirements more difficult. However, in 1987
in CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the
State of Indiana may, as a matter of corporate law and, in particular, with
respect to those aspects of corporate law concerning corporate governance,
constitutionally disqualify a potential acquirer from voting on the affairs of
a target corporation without the prior approval of the remaining stockholders.
The state law before the Supreme Court was by its terms applicable only to
corporations that had a substantial number of holders in the state and were
incorporated there.
Carey International, directly or through subsidiaries, conducts business in
a number of states throughout the United States, some of which have enacted
takeover laws. The Offerors do not believe that any state takeover statutes
apply to the Offer. Neither Carey International nor the Acquisition Company
has currently complied with any state takeover statute or regulation. The
Offerors reserve the right to challenge the applicability or validity of any
state law purportedly applicable to the Offer or the Merger and nothing in
this Offer to Purchase or any action taken in connection with the Offer or the
Merger is intended as a waiver of such right. In the event it is asserted that
one or more state takeover laws is applicable to the Offer or the Merger, and
an appropriate court does not determine that it is inapplicable or invalid as
applied to the Offer or the Merger, the Offerors might be required to file
certain information with, or receive approvals from, the relevant state
authorities. In addition, if enjoined, the Offerors might be unable to accept
for payment any Shares tendered pursuant to the Offer or be delayed in
continuing or consummating the Offer and the Merger. In such case, the
Offerors may not be obligated to accept for payment any Shares tendered. See
"THE TENDER OFFER -- Conditions of the Offer."
Antitrust. Under the HSR Act, and the rules that have been promulgated
thereunder by the Federal Trade Commission (the "FTC"), certain transactions
may not be consummated unless certain information has been furnished to the
DOJ and the FTC and certain waiting period requirements have been satisfied.
The Offerors have concluded that a filing under the HSR Act and the rules
promulgated thereunder by the FTC is not required for the Transaction.
In the event that a filing is required to be made under the HSR Act and the
rules promulgated thereunder by the FTC, the Offerors would promptly file
Notification and Report Forms under the HSR Act. The waiting period under the
HSR Act, with respect to Shares acquired pursuant to the Offer, if applicable,
will expire at 11:59 p.m., New York City time, on the fifteenth day after the
date on which the forms are filed, unless early termination of the waiting
period is granted. The DOJ or the FTC may extend the fifteen day waiting
period by requesting additional information or documentary material from the
Offerors. If such a request is made, such waiting period will expire at 11:59
p.m., New York City time, on the tenth day after substantial compliance with
such request. Only one extension of the waiting period pursuant to a request
for additional information is authorized by the HSR Act. Thereafter, such
waiting period may be extended only by court order or with the consent of
Acquisition Company. In practice, complying with a request for additional
information or material can take a significant amount of time. In addition, if
the DOJ or the FTC raises substantive issues in connection with a proposed
transaction, the parties frequently engage in negotiations with the relevant
governmental agency concerning possible means of addressing those issues and
may agree to delay consummation of the transaction while such negotiations
continue. If a filing under the HSR Act is required, the Offerors will not
accept for payment Shares tendered pursuant to the Offer unless and until the
waiting period requirements imposed by the HSR Act with respect to the Offer
have been satisfied.
The FTC and the DOJ routinely review the legality under the HSR Act of
transactions such as the proposed acquisition of Shares by the Offerors. Even
if a filing is not required under the HSR Act, at any time before or after the
purchase by the Offerors of Shares, either of the DOJ or the FTC could take
such action under the federal antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the
71
<PAGE>
purchase of Shares pursuant to the Offer or seeking the divestiture of Shares
purchased by the Offerors or the divestiture of substantial assets of Carey
International. Private parties and state governments may also bring legal
action under certain circumstances.
Although the Offerors believe that the acquisition of Shares pursuant to the
Offer would not violate the HSR Act or other antitrust statutes, there can be
no assurance that a challenge to the Offer on antitrust grounds will not be
made or, if such a challenge is made, what the outcome will be. See "THE
TENDER OFFER -- Conditions to the Offer" for certain conditions to the Offer,
including conditions with respect to litigation and certain government
actions.
14. Fees and Expenses.
Except as otherwise provided herein, all fees and expenses incurred in
connection with the Offer will be paid by the party incurring such fees and
expenses, except that each of Carey International and Parent will pay for one-
half of (i) any fee payable pursuant to the HSR Act, and (ii) all costs and
expenses related to the filing, printing and mailing of this Offer to
Purchase, the Schedule TO and any proxy statement or information statement
required to be filed with the Commission to consummate the Merger. See
"SPECIAL FACTORS -- Fees and Expenses" for a more complete discussion and
listing of the fees and expenses incurred by the Offerors with respect to the
Offer and the Merger.
15. Miscellaneous.
The Offerors are not aware of any jurisdiction where the making of the Offer
is prohibited by any administrative or judicial action pursuant to any valid
state statute. If the Offerors become aware of any valid state statute
prohibiting the making of the Offer or the acceptance of Shares pursuant
thereto, the Offerors will make a good faith effort to comply with such state
statute or seek to have such statute declared inapplicable to the Offer. If,
after such good faith effort, the Offerors cannot comply with any such state
statute, the Offer will not be made to (and tenders will not be accepted from
or on behalf of) the stockholders in such state. In any jurisdiction where the
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on behalf of the
Offerors by one or more registered brokers or dealers which are licensed under
the laws of such jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of the Offerors not contained in this Offer to
Purchase or in the Letter of Transmittal and, if given or made, such
information or representation must not be relied upon as having been
authorized.
The Offerors filed with the Commission the Schedule TO, together with
exhibits, pursuant to Sections 13(e) and 14(d)(1) of the Exchange Act and
Rules 13e-3 and 14d-3 promulgated thereunder, furnishing certain additional
information with respect to the Offer, and may file amendments thereto. The
Schedule TO and any amendments thereto, including exhibits, may be inspected
at, and copies may be obtained from, the same places and in the manner set
forth in "THE TENDER OFFER -- Certain Information Concerning Carey
International" (except that they will not be available at the regional offices
of the Commission).
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SCHEDULE I
INFORMATION CONCERNING DIRECTORS, EXECUTIVE OFFICERS
AND CERTAIN STOCKHOLDERS OF CAREY INTERNATIONAL, INC.
Directors and Executive Officers
The name, position with Carey International, Inc. (as used in this Schedule
I, the "Company"), present principal occupation or employment and five-year
employment history of each of the directors and executive officers of the
Company, together with the names, principal businesses and addresses of any
corporations or other organizations in which such principal occupations are
conducted, are set forth below. Unless otherwise indicated, each individual is
a United States citizen and each individual's business address is c/o Carey
International, Inc., 4530 Wisconsin Avenue, N.W., Washington, DC 20016. Unless
otherwise indicated, to the knowledge of the Company, no director or executive
officer of the Company has been convicted in a criminal proceeding during the
last five years (excluding traffic violations or similar misdemeanors) and no
director or executive officer of the Company was a party to any judicial or
administrative proceeding during the last five years (except for any matters
that were dismissed without sanction or settlement) that resulted in a
judgment, decree or final order enjoining the person from future violations
of, or prohibiting activities subject to, federal or state securities laws, or
a finding of any violation of federal or state securities laws.
Name Present Principal Occupation or Employment;
Material Positions Held during the past Five Years
Vincent A. Wolfington.... Mr. Wolfington, a co-founder of the Company, has
served as its Chairman of the Board of Directors
and Chief Executive Officer since 1979. For over 25
years, Mr. Wolfington has been involved in the
limousine industry and directly associated with the
Carey system of licensees and affiliates. Mr.
Wolfington has served as a consultant to the
National Academy of Sciences Transportation
Research Board, President of the National Para-
transit Association and a member of the
International Limousine Association. Mr. Wolfington
currently is a member of the Executive Committee of
the World Travel and Tourism Council, a global
organization of the chief executive officers of
companies engaged in all sectors of the travel and
tourism industry.
Don R. Dailey............ Mr. Dailey, a co-founder of the Company, has served
as the President and a director of the Company
since 1979. Mr. Dailey has been directly involved
in the limousine business for over 30 years. Mr.
Dailey has served on a number of boards and
committees related to the travel industry,
including the National Business Travel Association,
the International Business Travel Association, the
Association of Corporate Travel Executives, the
National Limousine Association and the
International Limousine Association (as its past
President and member of its Executive Committee).
Mr. Dailey is currently a member of the Travel
Business Round Table, a United States organization
of executive officers of companies engaged in all
sectors of the travel and tourism industry.
Richard A. Anderson, Jr... Mr. Anderson has served as Executive Vice
President -- Sales and Marketing of the Company
since July 1998. Mr. Anderson previously served as
Senior Vice President of the Company from December
1988 to July 1998 and was Chief Operating Officer
of Carey Limousine NY, Inc., a subsidiary of the
Company, from December 1988 until August 1997.
Mr. Anderson is a former Chairman of the New York
Taxi and Limousine Commission's Limousine Advisory
Board, a former board member of the
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<PAGE>
Association of Corporate Travel Executives, and a
member of the National Business Travel Association
and Meeting Planners International.
David H. Haedicke........ Mr. Haedicke has served as Executive Vice President
and Chief Financial Officer of the Company since
October 1996. From August 1996 to October 1996, he
was Senior Vice President and Chief Financial
Officer of Infotechnology, Inc., Hadron, Inc. and
Comtex Scientific Corporation, an affiliated group
of companies engaged in systems management and
software development. From September 1993 to May
1996, he was Chief Financial Officer of Walcoff &
Associates, Inc., a communications and information
management firm. From June 1991 to September 1993,
he was Chief Financial Officer and Vice President
of Xsirius, Inc., a high technology research and
development company. Mr. Haedicke was a partner at
Ernst & Young L.L.P. from 1985 to 1991 and was an
employee at that firm from 1973 to 1985.
Guy C. Thomas............ Mr. Thomas has served as Executive Vice President--
Operations of the Company since 1987. Mr. Thomas
has served on a number of boards and committees
related to the travel industry, including the
National Business Travel Association, the Greater
Washington Area Passenger Traffic Association, the
American Society of Association Executives, Meeting
Planners International, the Association of
Corporate Travel Executives, the National Limousine
Association and the International Taxicab and
Livery Association.
Devin J. Murphy.......... Mr. Murphy has served as Senior Vice President--
Operations of the Company since May 1998.
Previously, from April 1997 to May 1998, Mr. Murphy
served as Senior Vice President and Chief
Development Officer of the Company, and from May
1996 to April 1997 he served as Vice President --
Corporate Development of the Company. From 1988 to
1994, Mr. Murphy held sales and marketing positions
at several high tech companies.
Sally A. Snead........... Ms. Snead has served as the Company's Senior Vice
President -- Information Systems since June 1996.
From June 1993 to June 1996, she was Executive Vice
President and General Manager of Carey Limousine
L.A., Inc. From January 1987 to June 1993, she was
Executive Vice President and General Manager of
Carey Limousine DC, Inc. She is a member of
Executive Women International, the National
Business Travel Association, the Association of
Corporate Travel Executives and the National
Limousine Association.
Eugene S. Willard........ Mr. Willard has served as the Company's Senior Vice
President --Technology, Strategy and Planning since
February 1999. Mr. Willard has over 19 years
experience in systems development and strategic
systems planning. From 1985 to February 1999, Mr.
Willard held senior level positions in systems
development and strategic planning in the areas of
reservations, revenue management and loyalty
program marketing systems for Marriot
International.
John C. Wintle...........
Mr. Wintle has served as the Company's Senior Vice
President--Europe since May 1996 and as Executive
Vice President and Managing Director of Carey U.K.
Ltd., a subsidiary of the Company, since March
1996. From
I-2
<PAGE>
1982 to February 1996, Mr. Wintle served Savoy
Hotel PLC ("Savoy") and its affiliates, including
Camelot Barthropp Ltd. ("Camelot"), in various
capacities. From March 1993 to February 1996, Mr.
Wintle was Executive Vice Chairman of Camelot,
which was acquired by Carey U.K. Ltd. in February
1996. Previously, from 1989 to 1993, Mr. Wintle was
General Manager, Restaurant Division, of several
entities affiliated with Savoy. From 1982 to 1989,
Mr. Wintle had been Group Financial Controller at
Savoy. Mr. Wintle is a citizen of the United
Kingdom. Mr. Wintle's business address is c/o Carey
UK, 11-15 Headfort Place, London, United Kingdom.
Robert W. Cox............ Mr. Cox has served as a director of the Company
since 1995. From 1969 until his retirement in 1994,
Mr. Cox was a partner in the New York and Chicago
offices of the law firm Baker & McKenzie. From 1984
to 1992, Mr. Cox was Chairman of the Executive
Committee and Managing Partner of the firm, and
from 1993 to 1994, Mr. Cox was Chairman of the
Policy Committee. Mr. Cox is Chairman Emeritus of
Baker & McKenzie. Mr. Cox currently is a director
of Hon Industries, Inc. and Homebase, Inc.
Dennis I. Meyer.......... Mr. Meyer has served as a director of the Company
since June 1998. Mr. Meyer has been a partner in
the law firm of Baker & McKenzie since 1965. Mr.
Meyer has previously served as Chairman of the
Executive Committee and Managing Partner of Baker &
McKenzie. Mr. Meyer serves as a director of Oakwood
Homes Corporation as well as United Financial
Banking Companies, Inc., Jordan Kitt's Music, Inc.
and Daily Express, Inc. Mr. Meyer's business
address is c/o Baker & McKenzie, 815 Connecticut
Avenue, N.W., Suite 900, Washington, DC 20006.
Nicholas J. St. George... Mr. St. George has served as a director of the
Company since June 1997. Currently, Mr. St. George
serves as a consultant to Oakwood Homes
Corporation, a manufacturer and retailer of
manufactured homes. From February 1979 to September
1999, Mr. St. George served as Chairman and Chief
Executive Officer of Oakwood Homes Corporation. Mr.
St. George serves as a director of Legg Mason, Inc.
Joseph V. Vittoria....... Mr. Vittoria has served as a director of the
Company since June 1998. Mr. Vittoria has been the
Chairman and Chief Executive Officer of Travel
Services International, Inc. ("Travel Services")
since Travel Services completed its initial public
offering in July 1997. From September 1987 to
February 1997, Mr. Vittoria was the Chairman and
Chief Executive Officer of Avis, Inc. ("Avis"), a
multinational auto rental company where he was
employed for over 26 years. Mr. Vittoria was
responsible for the purchase of Avis by its
employees in 1987 by creating one of the world's
largest Employee Stock Ownership Plans. He was a
founding member of the World Travel and Tourism
Council. Mr. Vittoria serves as a director of
Sirius Satellite Radio, Inc., Transmedia Asia,
Puradyn Filter Technologies, Inc., ResortQuest
International, Inc. and various non-profit
associations. Mr. Vittoria's business address is
c/o Travel Services International, Inc., 220
Congress Park Drive, Del Ray Beach, Florida 33445.
I-3
<PAGE>
Beneficial Ownership of Shares.
The following table sets forth certain information known to the Company with
respect to beneficial ownership of Shares as of July 24, 2000 by (i) each
director of the Company and (ii) each executive officer of the Company. Except
as otherwise noted, the persons named in this table have sole voting and
investment power with respect to all Shares.
<TABLE>
<CAPTION>
Shares
Beneficially
Owned(1)
---------------
Name of Beneficial Owner Number Percent
------------------------ ------- -------
<S> <C> <C>
Vincent A. Wolfington (2).................................... 566,069 5.5
Don R. Dailey (3)............................................ 555,176 5.4
Richard A. Anderson, Jr. (4)................................. 41,286 *
David H. Haedicke (5)........................................ 169,600 1.7
Guy C. Thomas (6)............................................ 141,782 1.4
Devin J. Murphy (7).......................................... 75,200 *
Sally A. Snead (8)........................................... 52,917 *
Eugene S. Willard (5)........................................ 15,000 *
John C. Wintle (5)........................................... 16,967 *
Robert W. Cox (5)............................................ 24,400 *
Dennis I. Meyer (9).......................................... 9,000 *
Nicholas J. St. George (10).................................. 16,500 *
Joseph V. Vittoria (5)....................................... 4,000 *
</TABLE>
--------
* Less than 1%
(1) Percentages in the table are based upon 9,848,729 Shares outstanding as
of July 24, 2000. Except as reflected in the footnotes to this table,
Shares beneficially owned consist of outstanding Shares owned by the
indicated person or by that person for the benefit of minor children and
Shares that the indicated person has the right to acquire through the
exercise of Company Options.
(2) Includes 465,706 Shares that may be acquired upon the exercise of Company
Options. Also includes (i) 1,183 Shares currently held by a company
controlled by Mr. Wolfington, (ii) 1,560 Shares held by a limited
partnership which are attributable to Mr. Wolfington's wife (780 Shares)
and one of his children (780 Shares) and (iii) 430 Shares held by one of
his children. Excludes Shares held by Yerac Associates, L.P. ("Yerac"), a
limited partnership of which Mr. Wolfington is a limited partner, with
respect to which Shares Mr. Wolfington has no voting or investment power.
(3) Includes 415,707 Shares that may be acquired upon the exercise of Company
Options.
(4) Includes 30,386 Shares that may be acquired upon the exercise of Company
Options. Also includes (i) 600 Shares held by Mr. Anderson's wife as to
which Mr. Anderson disclaims beneficial ownership and (ii) and 1,500
Shares held by a trust of which Mr. Anderson is a beneficiary.
(5) Represents Shares that may be acquired upon the exercise of Company
Options.
(6) Includes 99,000 Shares that may be acquired upon the exercise of Company
Options.
(7) Includes 67,900 Shares that may be acquired upon the exercise of Company
Options.
(8) Includes 51,197 Shares that may be acquired upon the exercise of Company
Options.
(9) Includes 4,000 Shares that may be acquired upon the exercise of Company
Options. Also includes 5,000 Shares held by Mr. Meyer's wife as to which
Mr. Meyer disclaims beneficial ownership.
(10) Includes 11,500 Shares that may be acquired upon the exercise of Company
Options. Also includes 5,000 Shares held by Mr. St. George's wife as to
which Mr. St. George disclaims beneficial ownership.
I-4
<PAGE>
SCHEDULE II
MEMBERS OF THE BOARDS OF DIRECTORS AND
EXECUTIVE OFFICERS OF VIP HOLDINGS, LLC, VIP HOLDINGS II, LLC
VIP HOLDINGS III, LLC, LIMOUSINE HOLDINGS, LLC,
ALUWILL ACQUISITION CORP. AND CHARTWELL INVESTMENTS II LLC
Directors and Executive Officers
The name, business address, position with each of Holdings, Parent,
Acquisition Company and Chartwell, present principal occupation or employment
and five-year employment history of each of the directors and executive
officers of Holdings, Parent, Acquisition Company and Chartwell, together with
the names, principal businesses and addresses of any corporations or other
organizations in which such principal occupations are conducted, are set forth
below. Each individual is a United States citizen and each individual's
business address is 717 Fifth Avenue, 23rd Floor, New York, New York 10022. To
the knowledge of Holdings, Parent, Acquisition Company and Chartwell, no
director or executive officer of Holdings, Parent, Acquisition Company or
Chartwell has been convicted in a criminal proceeding during the last five
years (excluding traffic violations or similar misdemeanors) and no director
or executive officer of Holdings, Parent, Acquisition Company or Chartwell was
a party to any judicial or administrative proceeding during the last five
years (except for any matters that were dismissed without sanction or
settlement) that resulted in a judgment, decree or final order enjoining the
person from future violations of, or prohibiting activities subject to,
federal or state securities laws, or a finding of any violation of federal or
state securities laws.
Name Present Principal Occupation or Employment;
Material Positions Held during the past Five Years
Todd R. Berman........... Director and President of Acquisition Company and a
Manager of each of Holdings and Parent. Mr. Berman
is a co-founder and President of Chartwell, an
advisor to, and manager of, private equity funds
which invest in growth financings and buyouts of
middle market companies. Mr. Berman has been with
Chartwell, Chartwell Investments Inc. or its
predecessor since 1992. He received his A.B. from
Brown University and an M.B.A. from Columbia
University Graduate School of Business.
Michael S. Shein......... Director and Vice President, Secretary and
Treasurer of Acquisition Company and a Manager of
each of Holdings and Parent. Mr. Shein is a
Managing Director and co-founder of Chartwell. Mr.
Shein has been with Chartwell, Chartwell
Investments Inc. or its predecessor since 1992.
Mr. Shein received a B.S. summa cum laude from The
Wharton School at the University of Pennsylvania.
Jeffrey R. Larsen........ Vice President and Assistant Secretary of
Acquisition Company. Mr. Larsen has been an
Associate with Chartwell since September 1999. From
July 1997 to July 1999, Mr. Larsen was an Analyst
in the Leveraged Finance Group of the Investment
Banking Division of Goldman, Sachs & Co., which has
a business address of 85 Broad Street, New York,
New York 10004. Mr. Larsen received an A.B. magna
cum laude in Economics from Princeton University.
Beneficial Ownership of Shares
Each of Mr. Berman and Mr. Shein, as managers of Holdings and Parent and
directors of Acquisition Company may be deemed the beneficial owners of the
securities of Carey International which Acquisition Company has the right to
purchase pursuant to the terms of the Carey Purchase Agreements. Acquisition
II-1
<PAGE>
Company has the right and obligation to acquire, subject to certain conditions,
90% of the outstanding shares of common stock of Carey International after
giving effect to the exercise and conversion of certain derivative securities
of Carey International in accordance with the terms of the Carey Purchase
Agreements. The address of each of Mr. Berman, Mr. Shein, Mr. Larsen,
Chartwell, Holdings, Parent and Acquisition Company is c/o Chartwell
Investments II LLC, 717 Fifth Avenue, 23rd Floor, New York, New York 10022.
II-2
<PAGE>
SCHEDULE III
INFORMATION CONCERNING DIRECTORS, EXECUTIVE OFFICERS
AND CERTAIN STOCKHOLDERS OF FORD MOTOR COMPANY
Directors and Executive Officers
The name, position with Ford Motor Company (as used in this Schedule III,
the "Company"), present principal occupation or employment and five-year
employment history of each of the directors and executive officers of the
Company, together with the names of any corporations or other organizations in
which such principal occupations are conducted, are set forth below. Unless
otherwise indicated, each individual is a United States citizen and each
individual's business address is c/o Ford Motor Company, One American Road,
Dearborn, Michigan. Unless otherwise indicated, to the knowledge of the
Company, no director or executive officer of the Company has been convicted in
a criminal proceeding during the last five years (excluding traffic violations
or similar misdemeanors) and no director or executive officer of the Company
was a party to any judicial or administrative proceeding during the last five
years (except for any matters that were dismissed without sanction or
settlement) that resulted in a judgment, decree or final order enjoining the
person from future violations of, or prohibiting activities subject to,
federal or state securities laws, or a finding of any violation of federal or
state securities laws.
Directors:
Name Present Principal Occupation or Employment;
Material Positions Held during the past Five Years
Jacques A. Nasser........ Mr. Nasser serves as the President and Chief
Executive Officer of Ford Motor Company. Prior to
his election as President and CEO of the Company
effective January 1, 1999, Mr. Nasser was Executive
Vice President, President -- Ford Automotive
Operations. Before heading Ford Automotive
Operations, Mr. Nasser was Group Vice President --
Product Development from 1994 to 1996. He was
elected a Company Vice President in 1993 as the
Chairman of Ford of Europe. From 1990 to 1993, Mr.
Nasser served as President of Ford of Australia. He
has held a number of other global positions in
Asia-Pacific and South America since joining the
Company in 1968.
John R. H. Bond.......... Mr. Bond has served as a Director of Ford Motor
Company since July 12, 2000. Mr. Bond is currently
Group Chairman of HSBC Holdings plc. Mr. Bond
joined HSBC in 1961 and served as Executive
Director of The Hongkong and Shanghai Banking Corp.
from 1988 to 1992. He was President and Chief
Executive Officer of Marine Midland Bank Inc., now
known as HSBC USA Inc., from 1991 to 1993. He also
served as Group Chief Executive at HSBC from 1993
to 1998, and has been Group Chairman since 1998.
Mr. Bond is also Chairman of the Institute of
International Finance, a member of the Banking
Advisory Group of the International Finance
Corporation, and a fellow of the Chartered
Institute of Bankers. In 1999, Mr. Bond was
knighted for his services to the banking industry.
Mr. Bond is a citizen of Great Britain.
Michael D. Dingman....... Mr. Dingman has been a Director of Ford Motor
Company since 1981. Mr. Dingman currently is the
President and CEO of Shipston Group Ltd., a
diversified international holding company. In
addition, he is the former Chairman of the Board
and a current director of Fisher Scientific
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<PAGE>
International, a leader in serving science and
providing products and services to research, health
care, industry, education, and governments
worldwide. Mr. Dingman is also a Director of Teekay
Shipping Corporation. Mr. Dingman is a citizen of
Ireland.
Edsel B. Ford II......... Mr. Ford has been a Director of Ford Motor Company
since 1988. Mr. Ford is the Former Vice President
of Ford Motor Company and Former Chief Operating
Officer of Ford Motor Credit Company. Mr. Ford
retired as President and Chief Operating Officer of
Ford Motor Credit Company in 1998 having served in
that capacity since May 1991. Mr. Ford was also a
Vice President of the Company from 1993 through the
end of 1998. Prior to 1991, he held numerous senior
executive positions at Ford and Lincoln-Mercury,
both domestic and abroad. Mr. Ford is also a
Director of the Federal Reserve Bank of Chicago,
Detroit Branch and The Skillman Foundation.
William Clay Ford........ Mr. Ford has been a Director of Ford Motor Company
since 1948. Mr. Ford is the Retired Chairman of the
Finance Committee of Ford Motor Company. Mr. Ford
served as Chairman of the Finance Committee of
Ford's Board of Directors from November 1987 to
January 1995. He was elected a Vice Chairman of
Ford in 1980, retiring from that position in 1989.
He also owns and is President of The Detroit Lions,
Inc.
William Clay Ford, Jr.... Mr. Ford serves as the Chairman of the Board of
Directors, Chairman of the Environmental and Public
Policy Committee, Chairman of the Finance Committee
and Chairman of the Organization Review and
Nominating Committee of Ford Motor Company. Mr.
Ford has held a number of management positions
within Ford, including Vice President --
Commercial Truck Vehicle Center. Effective January
1, 1995, Mr. Ford became Chairman of the Finance
Committee, and effective January 1, 1999, he was
elected Chairman of the Board of Directors of the
Company. Mr. Ford also is Vice Chairman of The
Detroit Lions, Inc., and Chairman of the Board of
Trustees of the Henry Ford Museum and Greenfield
Village. He also is a Vice Chairman of Detroit
Renaissance Foundation and a Trustee of
Conservation International Foundation.
Irvine O. Hockaday, Jr... Mr. Hockaday has been a Director of Ford Motor
Company since 1987. Mr. Hockaday has been President
and Chief Executive Officer of Hallmark Cards, Inc.
in Kansas City, Missouri since January 1, 1986, and
a Director since 1978. Mr. Hockaday also serves as
a Director with Dow Jones, Inc.; Sprint
Corporation; and UtiliCorp United, Inc.
Marie-Josee Kravis....... Mrs. Kravis has been a Director of Ford Motor
Company since 1995. Mrs. Kravis was appointed a
Senior Fellow, Hudson Institute Inc., Indianapolis,
Indiana, in 1994. Prior to that time, and since
1978, she served as Executive Director of the
Hudson Institute of Canada. She also serves as a
Director of the Canadian Imperial Bank of Commerce;
Hasbro Inc.; Hollinger International Inc.;
StarMedia Network, Inc.; The Seagram Co. Ltd.; and
Compagnie UniMedia. Mrs. Kravis is a citizen of
Switzerland and Canada.
Ellen R. Marram..........
Ms. Marram has been a Director of Ford Motor
Company since 1988. She previously served as
President and CEO of Tropicana Beverage Group
III-2
<PAGE>
from September 1997 until November 1998 and had
previously served as President of the Group since
joining Seagram in 1993. She also served as
Executive Vice President of The Seagram Company
Ltd. and Joseph E. Seagram & Sons, Inc. She served
as President and CEO of Nabisco Biscuit Company and
Senior Vice President of the Nabisco Foods Group
from June 1988 until April 1993. She is also a
Director of The New York Times Company.
Homer A. Neal............ Dr. Neal has served as a Director of Ford Motor
Company since 1997. Dr. Neal is the Director of the
ATLAS Project, Professor of Physics, and Interim
President Emeritus at the University of Michigan.
He served as Interim President of the University of
Michigan from July 1, 1996 to February 1, 1997.
From 1987 to 1993, Dr. Neal was Chair of the
University of Michigan's Physics Department and
from 1993 to 1997 he served as Vice President of
Research for the University of Michigan. He is also
a Director of Ogden Corporation; Center for
Strategic and International Studies; and
Smithsonian Institution.
Jorma J. Ollila.......... Mr. Ollila has served as a Director of Ford Motor
Company since January 12, 2000. Mr. Ollila has been
the Chairman of the Board and Chief Executive
Officer of the Nokia Corporation in Finland since
1999. He also has been Chairman of its Group
Executive Board since 1992. He was President and
Chief Executive Officer from 1992 to 1999, a member
of its Board of Directors since 1995 and a member
of its Group Executive Board since 1986. He also
held various other positions since joining Nokia in
1985. From 1978 to 1985, Mr. Ollila held various
positions with Citibank Oy and Citibank N.A. Mr.
Ollila also serves as a Director of Otava Books and
Magazines Group, Ltd.; and UPM-Kymmene Corporation.
Mr. Ollila is a citizen of Finland.
Carl E. Reichardt........ Mr. Reichardt has served as a Director of Ford
Motor Company since 1986. Mr. Reichardt served as
the Chairman and Chief Executive Officer of Wells
Fargo & Company in San Francisco, California from
1983 until his retirement on December 31, 1994. Mr.
Reichardt also serves as a Director of Columbia/
HCA Healthcare Corporation; ConAgra, Inc.; McKesson
HBOC, Inc.; Newhall Management Corporation; Pacific
Gas and Electric Company; PG&E Corporation; and
HSBC Holdings plc.
Robert E. Rubin.......... Mr. Rubin has served as a Director of Ford Motor
Company since November 11, 1999. He also serves as
a Director, Chairman of the Executive Committee and
Member of the Office of the Chairman of Citigroup,
Inc., New York, New York. Before joining Citigroup
in 1999, Mr. Rubin served as U.S. Secretary of the
Treasury from 1995 to 1999. He previously served
from 1993 to 1995 in the White House as Assistant
to the President for Economic Policy and, in that
capacity, directed the activities of the National
Economic Council. Prior to that time, Mr. Rubin
spent 26 years at Goldman, Sachs & Co., where he
served as Co-Senior Partner and Co-Chairman from
1990 to 1992, and Vice Chairman and Co-Chief
Operating Officer from 1987 to 1990.
John L. Thornton.........
Mr. Thornton has served as a Director of Ford Motor
Company since 1996. Currently, Mr. Thornton serves
as the President and Co-Chief Operating Officer of
The Goldman Sachs Group, Inc. Mr. Thornton
III-3
<PAGE>
formerly served as Chairman of Goldman Sachs --
Asia. He was previously co-chief executive of
Goldman Sachs International, the firm's business in
Europe, the Middle East and Africa. Mr. Thornton
joined Goldman Sachs in 1980 and was named a
partner in 1988. He is also a Director for British
Sky Broadcasting Group PLC; The Goldman Sachs
Group, Inc.; Laura Ashley PLC; and Pacific Century
Group, Inc.
Executive Officers:
W. Wayne Booker.......... Mr. Booker serves as the Vice Chairman of Ford
Motor Company.
James D. Donaldson....... Mr. Donaldson serves as Group Vice President --
Global Business Development of Ford Motor Company.
Carlos E. Mazzorin....... Mr. Mazzorin serves as Group Vice President --
Global Purchasing and South America of Ford Motor
Company.
James J. Padilla......... Mr. Padilla serves as Group Vice President --
Global Manufacturing of Ford Motor Company.
Richard Parry-Jones...... Mr. Parry-Jones serves as Group Vice President --
Global Product Development and Quality of Ford
Motor Company. Mr. Parry-Jones is a citizen of
Great Britain.
Wolfgang Reitzle......... Dr. Reitzle serves as Group Vice President --
Premier Automotive Group of Ford Motor Company.
Dr. Reitzle is a citizen of Germany.
Robert L. Rewey.......... Mr. Rewey serves as Group Vice President -- Global
Consumer Services and North America of Ford Motor
Company.
John M. Rintamaki........ Mr. Rintamaki serves as Group Vice President, Chief
of Staff, General Counsel and Secretary of Ford
Motor Company.
Henry D. G. Wallace...... Mr. Wallace serves as Group Vice President and
Chief Financial Officer of Ford Motor Company. Mr.
Wallace is a citizen of Great Britain.
Gurminder S. Bedi........ Mr. Bedi serves as Vice President -- North American
Truck of Ford Motor Company.
William W. Boddie........ Mr. Boddie serves as Vice President -- Global Core
Engineering of Ford Motor Company.
Mei Wei Cheng............ Mr. Cheng serves as Vice President of Ford Motor
Company. Mr. Cheng also serves as President of Ford
Motor (China) Ltd.
William J. Cosgrove...... Mr. Cosgrove serves as Vice President of Ford Motor
Company. Mr. Cosgrove also serves as the Chief of
Staff and Chief Financial Officer of Premier
Automotive Group.
Terrall M. de Mr. de Jonckheere serves as Vice President -- Ford
Jonckheere............... South America Operations.
Wayne S. Doran...........
Mr. Doran serves as Vice President of Ford Motor
Company. Mr. Doran also serves as Chairman of Ford
Motor Land Development Corporation.
III-4
<PAGE>
Mark Fields.............. Mr. Fields serves as Vice President of Ford Motor
Company.
Bobbie A. Gaunt.......... Ms. Gaunt serves as Vice President of Ford Motor
Company. Ms. Gaunt also serves as President and
Chief Executive Officer of Ford Motor Company of
Canada, Ltd.
Louise K. Goeser......... Ms. Goeser serves as Vice President -- Quality of
Ford Motor Company.
Janet Mullins Grissom.... Ms. Grissom serves as Vice President -- Washington
Affairs of Ford Motor Company.
Elliott S. Hall.......... Mr. Hall serves as Vice President -- Dealer
Development of Ford Motor Company.
Earl J. Hesterberg....... Mr. Hesterberg serves as Vice President of Ford
Motor Company. Mr. Hesterberg also serves as Vice
President of Marketing, Sales and Service for Ford
of Europe, Inc.
Mark W. Hutchins......... Mr. Hutchins serves as Vice President of Ford Motor
Company. Mr. Hutchins also serves as President of
Lincoln and Mercury.
I. Martin Inglis......... Mr. Inglis serves as Vice President -- Ford North
America.
Michael D. Jordan........ Mr. Jordan serves as Vice President of Ford Motor
Company. Mr. Jordan also serves as President of
Automotive Consumer Services Group.
Brian P. Kelley.......... Mr. Kelley serves as Vice President -- Consumer
Connect of Ford Motor Company. Mr. Kelley also
serves as Chief Operating Officer of Ford
Investment Enterprises Corporation.
Vaughn A. Koshkarian..... Mr. Koshkarian serves as Vice President -- Ford
Asia Pacific Operations.
Roman J. Krygier......... Mr. Krygier serves as Vice President -- Powertrain
Operations of Ford Motor Company.
Martin Leach............. Mr. Leach serves as Vice President of Ford Motor
Company. Mr. Leach also serves as Vice President of
Product Development for Ford of Europe, Inc. Mr.
Leach is a citizen of Great Britain.
Malcolm S. Macdonald..... Mr. Macdonald serves as Vice President and
Treasurer of Ford Motor Company.
J.C. Mays................ Mr. Mays serves as Vice President -- Design of Ford
Motor Company.
David L. Murphy.......... Mr. Murphy serves as Vice President -- Human
Resources of Ford Motor Company. Mr. Murphy is a
citizen of Great Britain.
James G. O'Connor........ Mr. O'Connor serves as Vice President of Ford Motor
Company. Mr. O'Connor also serves as President of
Ford Division.
Helen O. Petrauskas...... Ms. Petrauskas serves as Vice President --
Environmental and Safety Engineering of Ford Motor
Company.
William F. Powers........
Mr. Powers serves as Vice President--Research of
Ford Motor Company.
III-5
<PAGE>
Neil W. Ressler.......... Mr. Ressler serves as Vice President and Chief
Technical Officer, Research and Vehicle Technology
of Ford Motor Company.
Dennis E. Ross........... Mr. Ross serves as Vice President and Chief Tax
Officer of Ford Motor Company.
Shamel T. Rushwin........ Mr. Rushwin serves as Vice President -- Vehicle
Operations of Ford Motor Company.
Nicholas V. Scheele...... Mr. Scheele serves as Vice President of Ford Motor
Company. Mr. Scheele also serves as Chairman of
Ford of Europe, Inc.
James C. Schroer......... Mr. Schroer serves as Vice President -- Global
Marketing of Ford Motor Company.
William A. Swift......... Mr. Swift serves as Vice President and Controller
of Ford Motor Company.
Frank M. Taylor.......... Mr. Taylor serves as Vice President -- Material
Planning and Logistics of Ford Motor Company.
Chris P. Theodore........ Mr. Theodore serves as Vice President -- North
America Car of Ford Motor Company.
David W. Thursfield...... Mr. Thursfield serves as Vice President of Ford
Motor Company. Mr. Thursfield also serves as
President of Ford of Europe. Mr. Thursfield is a
citizen of Great Britain.
Alex P. Ver.............. Mr. Ver serves as Vice President -- Advanced
Manufacturing Engineering of Ford Motor Company.
Jason H. Vines........... Mr. Vines serves as Vice President --
Communications of Ford Motor Company.
Donald A. Winkler........ Mr. Winkler serves as Vice President of Ford Motor
Company. Mr. Winkler also serves as Chairman and
Chief Executive Officer of Ford Motor Credit
Company.
James A. Yost............ Mr. Yost serves as Vice President and Chief
Information Officer of Ford Motor Company.
Martin B. Zimmerman...... Mr. Zimmerman serves as Vice President --
Governmental Affairs of Ford Motor Company.
Rolf Zimmermann.......... Mr. Zimmermann serves as Vice President of Ford
Motor Company. Mr. Zimmermann also serves as
Chairman of Ford Werke AG. Mr. Zimmermann is a
citizen of Germany.
All of the above officers, except those noted below, have been employed by
Ford or its subsidiaries in one or more capacities during the past five years.
Described below are the positions (other than those with Ford or its
subsidiaries) held by those officers who have not been with Ford or its
subsidiaries for five years:
. Mr. Cheng was President and Regional Executive of GE Appliances Ltd. in
Hong Kong from October 1996 until January 1998. From September 1994
until September 1996 he was President of General Electric China. General
Electric Company's address is 3135 Easton Turnpike, Fairfield,
Connecticut 06431.
III-6
<PAGE>
. Ms. Goeser served as General Manager, Refrigeration Product Team
Whirlpool Corporation, Whirlpool North American Appliance Group, from
September 1996 until March 1999. From January 1994 until September 1996,
she served as Vice President, Corporate Quality, Whirlpool Corporation.
Whirlpool Corporation's address is Whirlpool Center, 2000 M63, Benton
Harbor, Michigan 49022.
. Mr. Kelley served as Vice President and General Manager for Sales and
Distribution with General Electric's Appliance Division from January
1997 until June 1999. From January 1995 until January 1997 he served as
General Manager, Laundry Products, General Electric's Appliance Division
and as Marketing Director, GE Brands Worldwide, General Electric
Appliance Division from January 1994 until January 1995. General
Electric Company's address is 3135 Easton Turnpike, Fairfield,
Connecticut 06431.
. Mr. Mays was Vice President of Design Development at SHR Perceptual
Management in Scottsdale, Arizona from 1995 to 1997. Prior to that he
was design director responsible for worldwide design strategy,
development and execution for Audi AG. SHR Perceptual Management's
address is 703 Rancho Conejo Boulevard, Newbury Park, California 91320.
Audi AG's address is Auto-Union Strasse 2, 85045 Ingolstadt, Germany.
. Dr. Reitzle was a member of the Board of Management of BMW AG, Research
and Development from July 1987 to October 1995. He served as Chairman of
Rover Group Board from October 1995 to March 1997 and as a member of the
Board of Management of BMW AG, Market and Product from March 1998 to
February 1999. BMW AG's address is Research and Engineering Centre,
Knorrstr, 147 80788, Munich, Germany.
. Mr. Ross was a partner in the New York law firm of Davis, Polk &
Wardwell from May 1989 to May 1995. Davis, Polk & Wardwell's address is
450 Lexington Avenue, New York, New York 10017.
. Mr. Rushwin served as Vice President -- International Manufacturing and
Minivan Assembly Operations at DaimlerChrysler AG and its predecessors
from October 1994 until March 1999. Daimler Chrysler AG's address is
Epplestrasse 225, Stuttgart, Germany 011-4971117.
. Mr. Taylor was Executive Director, Production Control and Logistics --
General Motors Corporation Powertrain Group from March 1994 to July
1999. General Motors Corporation's address is 300 Renaissance Center,
Detroit, Michigan 48265.
. Mr. Theodore most recently was Senior Vice President -- Platform
Engineering at DaimlerChrysler AG and its predecessors from January 1998
until March 1999. His prior positions at DaimlerChrysler AG were General
Manager -- Small Car Platform Engineering from 1996 through December
1997 and General Manager -- Minivan Platform Engineering from 1992
through 1996. Daimler Chrysler AG's address is Epplestrasse 225,
Stuttgart, Germany 011-4971117.
. Mr. Vines served as Vice President -- External Affairs, Nissan North
America from April 1998 until February 2000. From 1983 until 1998, he
served in a variety of media relations, internal communications and
labor relations positions at Chrysler Corporation. Nissan North
America's address is 990 West 190th Street, Torrance, California 90502.
Chrysler Corporation's address is 1 Chrysler Drive, Auburn Hills,
Michigan 48326.
. Mr. Winkler was Chairman and CEO of Finance One, a finance subsidiary of
Bank One Corporation and served as Executive Vice President of Bank One
Corporation from 1993 to October 1999. Bank One's address is One First
National Plaza, Chicago, Illinois 60670.
III-7
<PAGE>
SCHEDULE IV
CAREY INTERNATIONAL, INC.
4530 WISCONSIN AVENUE, N.W.
WASHINGTON, D.C. 20016
----------------
INFORMATION STATEMENT PURSUANT TO
SECTION 14(f) OF THE SECURITIES EXCHANGE
ACT OF 1934 AND RULE 14f-1 PROMULGATED THEREUNDER
This Information Statement (the "Information Statement") is being mailed on
or about August 3, 2000 as part of the Offer to Purchase, dated August 3, 2000
(the "Offer to Purchase"), to the holders of the common stock (the "Common
Stock") of Carey International, Inc. (the "Company"). Capitalized terms used
and not otherwise defined herein shall have the meaning set forth in the Offer
to Purchase. You are receiving this Information Statement in connection with
the possible election of persons designated by Acquisition Company to a
majority of the seats on the Board of Directors of the Company (the "Board").
The Merger Agreement requires the Company to cause Acquisition Company's
designees to be elected to the Board under the circumstances described
therein. This Information Statement is required by Section 14(f) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule
14f-1 promulgated thereunder.
You are urged to read this Information Statement carefully. You are not,
however, required to take any action.
Pursuant to the Merger Agreement, the Offerors commenced the Offer on August
3, 2000. The Offer is scheduled to expire at 5:00 p.m., New York City time, on
Thursday, August 31, 2000, unless the Offer is extended.
The information contained in this Information Statement (including
information incorporated by reference) concerning Parent, Acquisition Company,
and the Acquisition Company Designees (as defined below) has been furnished to
the Company by either Parent or Acquisition Company, and the Company assumes
no responsibility for the accuracy or completeness of such information.
IV-1
<PAGE>
GENERAL INFORMATION REGARDING THE COMPANY
General
The Shares are the only class of voting securities of the Company
outstanding. Each Share has one vote. As of the close of business on July 24,
2000, there were 9,848,729 Shares issued and outstanding and 1,918,427 Shares
issuable upon the exercise of outstanding options granted under the Company's
stock option plans. The Company's Board of Directors currently consists of six
members. The Board is divided into three classes with staggered three-year
terms. Successors to the directors whose terms expire at each annual meeting
are elected for three-year terms. A director holds office until the annual
meeting for the year in which his term expires and until his successor is
elected and qualified or until such director's earlier resignation or removal.
Right to Designate Directors; the Acquisition Company Designees
Pursuant to the Merger Agreement, promptly upon the Offer Closing and from
time to time thereafter until the Effective Time, Acquisition Company will be
entitled to designate such number of directors (the "Acquisition Company
Designees") equal to the greater of (a) a majority of the Board and (b) the
product of (i) the number of directors on the Board and (ii) the percentage
that such number of Shares owned by Acquisition Company bears to the number of
Shares outstanding and not owned by the Company less the number of Independent
Directors (as defined below). In furtherance thereof, the Company has agreed,
upon request by Acquisition Company, either to increase the size of the Board
or use reasonable efforts to secure the resignations of, or failing that, to
remove such number of directors as is necessary to enable the Acquisition
Company Designees to be elected or appointed to the Board and shall cause the
Acquisition Company Designees to be so elected or appointed.
The Company's obligation to appoint the Acquisition Company Designees is
subject to Rule 14(f) of the Exchange Act. The Company is required to take all
action necessary to effect any such election and to include in this
Information Statement the information required by Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder. The foregoing
notwithstanding, the Merger Agreement further provides that at least two
directors who are not employees of the Company or any of its subsidiaries (the
"Independent Directors") shall continue to serve on the Board until the
effectiveness of the Merger. Following the election or appointment of the
Acquisition Company Designees to the Board, but prior to the Effective Time,
any permitted termination of the Merger Agreement by the Company, any
amendment of the Merger Agreement or the Company's certificate of
incorporation or by-laws requiring action by the Board, any extension of time
for the performance of any of the obligations or other acts of Parent and any
waiver of compliance with any of the agreements or conditions contained in the
Merger Agreement must be authorized by a majority of the Independent Directors
as well as a majority of all Board members.
Acquisition Company has informed the Company that it has chosen the persons
listed below as the Acquisition Company Designees and that each of the
Acquisition Company Designees has consented to act as a director. The names of
the Acquisition Company Designees, their ages as of July 24, 2000 and certain
other information about them are set forth below.
Jeffrey R. Larsen, age 25, has been an Associate with Chartwell since
September 1999. From July 1997 to July 1999, Mr. Larsen was an Analyst in the
Leveraged Finance Group of the Investment Banking Division of Goldman, Sachs &
Co. Mr. Larsen received an A.B. magna cum laude in Economics from Princeton
University.
Michael J. Rolland, age 56, has been an advisor to Chartwell since April
2000 when he retired as a Managing Director of Merrill Lynch & Co. He joined
Merrill Lynch & Co. in 1984 following its acquisition of A.G. Becker. At
Merrill Lynch, he founded and managed the Private Sales & Divestitures Group,
which focuses on advising sellers of middle market businesses. During his
career at Merrill, he supervised the sale of over 250 businesses. At A.G.
Becker, where he joined its Warburg Paribas Becker operation in 1977, he had
specialized in international mergers and acquisitions. Prior to 1977, he was
associated with the investment management firm
IV-2
<PAGE>
of Ivory & Sime in Edinburgh, Scotland. Mr. Rolland received his M.B.A. from
Stanford University and his M.A. from the University of St. Andrews, Scotland.
W. Gray Hudkins, age 25, is an Associate at Chartwell. Mr. Hudkins
previously worked as an Associate at the private equity investment firm of
Saunders Karp & Megrue in Stamford, Connecticut. Prior to his work at Saunders
Karp & Megrue, Mr. Hudkins worked as an Analyst at Montgomery Securities in
San Francisco, where he focused on underwriting as well as merger and
acquisition advisory services for the lodging, travel and leisure sectors. Mr.
Hudkins received an A.B., cum laude, in Economics and a Certificate in
Germanic Language and Literature from Princeton University.
James C. Schroer, age 48, is Vice President -- Global Marketing for Ford, a
position he was appointed to in June 1999. In this capacity, he is responsible
for the development of Ford's Brands, excellence in world-class marketing, and
global services to Ford's businesses, including marketing research, media
buying and placement, dealer education and training and the Ford presence on
the Internet. From October 1996 to June 1999, Mr. Schroer served as Executive
Director -- Marketing Strategy and Brand Management of Ford. From 1995 to
September 1996, Mr. Schroer was Vice President and lead partner of the
consumer industries group at Booz, Allen & Hamilton. Previously, Mr. Schroer
was Executive Vice President of Sales and Marketing at RJR Nabisco and Vice
President, Marketing at the STP and Wagner divisions of Studebaker-
Worthington, Inc. Mr. Schroer earned a bachelor's degree in economics from
Carleton College and a M.B.A. from Harvard University.
Elizabeth S. Acton, age 49, is Executive Vice President and Chief Financial
Officer of Ford Motor Credit Company, a wholly owned subsidiary of Ford. Ms.
Acton joined Ford Credit in January of 1998. From February 1995 to January
1998, Ms. Acton was Assistant Treasurer of Ford. Ms. Acton held a variety of
positions during her 14 year tenure with Ford, including positions with the
Treasurer's Office that involved international financing, portfolio and
foreign exchange management, cash flow forecasting, corporate finance and
pension asset management. Prior to joining Ford in 1983, Ms. Acton was Vice
President and Relationship Manager in the multinational banking group at
Continental Bank in Chicago. Ms. Acton holds a bachelor's degree in psychology
from the University of Minnesota and a M.B.A. in Finance from Indiana
University.
Acquisition Company has advised the Company that to the best knowledge of
Acquisition Company, none of the potential Acquisition Company Designees
currently is a director of, or holds any position with the Company, and except
as disclosed in the Offer to Purchase (including Schedule I thereto), none of
the potential Acquisition Company Designees beneficially owns any securities
(or rights to acquire any securities) of the Company or has been involved in
any transactions with the Company or any of its directors, executive officers
or affiliates that are required to be disclosed pursuant to the rules of the
Commission, except as may be disclosed in the Offer to Purchase. None of the
Acquisition Company Designees has any family relationship with any director or
executive officer of the Company.
Acquisition Company has advised the Company that none of the persons listed
above has during the last five years been convicted in a criminal proceeding
(excluding traffic violations and similar misdemeanors) or was a party to a
civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was, or is, subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any
violation of such laws or is involved in any other legal proceeding which is
required to be disclosed under Item 401(f) of Regulation S-K promulgated by
the Commission.
DIRECTORS OF THE COMPANY
Current Members of the Board of Directors
The names of the Company's current directors, their ages as of July 24, 2000
and certain other information about them are set forth below. As indicated
below, some of the directors have resigned effective upon the consummation of
the Offer.
IV-3
<PAGE>
Vincent A. Wolfington, age 60, a co-founder of the Company, has served as
its Chairman of the Board of Directors and Chief Executive Officer since 1979.
For over 25 years, Mr. Wolfington has been involved in the limousine industry
and directly associated with the Carey system of licensees and affiliates. Mr.
Wolfington has served as a consultant to the National Academy of Sciences
Transportation Research Board, President of the National Para-transit
Association and a member of the International Limousine Association. Mr.
Wolfington currently is a member of the Executive Committee of the World
Travel and Tourism Council, a global organization of the chief executive
officers of companies engaged in all sectors of the travel and tourism
industry.
Don R. Dailey, age 63, a co-founder of the Company, has served as the
President and a director of the Company since 1979. Mr. Dailey has been
directly involved in the limousine business for over 30 years. Mr. Dailey has
served on a number of boards and committees related to the travel industry,
including the National Business Travel Association, the International Business
Travel Association, the Association of Corporate Travel Executives, the
National Limousine Association and the International Limousine Association (as
its past President and member of its Executive Committee). Mr. Dailey is
currently a member of the Travel Business Round Table, a United States
organization of executive officers of companies engaged in all sectors of the
travel and tourism industry. Mr. Dailey has resigned as a director of Carey
International effective upon the consummation of the Offer.
Robert W. Cox, age 62, has served as a director of the Company since 1995.
From 1969 until his retirement in 1994, Mr. Cox was a partner in the New York
and Chicago offices of the law firm Baker & McKenzie. From 1984 to 1992, Mr.
Cox was Chairman of the Executive Committee and Managing Partner of the firm,
and from 1993 to 1994, Mr. Cox was Chairman of the Policy Committee. Mr. Cox
is Chairman Emeritus of Baker & McKenzie. Mr. Cox currently is a director of
Hon Industries, Inc. and Homebase, Inc.
Dennis I. Meyer, age 64, has served as a director of the Company since June
1998. Mr. Meyer has been a partner in the law firm of Baker & McKenzie since
1965. Mr. Meyer has previously served as Chairman of the Executive Committee
and Managing Partner of Baker & McKenzie. Mr. Meyer serves as a director of
Oakwood Homes Corporation as well as United Financial Banking Companies, Inc.,
Jordan Kitt's Music, Inc. and Daily Express, Inc.
Nicholas J. St. George, age 61, has served as a director of the Company
since June 1997. Currently, Mr. St. George serves as a consultant to Oakwood
Homes Corporation, a manufacturer and retailer of manufactured homes. From
February 1979 to September 1999, Mr. St. George served as Chairman and Chief
Executive Officer of Oakwood Homes Corporation. Mr. St. George serves as a
director of Legg Mason, Inc. Mr. St. George has resigned as a director of
Carey International effective upon the consummation of the Offer.
Joseph V. Vittoria, age 65, has served as a director of the Company since
June 1998. Mr. Vittoria has been the Chairman and Chief Executive Officer of
Travel Services International, Inc. ("Travel Services") since Travel Services
completed its initial public offering in July 1997. From September 1987 to
February 1997, Mr. Vittoria was the Chairman and Chief Executive Officer of
Avis, Inc. ("Avis"), a multinational auto rental company where he was employed
for over 26 years. Mr. Vittoria was responsible for the purchase of Avis by
its employees in 1987 by creating one of the world's largest Employee Stock
Ownership Plans. He was a founding member of the World Travel and Tourism
Council. Mr. Vittoria serves as a director of Sirius Satellite Radio, Inc.,
Transmedia Asia, Puradyn Filter Technologies, Inc., ResortQuest International,
Inc. and various non-profit associations. Mr. Vittoria has resigned as a
director of Carey International effective upon the consummation of the Offer.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Board currently has three standing committees: the Audit Committee, the
Compensation Committee and the Executive Committee. The Board does not
currently have a standing Nominating Committee. The members and functions of
the standing committees are described briefly below.
IV-4
<PAGE>
Executive Committee
The members of the Executive Committee of the Company's Board of Directors
are Messrs. Wolfington, Cox and Dailey. The Executive Committee exercises all
the powers of the Board of Directors between meetings of the Board of
Directors, except such powers that are reserved to the Board of Directors by
applicable law.
Audit Committee
The members of the Audit Committee of the Company's Board of Directors are
Messrs. Meyer and Vittoria. The Audit Committee makes recommendations
concerning the engagement of independent public accountants, reviews with the
independent public accountants the plans for and results of the audit,
approves professional services provided by the independent public accountants,
reviews the independence of the independent public accountants, considers the
range of audit and non-audit fees, and reviews the adequacy of the Company's
internal accounting controls.
Compensation Committee
The members of the Compensation Committee of the Company's Board of
Directors are Messrs. Cox and St. George. The Compensation Committee
establishes a general compensation policy for the Company and approves
increases in directors' fees and salaries paid to officers and senior
employees of the Company. The Compensation Committee administers the Company's
equity incentive plans and determines, subject to the provisions of the
Company's plans, the directors, officers and employees of the Company eligible
to participate in any of the plans, the extent of such participation and terms
and conditions under which benefits may be vested, received or exercised.
During the fiscal year ended November 30, 1999, the Board of Directors met
five times, the Audit Committee met twice, the Compensation Committee met
three times and the Executive Committee did not meet. There are no family
relationships among any of the directors or executive officers of the Company.
Director Compensation
Members of the Board of Directors who also serve as officers of the Company
do not receive compensation for serving on the Board. Each other member of the
Board receives an annual retainer of $20,000 for serving on the Board, plus a
fee of $1,000 for each Board meeting attended and $500 for each committee
meeting attended, except that only one $500 fee is paid in the event that more
than one committee meeting is held on a single day. All directors receive
reimbursement of reasonable expenses incurred in attending Board and committee
meetings and otherwise carrying out their duties.
At his or her election, a director may defer all or a portion of the fees
paid to him or her by the Company. If such an election is made, the deferred
fees are credited to the director's account at the end of each fiscal quarter
in the form of phantom shares of Common Stock. Each phantom share is equal to
one share of Common Stock, and the total number of phantom shares credited to
the account during any fiscal quarter is determined based on the average
closing price of the Common Stock on the Nasdaq National Market during the
last 20 trading days of such fiscal quarter. The account reaches maturity on
the earlier of (i) the last day of the Company's fiscal year in which the
director ceases to be a member of the Board of Directors or (ii) the date on
which the director, with the consent of the Company, elects to receive payment
of his or her deferred fees. Upon maturity, payment will be paid in cash an
amount equal to the number of phantom shares in the director's account. The
value of the phantom shares at maturity is determined based on the average
closing price of the Common Stock on the Nasdaq National Market during the 20
trading days preceding the date of maturity. To date, elections to defer all
or a portion of their fees have been made by Messrs. Cox, Meyer, St. George
and Vittoria.
The Company maintains the Stock Plan for Non-Employee Directors (the
"Directors' Plan"). A maximum of 100,000 shares of Common Stock may be
delivered upon the exercise of options granted under the Directors' Plan and
elections to receive shares in lieu of cash compensation. Only directors of
the Company who are not
IV-5
<PAGE>
employees of the Company or any of its subsidiaries (the "Non-Employee
Directors") are eligible to participate in the Directors' Plan. While grants
of stock options under the Directors' Plan are automatic and non-
discretionary, all questions of interpretation of the Directors' Plan are
determined by the Board of Directors.
On the date of each annual meeting of stockholders, each Non-Employee
Director continuing in office will be granted an option pursuant to the
Directors' Plan covering 5,000 shares. Any newly elected Non-Employee Director
will be granted an option pursuant to the Directors' Plan covering 5,000
shares on the date of his or her election (whether such election occurs at an
annual meeting or otherwise). The option exercise price for all options
granted under the Directors' Plan is the closing price of a share of the
Common Stock as reported on the Nasdaq National Market on the date the option
is granted. All options granted under the Directors' Plan become fully
exercisable six months after the date of grant. Unless sooner terminated
following the death, disability or termination of service of a director,
options granted under the Directors' Plan will remain exercisable until the
fifth anniversary of the date of grant. In addition, upon certain transactions
involving a change of control or the dissolution or liquidation of the
Company, all options outstanding under the Directors' Plan will terminate;
provided however, that 20 days prior to the effective date of any such
transaction, dissolution or liquidation, all options outstanding under the
Directors' Plan that are not otherwise exercisable will become immediately
exercisable.
Under the Directors' Plan, a Non-Employee Director may elect to be paid all
or a portion of his or her annual retainer in shares of Common Stock. Any such
election must be made in writing at least 30 days prior to the date the annual
retainer would be paid by the Company. The number of shares to be delivered to
a Non-Employee Director upon such election is determined by dividing the
amount of the annual retainer to be received in shares of Common Stock by the
closing price of a share of Common Stock as reported on the Nasdaq National
Market on the date the annual retainer is to be paid. The Board of Directors
may at any time or times amend the Directors' Plan for any purpose which at
the time may be permitted by law.
Messrs. Cox, Meyer, St. George and Vittoria have agreed to cancel the
options granted to each of them pursuant to the Directors' Plan on June 25,
1999 to purchase 5,000 shares of Common Stock at an exercise price of $24.625.
EXECUTIVE OFFICERS OF THE COMPANY
The following paragraphs set forth certain information, as of July 24, 2000,
about the other current executive officers of the Company who are not
directors. Such officers serve at the pleasure of the Board.
Richard A. Anderson, Jr., age 54, has served as Executive Vice President --
Sales and Marketing of the Company since July 1998. Mr. Anderson previously
served as Senior Vice President of the Company from December 1988 to July 1998
and was Chief Operating Officer of Carey Limousine NY, Inc., a subsidiary of
the Company, from December 1988 until August 1997. Mr. Anderson is a former
Chairman of the New York Taxi and Limousine Commission's Limousine Advisory
Board, a former board member of the Association of Corporate Travel
Executives, and a member of the National Business Travel Association and
Meeting Planners International.
David H. Haedicke, age 53, has served as Executive Vice President and Chief
Financial Officer of the Company since October 1996. From August 1996 to
October 1996, he was Senior Vice President and Chief Financial Officer of
Infotechnology, Inc., Hadron, Inc. and Comtex Scientific Corporation, an
affiliated group of companies engaged in systems management and software
development. From September 1993 to May 1996, he was Chief Financial Officer
of Walcoff & Associates, Inc., a communications and information management
firm. From June 1991 to September 1993, he was Chief Financial Officer and
Vice President of Xsirius, Inc., a high technology research and development
company. Mr. Haedicke was a partner at Ernst & Young L.L.P. from 1985 to 1991
and was an employee at that firm from 1973 to 1985.
IV-6
<PAGE>
Guy C. Thomas, age 62, has served as Executive Vice President -- Operations
of the Company since 1987. Mr. Thomas has served on a number of boards and
committees related to the travel industry, including the National Business
Travel Association, the Greater Washington Area Passenger Traffic Association,
the American Society of Association Executives, Meeting Planners
International, the Association of Corporate Travel Executives, the National
Limousine Association and the International Taxicab and Livery Association.
Devin J. Murphy, age 34, has served as Senior Vice President -- Operations
of the Company since May 1998. Previously, from April 1997 to May 1998, Mr.
Murphy served as Senior Vice President and Chief Development Officer of the
Company, and from May 1996 to April 1997 he served as Vice President --
Corporate Development of the Company. From 1988 to 1994, Mr. Murphy held sales
and marketing positions at several high tech companies.
Sally A. Snead, age 40, has served as the Company's Senior Vice President --
Information Systems since June 1996. From June 1993 to June 1996, she was
Executive Vice President and General Manager of Carey Limousine L.A., Inc.
From January 1987 to June 1993, she was Executive Vice President and General
Manager of Carey Limousine DC, Inc. She is a member of Executive Women
International, the National Business Travel Association, the Association of
Corporate Travel Executives and the National Limousine Association.
Eugene S. Willard, age 50, has served as the Company's Senior Vice
President -- Technology, Strategy and Planning since February 1999. Mr.
Willard has over 19 years experience in systems development and strategic
systems planning. From 1985 to February 1999, Mr. Willard held senior level
positions in systems development and strategic planning in the areas of
reservations, revenue management and loyalty program marketing systems for
Marriot International.
John C. Wintle, age 53, has served as the Company's Senior Vice President --
Europe since May 1996 and as Executive Vice President and Managing Director
of Carey U.K. Ltd., a subsidiary of the Company, since March 1996. From 1982
to February 1996, Mr. Wintle served Savoy Hotel PLC ("Savoy") and its
affiliates, including Camelot Barthropp Ltd. ("Camelot"), in various
capacities. From March 1993 to February 1996, Mr. Wintle was Executive Vice
Chairman of Camelot, which was acquired by Carey U.K. Ltd. in February 1996.
Previously, from 1989 to 1993, Mr. Wintle was General Manager, Restaurant
Division, of several entities affiliated with Savoy. From 1982 to 1989, Mr.
Wintle had been Group Financial Controller at Savoy. Mr. Wintle is a citizen
of the United Kingdom. Mr. Wintle's business address is c/o Carey UK, 11-15
Headfort Place, London, United Kingdom.
IV-7
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information with respect to Company
compensation earned in the last three completed fiscal years by the Chief
Executive Officer and the four other most highly compensated executive
officers (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
----------------------- ------------
Other Awards
Annual Shares All Other
Name and Principal Salary Bonus Comp. Underlying Compensation
Position Year ($) ($) ($) Options ($)
------------------ ---- -------- ------- ------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Vincent A. Wolfington.. 1999 $256,950 $50,000 $ -- 80,000 $71,509(1)
Chairman and Chief 1998 231,620 -- -- 180,000(2) 71,774
Executive Officer 1997 231,620 85,000 -- 100,000 12,000
Don R. Dailey.......... 1999 226,667 50,000 -- 80,000 64,337(1)
President and Director 1998 205,000 -- -- 180,000(2) 35,150
1997 205,001 70,000 -- 100,000 12,000
David H. Haedicke...... 1999 151,250 30,000 -- -- --
Executive Vice
President 1998 135,000 -- -- 120,000 ---
and Chief Financial
Officer 1997 135,000 45,000 -- 30,000 --
Guy C. Thomas.......... 1999 115,000 12,000 13,020(3) 24,000 19,456(1)
Executive Vice 1998 115,000 -- 13,020(3) 60,000(2) 10,995
President-Operations 1997 115,000 25,000 13,020(3) 15,000 9,900
John C. Wintle(4)...... 1999 101,767 47,933 -- -- --
Senior Vice President 1998 87,599 63,019 -- 6,000 --
1997 89,668 44,817 -- 10,000 --
</TABLE>
--------
(1) Represents the premium payment on life insurance policies for
beneficiaries designated by the Named Executive Officers.
(2) Excludes options granted in April 1998 to Messrs. Wolfington, Dailey and
Thomas to purchase 100,000, 100,000 and 30,000 shares, respectively, which
April 1998 options were replaced by the options shown for 1999.
(3) Represents a car allowance.
(4) Amounts reported for Mr. Wintle reflect the application of British Pound
to U.S. Dollar exchange ratios as of November 30, 1999, 1998 and 1997 of
1.5985, 1.6510 and 1.6900, respectively.
IV-8
<PAGE>
Options Granted in Last Fiscal Year
The following table sets forth certain information regarding options granted
during the fiscal year ended November 30, 1999 by the Company to each of the
Named Executive Officers who received options (the options shown are repriced
options originally granted in April 1998):
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Rates of Stock
Price Appreciation
Individual Grants For Option Term
-------------------------------------------- --------------------
Number of % of Total
Shares Options
Underlying Granted to Exercise
Options Employees in Price Expiration
Name Granted Fiscal Year ($/Share) Date 5% 10%
---- ---------- ------------ --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Vincent A. Wolfington... 80,000 32.8% $15.00 4/29/08 $ 754,674 1,912,491
Don R. Dailey........... 80,000 32.8 15.00 4/29/08 754,674 1,912,491
Guy C. Thomas........... 24,000 9.8 15.00 4/29/08 226,402 573,747
</TABLE>
Aggregate Options Exercised in the Last Fiscal Year an Year-End Stock Option
Values
The following table sets forth certain information regarding the aggregate
number and dollar value of all options exercised by each of the Named
Executive Officers during the fiscal year ended November 30, 1999 and the
aggregate number and value of all unexercised options held by each of the
Named Executive Officers at November 30, 1999.
<TABLE>
<CAPTION>
Number of Shares
Underlying Unexercised Value of Unexercised
Otions at In-the-Money Options at
November 30, 1999 November 30, 1999(2)
------------------------- -------------------------
Shares
Acquired Number of Number of
On Value Exercisable Unexercisable Exercisable Unexercisable
Name Exercise Realized(1) Shares Shares Value Value
---- -------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Vincent A. Wolfington... -- $ -- 285,706 180,000 $3,365,433 $1,147,500
Don R. Dailey........... -- -- 235,707 180,000 2,529,200 1,147,500
David H. Haedicke....... 6,200 75,995 39,600 130,000 574,560 873,750
Guy C. Thomas........... 32,018 582,060 34,000 65,000 261,750 436,875
John C. Wintle.......... 7,933 106,240 7,633 9,334 108,164 74,507
</TABLE>
--------
(1) Value is calculated based upon the difference between the option exercise
price and the closing market price of the Company's Common Stock on the
Nasdaq National Market on the date of exercise.
(2) Value of unexercised in-the-money options based upon $21.375, the closing
price of the Company's Common Stock on the Nasdaq National Market on
November 30, 1999.
Equity Incentive Plans
The Company currently maintains the 1987 Stock Option Plan (the "1987 Plan")
and the 1992 Stock Option Plan (the "1992 Plan"), under which the Company has
awarded incentive and non-statutory stock options. The Company also maintains
the 1997 Equity Incentive Plan (the "1997 Plan"), which currently provides for
the award of up to 1,550,000 shares of Common Stock in the form of incentive
stock options, non-statutory stock options, stock appreciation rights,
restricted stock, performance stock units and other stock units that are
valued by reference to the value of the Common Stock. In addition, the Company
maintains the 1998 Non-Qualified Stock Option Plan (the "1998 Plan"), which
provides for the award of up to 500,000 shares of Common Stock in the form of
non-statutory stock options. The 1987 Plan, the 1992 Plan, the 1997 Plan and
the 1998 Plan are hereinafter referred to collectively as the "Equity Plans".
IV-9
<PAGE>
As of November 30, 1999, options were outstanding to purchase an aggregate
of 1,846,217 shares of Common Stock under the Equity Plans, and approximately
170,500 shares of Common Stock are authorized but had not been granted under
options pursuant to the Equity Plans.
Officers, key employees, non-employee directors of and consultants to the
Company are eligible to participate in the Equity Plans, except officers and
directors are not eligible to participate in the 1998 Plan. The Equity Plans
are administered by the Compensation Committee of the Board of Directors.
Among other things, the Compensation Committee determines, subject to the
provisions of the Equity Plans, who shall receive awards, the types of awards
to be made, and the terms and conditions of each award. Options that are
intended to qualify as incentive stock options under the Equity Plans may be
exercisable for not more than 10 years after the date the option is awarded
and may not be granted at an exercise price less than the fair market value of
the shares of Common Stock at the time the option is granted (and, in the case
of stock options granted to holders of more than 10% of the Common Stock, may
not be granted at an exercise price less than 110% of the fair market value of
the shares of Common Stock at the time the options are granted). The 1997 Plan
and the 1998 Plan provide that in the event of a merger or other transaction
that results or will result in the Company's Common Stock not being registered
under Section 12 of the Securities Exchange Act of 1934, as amended, any
unexercisable options or awards will become fully exercisable 20 days prior to
the effective date of the merger or other transaction.
The Compensation Committee may amend, modify or terminate any outstanding
award under the Equity Plans with the participant's consent, except consent
shall not be required if the Compensation Committee determines that such
action will not materially and adversely affect the participant. The Board may
amend, suspend or terminate any of the Equity Plans, or any part of such
plans, at any time, except that no amendment may be made without stockholder
approval if such approval is necessary to comply with any applicable tax or
regulatory requirement.
Agreements With Executive Officers
New Management Agreements. Acquisition Company plans to enter into an
employment agreement with Mr. Wolfington and a retirement and consulting
agreement with Mr. Dailey. Each of the these agreements is described in the
section captioned "SPECIAL FACTORS -- The Merger Agreement and Related
Documents" of the Offer to Purchase accompanying this Information Statement
and is incorporated herein by reference.
Existing Employment and Severance Agreements. Set forth below is a
description of the employment and/or severance agreements currently existing
between the Company and its Named Executive Officers.
On May 12, 2000, the Company entered into employment agreements with each of
Messrs. Wolfington and Dailey. The employment agreements each have a term
expiring on the earlier to occur of the executive's Normal Retirement Date
under the Company's qualified retirement plan and the termination of the
executive's employment pursuant to the terms of the employment agreement. The
base salaries to be paid to Messrs. Wolfington and Dailey under the terms of
the employment agreements are $325,000 and $275,000, respectively. In
addition, Messrs. Wolfington and Dailey are each entitled to yearly incentive
compensation in an amount determined by the Board of Directors and fringe
benefits not less favorable than the fringe benefits to which they were
entitled on May 12, 2000. In the event that Mr. Wolfington or Mr. Dailey dies
during the term of his employment agreement, the Company will pay an amount
equal to his base salary for a period of three months to the designated
beneficiary. In the event that either Mr. Wolfington or Mr. Dailey becomes
disabled during the term of his employment agreement, the Company will pay an
amount equal to his base salary and any benefits to which he is entitled until
he becomes eligible for disability income under the Company's long-term
disability income plan. If either Mr. Wolfington or Mr. Dailey is terminated
without cause (as defined in the employment agreements) or terminates his
employment for good reason (as defined in the employment agreements), the
Company will pay him an amount equal to three times his total compensation
during his last full year of employment with the Company, and he will become
fully vested in all benefits accrued. In the event of a change of control of
the Company (as defined in the employment agreements) during the term of the
employment agreements, the Company will pay to each of Messrs. Wolfington and
Dailey, within ten days following the change of control, the sum of
$1,250,000. If this payment is subject to an excise tax imposed by the
Internal
IV-10
<PAGE>
Revenue Code, Messrs. Wolfington and Dailey will be entitled to receive an
additional payment in an amount equal to the excise tax imposed upon the
payment.
On May 12, 2000, the Company also entered into severance and change of
control agreements with each of Messrs. Haedicke, Thomas and Wintle. The
severance agreements provide that in the event of a change of control of the
Company (as defined in the severance agreements), the Company will pay to each
of Messrs. Haedicke Thomas and Wintle the sums of $400,000, $300,000 and
$100,000, respectively, within ten days following the change of control. If
any of Messrs. Haedicke, Thomas or Wintle dies while any amount is still
payable, all such amounts will be paid in accordance with the terms of the
severance agreements to their divesee, legatee or estate. Nothing in the
severance agreements prevents or limits Messrs. Haedicke, Thomas or Wintle
from participation in any benefit, bonus, incentive or other plan or program
provided by the Company and for which they qualify.
Interests of Certain Directors and Executive Officers in the Transactions
Certain directors and executive officers of the Company have interests in
the Transaction different from those of stockholders generally, which may
present such persons with certain potential conflicts of interests. These
interests are described in the section captioned "SPECIAL FACTORS -- Interests
of Certain Persons in the Transaction" of the Offer to Purchase accompanying
this Information Statement and is incorporated herein by reference.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee are Messrs. Cox and St.
George. No present or former executive officer of the Company serves as a
member of the Compensation Committee. Furthermore, there are no interlocking
relationships between any executive officer of the Company and any entity
whose directors or executive officers serve on the Compensation Committee.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The Company has been party to certain other related party transactions which
are described below.
During 1993, for an aggregate purchase price of $850,000, the Company
acquired 85 shares of non-voting redeemable preferred stock of CLI Fleet, Inc.
("CLI Fleet"), a privately-held finance company formed for the purpose of
financing the chauffeured vehicle service industry. During 1999, the Company
acquired, for an aggregate purchase price of approximately $657,000, paid for
through the conversion of outstanding loans and deposits with CLI Fleet, a
further 65.634 shares of CLI Fleet's non-voting redeemable preferred stock. As
a holder of CLI Fleet preferred stock, the Company is currently entitled to
receive an annual dividend of $500 per share. The Company waived the right to
receive any dividends accrued in respect of its preferred stock through April
30, 1996. During 1998, CLI Fleet redeemed 10 shares of preferred stock held by
the Company for an aggregate redemption price of $100,000. The remaining
shares of preferred stock are subject to mandatory redemption by payments of
$100,000 annually on May 30, 2001 through 2009 with a final payment of
$406,340 on May 30, 2010. Under the terms of an agreement with CLI Fleet,
commencing April 1997, the Company has an exclusive option to purchase all of
the outstanding shares of common stock of CLI Fleet at a purchase price equal
to the greater of $187,500 or CLI Fleet's liquidating value as determined by
an independent appraisal. The Company is a party to three ten-year leases of
administrative offices from CLI Fleet. During 1999, the aggregate rent expense
paid to CLI Fleet pursuant to the leases was approximately $139,000.
To date, CLI Fleet has provided financing to the Company's independent
operators, without recourse to the Company, for both initial fees due under
the Company's independent operator agreements and with respect to vehicles
purchased by independent operators. Each of the Company's owned and operated
chauffeured vehicle service companies has entered into a Finance and Service
Agreement with CLI Fleet, which provides that the Company will recommend and
refer independent operators to CLI Fleet for financing of vehicles. From 1993
to 1996, CLI Fleet purchased from the Company notes receivable due from
independent operators in exchange for cash or demand notes on a non-recourse
basis.
IV-11
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information as of July 24, 2000 with
respect to the beneficial ownership of Common Stock by (i) each director of
the Company, (ii) each the Named Executive Officer, (iii) each beneficial
owner of more than five percent of the Company's Common Stock and (iv) all
directors and executive officers of the Company as a group. As of July 24,
2000, there were 9,848,729 shares of the Company's Common Stock outstanding.
Except as indicated in the footnotes below, the persons named in this table
have sole investment and voting power with respect to the shares beneficially
owned by them.
<TABLE>
<CAPTION>
Shares Beneficially Owned
-------------------------
Name of Beneficial Owner Number Percent
------------------------ --------------- -------------
<S> <C> <C>
Vincent A. Wolfington (1).......................... 566,069 5.5
Don R. Dailey (2).................................. 555,176 5.4
David H. Haedicke (3).............................. 169,600 1.7
Guy C. Thomas (4).................................. 141,782 1.4
John C. Wintle (3)................................. 16,967 *
Robert W. Cox (3).................................. 24,400 *
Dennis I. Meyer (5)................................ 9,000 *
Nicholas J. St. George (6)......................... 16,500 *
Joseph V. Vittoria (3)............................. 4,000 *
Gilder Gagnon Howe & Co. LLC (7)...................... 1,568,448 15.9
1775 Broadway, 26th Floor
New York, New York 10019
J. & W. Seligman & Co. Incorporated (8)............ 861,279 8.7
100 Park Avenue
New York, New York 10017
All directors and executive officers as a group
(12 persons) (9).................................. 1,687,897 15.0
</TABLE>
--------
* Less than 1%.
(1) Includes options to purchase 465,706 shares of Common Stock. Also includes
(i) 1,183 shares of Common Stock currently held by a company controlled by
Mr. Wolfington, (ii) 1,560 shares held by a limited partnership which are
attributable to Mr. Wolfington's wife (780 shares) and one of his children
(780 shares) and (iii) 430 shares held by one of his children. Excludes
shares held by Yerac Associates, L.P. ("Yerac"), a limited partnership of
which Mr. Wolfington is a limited partner, with respect to which shares
Mr. Wolfington has no voting or investment power.
(2) Includes options to purchase 415,707 shares of Common Stock.
(3) Represents options to purchase shares of Common Stock.
(4) Includes options to purchase 99,000 shares of Common Stock.
(5) Includes options to purchase 4,000 shares of Common Stock. Also includes
5,000 shares held by Mr. Meyer's wife as to which Mr. Meyer disclaims
beneficial ownership.
(6) Includes options to purchase 11,500 shares of Common Stock. Also includes
5,000 shares held by Mr. St. George's wife as to which Mr. St. George
disclaims beneficial ownership.
(7) Includes 5,025 shares of Common Stock over which Gilder Gagnon Howe & Co.
LLC has sole voting and 1,568,448 shares of Common Stock over which Gilder
Gagnon Howe & Co. LLC has shared dispositive
IV-12
<PAGE>
power. This information is based upon the Schedule 13G filed by Gilder
Gagnon Howe & Co. LLC with the Securities and Exchange Commission on
February 14, 2000.
(8) Includes 663,400 shares of Common Stock over which J. & W. Seligman & Co.
Incorporated has shared voting power and 861,279 shares of Common Stock
over which J. & W. Seligman & Co. Incorporated has shared dispositive
power. William C. Morris, as the owner of a majority of the outstanding
voting securities of J. & W. Seligman & Co. Incorporated, may be deemed to
beneficially own the shares held by J. & W. Seligman & Co. Incorporated.
This information is based upon the Schedule 13G filed by J. & W. Seligman
& Co. Incorporated and William C. Morris, as a group, with the Securities
and Exchange Commission on July 17, 2000.
(9) See Notes 2 through 6. Also includes options to purchase 164,483 shares of
Common Stock and 19,920 shares of Common Stock beneficially owned by
executive officers not listed in the table above.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers,
directors, and more than ten percent stockholders to file with the SEC reports
on prescribed forms of their ownership and changes in ownership of Common
Stock and furnish copies of such forms to the Company.
Except for the following, the Company believes that during and with respect
to the fiscal year ended November 30, 1999, all reports required by Section
16(a) to be filed by the Company's officers, directors and more than ten
percent stockholders were filed on a timely basis. Devin Murphy filed a Form 4
with the Commission on May 13, 1999 for shares purchased on the open market on
February 4, 1999. Paul Sandt filed a Form 4 with the Commission on October 26,
1999 for shares purchased pursuant to the exercise of a stock option and the
sale of those shares on July 21, 1999. David Haedicke filed a Form 4 with the
Commission on January 13, 2000 for shares purchased pursuant to the exercise
of a stock option and the sale of those shares on November 12, 1999.
IV-13
<PAGE>
EXHIBIT A
[LOGO OF FRIEDMAN, BILLINGS, RAMSEY & CO. INC.]
July 15, 2000
Independent Committee of
the Board of Directors
Carey International, Inc.
4530 Wisconsin Avenue, NW
Washington, DC 20016
Board of Directors:
You have requested that Friedman, Billings, Ramsey & Co., Inc. ("FBR") provide
you with its opinion as to the fairness, from a financial point of view, to the
public holders of common stock ("Non-Affiliated Shareholders") of Carey
International Inc. (the "Company") of consideration to be received by them
pursuant to a draft Agreement and Plan of Merger dated July 14, 2000 (the
"Merger Agreement") among the Company, a newly formed Delaware Corporation
("NewCo") and Chartwell Investments, Inc. Pursuant to the Merger Agreement, a
wholly owned subsidiary of NewCo will be merged with and into the Company (the
"Merger"). The Merger Agreement provides, among other things, that for each
outstanding share of common stock of the Company (a "Share") (other than those
shares subject to dissenters' rights), shareholders, including Shares held by
the Non-Affiliated Shareholders and certain members of the Company's
management, will receive $18.25 cash per Share. The terms of the Merger are
more fully set forth in the Merger Agreement.
FBR has acted as financial advisor to the Independent Committee in connection
with the Merger. In delivering this opinion, FBR has among other things:
1. Reviewed the Company's Form 10-K for the fiscal year ended November 30,
1999;
2. Reviewed the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended February, 29, 2000;
3. Reviewed the Company's un-audited quarterly results for the fiscal quarter
ended May 31, 2000;
4. Reviewed the Company's Annual Proxy Statement dated May 26, 1999;
5. Conducted discussions with certain members of management of the Company
concerning the financial condition, results of operations, financial
forecasts, business and prospects of the Company;
6. Conducted discussions with PriceWaterhouse Coopers, the Company's auditor,
concerning the condition of the Company's accounting controls and financial
statements;
7. Reviewed market prices and trading activity for the Shares for the period
December 22, 1997 through July 11, 2000.
8. Compared the results of operations and financial condition of the Company
with those of certain publicly-traded companies that FBR deemed to be
reasonably comparable to the Company;
9. Reviewed the financial terms, to the extent publicly available, of certain
acquisition transactions that FBR deemed to be reasonably comparable to the
Merger;
10. Reviewed the Merger Agreement and related documents; and
11. Performed such other analyses and reviewed and analyzed such other
information as FBR deemed appropriate.
In rendering this opinion, FBR did not assume responsibility for independently
verifying, and did not independently verify, any financial or other information
concerning the Company furnished to it by the Company, or the publicly-
available financial and other information regarding the Company and other
comparable public companies. FBR has assumed that all such information is
accurate and complete and has no reason to believe
A-1
<PAGE>
otherwise. FBR has relied on certain assumptions, conveyed by the Company's
management, pertaining to the financing used to consummate the merger. FBR has
further relied on the assurances of management of the Company that they are
not aware of any facts that would make such financial or other information
relating to such entities inaccurate or misleading. With respect to financial
forecasts for the Company provided to FBR by the Company's management, FBR has
assumed, for purposes of this opinion, that the forecasts have been reasonably
prepared on bases reflecting the best available estimates and judgments of
such management at the time of preparation as to the future financial and
operating performance of the Company. FBR has assumed that there has been no
undisclosed material change in the Company's assets, financial condition,
result of operations, business or prospects since February 29, 2000, and has
relied upon the 10-K for November 30, 1999 as representation of the Company's
financial position and operating results through that date. FBR was not
requested to, and did not, undertake an independent appraisal of the assets or
liabilities of the Company nor was FBR furnished with any such appraisals.
FBR's conclusions and opinion are necessarily based upon economic, market and
other conditions and the information made available to FBR as of the date of
this opinion. FBR expresses no opinion on matters of a legal, regulatory, tax
or accounting nature related to the Merger.
In connection with FBR's role as financial advisor to the Company regarding
the Merger, FBR will receive a fee of $400,000.00 upon rendering this opinion.
Based upon and subject to the foregoing, as well as any such other matters as
we consider relevant, it is FBR's opinion, as of the date hereof, that
consideration to be received by the Non-Affiliated Shareholders in the Merger
is fair, from a financial point of view.
This letter does not constitute a recommendation to any Shareholder as to how
such Shareholder should vote on the proposed Merger or as to what election
Management should make pursuant to the Merger Agreement. This letter is for
the information of the Board of Directors and of the Special Committee of the
Board of Directors and may be referred to and reproduced in its entirety in
proxy materials sent to the Shareholders in connection with the solicitation
of approval for the Merger. The letter may not be otherwise reproduced,
disseminated, quoted from or referred to by the Company without FBR's prior
written consent.
Very truly yours,
/s/ Joseph R. Nardini
FRIEDMAN, BILLINGS, RAMSEY & CO.,
INC.
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EXHIBIT B
[LOGO OF BENEDETTO GARTLAND COMPANY]
July 15, 2000
Board of Directors
Carey International, Inc.
4530 Wisconsin Avenue, NW, Suite 500
Washington, DC 20016
Dear Sirs:
You have requested our opinion as to the fairness from a financial point of
view to the holders of common stock, par value $0.01 per share ("Company Common
Stock"), of Carey International, Inc. (the "Company") of the consideration to
be received by such holders pursuant to the terms of the Agreement and Plan of
Merger (the "Agreement"), by and among the Company, Limousine Holdings LLC, a
Delaware limited liability company ("Parent"), Aluwill Acquisition Corp, a
Delaware corporation and a wholly owned subsidiary of Parent ("Acquisition
Company") and Eranja Acquisition Sub, Inc., a Delaware corporation and a wholly
owned subsidiary of Acquisition Company ("Acquisition Sub Company") pursuant to
which Acquisition Company or Acquisition Sub Company will be merged (the
"Merger") with and into the Company.
Pursuant to the Agreement, Acquisition Company and the Company will commence a
tender offer (the "Tender Offer") for all the outstanding shares of Company
Common Stock at a price of $18.25 per share. The Tender Offer is to be followed
by the Merger in which the shares of all holders who did not tender will be
converted into the right to receive $18.25 per share in cash.
We understand that Vincent A. Wolfington and other members of the Company's
management team (collectively, "Management") will continue to have an interest
in the Company after the closing of the Merger. This opinion does not address
the fairness from a financial point of view of the Tender Offer and/or Merger
to Management.
In the course of performing our review and analyses for rendering this opinion,
we have:
(i) reviewed a draft of the Agreement;
(ii) reviewed certain publicly available business and financial information
relating to the Company;
(iii) reviewed certain operating and financial information, including
projections, provided to or discussed with us by management of the
Company related to the Company and its prospects;
(iv) met with certain member's of the Company's senior management to
discuss its business, operations, historical and projected financial
results and future prospects;
(v) reviewed the historical stock prices, valuation parameters and trading
volume of the Company Common Stock;
(vi) reviewed publicly available financial data, stock market performance
data and valuation parameters of companies whose operation we
considered generally relevant in evaluating the Company;
(vii) reviewed the terms of recent selected mergers and acquisitions which
we deemed generally relevant in evaluating the Merger;
(viii) performed discounted cash flow analyses based on the projections for
the Company furnished to us; and
(ix) considered such other information and conducted other studies,
analyses, inquiries and investigations as we deemed appropriate.
In rendering our opinion, we have relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available
to us from public sources, that was provided to us by the Company, or
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that was otherwise reviewed by us and have assumed that the Company is not
aware of any information prepared by it or its advisors that might be material
to our opinion that has not been made available to us. With respect to the
financial projections supplied to us, we have relied on the representations
that they have been reasonably prepared on the basis reflecting the best
currently available estimates and judgments of the management of the Company
as to the future operating and financial performance of the Company. We have
not assumed any responsibility for making an independent evaluation of any
assets or liabilities or for making any independent verification of the
information reviewed by us.
Our opinion is necessarily based on economic, market, financial and other
condition as they exist on, and on the information made available to us as of,
the date of this letter. It should be understood that, although subsequent
developments may affect this opinion, we do not have any obligation to update,
revise or reaffirm this opinion. Our opinion does not address the relative
merits of the Tender Offer and Merger or any other business strategies being
considered by the Company's Board of Directors, nor does it address the
Board's decision to proceed with the Tender Offer and Merger. Our opinion does
not constitute a recommendation to any stockholder as to whether such
stockholder should tender into the Tender Offer or how such stockholder should
vote on any proposed Merger.
We have acted as advisor to the Company's Board of Directors in connection
with the Merger and will receive a fee for such services, including the
rendering of this opinion, a significant portion of which is contingent upon
consummation of the Merger. This opinion is addressed to the Board of
Directors. We understand that the Company's Special Committee of the Board of
Directors (the "Special Committee") has retained Friedman, Billings, Ramsey
Group, Inc. to provide an opinion exclusively to the Special Committee.
This opinion may be included in its entirety, and only its entirety, in any
proxy statement or tender offer document distributed to the Company's
shareholders in connection with the Merger or the Tender Offer. However, no
version or excerpt may be used, and no public reference (except as provided
for in the preceding sentence) to this opinion may be made with out our prior
written consent.
Based upon and subject to the foregoing and such other factors as we deem
relevant, we are of the opinion that, as of the date hereof, the consideration
to be received by the holders of the Company Common Stock (other than
Management) pursuant to the Tender Offer and/or Merger is fair to such
shareholders from a financial point of view.
Very truly yours,
BENEDETTO, GARTLAND & COMPANY, INC.
/s/ M. William Benedetto
By: _________________________________
M. William Benedetto
Chairman
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EXHIBIT C
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
(a) Any stockholder of a corporation of this State who holds shares of stock
on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares
through the effective date of the merger or consolidation, who has otherwise
complied with subsection (d) of this section and who has neither voted in
favor of the merger or consolidation nor consented thereto in writing pursuant
to sec. 228 of this title shall be entitled to an appraisal by the Court of
Chancery of the fair value of the stockholder's shares of stock under the
circumstances described in subsections (b) and (c) of this section. As used in
this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to
be effected pursuant to sec. 251 (other than a merger effected pursuant to
sec. 251(g) of this title), sec. 252, sec. 254, sec. 257, sec. 258, sec. 263
or sec. 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall be
available for the shares of any class or series of stock, which stock,
or depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange
or designated as a national market system security on an interdealer
quotation system by the National Association of Securities Dealers,
Inc. or (ii) held of record by more than 2,000 holders; and further
provided that no appraisal rights shall be available for any shares of
stock of the constituent corporation surviving a merger if the merger
did not require for its approval the vote of the stockholders of the
surviving corporation as provided in subsection (f) of sec. 251 of this
title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or
series of stock of a constituent corporation if the holders thereof are
required by the terms of an agreement of merger or consolidation
pursuant to sec. 251, 252, 254, 257, 258, 263 and 264 of this title to
accept for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from such
merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts in
respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national
securities exchange or designated as a national market system
security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or held of record by more
than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and cash
in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under sec. 253 of this title is not owned by
the parent corporation immediately prior to the merger, appraisal
rights shall be available for the shares of the subsidiary Delaware
corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
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incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior
to the meeting, shall notify each of its stockholders who was such on
the record date for such meeting with respect to shares for which
appraisal rights are available pursuant to subsection (b) or (c) hereof
that appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of
this section. Each stockholder electing to demand the appraisal of such
stockholder's shares shall deliver to the corporation, before the
taking of the vote on the merger or consolidation, a written demand for
appraisal of such stockholder's shares. Such demand will be sufficient
if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such stockholder's shares. A proxy or vote against the
merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate
written demand as herein provided. Within 10 days after the effective
date of such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in
favor of or consented to the merger or consolidation of the date that
the merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to sec. 228 or
sec. 253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal
rights of the approval of the merger or consolidation and that
appraisal rights are available for any or all shares of such class or
series of stock of such constituent corporation, and shall include in
such notice a copy of this section; provided that, if the notice is
given on or after the effective date of the merger or consolidation,
such notice shall be given by the surviving or resulting corporation to
all such holders of any class or series of stock of a constituent
corporation that are entitled to appraisal rights. Such notice may,
and, if given on or after the effective date of the merger or
consolidation, shall, also notify such stockholders of the effective
date of the merger or consolidation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of such
notice, demand in writing from the surviving or resulting corporation
the appraisal of such holder's shares. Such demand will be sufficient
if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation,
either (i) each such constituent corporation shall send a second notice
before the effective date of the merger or consolidation notifying each
of the holders of any class or series of stock of such constituent
corporation that are entitled to appraisal rights of the effective date
of the merger or consolidation or (ii) the surviving or resulting
corporation shall send such a second notice to all such holders on or
within 10 days after such effective date; provided, however, that if
such second notice is sent more than 20 days following the sending of
the first notice, such second notice need only be sent to each
stockholder who is entitled to appraisal rights and who has demanded
appraisal of such holder's shares in accordance with this subsection.
An affidavit of the secretary or assistant secretary or of the transfer
agent of the corporation that is required to give either notice that
such notice has been given shall, in the absence of fraud, be prima
facie evidence of the facts stated therein. For purposes of determining
the stockholders entitled to receive either notice, each constituent
corporation may fix, in advance, a record date that shall be not more
than 10 days prior to the date the notice is given, provided, that if
the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no
record date is fixed and the notice is given prior to the effective
date, the record date shall be the close of business on the day next
preceding the day on which the notice is given.
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(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied
with subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger
or consolidation, any stockholder shall have the right to withdraw such
stockholder's demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the
merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting
from the consolidation a statement setting forth the aggregate number of
shares not voted in favor of the merger or consolidation and with respect to
which demands for appraisal have been received and the aggregate number of
holders of such shares. Such written statement shall be mailed to the
stockholder within 10 days after such stockholder's written request for such a
statement is received by the surviving or resulting corporation or within 10
days after expiration of the period for delivery of demands for appraisal
under subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed 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 by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates
to submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court
may, in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on
the list filed by the surviving or resulting corporation pursuant to
subsection (f) of this section and who has submitted such stockholder's
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that such
stockholder is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders of uncertificated stock forthwith, and the case of holders of
shares represented by certificates upon the surrender to the corporation
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of the certificates representing such stock. The Court's decree may be
enforced as other decrees in the Court of Chancery may be enforced, whether
such surviving or resulting corporation be a corporation of this State or of
any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be filed within
the time provided in subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a written withdrawal
of such stockholder's demand for an appraisal and an acceptance of the merger
or consolidation, either within 60 days after the effective date of the merger
or consolidation as provided in subsection (e) of this section or thereafter
with the written approval of the corporation, then the right of such
stockholder to an appraisal shall cease. Notwithstanding the foregoing, no
appraisal proceeding in the Court of Chancery shall be dismissed as to any
stockholder without the approval of the Court, and such approval may be
conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.
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Fascimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each
stockholder of Carey International or his broker, dealer, commercial bank,
trust company or other nominee to the Depositary, at one of the address set
forth below:
The Depositary for the Offer is:
United States Trust Company of New York
By Overnight Courier and by By Hand Delivery By Registered or
Hand to 4:30 p.m. Certified Mail:
after 4:30 p.m. on Expiration
Date:
United States Trust United States Trust
Company of New York Company of New York
United States Trust Company 30 Broad Street, B-Level P.O. Box 112
of New York New York, NY 10004-2304 Bowling Green Station
30 Broad Street, 14th Floor New York, NY 10274-0012
New York, NY 10004-2304
Facsimile Transmission:
(212) 422-0183 or (646) 458-
8104
For additional information, please call United States Trust Company of New
York
(800) 548-6565
Questions or requests for assistance or additional copies of this Offer to
Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent at its location and telephone numbers set
forth below. Stockholders may also contact their broker, dealer, commercial
bank or trust company for assistance concerning the Offer.
The Information Agent for the Offer is:
D.F. King & Co., Inc.
77 Water Street
20th Floor
New York, NY 10005
Banks and Brokers Call Collect:
(212) 269-5550
All Others Please Call Toll-Free:
(800) 628-8510
