Exhibit (b)(ii)
GarMark Advisors L.L.C. First Union Investors, Inc.
1325 Avenue of the Americas 301 S. College Street
26th Floor Charlotte, NC 28288
New York, NY 10019
July 12, 2000
Mr. Todd R. Berman, President
Chartwell Investments II LLC
717 Fifth Avenue
New York, NY 10022
Re: Carey International, Inc.
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Gentlemen:
Chartwell Investments II LLC (the "Sponsor") has informed
GarMark Advisors L.L.C., as advisor to GarMark Partners, L.P. ("GarMark"), and
First Union Investors, Inc. (together with GarMark, the "Purchasers") that the
Sponsor and Ford Motor Company or one or more of its affiliates (collectively,
"FMC") are seeking $40.0 million of subordinated debt financing together with
detachable common stock purchase warrants (the "Financing") to support the
proposed leveraged acquisition (as more fully described below) of Carey
International, Inc., a Delaware corporation (the "Borrower").
We understand that the Sponsor and FMC intend to form a
holding company ("Parent") which will in turn form a wholly-owned subsidiary
("MergerCo"), and Parent and MergerCo will enter into an Agreement and Plan of
Merger (the "Merger Agreement") with the Borrower, pursuant to which MergerCo
and the Borrower will commence a joint tender offer (the "Tender Offer") to
acquire, for cash, all of the issued and outstanding shares of common stock of
the Borrower (the "Company Common Stock"). Pursuant to the Merger Agreement,
upon completion of the Tender Offer, either MergerCo or a wholly-owned
subsidiary of MergerCo created for such purpose will merge (the "Merger") with
and into the Borrower. The Tender Offer and Merger will be completed either in a
Short Form Merger Structure (as defined herein) or a Long Form Merger Structure
(as defined herein), depending on the number of shares of Company Common Stock
that are tendered in the Tender Offer.
We understand that the Merger Agreement will provide that the
Tender Offer will be made jointly by MergerCo and the Borrower and will provide
for the grant by the Borrower to
MergerCo of an option (the "Topping Option") to acquire a specified number of
shares of newly issued Company Common Stock, for cash, at a price of not more
than $18.25 per share. In the event that holders of outstanding shares of
Company Common Stock tender shares representing less than 90% of the outstanding
Company Common Stock, MergerCo may exercise the Topping Option to acquire such
number of shares of Company Common Stock as will be necessary so that, upon
completion of the Tender Offer and exercise of the Topping Option, MergerCo will
own at least 90% of the then outstanding shares of Company Common Stock entitled
to vote in connection with the Merger, giving effect to the issuance of such
shares. The exercise of the Topping Option and the issuance of the shares of
Company Common Stock to MergerCo thereunder will be completed simultaneously
upon acceptance of shares in the Tender Offer. Upon completion of the Tender
Offer and acquisition of shares of Company Common Stock pursuant to the Topping
Option, and prior to or simultaneously with the funding of the Financing and the
initial funding of senior secured credit facilities (the "Facilities"), MergerCo
will merge with and into the Borrower, with the Borrower being the surviving
corporation (the "Short Form Merger"). In the Short Form Merger, outstanding
shares of Company Common Stock (other than shares held by MergerCo and
dissenting shares) will be converted into the right to receive cash in the
amount of not more than $18.25 per share, and the Borrower will utilize draws
under the Facilities to fund the payment of cash to the holders of such shares.
In order to finance the Tender Offer and the Short Form Merger, (a) equity
contributions will be made to Parent and/or Borrower of approximately, and in
any event not less than, $105.5 million which shall be comprised of (x) not less
than $97.0 million in cash contributed as equity to Parent by Sponsor, FMC and
certain other investors and (y) up to $9.0 million, but not less than $6.0
million, of equity (including roll-over equity) contributed by current members
of management of the Borrower (such equity to be valued at the Tender Offer
Price) and such cash equity shall be contributed by Parent to MergerCo
(collectively, the "Equity Capitalization"), (b) the Borrower will obtain the
Facilities, and (c) the Borrower will issue $40 million in aggregate principal
amount of unsecured senior subordinated notes (the "Notes") together with
detachable common stock purchase warrants (the "Warrants", and together with the
Warrants, the "Securities") in a private placement. We understand that the
roll-over equity will be contractually committed to as of the date of the Tender
Offer and shall be contributed to the Borrower concurrently with the Merger. The
structure described in this paragraph is defined as the "Short Form Merger
Structure."
We understand that in the event that holders of shares of
outstanding Company Common Stock tender shares representing more than 50.1% of
the outstanding common stock of the Borrower but the Short-Form Merger Structure
cannot be utilized, then upon completion of the Tender Offer, (a) MergerCo will
acquire shares tendered in the Tender Offer representing at least 50.1% of the
outstanding Company Common Stock entitled to vote in connection with the
approval of the Merger, after giving effect to such purchase and the Self-Tender
(as defined below), and (b) the Borrower will acquire and immediately cancel the
remainder of the shares tendered in the Tender Offer (the "Self-Tender"),
utilizing (i) first, proceeds of the issuance of the Securities and (ii) second,
to the extent necessary, draws under the Facilities to pay for any remaining
tendered shares. As soon as possible after completion of the Tender Offer in
accordance with applicable
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law, MergerCo or a wholly-owned subsidiary thereof created solely for such
purpose will merge with and into the Borrower, with the Borrower being the
surviving corporation (the "Long Form Merger"). In the Long Form Merger,
outstanding shares of Company Common Stock (other than shares held by MergerCo
and dissenting shares) will be converted into the right to receive cash in the
amount of not more than $18.25 per share, and the Borrower will utilize the
draws under the Facilities (and, to the extent not required to fund the
Self-Tender or refinance the Borrower's existing senior bank credit facilities,
the remaining proceeds of the Notes) to fund the payment of cash to the holders
of such shares. In order to finance the Tender Offer utilizing the Long Form
Merger Structure, (a) Parent will effect the Equity Capitalization and (b) the
Borrower will obtain the Facilities and issue the Securities. The structure
described in this paragraph is defined as the "Long Form Merger Structure."
The Sponsor has requested that the Purchasers commit to
purchase, or cause their respective affiliates to purchase, the entire principal
amount of the Notes and the Warrants.
Based on our understanding of the transaction as described
above and the information you have provided to the Purchasers, the Purchasers
are pleased to severally confirm their respective commitment (the "Commitment")
to purchase the principal amount of the Securities set forth opposite their
names on the signature page hereto, subject to the terms and conditions
contained herein and in the attached Summary of Proposed Terms and Conditions
(the "Term Sheet"). We understand that all proceeds received by the Borrower
from the issuance of the Notes and Warrants would be used in the Tender Offer as
described above. (This letter and the Term Sheet are sometimes collectively
referred to herein as the "Letter"). Any capitalized term used and not otherwise
defined herein shall have the meaning ascribed to such term in the Term Sheet.
The Commitment of the Purchasers hereunder is based upon the
financial and other information regarding the Borrower and its subsidiaries
previously provided to the Purchasers and is subject to the various conditions
described in the Term Sheet and to the usual reservations, among others, that
there shall not have occurred after the date of such information, in the sole
opinion of the Purchasers, any material adverse change in the business, assets,
liabilities (actual or contingent), operations, condition (financial or
otherwise) or prospects of the Borrower and its subsidiaries taken as a whole.
If the continuing review by the Purchasers of the Borrower discloses information
relating to conditions or events not previously disclosed to the Purchasers or
relating to new information or additional developments concerning conditions or
events previously disclosed to the Purchasers that the Purchasers in their sole
discretion believe may have a material adverse effect on the condition
(financial or otherwise), assets, properties, business operations or prospects
of the Borrower and its subsidiaries taken as a whole, the Purchasers, may, in
their sole discretion, decline to provide the Financing.
This Commitment is also subject to (i) the Sponsor's written
acceptance of a letter from the Purchasers to the Sponsor of even date herewith
(the "Fee Letter") pursuant to which the Sponsor agrees to pay, or cause to be
paid, to the Purchasers certain
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fees in connection with this Commitment as more particularly set forth therein,
(ii) the completion by the Purchasers of their legal due diligence review of the
Borrower and its subsidiaries which shall be satisfactory to the Purchasers in
their sole discretion, (iii) the completion of a definitive note purchase
agreement, the Notes, the Warrants and other related documentation
(collectively, the "Note Purchase Documents") on terms consistent with the Term
Sheet and definitive documentation for the Facilities, the Tender Offer and the
Merger, in each case in form and substance satisfactory to the Purchasers, (iv)
compliance with all applicable laws and regulations (including compliance of
this Letter and the transactions described herein with all applicable federal
banking and securities laws, rules and regulations), (v) the tendering of at
least 50.1% of the outstanding shares of Company Common Stock in the Tender
Offer and (vi) the satisfaction of all other conditions described herein, in the
Term Sheet and in the Note Purchase Documents. It is a condition to each
Purchaser's Commitment hereunder that the Commitment of the other shall be
committed to on the Closing Date (as defined herein) (on the terms and subject
to the conditions set forth herein and in the Term Sheet). Those matters which
are not covered by or made clear in this Letter are subject to the mutual
agreement of the parties.
The Purchasers reserve the right, prior to or after the
execution of the Note Purchase Documents, to assign part of the foregoing
Commitment to purchase the Securities to one or more of their respective
affiliates. The Sponsor agrees that the Purchasers may share with any of their
affiliates and advisors any information related to the transactions described
herein or any other matter contemplated hereby, on a confidential basis.
The Sponsor hereby represents, warrants and covenants to the
Purchasers that (i) all information, other than the Projections (as defined
below), which has been, or is hereafter, made available to the Purchasers by the
Sponsor or any of its representatives in connection with the transactions
contemplated hereby ("Information"), is, and will be, complete and correct in
all material respects and does not, and will not, contain any untrue statement
of a material fact or omit to state a fact necessary to make the statements
contained therein not misleading and (ii) all financial projections concerning
the Borrower that have been, or are hereafter, made available to the Purchasers
by the Sponsor or the Borrower or any of their respective representatives (the
"Projections") have been, or will be, prepared in good faith based upon
reasonable assumptions. The Sponsor also agrees to furnish the Purchasers with
such information and Projections as they may reasonably request and to
supplement the Information and the Projections from time to time, through and
including the closing date of the Financing (the "Closing Date"), so that the
representations and warranties set forth in the preceding sentence are correct
on the Closing Date. The Sponsor acknowledges that the Purchasers, in committing
to make funds available to the Borrower, subject to the terms of this Letter, in
connection with the Financing, have been, and will be, using and relying on the
Information and the Projections without any independent verification thereof.
Regardless of whether the Commitment herein expires or is
terminated or the Financing closes, Sponsor agrees to pay upon demand to the
Purchasers all out-of-pocket expenses which may be incurred by the Purchasers in
connection with the
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Financing or the other transactions described herein (including all reasonable
legal, environmental and other consulting costs and fees incurred in connection
with the preparation of this Letter, the Fee Letter, the Note Purchase Documents
and evaluation of and documenting the Financing and the other transactions
described herein). Sponsor shall provide the Purchasers with at least eleven
business days prior written notification of the Closing Date to comply with the
funding requirements of the Purchasers and shall indemnify the Purchasers for
any losses, liabilities or expenses incurred by the Purchasers resulting from
the failure of the Company to issue the Notes and the Warrants on the Closing
Date.
The Sponsor agrees to cause the Borrower to indemnify and hold
harmless the Purchasers and their respective affiliates and each of their
respective directors, officers, partners, attorneys and advisors (each such
person or entity referred to hereafter in this paragraph as an "Indemnified
Person") from any and all losses, claims, costs, damages, expenses or
liabilities (or actions, suits or proceedings, including any inquiry or
investigation with respect thereto) ("Damages") to which any Indemnified Person
may become subject, insofar as such Damages arise out of, in any way relate to,
or result from, this Letter, the Fee Letter, the Financing, or the other
transactions contemplated hereby and thereby and to reimburse upon demand each
Indemnified Person for any and all legal and other expenses incurred in
connection with investigating, preparing to defend, or defending against, any
such Damages; provided, however, that the Borrower shall not have any obligation
under this indemnity provision for liabilities determined in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of any Indemnified Person. The
foregoing provisions of this paragraph shall be in addition to any right that an
Indemnified Person shall have at common law or otherwise. No Indemnified Person
shall (x) have any liability (whether direct or indirect, in contract or tort or
otherwise) to the Borrower or the Sponsor or their respective security holders
or creditors arising out of, related to, or resulting from, the transactions
contemplated herein, except to the extent that such liability is found by a
final, non-appealable judgment of a court of competent jurisdiction to have
resulted from such Indemnified Person's gross negligence or willful misconduct
or (y) be responsible or liable for any indirect or consequential damages that
may be alleged as a result of this Letter.
The provisions of the immediately preceding two paragraphs
shall remain in full force and effect regardless of whether definitive
documentation for the Financing shall be completed, executed and delivered, and
notwithstanding the termination or expiration of this Letter or the Commitment
of the Purchasers hereunder. Upon execution of the Note Purchase Documents, the
Borrower shall assume all obligations of the Sponsor hereunder and the Sponsor
shall be released therefrom in a manner mutually satisfactory to the Borrower
and the Purchasers.
This Letter is delivered to the Sponsor with the understanding
that neither this Letter nor the substance of the Financing proposed herein
shall be disclosed by the Sponsor to any person, entity or group outside the
Sponsor, the Borrower or FMC, except to those professional advisors who are in a
confidential relationship with the Sponsor or
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the Borrower and require knowledge thereof to perform their respective duties
(such as the Sponsor's and the Borrower's legal counsel, independent auditors
and financial advisers and legal counsel to the agents of the Facilities), or
where disclosure is required by applicable law; provided, however, that once
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this Letter is accepted by the Sponsor, the Sponsor will consult with the
Purchasers as to any public filings or document distribution in which reference
is made to either this Letter or the substance of the Financing proposed herein.
This Letter (i) shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to any
choice-of-law principles thereof, (ii) may be executed in counterparts, which,
taken together, shall constitute an original, (iii) shall be amended or modified
only in a writing executed by the Purchasers and the Sponsor, (iv) shall not be
assigned or transferred by the Sponsor (whether by operation of law or
otherwise) without the prior written consent of the Purchasers, and (v)
supersedes and replaces any and all proposals or commitment letters previously
delivered by either of the Purchasers to the Sponsor relating to the Financing.
In addition, no party has been authorized by the Purchasers to make any oral or
written statements inconsistent with this Letter.
The Commitment proposed herein will be available for
acceptance until 5:00 p.m. (New York, NY time) on July 13, 2000, unless further
extended in writing by the Purchasers. Notwithstanding the Sponsor's acceptance
of the Commitment, it shall expire if the Financing described herein has not
closed on or before September 15, 2000, unless the Commitment is extended by the
Purchasers in their sole discretion.
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We are delighted to have this opportunity to work with you. If
the terms of the Letter meet with your approval, please indicate your acceptance
by signing and dating the enclosed copy of this Letter, and then returning the
same to the undersigned.
Very truly yours,
Commitment
Amount
GARMARK ADVISORS L.L.C. $30,000,000
By:
-------------------------
Name:
Title:
By:
-------------------------
Name:
Title:
FIRST UNION INVESTORS, INC.
$10,000,000
By:
-------------------------
Name:
Title:
AGREED TO AND ACCEPTED THIS
____ DAY OF JULY, 2000:
CHARTWELL INVESTMENTS II LLC
By:
-------------------------
Name:
Title:
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SUMMARY OF PROPOSED TERMS AND CONDITIONS
OF INVESTMENT IN CAREY INTERNATIONAL, INC.
SENIOR SUBORDINATED NOTES AND WARRANTS
ISSUER: Carey International, Inc. (the "Company").
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BACKGROUND: Chartwell Investments II LLC ("Chartwell"), together with Ford
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Motor Company or one or more of its affiliates (collectively,
"FMC") and certain other investors, intends to form a holding
---
company ("Parent") which will in turn form a wholly-owned
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subsidiary ("MergerCo"), and Parent and MergerCo will enter into
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an Agreement and Plan of Merger (the "Merger Agreement") with the
----------------
Company, pursuant to which MergerCo and the Company will commence
a joint tender offer (the "Tender Offer") to acquire, for cash,
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all of the issued and outstanding shares of common stock of the
Company. Pursuant to the Merger Agreement, upon completion of the
Tender Offer, either MergerCo or a wholly-owned subsidiary of
MergerCo created for such purpose will merge (the "Merger") with
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and into the Company. The Tender Offer and Merger will be
completed either in a Short Form Merger Structure (as defined
herein) or a Long Form Merger Structure (as defined herein),
depending on the number of shares of common stock of the Company
that are tendered in the Tender Offer.
The Tender Offer will be made jointly by MergerCo and the Company
and provide for the grant by the Company to MergerCo of an option
(the "Topping Option") to acquire a specified number of shares of
--------------
newly issued common stock of the Company, for cash, at a price of
not more than $18.25 per share. In the event that holders of
outstanding shares of common stock tender shares representing
less than 90% of the outstanding common stock of the Company,
MergerCo may exercise the Topping Option to acquire such number
of shares of common stock of the Company as will be necessary so
that, upon completion of the Tender Offer and exercise of the
Topping Option, MergerCo will own at least 90% of the then
outstanding shares of common stock of the Company entitled to
vote in connection with the Merger, giving effect to the issuance
of such shares. The exercise of the Topping Option and the
issuance of the shares of common stock to MergerCo thereunder
will be completed simultaneously upon acceptance of shares in the
Tender Offer. Upon completion of the Tender Offer and acquisition
of shares pursuant to the Topping Option, and prior to or
simultaneously with the Closing and the initial funding of senior
secured credit facilities of the Company (the "Facilities"),
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MergerCo will merge with and into the Company, with the Company
being the surviving corporation (the "Short Form Merger"). In the
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Short Form Merger, outstanding shares of common stock of the
Exhibit (b)(ii)
Part 2
Company (other than shares held by MergerCo and dissenting
shares) will be converted into the right to receive cash in the
amount of not more than $18.25 per share, and the Company will
utilize draws under the Facilities to fund the payment of cash to
the holders of such shares. In order to finance the Tender Offer
and the Short Form Merger, (a) equity contributions will be made
to Parent and/or the Company of approximately, and in any event
not less than, $105.5 million which shall be comprised of (x) not
less than $97.0 million in cash contributed as equity to Parent
by Sponsor, FMC and certain other investors and (y) up to $9.0
million, but not less than $6.0 million, of equity (including
roll-over equity) contributed by current members of management of
the Company (such equity to be valued at the Tender Offer Price)
and such cash equity shall be contributed by Parent to MergerCo
(collectively, the "Equity Capitalization"), (b) the Company will
---------------------
obtain the Facilities, and (c) the Company will issue $40 million
in aggregate principal amount of Notes (as defined herein),
together with Warrants (as defined herein, and together with the
Notes, the "Securities") in a private placement. The roll-over
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equity will be contractually committed to as of the date of the
Tender Offer and shall be contributed to the Company concurrently
with the Merger. The structure described in this paragraph is
defined as the "Short Form Merger Structure."
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In the event that holders of shares of outstanding common stock
of the Company tender shares representing more than 50.1% of the
outstanding common stock of the Company but the Short Form Merger
Structure cannot be utilized, then upon completion of the Tender
Offer, (a) MergerCo will acquire shares tendered in the Tender
Offer representing at least 50.1% of the outstanding common stock
of the Company entitled to vote in connection with the approval
of the Merger, after giving effect to such purchase and the
Self-Tender (as defined below), and (b) the Company will acquire
and immediately cancel the remainder of the shares tendered in
the Tender Offer (the "Self-Tender"), utilizing (i) first, the
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proceeds of the issuance of the Notes, and (ii) second, to the
extent necessary, draws under the Facilities to pay for any
remaining tendered shares. As soon as possible after completion
of the Tender Offer in accordance with applicable law, MergerCo
or a wholly-owned subsidiary thereof created solely for such
purpose will merge with and into the Company, with the Company
being the surviving corporation (the "Long Form Merger"). In the
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Long Form Merger, outstanding shares of common stock of the
Company (other than shares held by MergerCo and dissenting
shares) will be converted into the right to receive cash in the
amount of not more than $18.25 per share, and the Company will
utilize the draws under the Facilities (and, to the extent not
required to fund the Self-Tender or refinance the Company's
existing senior bank credit facilities, the remaining proceeds of
the Notes) to fund the payment of cash to the holders of such
shares. In order to finance the Tender Offer,
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(a) Parent will effect the Equity Capitalization, and (b) the
Company will obtain the Facilities and issue the Securities. The
structure described in this paragraph is defined as the "Long
----
Form Merger Structure."
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The Tender Offer, the Short Form Merger, the Long Form Merger,
the Topping Option and the exercise thereof, the Equity
Capitalization, the Facilities, the Securities and the other
transactions described herein are referred to collectively as the
"Transactions." The direct parent company of the Company after
------------
giving effect to the Transactions, whether Parent or MergerCo, is
referred to herein as "Holdings."
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ISSUE: Senior Subordinated Notes (the "Notes") together with the
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Warrants issued by the same entity as the borrower under the
Facilities.
PURCHASERS: GarMark Partners, L.P. ("GarMark") and First Union Investors,
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Inc. ("First Union" and together with GarMark, the "Purchasers");
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provided that the Purchasers shall have the right at any time
after the Closing Date to sell or transfer the Notes, in whole or
in part, to any of their respective affiliates or any third
parties (subject to the restrictions set forth under
Assignments).
PRINCIPAL
AMOUNT: $40,000,000 aggregate principal amount (comprised of commitments
by GarMark in the amount of $30,000,000 and First Union in the
amount of $10,000,000).
CLOSING: Closing of the purchase of the Notes is expected to occur on or
before September 15, 2000 (the "Closing Date").
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MATURITY: Seven years from the Closing Date.
INTEREST: The Notes will bear interest at a fixed rate of 17.0% per annum
payable quarterly, in arrears, up to 3.5% of which may be paid in
kind at the option of the Company, and the remainder of which
shall be paid in cash.
SECURITY: The Notes will be unsecured.
SUBORDINATION: The Notes will be subordinate (on terms acceptable to the
Purchasers) to agreed upon amounts of permitted senior debt
arising under the Facilities (the "Senior Debt") and senior to
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all other subordinated indebtedness.
GUARANTEES: The Notes will be irrevocably and unconditionally guaranteed on a
joint and several basis by any direct parent or holding company
of the Company and each existing and subsequently acquired or
organized direct and indirect domestic subsidiary of the Company,
on a basis
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subordinate in right and interest to the guaranties of the Senior
Debt in a manner consistent with the subordination of the Notes.
USE OF
PROCEEDS: The proceeds of the Notes shall be used solely to (a) refinance
certain existing debt, (b) finance the Tender Offer and the
Merger, (c) provide general working capital, (d) provide capital
for general corporate purposes, (e) pay certain acquisition
costs, fees and expenses in connection with the Transactions and
(f) pay any fees and expenses in connection with the issuance and
sale of the Notes, all in amounts acceptable to the Purchasers.
MANDATORY
REDEMPTION: The Company will redeem the full principal amount of the Notes,
plus any accrued interest and the appropriate redemption premium
amount, upon the earlier to occur of any of the following: the
Maturity, a sale of all or substantially all of the Company's
assets or an acceleration following an event of default under the
note purchase agreement. Mandatory redemptions will be subject to
the premiums set forth in the Optional Redemption section set
forth below.
OFFER TO
PURCHASE: The Company will make an offer to redeem (i) the full principal
amount of the 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 the Company or an asset sale, the
principal amount of the 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 below; provided,
however, that if such redemptions occur after the second
anniversary of the Closing Date, the redemption price shall be
equal to 101% of the principal amount of the Notes being
redeemed, plus accrued and unpaid interest to the date of
redemption.
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OPTIONAL
REDEMPTION: The Notes may be redeemed at the option of the Company, in whole
and not in part, upon not less than 30 days and not more than 60
days notice, at the redemption price (the "Redemption Price") set
----------------
forth below, in each case plus accrued and unpaid interest
thereon ("Unpaid Interest"), if any, to the redemption date.
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Redemption Date Redemption Price Percentage
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Prior to second anniversary of 100% plus two years interest
the Closing Date less interest paid as of the
date of redemption
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Second anniversary of the Closing Date
through the third 104%
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Third anniversary of the Closing Date
through the fourth 102%
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Thereafter 100%
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CONDITIONS
PRECEDENT: The closing of the purchase of the Notes will be subject to the
satisfaction of conditions consistent with those customarily
found in similar financings and such additional conditions deemed
appropriate by the Purchasers in the context of the Notes,
including without limitation, the conditions set forth in the
Commitment Letter to which this Summary of Terms and Conditions
is attached and the following:
(1) The definitive note purchase agreement, Notes, Warrant (as
defined herein) and other documentation for the Notes and
the Warrant shall be satisfactory in form and substance to
the Purchasers;
(2) Parent, MergerCo and the Company shall have entered into the
Merger Agreement, and the Merger Agreement, the Tender Offer
and the Merger shall have been approved by the Company's
board of directors and such approval shall not have been
withdrawn or modified in a manner adverse to the Purchasers;
(3) The Purchasers shall be satisfied with the corporate and
capital structure of Holdings, the Company and their
respective subsidiaries and the management of the Company
and its subsidiaries after giving effect to the
Transactions, with all legal,
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tax and accounting matters relating to the Transactions or
to Holdings, the Company and their respective subsidiaries
after giving effect thereto, and with all documentation
relating to the Tender Offer, the Merger, the Equity
Capitalization and the other Transactions (including the
Merger Agreement and all schedules and exhibits thereto, the
offer to purchase (the "Offer to Purchase") and related
-----------------
documentation in connection with the Tender Offer, and all
employment contracts and security holder agreements
(including all agreements with FMC); and without limitation
of the foregoing, the Purchasers shall be satisfied that (i)
the aggregate purchase price for all of the issued and
outstanding shares of the Company acquired pursuant to the
Tender Offer and the Merger will not exceed $220 million
(before giving effect to proceeds to the Company from the
exercise of options and warrants), and the purchase price
for any share shall not exceed $18.25, (ii) aggregate fees
and expenses of Parent and MergerCo, payable in connection
with the Transactions will not exceed an amount reasonably
acceptable to the Purchasers and (iii) in the event the Long
Form Merger Structure is utilized, the Company will be
prepared to file its preliminary proxy or information
statement relating to the Merger with the Securities and
Exchange Commission (the "Commission") promptly after
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completion of the Tender Offer;
(4) The Purchasers shall be satisfied to the extent that the
Short Form Merger is utilized that the exercise of the
Topping Option shall permit the utilization of the Short
Form Merger Structure. In the event the Short Form Merger
Structure is utilized, the Purchasers shall be satisfied
that, prior to or substantially concurrently with the
Closing, (i) the Tender Offer, the exercise of the Topping
Option and the Short Form Merger shall have been consummated
in accordance with the terms of the Merger Agreement, the
Offer to Purchase and all other applicable documentation and
in compliance with all applicable laws and regulatory
approvals, without any amendment or waiver of any material
condition or other provision thereof except as approved by
the Purchasers, and (ii) MergerCo shall have accepted for
payment and acquired tendered shares which, together with
other shares then owned by MergerCo (including shares
acquired directly from the Company pursuant to exercise of
the Topping Option), represent not less than 90% of the
aggregate voting power (after giving effect to the exercise
of the Topping Option) of all outstanding shares of the
Company entitled to vote in connection with the approval of
the Merger;
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(5) In the event the Long Form Merger Structure is utilized, the
Purchasers shall be satisfied that, prior to or
substantially concurrently with the Closing, (i) the Tender
Offer and the Self-Tender shall have been consummated in
accordance with the terms of the Merger Agreement, the Offer
to Purchase and all other applicable documentation and in
compliance with all applicable laws and regulatory
approvals, without any amendment or waiver of any material
condition or other provision thereof except as approved by
the Purchasers, and (ii) MergerCo shall have accepted for
payment and acquired tendered shares representing not less
than 50.1 % of the aggregate voting power (determined after
giving pro forma effect to the consummation of the
Self-Tender and the cancellation of shares acquired by the
Company in the Self-Tender) of all outstanding shares of the
Company entitled to vote in connection with the approval of
the Merger;
(6) All governmental and third-party consents and approvals
necessary in connection with the offer, sale and issuance of
the Notes, the consummation of the Tender Offer and (unless
the Long Form Merger Structure is utilized) the Merger, and
the other Transactions (including Hart-Scott-Rodino
clearance), shall have been obtained and remain in effect
and shall be satisfactory to the Purchasers; all applicable
waiting periods shall have expired without any action being
taken or threatened by any competent authority) and no law
or regulation shall be applicable, or event shall have
occurred, that seeks to enjoin, restrain, restrict, set
aside or prohibit, or impose materially adverse conditions
upon, the consummation of the Tender Offer, the Merger, the
Notes or any of the other Transactions;
(7) The Equity Capitalization shall have been consummated on
terms and conditions satisfactory to the Purchasers; and in
connection therewith the Purchasers shall be satisfied that
after giving effect thereto (i) Parent shall have received
from (A) FMC net cash proceeds of not less than $43 million,
$28 million of which will be proceeds from the issuance of
preferred stock, on terms and conditions consistent with the
June 29, 2000 Term Sheet for the preferred stock and common
stock (the "Preferred Stock"), and $15 million of which will
---------------
be proceeds from the issuance of common stock, plus an
additional $7.0 million that can be called by Chartwell at
any time after the consummation of the Merger in the same
proportion as the Preferred Stock and the common stock,
provided that Chartwell contributes a pro rata amount
(collectively, the "Additional Equity"), and (B) from
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Chartwell net cash proceeds of not less than $54 million
(and in each case
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Parent shall have contributed such proceeds to MergerCo)
from the issuance of equity on terms and conditions
satisfactory to the Purchasers, (ii) management investors
shall have committed to contribute not less than $6.0
million in equity to the Company, including pursuant to the
retention or roll-over of existing common stock; and (iii)
and the aggregate amount of net proceeds from the Equity
Capitalization, including any management equity or roll-over
equity, shall not be less than $105.5 million (of which not
less than $97.0 million shall be cash). In addition, under
certain circumstances to be agreed upon, the Purchasers may
require that the Additional Equity be contributed by FMC and
Chartwell in connection with certain earn-out provisions on
previous acquisitions by the Company.
(8) The Company shall have binding commitments to receive not
less than $160 million from the Facilities as follows: (i)
$100 million term loans, (ii) $25 million revolving credit
facility and (iii) $35 million acquisition facility, all on
terms and conditions (including, without limitation,
interest, maturity, covenants, default, permitted
indebtedness and acceleration), and pursuant to
documentation, satisfactory to the Purchasers and consistent
with the July 11, 2000 Term Sheet for the Facilities
previously provided to Purchasers;
(9) The Purchasers shall have received an opening pro forma
balance sheet and income statement of the Company and its
subsidiaries, as of the last day of the month most recently
ended prior to the Closing Date (or, if the Closing Date
occurs on or prior to the 20th day of a month, as of the
last day of the next prior month) and for the twelve-month
period then ended (provided that such balance sheet shall be
as of the most recent date as of which a balance sheet of
the Company has been prepared and is available, if prior to
the date required above, except that debt balances shall be
as of the date required above), giving effect to the
consummation of the Tender Offer, the Merger, the funding of
the Notes, the initial funding of the Facilities and the
consummation of the other Transactions, together with
projected financial statements of the Company and its
subsidiaries (consisting of balance sheets and statements of
income and cash flows) prepared on an annual basis through
November 30, 2009, all of which shall be in form and
substance satisfactory to the Purchasers;
(10) The Purchasers shall be satisfied that, on a pro forma basis
as of a recent date after giving effect to the Tender Offer,
the Merger, the funding of the Notes, the initial funding of
the Facilities and the consummation of the other
Transactions, (i) the Company is in
8
compliance with all financial covenants in the definitive
credit documentation, (ii) EBITDA of the Company and its
subsidiaries for the most recently completed twelve-month
period is not less than $33.25 million, and (iii) aggregate
total funded debt of the Company and its subsidiaries is not
greater than $148.5 million and aggregate total funded
senior debt of the Company and its subsidiaries is not
greater than $108.5 million (in each case, (i) plus
miscellaneous items of indebtedness reasonably acceptable to
the Purchasers and (ii) subject to adjustment in a manner
acceptable to the Purchasers based upon changes in working
capital);
(11) There shall not have occurred, since November 30, 1999, (i)
any material adverse change in the condition (financial or
otherwise), operations, properties, prospects or business of
the Company and its subsidiaries, or (ii) any event,
condition or state of facts that could reasonably be
expected to have such a material adverse change;
(12) No action, suit, proceeding or investigation shall have been
instituted or threatened before, and no order, injunction or
decree shall have been entered by, any court, arbitrator or
governmental authority, in each case seeking to enjoin,
restrain, restrict, set aside or prohibit, to impose
material conditions upon, or to obtain substantial damages
in respect of, the consummation of the Tender Offer, the
Merger, the Notes, the Facilities or any of the other
Transactions or that, in the opinion of the Purchasers,
could reasonably be expected to have a material adverse
effect upon the condition (financial or otherwise),
operations, properties, prospects or business of the Company
and its subsidiaries or on the ability of Holdings, the
Company and their respective subsidiaries to perform their
respective obligations under the definitive documentation
for the Notes;
(13) The Purchasers shall have received a solvency opinion with
respect to the Company and its subsidiaries after giving
effect to the Transactions, from an independent valuation
firm acceptable to the Purchasers and in form and substance
satisfactory to the Purchasers;
(14) The Purchasers shall have received final copies of (i) due
diligence reports on the Company and its subsidiaries from
PricewaterhouseCoopers and Bain, (ii) business and financial
due diligence reports for County Limousine, (iii) a review
of the insurance coverages of the Company and its
subsidiaries from Marsh & McLennan and (iv) environmental
reports with respect
9
to selected properties of the Company and its Subsidiaries,
and shall be satisfied in their sole discretion with the
results thereof;
(15) The Purchasers shall have completed all legal due diligence
with respect to the Company and its subsidiaries in scope
and determination satisfactory to the Purchasers in their
sole discretion;
(16) The Purchasers shall have received a copy of the executed
fairness opinion of the Company's financial advisors in
connection with the Tender Offer and the Merger;
(17) The representations and warranties contained in the
definitive subordinated debt documentation shall be true and
correct as of the Closing Date as if made on such date, and
no default or event of default thereunder shall have
occurred and be continuing;
(18) All fees and expenses of the Purchasers required to have
been paid as a condition to the Notes shall have been paid;
and
(19) The Purchasers shall have received such other documents,
agreements and opinions in connection with the Notes
(including but not limited to legal opinions of counsel to
Holdings, the Company and their respective subsidiaries
(including local counsel in such jurisdiction as shall be
requested by the Purchasers) and reliance letters with
respect to opinions delivered in connection with the Merger,
including an opinion of Delaware counsel to the Company as
to the validity of the Merger), all satisfactory in form and
substance, as the Purchasers may reasonably request.
REPRESENTATIONS
AND
WARRANTIES: The definitive note purchase agreement (as well as any other
investment documentation as the Purchasers determine to be
appropriate to effect the transactions contemplated hereby) will
contain representations and warranties customarily found in note
agreements for similar financings and any additional
representations and warranties deemed appropriate by the
Purchasers in the context of the proposed transaction, including,
without limitation, representations and warranties regarding
corporate organization and power, absence of violation of
organizational documents, other agreements and applicable laws,
absence of material litigation, obtaining of government and other
approvals, subsidiaries, payment of taxes, authorization and
enforceability of the note purchase documents, compliance with
other instruments, full disclosure, margin securities, ERISA
matters, accuracy of financial statements, absence of
10
material adverse change, title to and sufficiency of assets,
solvency, real estate, governmental permits and licenses,
compliance with laws, environmental matters, insurance,
consummation of, and receipt of proceeds from, the Tender Offer
and Merger, and the other Transactions, and material contracts.
FINANCIAL
COVENANTS: Financial covenants, with definitions of financial terms, levels
and other terms to be agreed upon by the Company and the
Purchasers determined on a consolidated basis for the Company and
its subsidiaries, and to include, at a minimum, the following:
(a) Maximum Total Leverage Ratio;
(b) Minimum Fixed Charge Coverage Ratio;
(c) Minimum Interest Coverage Ratio; and
(d) Maximum Annual Capital Expenditures.
To the extent acceptable to the Purchasers, the financial
covenants will track the corresponding covenants set forth in the
Senior Debt documents, but be less restrictive as appropriate.
AFFIRMATIVE
AND NEGATIVE
COVENANTS: The definitive note purchase agreement (as well as any other
investment documentation as the Purchasers determine to be
appropriate to effect the transactions contemplated hereby) will
contain affirmative and negative covenants customary for
financings of this type and any additional covenants deemed
appropriate by the Purchasers and the context of the proposed
transactions. To the extent acceptable to the Purchasers, the
affirmative and negative covenants will track the corresponding
covenants set forth in the Senior Debt documents, but be less
restrictive as appropriate.
EVENTS OF
DEFAULT: Those customarily found in note agreements for similar financings
and any additional events of default deemed appropriate by the
Purchasers in the context of the proposed transaction including
without limitation: failure to pay any principal, interest or
fees when due (subject to grace periods to be agreed upon);
breach of covenants with customary grace periods for certain
affirmative covenants; material incorrectness when made of any
representation or warranty; default under material indebtedness
(other than the Senior Debt); acceleration of any amounts due
under the Senior Debt as a result of a default thereunder;
breaches of material contracts; bankruptcy or insolvency;
judgments or uninsured losses in excess of agreed upon amounts;
certain ERISA events; and
11
actual or asserted invalidity of guaranty documents. In the
event of a default and acceleration of the Notes, the
Optional Redemption premium provisions shall apply. Upon the
occurrence and during the continuance of any event of
default, the applicable coupon shall be set at 2% per annum
above the otherwise applicable rate and such additional
interest shall be payable in cash.
WARRANTS: Upon the purchase of the Notes, detachable Warrants (the
"Warrants") will be issued sufficient to provide the
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Purchasers with 5.25% of the common stock of the Company on
a fully-diluted basis (such fully-diluted basis shall
include any shares of common stock or other equity- based
awards issuable under any current employee option plans and
other employee plans or awards on terms and conditions to be
agreed upon).
WARRANT
EXERCISABILITY: At any time, in whole or in part, after issuance.
WARRANT TERM: Ten years after the Closing.
WARRANT
EXERCISE PRICE: $.01 per share in cash or, at the option of the Purchasers,
in an equivalent amount of Notes or Warrants.
OTHER RIGHTS: In addition to the above rights, the Warrants will provide
for:
(i) Customary weighted average anti-dilution protection
for issuances below fair market value (subject to
agreed upon exceptions) and other customary equity
rights satisfactory to the Purchasers;
(ii) Pre-emptive rights for the Purchasers and their
respective affiliates on any sale of equity or equity
linked securities by the Company (subject to customary
exceptions);
(iii) Co-sale rights on any private sale of equity
securities of the Company (subject to customary
exceptions);
(iv) Put right exercisable at the conclusion of year seven
and call right exercisable at the conclusion of year
eight, in each case for fair market value (subject to
agreed upon deferral conditions);
(v) Cashless exercise;
(vi) Piggy-back registration rights; and
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(vii) Board observation rights for 2 observers for the
Warrant holders plus a monitoring fee of $50,000 per
annum to be allocated pro rata among the Purchasers.
VOTING: Majority, subject to certain customary 100% voting issues.
ASSIGNMENTS: Any Note holder may assign its interest in the Notes in no
less than $5,000,000 principal aggregate increments.
NOTE PURCHASE
DOCUMENTS: The transactions described herein will be evidenced by a
note purchase agreement and other ancillary agreements,
documents, opinions, certificates, schedules and exhibits
deemed necessary by the Purchasers.
INFORMATION
PERTAINING TO
THE PURCHASERS: The Company shall not release any information relating to
the Purchasers, or any of their respective affiliates,
without their prior written consent, unless otherwise
required by applicable law. In addition, the Company shall,
within a reasonable time before the issuance of any press
release or the making of any public announcement relating to
the Purchasers or their respective affiliates, consult in
good faith with the Purchasers regarding the contents
thereof.
PUBLICLY
AVAILABLE
INFORMATION: The Company will file the reports required to be filed by it
under the Securities Act of 1933, as amended (the
"Securities Act"), and the Exchange Act (or, if the Company
--------------
is not required to file such reports, it will, upon the
request of any holder, make available other information so
long as necessary to permit sales under Rule 144A under the
Securities Act), and it will take such further action as any
holder may request, all to the extent required from time to
time to enable such holder to sell registrable securities
without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144A under
the Securities Act, as such Rule may be amended from time to
time, or (b) any similar rule or regulation hereafter
adopted by the Commission. Upon the request of any holder,
the Company will deliver to such holder a written statement
as to whether it has complied with such requirements.
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PUBLIC
DOCUMENTS: For so long as the Company has any securities registered
under the Securities Exchange Act of 1934, as amended, upon
the filing with the Commission of any financial statements,
proxy or information statements, notices, reports or
registration statements (other than any registration
statements relating to employee benefit or dividend
reinvestment plans), or the issuance of any press release or
other public announcement (each a "Public Document"), the
---------------
Company shall promptly provide to each holder a copy of such
Public Document.
EXPENSES: The Company will pay (i) all of the Purchasers' reasonable
out-of-pocket expenses associated with the Transaction,
including the reasonable fees and disbursements of one
counsel to GarMark and one counsel to the other Purchasers
and Note holders in connection with the preparation,
execution, delivery and administration of the note purchase
documents and any amendment or waiver thereto, plus any
outside consultants to be mutually agreed upon and (ii) all
reasonable out-of-pocket expenses of GarMark, the other
Purchasers and other Note holders (including the reasonable
fees and disbursements of one counsel to GarMark and one
counsel to the other Purchasers and Note holders) in
connection with the enforcement of any of the note purchase
documents.
INDEMNIFICATION: The Company will indemnify the Purchasers and the other Note
and Warrant holders and hold them harmless against all
claims, losses, liabilities and expenses (including
reasonable fees and disbursements of counsel) arising from
or relating to the proposed financing contemplated hereby
and the other transactions connected therewith, except to
the extent of such indemnified party's gross negligence or
willful misconduct.
GOVERNING LAW: The note purchase documents, including the Warrants, and all
other documents related to the transactions contemplated
hereby (to the extent determined to be appropriate by the
Purchasers) shall be governed by, and construed in
accordance with, the laws of the State of New York, without
regard to any conflicts of law principles thereof.
PURCHASER'S
COUNSEL: Swidler Berlin Shereff Friedman, LLP
MISCELLANEOUS: Customary provisions regarding amendments and waivers,
consent to forum in New York and service of process and
other miscellaneous matters.
14
This Term Sheet is intended as a summary only and does not reference all of the
terms, conditions, representations, warranties, covenants and other provisions
which will be contained in the definitive documentation for the Notes and the
transactions contemplated thereby.
15