<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
CAREY INTERNATIONAL, INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
CAREY INTERNATIONAL, INC.
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________
(5) Total fee paid:
________________________________________________________________________
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
________________________________________________________________________
(3) Filing Party:
________________________________________________________________________
(4) Date Filed:
________________________________________________________________________
<PAGE>
LOGO
CAREY INTERNATIONAL, INC.
4530 WISCONSIN AVENUE, N.W.
WASHINGTON, D.C. 20016
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 3, 1998
----------------
The Annual Meeting of Stockholders of Carey International, Inc. will be held
on Wednesday, June 3, 1998 at 10:00 a.m., Eastern Daylight Time, at Embassy
Suites, 4300 Military Road, N.W., Chevy Chase, Maryland for the following
purposes:
1. To elect a Board of Directors to serve for the ensuing year and until
their successors are duly elected and qualified.
2. To consider and act upon a proposal to approve the Company's 1997
Equity Incentive Plan, as amended.
3. To consider and act upon such other business and matters or proposals
as may properly come before said Annual Meeting or any adjournment or
adjournments thereof.
The Board of Directors has fixed the close of business on April 15, 1998 as
the record date for determining the stockholders having the right to receive
notice of and to vote at said Annual Meeting.
By Order of the Board of Directors
Don R. Dailey
Secretary
Washington, D.C.
May 6, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN,
DATE AND MAIL PROMPTLY THE ENCLOSED PROXY WHICH IS BEING SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS. A RETURN ENVELOPE WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES IS ENCLOSED FOR THAT PURPOSE.
<PAGE>
LOGO
CAREY INTERNATIONAL, INC.
---------------
PROXY STATEMENT
---------------
ANNUAL MEETING OF STOCKHOLDERS
JUNE 3, 1998
This Proxy Statement is furnished in connection with the solicitation by and
on behalf of the Board of Directors of Carey International, Inc. (the
"Company") of proxies for use at the Annual Meeting of Stockholders of the
Company to be held, pursuant to the accompanying Notice of Annual Meeting, on
Wednesday, June 3, 1998 at 10:00 a.m., and at any adjournment or adjournments
thereof (the "Annual Meeting"). Action will be taken at the Annual Meeting to
elect a Board of Directors to serve for the ensuing year and to approve the
Company's 1997 Equity Incentive Plan, as amended.
If a stockholder specifies in the proxy accompanying this Proxy Statement
(the "Proxy") how it is to be voted, it will be voted in accordance with such
specification, but any Proxy which is signed and returned and which does not
specify how it is to be voted will be voted "for" the election of the nominees
for directors named herein, and for approval of the 1997 Equity Incentive
Plan. Any stockholder giving a Proxy in the accompanying form retains the
power to revoke it at any time before it is exercised by delivering a written
revocation to the Secretary of the Company, by executing and returning to the
Company a proxy bearing a later date or by attending the Annual Meeting and
voting his or her shares in person. Any stockholder who attends the Annual
Meeting in person will not be deemed thereby to revoke the stockholder's Proxy
unless such stockholder affirmatively indicates thereat his or her intention
to vote the shares in person.
The Company's principal executive offices are located at 4530 Wisconsin
Avenue, N.W., Washington, D.C. 20016. The Company mailed this Proxy Statement
and the Proxy on or about May 6, 1998 to its stockholders of record at the
close of business on April 15, 1998.
ANNUAL REPORT ON FORM 10-K AND INDEPENDENT PUBLIC ACCOUNTANTS
The Company's Annual Report on Form 10-K for the fiscal year ended November
30, 1997, including financial statements and the report of Coopers & Lybrand
LLP thereon, is being mailed herewith to each of the Company's stockholders of
record at the close of business on April 15, 1998. Representatives of
Coopers & Lybrand LLP are expected to be present at the Annual Meeting, and
will have the opportunity to make a statement if they desire to do so and will
be available to respond to appropriate questions.
At its meeting held in connection with the Annual Meeting, the Company's
Board of Directors will approve independent certified public accountants for
the ensuing year.
VOTING SECURITIES
The holders of record of shares of Common Stock of the Company at the close
of business on April 15, 1998 may vote at the Annual Meeting. On that date,
there were outstanding and entitled to vote 7,743,399 shares of Common Stock.
Each stockholder has one vote at the Annual Meeting for each share of Common
Stock held of record on said date. As long as a quorum (a majority of issued
and outstanding shares of Common Stock) is present at the Annual
<PAGE>
Meeting, the directors will be elected by a plurality of the votes cast at the
Annual Meeting by the holders of shares entitled to vote thereat, and approval
of the 1997 Equity Incentive Plan will require the affirmative vote of the
holders of shares of Common Stock representing a majority of the votes cast on
the matter. Votes may be cast in favor of the election of the nominees for
director or withheld; votes that are withheld will have no effect on the
outcome of the election of directors. Abstentions will have the effect of a
vote against the approval of the 1997 Equity Incentive Plan, as amended. If a
broker or nominee holding stock in "street name" indicates on the Proxy that
it does not have a discretionary authority to vote to approve the 1997 Equity
Incentive Plan, those shares represented by the Proxy will not be considered
as present and entitled to vote with respect to such matter. Accordingly,
"broker non-votes" on such matter will not be counted as votes cast in
determining approval of such matter.
ITEM I
ELECTION OF DIRECTORS
The Company's By-laws provide that the Board of Directors shall consist of
not less than three nor more than fifteen directors, the exact number to be
determined from time to time by the Board of Directors. The Board of Directors
has fixed the number of directors for the ensuing year at six. In the event
that any of the nominees becomes unavailable (which is not now anticipated by
the Company), the persons named as proxies have discretionary authority to
vote for a substitute. The Board of Directors has no reason to believe that
any of the nominees will be unwilling or unable to serve if elected. The By-
laws provide that, within the limits above specified, the number of directors
may at any time be increased or decreased by the vote of the Board. No
decrease in the number of directors, however, shall affect the term of any
director in office. Nevertheless, it is possible that, under circumstances
deemed by the Board of Directors to be appropriate, such action may be taken
at any time during the ensuing year.
The Company's Board of Directors is divided into three classes with
staggered three-year terms. The terms of William R. Hambrecht and David McL.
Hillman expire at the Annual Meeting, the terms of Robert W. Cox and Nicholas
J. St. George expire at the Company's 1999 annual meeting, and the terms of
Vincent A. Wolfington and Don R. Dailey expire at the Company's 2000 annual
meeting. 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. Messrs. Hambrecht and Hillman are retiring from the
Board at the Annual Meeting. Dennis I. Meyer and Joseph V. Vittoria have been
nominated for election to the Board of Directors as members of the class of
directors elected at the Annual Meeting whose terms expire at the Company's
2001 annual meeting.
NOMINEES FOR DIRECTOR
Dennis I. Meyer, age 62, has been a partner in law firm of Baker & McKenzie
since 1965. Mr. Meyer has previously served as Chairman of the Executive
Committee and Managing Partner of Baker & McKenzie and currently serves as the
managing partner of the North American offices of the firm. Mr. Meyer also is
a founding partner of Potomac Investment Associates, a global real estate
developer specializing in golf-oriented residential developments. 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.
Joseph V. Vittoria, age 62, 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, a global organization of the chief executive
officers of companies engaged in all sectors of the travel and tourism
industry. Mr. Vittoria serves as a director of CD Radio, Inc., Transmedia
Europe, Transmedia Asia and various non-profit associations.
2
<PAGE>
CONTINUING DIRECTORS
Vincent A. Wolfington, age 58, 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.
Don R. Dailey, age 60, 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
serves on a number of boards and committees related to the travel industry,
including the National Business Travel Association, the International Business
Travel Associates, 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).
Robert W. Cox, age 60, 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
currently is a director of Hon Industries, Inc.
Nicholas J. St. George, age 59, has served as a director of the Company
since June 1997. Mr. St. George has been President and Chief Executive Officer
of Oakwood Homes Corporation ("Oakwood"), a manufacturer and retailer of
manufactured homes, since February 1979. Mr. St. George serves as a director
of Oakwood, and also is a director of American Bankers Insurance Group, Inc.
and Legg Mason, Inc.
CERTAIN INFORMATION REGARDING BOARD OF DIRECTORS
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. Hillman and St. George. 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, 1997, 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.
3
<PAGE>
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 of Directors' meeting attended. In addition, such
directors receive an additional fee of $500 for each committee meeting
attended, except that only one fee is paid in the event that more than one
such 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.
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 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. 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.
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 held by Non-Employee Directors will terminate; however,
for a period of 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 immediately vest and become
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 Company has entered into deferred compensation agreements with three of
its Non-Employee Directors, Messrs. Cox, Hambrecht and St. George, pursuant to
which they have elected to defer the payment to them of director's fees that
otherwise would be paid in cash. Under the agreements, the deferred fees are
converted into phantom shares during the fiscal quarter when they otherwise
would have been paid based upon the average closing price of the Common Stock
during the 20 trading days preceding the end of the quarter. On the last day
of the fiscal year when the director ceases to be a member of the Board
because of death or any other reason, he is entitled to receive, at his
election, shares of Common Stock equal to the number of phantom shares
credited to him or cash equal to the market value of such phantom shares based
upon the average closing price of the Common Stock during the 20 trading days
preceding the end of such fiscal year.
4
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table contains a summary of the compensation paid or accrued
during the fiscal years ended November 30, 1996 and 1997 to the Chief
Executive Officer of the Company and the four other most highly compensated
executive officers (the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL AWARDS
COMPENSATION SHARES
------------------- OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION
- --------------------------- ---- -------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Vincent A. Wolfington ... 1997 $231,620 $85,000 $ -- 100,000 $12,000(1)
Chairman and Chief
Executive Officer 1996 231,620 20,000 -- -- 57,000(1)
Don R. Dailey............ 1997 205,001 70,000 -- 100,000 12,000(2)
President and Director 1996 205,001 20,000 -- -- 57,000(2)
David H. Haedicke........ 1997 135,000 55,000 -- 30,000 --
Executive Vice President
and Chief Financial 1996 20,510(3) 2,500 -- 25,800 --
Officer
Guy C. Thomas............ 1997 115,000 25,000 -- 15,000 9,900(4)
Executive Vice President 1996 115,000 10,000 13,020(5) -- 9,900
Operations
Richard A. Anderson...... 1997 91,000 18,950 11,200(6) 10,000 8,219(7)
Senior Vice President 1996 91,000 12,000 11,200(6) -- 9,513
</TABLE>
- --------
(1) Includes the annual payment of premiums of $12,000 on a life insurance
policy for a beneficiary designated by Mr. Wolfington. As to 1996, also
includes $45,000 paid for providing personal guarantees on behalf of the
Company.
(2) Includes the annual payment of premiums of $12,000 on a life insurance
policy for a beneficiary designated by Mr. Dailey. As to 1996, also
includes $45,000 paid for providing personal guarantees on behalf of the
Company.
(3) Mr. Haedicke commenced his employment with the Company on October 7, 1996.
(4) Represents premiums on a life insurance policy for a beneficiary
designated by Mr. Thomas.
(5) Includes a car allowance of $11,820.
(6) Includes a car allowance of $6,600 and a club membership of $4,600.
(7) Represents premiums on a life insurance policy for a beneficiary
designated by Mr. Anderson.
5
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding options granted
during the fiscal year ended November 30, 1997 by the Company to each of the
Named Executive Officers:
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE AT
---------------------------------------------- ASSUMED RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SHARES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED EXERCISE OPTION TERM
OPTIONS TO EMPLOYEES PRICE EXPIRATION -------------------
NAME GRANTED IN FISCAL YEAR ($/SHARE) DATE 5% 10%
- ---- ---------- -------------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Vincent A. Wolfington... 100,000 19.8% $10.50 5/27/07 $660,339 $1,673,430
Don R. Dailey........... 100,000 19.8% 10.50 5/27/07 660,339 1,673,430
David H. Haedicke....... 30,000 5.9% 10.50 5/27/07 198,102 502,029
Guy C. Thomas........... 15,000 3.0% 10.50 5/27/07 99,051 251,014
Richard A. Anderson..... 10,000 2.0% 10.50 5/27/07 66,034 167,343
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END STOCK OPTION
VALUES
There were no options exercised by any of the Named Executive Officers
during the fiscal year ended November 30, 1997. The following table indicates
the aggregate value of all unexercised options held by each Named Executive
Officer as of November 30, 1997.
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
AT NOVEMBER 30, 1997 NOVEMBER 30, 1997(1)
---------------------------------- -------------------------
NUMBER OF NUMBER OF
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME SHARES SHARES VALUE VALUE
- ---- --------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C>
Vincent A. Wolfington... 205,706 -- $1,286,925 $ --
Don R. Dailey........... 205,706 -- 1,286,925 --
David H. Haedicke....... 17,200 38,600 156,520 175,760
Guy C. Thomas........... 32,018 15,000 291,364 48,750
Richard A. Anderson..... 4,386 10,000 39,913 32,500
</TABLE>
- --------
(1) Value of unexercised in-the-money options based upon $13.75, the closing
price of the Company's Common Stock on the Nasdaq National Market on
November 28, 1997.
EQUITY INCENTIVE PLANS
The Company currently maintains the 1987 Stock Option Plan (the "1987 Plan")
and the 1992 Stock Option Plan (the "1992 Plan"), both of which provide for
the award of incentive and non-statutory stock options by the Company. The
Company also maintains the 1997 Equity Incentive Plan (the "1997 Plan"), which
currently provides for the award of up to 650,000 shares of Common Stock and
which is further described in Item II of this Proxy Statement. The 1987 Plan,
1992 Plan and 1997 Plan are hereinafter referred to collectively as the
"Equity Plans."
As of April 15, 1998, options were outstanding to purchase an aggregate of
884,998 shares of Common Stock under the Equity Plans, and an aggregate of
146,668 shares of Common Stock are authorized but have not yet been granted
under options or other awards under such plans (including 142,523 shares
pursuant to the 1997 Plan).
6
<PAGE>
Officers, key employees, non-employee directors of and consultants to the
Company are eligible to participate in the Equity Plans. 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 said plans, who shall receive awards, the types of awards to be made, and
the terms and conditions of each award.
COMPENSATION COMMITTEE REPORT
Prior to the completion of its initial public offering in June 1997 (the
"IPO"), the Company did not have a Compensation Committee or any other
committee of the Board of Directors. Decisions concerning compensation of
executive officers were made during this period by the Company's Board of
Directors. During this period, the Company established the salaries of its
executive officers, including the Chief Executive Officer, at levels designed
to attract and retain the key personnel upon whom the Company has relied for
its growth and success to date.
Since the IPO, the responsibility for the establishment and administration
of the Company's executive compensation policies has been delegated to the
Compensation Committee of the Board of Directors (the "Committee"). The
Committee is composed of two independent, non-employee directors. In addition
to setting salary and bonus compensation levels for the Company's executive
officers, the Committee is responsible for granting awards under and the
administration of the Equity Plans.
The base salaries of the Chief Executive Officer and the other Named
Executive Officers remained unchanged from 1996 to 1997. All executive
officers of the Company received the grant of stock options in connection with
the closing of the Company's IPO in 1997. Executive officers generally did not
receive the grant of stock options in 1996. Bonuses were awarded in 1997
generally in recognition of the completion of the IPO and acquisitions made by
the Company during the year, as well as the growth in the Company's revenues
and earnings.
The Company has retained an executive compensation consulting firm to assist
the Compensation Committee in reviewing and establishing compensation policies
for the Company's executive officers. In general, the Compensation Committee
believes that the Company should utilize base salary, incentive bonuses and
equity incentives as the three basic components of the Company's executive
compensation. The Compensation committee also believes that executive
compensation should be structured so as to align the interests of executive
management with the long term interests of the Company's stockholders. The
Compensation committee currently intends to finish its review and formalize
compensation policies during 1998.
Respectfully submitted by,
THE COMPENSATION COMMITTEE
Robert W. Cox
Nicholas J. St. George
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Messrs. Wolfington, Sandt and Murphy each filed a Form 4 with the Securities
and Exchange Commission on July 9, 1997 for shares purchased on May 27, 1997
in connection with the IPO.
7
<PAGE>
COMPARATIVE STOCK PERFORMANCE
The following graph and chart sets forth the annual change in the cumulative
total return on the Company's Common Stock, the Russell 2000 Index and a Peer
Group Index (as defined below) during the period commencing May 27, 1997, the
first day that the Common Stock was traded on Nasdaq, through November 30,
1997, the Company's fiscal year end, and ending March 31, 1998.
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
Label A B C
- -------------------------------------------------------------------------------------------
Label Carey International Inc. Peer Group Russell 2000 Index
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 5/28/97 100 100 100
2 5/31/97 103.64 99.6 100
3 8/31/97 100.91 101.37 111.62
4 11/30/97 100 103.75 113.78
5 2/27/98 130.91 97.08 122.37
6 3/31/98 172.73 105.26 127.42
</TABLE>
(1) Assumes the investment of $100 on May 27, 1997 (at $10.50 for the Common
Stock, the price per share to the public in the IPO, and at the market
close for the indices) and the reinvestment of any dividends.
(2) The Peer Group consists of the following consolidators selected by the
Company from the transportation industries and other industries: Coach
USA, Inc., Dispatch Management Services Corp., Keystone Automotive
Industries, Inc., Miller Industries, Inc., Republic Industries, Inc.,
Rural/Metro Corporation, Travel Services International, Inc. and United
Auto Group, Inc.
8
<PAGE>
ITEM II
PROPOSALS TO AMEND THE 1997 EQUITY INCENTIVE PLAN
The 1997 Equity Incentive Plan, as amended (the "1997 Plan") was adopted by
the written consent of the stockholders of the Company in February 1997 and
provides for the award of up to 650,000 shares of Common Stock in the form of
incentive stock options ("ISOs"), non-qualified stock options, restricted
stock, stock appreciation rights, performance shares or stock units (each, an
"Award"). To date, the Company has only awarded ISOs and non-qualified stock
options under the 1997 Plan. The Company has not awarded stock appreciation
rights, performance shares, restricted stock or stock units under the 1997
Plan.
On February 20, 1998, the Board of Directors approved an amendment to the
1997 Plan, subject to stockholder approval, increasing the maximum number of
shares of Common Stock which may be issued under the 1997 Plan by 900,000
shares to a total of 1,550,000 shares of Common Stock. As of April 15, 1998,
142,523 shares of Common Stock remained available for Awards under the 1997
Plan (without giving effect to the proposed amendment). The Board believes
that the amendment increasing the shares available under the 1997 Plan is a
necessary factor in allowing the Company to attract and retain those highly
competent individuals upon whose judgment, initiative and leadership the
Company's continuing success in large measure depends.
The Board is seeking stockholder approval of the 1997 Plan (including the
recent amendment) in order to satisfy the requirements of Section 162(m) of
the Internal Revenue Code, as amended (the "Code"). Section 162(m) of the Code
imposes a $1 million limit on deductions of the Company with respect to
compensation of the Company's Chief Executive Officer and four other most
highly compensated executive officers. Stock options (whether ISOs or non-
qualified stock options) will be excluded from this limitation provided that
the exercise price of the option is equal to the fair market value of the
Company's shares subject to the option on the date of the grant, the 1997 Plan
includes a provision stating the maximum number of shares with respect to
which stock options may be granted to any employee during a specified period
of time, and certain other requirements, relating to the composition of the
Compensation Committee and shareholder approval of the 1997 Plan, are met.
The following is a summary of the material provisions of the 1997 Plan,
which is qualified in its entirety by a copy of the 1997 Plan which is
attached hereto as Exhibit A.
The 1997 Plan is administered by the Compensation Committee of the Board of
Directors (the "Committee"). The Committee determines those employees and
consultants (including directors who are employees or consultants) who receive
Awards and the size and type of Awards. The Committee has authority to adopt,
alter and repeal rules and guidelines governing the 1997 Plan, interpret
provisions of the 1997 Plan and decide all disputes arising in connection with
the 1997 Plan.
OPTIONS. The Committee may award ISOs and non-qualified stock options
(collectively, the "Options") and determines the number of shares to be
covered by each Option, the Option price therefor, the term of the Option,
when an Option becomes exercisable, and other conditions and limitations
applicable to the exercise of the Option. As required by the Code, the Option
price per share of Common Stock purchasable under an ISO cannot be less than
100% of the fair market value of the Common Stock on the date of grant (110%,
in case of a 10% shareholder). The 1997 Plan provides that in no event shall
any optionee receive in any calendar year, awards under the 1997 Plan for more
than 300,000 shares of Common Stock. The 1997 Plan also provides that the
Option price per share of Common Stock purchasable under a non-qualified stock
option will be determined by the Committee, and may be less than, equal to or
greater than the fair market value of the Common Stock on the date of grant.
The Committee may at any time accelerate the exercisability of all or any
portion of any Option. No ISO may be exercised later than 10 years from the
date of grant, provided that persons who are deemed to own more than 10% of
the total combined voting power of all classes of stock of the Company or any
of its subsidiaries may exercise an ISO not later than five years from the
date of grant.
9
<PAGE>
For federal income tax purposes, no taxable income results to the optionee
upon the grant of an ISO or upon the issuance of shares to him upon the
exercise of an ISO. Correspondingly, no deduction is allowed to the Company
upon either the grant or the exercise of an ISO. However, if the aggregate
fair market value (determined at the time the Option is granted) of the Common
Stock covered by ISOs which are exercisable for the first time by an
individual in a calendar year exceeds $100,000, the amount of the excess will
not be treated as shares acquired through exercise of an ISO.
If shares acquired upon the exercise of an ISO are not disposed of until the
later of (i) the two-year period following the date the ISO is granted or (ii)
the one-year period following the date the shares are transferred to the
optionee pursuant to exercise of the ISO (the "Statutory Holding Period"), the
difference between the amount realized on any disposition thereafter and the
Option price will be treated as long-term capital gain or loss to the
optionee. Any long-term capital gain will be taxed at a rate of 20% to the
extent the shares were held for more than 18 months, and 28% to the extent the
shares were held for more than 12 months but not more than 18 months. If a
disposition occurs before the expiration of the Statutory Holding Period, then
the lower of (i) any excess of the fair market value of the shares at the time
of exercise of the ISO over the Option price or (ii) the actual gain realized
on disposition will be deemed to be compensation to the optionee and will be
taxed at ordinary income rates. In such event, the Company will be entitled to
a corresponding deduction from its income, provided the Company satisfies
applicable reporting requirements with respect to such income in a timely
manner. Any such increase in the income of the optionee or deduction from the
income of the Company attributable to such disposition is treated as an
increase in income or a deduction from the income in the taxable year in which
the disposition occurs. Any excess of the amount realized by the optionee on
disposition over the fair market value of the shares at the time of exercise
will be treated as short-term capital gain and taxed at ordinary rates if such
shares were held for 12 months or less and as long-term capital gain if such
shares were held for more than 12 months.
"Alternative minimum taxable income" in excess of a taxpayer's exemption
amount is subject to the alternative minimum tax, which is imposed at rates of
26% to 28% on individuals and is payable to the extent it exceeds the regular
income tax. The excess of the fair market value on the date of exercise over
the Option price of shares acquired on exercise of ISOs generally constitutes
an item of alternative minimum taxable income for the purpose of the
alternative minimum tax. The payment of any alternative minimum tax resulting
therefrom will not increase the optionee's basis in the shares acquired for
regular income tax purposes. However, the amount of adjusted net alternative
minimum tax paid in any taxable year is available as a credit against regular
tax in future years.
Under the Code, a person who is granted a non-qualified stock option will
not have taxable income at the date of grant; however, an optionee who
thereafter exercises such an option will be deemed to have received
compensation income in an amount equal to the excess, if any, of the fair
market value of the shares on the date of exercise over the Option price. The
optionee's basis for such shares will be increased by the amount which is
deemed compensation income. Provided the Company satisfies applicable
reporting requirements with respect to such income in a timely manner, the
Company will be entitled to a deduction in the same amount as the optionee is
required to include in his or her income, unless the optionee is an employee
subject to Section 162(m) of the Code and the Option price is less than the
fair-market value of the stock underlying the options at the date of grant.
When the optionee disposes of such shares, he or she will recognize capital
gain or loss.
Any capital gain recognized on the disposition of shares by the optionee
will be short-term capital gain to the extent such shares are held by the
recipient for 12 months or less and long-term capital gain to the extent such
shares are held by the recipient for more than 12 months.
Any deduction by the Company on account of compensation income recognized by
an optionee may also be limited by Section 280G of the Code. Section 280G of
the Code provides that the Company may not deduct the amount of any "excess
parachute payment" (as defined under Section 280G(b) of the Code). Thus, to
the extent that any change in the vesting or cancellation provisions of an ISO
or nonqualified option would result in the Optionee being deemed to receive,
in the reasonable opinion of the Company's tax advisor, compensation
10
<PAGE>
constituting a parachute payment under the Code, the amount of any excess
parachute payment (as defined under Section 280G(b)(1) of the Code) would not
be deductible by the Company as an expense.
RESTRICTED STOCK. An Award of restricted stock ("Restricted Stock") entitles
the participant to acquire shares of Common Stock for a purchase price equal
to or greater than par value, subject to such conditions and restrictions,
including a right of the Company, during a specified period or periods, to
repurchase such shares at their original purchase price (or to require
forfeiture of such shares) upon the participant's termination of employment.
Subject to the provisions of the 1997 Plan, the Compensation Committee may
award shares of Restricted Stock and determine the cash purchase price or
other consideration therefor, the duration of the restricted period during
which, and the conditions under which, the shares may be forfeited to or
repurchased by the Company, and the other terms and conditions of such Awards.
The Compensation Committee may modify or waive the restrictions with respect
to any Restricted Stock. Shares of Restricted Stock may be issued for no cash
consideration or such minimum consideration as may be required by applicable
law. A participant has all the rights of a stockholder with respect to his or
her Restricted Stock including voting and dividend rights, subject to any
applicable restrictions on transfer and Company repurchase or forfeiture
rights, and subject to any other conditions contained in the Award.
A recipient of Restricted Stock generally will be subject to tax at ordinary
income rates on the fair market value of the Common Stock at the time the
Common Stock is no longer subject to forfeiture, less any amount paid for such
stock. However, a recipient who makes an election under Section 83(b) of the
Code within 30 days of the date of issuance of the Restricted Stock will
realize ordinary income on the date of issuance equal to the fair market value
of the shares of Restricted Stock at that time (measured as if the shares were
unrestricted and could be sold immediately), less any amount paid for such
stock. Subject to Section 162(m) of the Code and satisfaction of the
applicable reporting requirements, the Company will be entitled to deduct, as
compensation expense, the same amount as the recipient must include in
ordinary income in the Company's tax year which includes the last day of the
recipient's tax year in which the recipient is required to include the amount
in income. If the election is made, no taxable income will be recognized when
the shares subject to such election are no longer subject to forfeiture. If
the shares subject to such election are forfeited, the recipient will not be
entitled to any deduction, refund or loss for tax purposes with respect to
amounts previously included in income with respect to the shares. However, the
recipient is allowed a capital loss if the amount paid for the shares is not
fully restored upon forfeiture. The holding period to determine whether the
recipient has long-term or short-term capital gain or loss upon sale of the
shares begins when the restriction period expires (or upon issuance of the
shares, if the recipient elected immediate recognition of income under Section
83(b) of the Code).
GENERAL. The Committee determines whether Awards are settled in whole or in
part in cash, Common Stock, other securities of the Company, other Awards or
other property. The Committee may permit a participant to defer all or any
portion of a payment under the 1997 Plan, including the crediting of interest
on deferred amounts denominated in Common Stock. Such a deferral may have no
effect for purposes of determining the timing of taxation of payments. The
Committee may amend, modify or terminate any outstanding Award, including
substituting therefor another Award of the same or a different type, changing
the date of exercise or realization, and converting an ISO to a non-qualified
stock option, if the participant consents to such action or the Committee
determines that the action would not materially and adversely affect the
participant. Awards may not be made under the 1997 Plan after February 25,
2007, but outstanding Awards may extend beyond such date.
The number of shares of Common Stock issuable pursuant to the 1997 Plan may
not be changed except by approval of the stockholders. However, in the event
that the Committee determines that any stock dividend, extraordinary cash
dividend, creation of a class of equity securities, recapitalization,
reorganization, merger, split-up, spin-off, combination, exchange of shares,
warrants or rights offering to purchase Common Stock at a price substantially
below fair market value, or other similar transaction affects the Common Stock
such that an adjustment is required in order to preserve the benefits intended
to be made available under the 1997 Plan, the Committee may adjust equitably
the number and kind of shares of stock or securities in respect of which
Awards may be made under the 1997 Plan, the number and kind of shares subject
to outstanding Awards, and the award,
11
<PAGE>
exercise or conversion price with respect to any of the foregoing, and if
considered appropriate, the Committee may make provision for a cash payment
with respect to an outstanding Award. Except pursuant to the preceding
sentence and except for Options covering shares of Common Stock aggregating no
more than five percent of the shares of Common Stock reserved for issuance
under the 1997 Plan at the time, the Committee may not reprice outstanding
Options under the 1997 Plan without approval by the stockholders. Common Stock
subject to Awards which expire or are terminated prior to exercise or Common
Stock which has been forfeited under the 1997 Plan will be available for
future Awards under the Plan. Any proceeds received by the Company from
transactions under the 1997 Plan will be used for the general purposes of the
Company.
In the event a merger or other transaction occurs that results in the Common
Stock not being registered under Section 12 of the Securities Exchange Act of
1934, as amended, all Awards shall terminate upon the completion of the
transaction, provided, however, that 20 days prior to the effective date of
any such merger or other transaction all Awards outstanding under the Plan
shall become fully exercisable and realizable. If the transaction is intended
to be treated as a pooling of interests for accounting purposes, then the
Committee or the Board of Directors shall cause the acquiring or surviving
corporation or one of its affiliates to grant replacement Awards to
participants. Otherwise, the Committee or the Board of Directors may either
arrange for replacement Awards or provide for a cash payment in connection
with the termination of the Awards.
The 1997 Plan may be amended from time to time by the Board of Directors or
terminated in its entirety, provided that no amendment may be made without
stockholder approval if such approval is necessary to comply with any
applicable tax or regulatory requirement.
Based, in part, upon compensation information provided by an executive
compensation consulting firm retained by the Company, the Compensation
Committee has granted options, subject to stockholder approval of the 1997
Plan, as amended, to purchase an aggregate of 977,000 shares of Common Stock
to 20 employees for a purchase price per share of $22.125. Options to purchase
747,000 of such shares are performance options (the "Performance Options") and
vest (i) after the price of Common Stock on the Nasdaq National Market or any
exchange on which it may be traded exceeds for 30 consecutive trading days the
following benchmark prices: $25, $30, $35, $40, $45 and $50 or (ii) April 29,
2006. Each time one of the price benchmarks is exceeded, the Performance
Options vest with respect to one-sixth of the shares for which they were
originally exercisable. The Compensation Committee granted the Performance
Options and tied the vesting of the Options to an increase in the price of
Common Stock because it believes that the best interests of the Company are
served by linking stock options to increases in stockholder value as well as
improvements in corporate performance. The Options to purchase the other
230,000 shares of Common Stock (the "Other Options") vest upon the closing of
the proposed public offering of up to 2,486,300 shares of Common Stock
pursuant to the Company's Registration Statement on Form S-1 (File No. 333-
50245) filed on April 16, 1998.
The following table provides a summary of the grants of Performance Options
and Other Options made, subject to stockholder approval, to the Named
Executive Officers, all current executive officers as a group, all current
directors who are not executive officers as a group and all employees,
including all current officers who are not executive officers, as a group. The
closing price of Common Stock on the Nasdaq National Market on April 30, 1998
was $22.75.
<TABLE>
<CAPTION>
SHARES UNDERLYING SHARES UNDERLYING
NAME OR GROUP PERFORMANCE OPTIONS OTHER OPTIONS
- ------------- ------------------- -----------------
<S> <C> <C>
Vincent A. Wolfington.................... 180,000 100,000
Don R. Dailey............................ 180,000 100,000
David H. Haedicke........................ 120,000 --
Guy C. Thomas............................ 60,000 30,000
Richard A. Anderson...................... 6,000 --
Current Executive Officer Group
(11 Persons)............................ 693,000 230,000
Non-Executive Officer Director Group
(4 Persons)............................. -- --
Non-Executive Officer Employee Group
(9 Persons)............................. 57,000 --
</TABLE>
THE BOARD URGES THE STOCKHOLDERS TO VOTE FOR APPROVAL OF THE 1997 PLAN, AS
AMENDED.
12
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of Common Stock, as of (i) each director and nominee for
director of the Company, (ii) each of the Named Executive Officers, (iii) all
directors and executive officers as a group and (iv) each beneficial owner of
more than 5% of the Company's Common Stock. Except as indicated in the
footnotes below, information is as of April 30, 1998 and 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(1)
-----------------
DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS NUMBER PERCENT
- ------------------------------------------ --------- -------
<S> <C> <C>
Vincent A. Wolfington(2)..................................... 355,989 4.5%
Don R. Dailey(3)............................................. 345,176 4.3%
David H. Haedicke(4)......................................... 24,700 *
Guy C. Thomas(5)............................................. 98,550 1.3%
Richard A. Andersen(6)....................................... 15,486 *
Robert W. Cox(7)............................................. 20,400 *
William R. Hambrecht(8)...................................... 119,806 1.5%
David McL. Hillman(9)........................................ 624,044 8.1%
Nicholas J. St. George(10)................................... 12,500 *
Dennis I. Meyer(11).......................................... 5,000 *
Joseph V. Vittoria........................................... -- --
All directors and executive officers as a group
(15 persons)(12)............................................ 1,672,893 20.1%
OTHER 5% STOCKHOLDERS
- ---------------------
Kaufman Fund, Inc.(13)....................................... 850,000 11.0%
140 East 45th St.
43rd Floor
New York, NY 10017
H&Q London Ventures.......................................... 444,093 5.7%
One Bush St.
San Francisco, CA 94104
PNC Capital Corp............................................. 616,544 8.0%
One PNC Plaza
249 Fifth Avenue
Pittsburgh, PA 15222
Yerac Associates, L.P.(14) .................................. 516,018 6.6%
45 Belden Place
San Francisco, CA 94104
</TABLE>
- --------
* Less than 1%.
(1) Percentages are based upon 7,743,399 shares of Common Stock outstanding
on April 15, 1998. On April 16, 1998, the Company filed a Registration
Statement on Form S-1 (File No. 333-50245) with the Securities and
Exchange Commission registering the proposed public offering of up to
1,450,000 shares of Common Stock by the Company and 1,036,300 shares of
Common Stock by certain selling stockholders, including up to the
indicated number of shares by the following selling stockholders: Mr.
Wolfington (50,000 shares), Mr. Dailey (50,000 shares), Mr. Thomas
(20,000 shares), Mr. Hambrecht (25,000 shares), PNC Capital Corp.
(309,300 shares), H&Q London Ventures (444,093 shares) and Yerac
Associates, L.P. (50,000 shares). The shares listed in the preceding
sentence for certain of the selling stockholders and the Company include
up to an aggregate of 324,300 shares of Common Stock that may be sold
under the underwriters' proposed over-allotment option. The table does
not give effect to (i) the sale of any shares in the proposed public
offering or (ii) the recent grant of Performance Options or Other
Options.
13
<PAGE>
(2) Includes options to purchase 205,706 shares of Common Stock that
currently are exercisable. 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) 450 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 options to purchase 205,706 shares of Common Stock. Excludes
shares held by Yerac, a limited partnership of which Mr. Dailey is a
limited partner, with respect to which shares Mr. Dailey has no voting or
investment power.
(4) Represents options to purchase shares of Common Stock.
(5) Includes options to purchase 35,768 shares of Common Stock.
(6) Includes options to purchase 6,886 shares of Common Stock.
(7) Represents options to purchase shares of Common Stock.
(8) Includes options to purchase 7,500 shares of Common Stock that currently
are exercisable. Also includes (i) 85,816 shares of Common Stock with
respect to which Mr. Hambrecht shares record and beneficial ownership
with Hamco Capital Corp. and (ii) 26,490 shares of Common Stock with
respect to which Mr. Hambrecht shares record and beneficial ownership
with the Hambrecht 1980 Revocable Trust. See "Certain Transactions."
(9) Represents (i) options to purchase 7,500 shares of Common Stock, and
(ii) 616,544 shares held by PNC Capital Corp., a Company of which Mr.
Hillman is Executive Vice President. Mr. Hillman disclaims beneficial
ownership of the shares held by PNC Capital Corp. and his address is that
of PNC Capital Corp.
(10) Includes options to purchase 7,500 shares of Common Stock.
(11) Includes 5,000 shares held by Mr. Meyer's wife as to which Mr. Meyer
disclaims beneficial ownership.
(12) See Notes 3 through 10. Includes options to purchase 52,622 shares of
Common Stock held by executive officers of the Company not listed in the
table above.
(13) Information is based upon the Schedule 13G dated July 16, 1997 filed by
Kaufman Fund, Inc.
(14) Includes shares of Common Stock issuable upon exercise of a warrant to
purchase 86,003 shares of Common Stock at a price of approximately $4.65
per share. The warrant is exercisable at any time until September 1,
2001.
14
<PAGE>
CERTAIN TRANSACTIONS
CLI FLEET
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. As a holder of CLI Fleet
preferred stock, the Company is currently entitled to receive an annual
dividend (when declared) of $500 per share. The Company waived the right to
receive any dividends accrued in respect of its preferred stock through April
30, 1997, but during 1995 and 1997 received referral fees totalling $100,000
and $37,500, respectively, from CLI Fleet. During 1995, 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 redemption payments of $100,000, $100,000 and $550,000
in May 1998, 1999 and 2000, respectively. Under the terms of an agreement with
CLI Fleet, the Company currently 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.
CLI Fleet 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 vehicles purchased by independent
operators. Each of the Company's owned and operated chauffeured vehicle
service companies has entered into a Finance & Service Agreement with CLI
Fleet, which provides that the Company will recommend and refer independent
operators to CLI Fleet for financing of vehicles. CLI Fleet also has purchased
from the Company notes receivable due from independent operators in exchange
for cash or demand notes on a non-recourse basis. The Company sold $1.8
million and $1.0 million of independent operator notes receivable to CLI Fleet
for cash of $1.3 million and approximately $730,000 and demand promissory
notes of approximately $470,000 and approximately $280,000 in 1995 and 1996,
respectively. These promissory notes are due to CLI Fleet on demand, although
monthly principal payments generally are received, and bear interest at rates
ranging from 5% to 7%. The Company generally no longer sells notes receivable
from independent operators to CLI Fleet, although CLI Fleet continues to
provide vehicle financing to the Company's independent operators.
PNC
In May 1996, the exercise price of a warrant issued to PNC Capital Corp.
("PNC") was reduced from $6.14 to $4.65 per share. In addition, pursuant to
the recapitalization effected in connection with the IPO (the
"Recapitalization"), Carey repaid approximately $912,000 of the $3.8 million
in principal outstanding on its subordinated note held by PNC and applied the
balance of the outstanding principal to pay the purchase price for 616,544
shares of Common Stock issued to PNC upon exercise of the warrant held by it.
David McL. Hillman, a director of the Company, is Executive Vice President of
PNC.
YERAC
In May 1996, the exercise price of a warrant to purchase 86,003 shares of
Common Stock owned by Yerac Associates, L.P. ("Yerac") was reduced from $6.14
to $4.65 per share. In addition, in connection with the Recapitalization,
Yerac converted the entire outstanding balance of a $2.0 million subordinated
note held by it into approximately 430,000 shares of Common Stock. From the
net proceeds of the IPO, the Company repaid approximately $1.1 million of
additional outstanding indebtedness to Yerac. Messrs. Wolfington and Dailey
are limited partners of Yerac. See "Principal Stockholders."
OTHER TRANSACTIONS INVOLVING OFFICERS AND DIRECTORS
In connection with the Recapitalization, the Company redeemed 22,000 shares
of its Series A Preferred Stock held by H&Q London Ventures and entities then
affiliated with it (collectively, "H&Q") for an aggregate of $1.1 million in
cash plus 44,974 shares of Common Stock. Also in connection with the
Recapitalization, such
15
<PAGE>
entities received an aggregate of 900,089 shares of Common Stock as a result
of the conversion of 5,500 shares of Series B Preferred Stock and 31,864
shares of Series G Preferred Stock. William R. Hambrecht, a director of the
Company, is a director and chairman of Hamco Capital Corporation and a trustee
of The Hambrecht 1980 Revocable Trust. Prior to January 1, 1998, Mr. Hambrecht
was affiliated in different capacities with the various entities comprising
H&Q, including as a general partner of Hambrecht & Quist Venture Partners
("Partners"). Partners currently is the general partner of H&Q London
Ventures. See "Principal Stockholders."
Vincent A. Wolfington, the Company's Chairman and Chief Executive Officer,
and Don R. Dailey, the Company's President, each personally guaranteed certain
indebtedness of the Company in the original principal amount of $4.5 million
and was paid $45,000 during 1996 for such guarantee. The Company used part of
the net proceeds of the IPO to repay the entire outstanding amount of the
underlying indebtedness, and following the repayment the guarantees were
terminated. In connection with the Recapitalization, Messrs. Wolfington and
Dailey received $20,250 and $13,650, respectively, and 7,569 shares and 5,123
shares of Common Stock, respectively, as a result of the redemption of the
shares of Series A Preferred Stock and the conversion of the shares of Series
G Preferred Stock beneficially owned by each of them.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the next annual
meeting of stockholders must be received by the Company at its principal
executive offices by January 6, 1999 for inclusion in the proxy statement and
form of proxy relating to that meeting and must comply with the applicable
requirements of the federal securities laws.
OTHER MATTERS
The Board of Directors knows of no business which will be presented for
consideration at the Annual Meeting other than as shown above. However, if any
such other business should come before the Annual Meeting, it is the intention
of the persons named in the enclosed Proxy to vote the Proxies in respect of
any such business in accordance with their best judgment.
The cost of preparing, assembling and mailing this proxy material will be
borne by the Company. The Company may solicit Proxies otherwise than by use of
the mail, in that certain officers and regular employees of the Company,
without additional compensation, may use their personal efforts, by telephone
or otherwise, to obtain Proxies. Such assistance may take the form of
personal, telephonic or written solicitation or any combination thereof. The
Company will also request persons, firms and corporations holding shares in
their names, or in the names of their nominees, which shares are beneficially
owned by others, to send this proxy material to and obtain Proxies from such
beneficial owners and will reimburse such holders for their reasonable
expenses in doing so. The Company has retained D.F. King & Co., Inc. ("King")
to assist it in the solicitation of proxies by telephonic and written means on
behalf of the Board of Directors in connection with the Annual Meeting. The
Company expects King's fees to be approximately $5,500, exclusive of
reimbursement of expenses.
By Order of the Board of Directors
Don R. Dailey
Secretary
May 6, 1998
16
<PAGE>
EXHIBIT A
CAREY INTERNATIONAL, INC.
1997 EQUITY INCENTIVE PLAN
(AS AMENDED)
SECTION 1 PURPOSE AND DURATION
1.1 Purposes. The purposes of the Plan are to attract, retain and motivate
employees and consultants of the Company, its Parent (if any), and any present
or future Subsidiaries and to enable them to participate in the growth of the
Company by providing for or increasing the proprietary interests of such
persons in the Company.
1.2 Effective Date. The Plan is effective as of the date of its adoption by
the Board.
1.3 Expiration Date. The Plan shall expire within ten years from the date of
the adoption of the Plan by the Board. In no event shall any Awards be made
under the Plan after such expiration date, but Awards previously granted may
extend beyond such date.
SECTION 2 DEFINITIONS
As used in the Plan, the following capitalized words shall have the meanings
indicated below:
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Award" means, individually or collectively, a grant under the Plan of
Options, SARs, Performance Shares, Restricted Stock or Stock Units.
"Award Agreement" means the written agreement setting forth the terms and
provisions applicable to an Award granted under the Plan.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the committee of the Board appointed by the Board to
administer the Plan in accordance with Section 3.1.
"Company" means Carey International, Inc., a Delaware corporation, or any
successor thereto.
"Director" means any individual who is a member of the Board.
"Fair Market Value" means, with respect to a Share, the fair market thereof
as of the relevant date of determination, as determined in accordance with a
valuation methodology approved by the Board in good faith but in no event less
than, in the case of newly issued stock, the par value per Share; provided
that if the Board does not adopt or employ any such valuation methodology and
Shares are traded on an exchange or quoted on The Nasdaq National Market, fair
market value shall mean, on the relevant date of determination, the closing
price of a Share traded on the principal exchange for the Shares or, if the
Shares are so traded, the closing or last price quoted on The Nasdaq National
Market.
"Grant Date" means the effective date of an Award as specified by the Board
and set forth in the applicable Award Agreement.
"Incentive Stock Option" or "ISO" means an option to purchase Shares awarded
to a Participant under Section 6 of the Plan that is intended to meet the
requirements of Section 422 of the Code.
A-1
<PAGE>
"Non-Employee Director" means a non-employee director as that term is
defined in Rule 16b-3 promulgated under the 1934 Act.
"Nonqualified Stock Option" or "NQO" means an option to purchase Shares
awarded to a Participant under Section 6 of the Plan that is not intended to
be an ISO.
"Option" means an ISO or an NQO.
"Parent" means a "parent corporation" as that term is defined in Section 424
of the Code.
"Participant" means an individual who has been selected by the Board to
receive an Award under the Plan.
"Performance Cycle" means the period of time selected by the Board during
which performance is measured for the purpose of determining the extent to
which an Award of Performance Shares has been earned. More than one
Performance Cycle may be in progress at any one time and the duration of
Performance Cycles may differ.
"Performance Share" means a Share awarded to a Participant under Section 8
of the Plan that entitles the Participant to acquire Shares upon the
attainment of specified performance goals.
"Plan" means the 1997 Equity Incentive Plan set forth in this document and
as hereafter amended from time to time in accordance with Section 13.
"Restricted Period" means the period of time selected by the Board during
which Shares of Restricted Stock are subject to forfeiture and/or restrictions
on transferability.
"Restricted Stock" means Shares awarded to a Participant under Section 9 of
the Plan pursuant to an Award that entitles the Participant to acquire Shares
for a purchase price (which may be zero), subject to such conditions,
including a Company right during a specified period or periods to repurchase
the Shares at their original purchase price (or to require forfeiture of the
Shares if the purchase price was zero) upon the Participants termination of
employment.
"SAR" or "Stock Appreciation Right" means an Award that is designated as an
SAR pursuant to Section 7 of the Plan, granted alone or in connection with a
related Award, entitling a Participant to receive an amount in cash or Shares
or a combination thereof having a value equal to (or if the Board shall so
determine at time of grant, less than) the excess of the Fair Market Value of
a Share on the date of exercise over the Fair Market Value of a Share on the
Grant Date (or over the Option exercise price, if the Stock Appreciation Right
was granted in tandem with an Option) multiplied by the number of Shares with
respect to which the Stock Appreciation Right is exercised.
"Shares" means shares of the Company's common stock, par value $0.01 per
share.
"Stock Unit" means an Award of a Share or a unit valued in whole or in part
by reference to, or otherwise based on, the value of a Share, granted to a
Participant under Section 10 of the Plan.
"Subsidiary" means a subsidiary corporation as that term is defined in
Section 424 of the Code.
SECTION 3 ADMINISTRATION OF THE PLAN
3.1 The Board. The Plan shall be administered by the Board. The Board may,
in its discretion, delegate some or all of its powers with respect to the Plan
to the Committee, in which event all references in the Plan to the Board
(except references in Section 13.1) shall be deemed to refer to the Committee.
The Committee, if one is appointed, shall consist of at least two Non-Employee
Directors.
A-2
<PAGE>
3.2 Authority of the Board. The Board shall have the authority to adopt,
alter and repeal such administrative rules, guidelines and practices governing
the operation of the Plan as it shall consider advisable from time to time, to
interpret the provisions of the Plan and any Award, and to decide all disputes
arising in connection with the Plan. The Boards decisions and interpretations
shall be final and binding.
SECTION 4 ELIGIBILITY OF PARTICIPANTS
The persons eligible to receive Awards under the Plan shall be all executive
officers of the Company, its Parent (if any), and any Subsidiaries and other
employees, consultants and advisers who, in the opinion of the Board, are in a
position to make a significant contribution to the success of the Company, its
Parent (if any), and any Subsidiaries. Directors, including directors who are
not employees, of the Company, its Parent (if any), and any Subsidiaries,
shall be eligible to receive Awards under the Plan.
SECTION 5 STOCK AVAILABLE FOR AWARDS
5.1 Number of Shares. Awards may be made under the Plan for up to One
Million Five Hundred Fifty Thousand (1,550,000) Shares. Shares issued under
the Plan may consist in whole or in part of authorized but unissued Shares or
treasury Shares.
5.2 Lapsed, Forfeited or Expired Awards. If any Award in respect of Shares
expires or is terminated before exercise or is forfeited for any reason, the
Shares subject to such Award, to the extent of such expiration, termination,
or forfeiture, shall again be available for award under the Plan.
5.3 Maximum Number of Shares to a Single Participant in any Calendar
Year. In no event shall any Participant receive in any calendar year Awards
under the Plan and any other grants for more than Three Hundred Thousand
(300,000) Shares.
SECTION 6 STOCK OPTIONS
6.1 Grant of Options. Subject to the terms and provisions of the Plan, the
Board may award Options and determine the number of shares to be covered by
each Option, the exercise price therefor, the term of the Option, and any
other conditions and limitations applicable to the exercise of the Option. The
Board may grant ISOs, NQOs or a combination thereof.
6.2 Exercise Price. Subject to the provisions of this Section 6, the
exercise price for each Option shall be determined by the Board in its sole
discretion.
6.3 Restrictions on Option Transferability and Exercisability. No Option
shall be transferable by the Participant other than by will or the laws of
descent and distribution, and all Options shall be exercisable, during the
Participant's lifetime, only by the Participant; provided, however, that the
Board may provide that an Option is transferable by the Participant and
exercisable by persons other than the Participant upon such terms and
conditions as the Board shall determine.
6.4 Certain Additional Provisions for Incentive Stock Options
6.4.1 Exercise Price. In the case of an ISO, the exercise price shall be not
less than one hundred percent (100%) of the Fair Market Value on the Grant
Date of the Shares subject to the Option; provided, however, that if on the
Grant Date the Participant (together with persons whose stock ownership is
attributed to the Participant pursuant to Section 424(d) of the Code) owns
stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company, its Parent (if any) or any
Subsidiaries, the exercise price shall be not less than one hundred and ten
percent (110%) of the Fair Market Value on the Grant Date of the Shares
subject to the Option.
A-3
<PAGE>
6.4.2 Exercisability. Subject to Section 12.3 and 12.4, the aggregate Fair
Market Value (determined on the Grant Date(s)) of the Shares with respect to
which ISOs are exercisable for the first time by any Participant during any
calendar year (under all plans of the Company, its Parent (if any) and any
Subsidiaries) shall not exceed $100,000.
6.4.3 Eligibility. ISOs may be granted only to persons who are employees of
the Company, its Parent (if any) or any Subsidiaries on the Grant Date.
6.4.4 Expiration. ISOs may not be exercised after the expiration of ten (10)
years from the Grant Date; provided, however, that if the Option is granted to
a Participant who, together with persons whose stock ownership is attributed
to the Participant pursuant to Section 424(d) of the Code, owns stock
possessing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company, its Parent (if any) or any Subsidiaries,
the ISO may not be exercised after the expiration of five (5) years from the
Grant Date.
6.4.5 Compliance with Section 422 of the Code. The terms and conditions of
ISOs shall be subject to and comply with Section 422 of the Code or any
successor provision.
6.4.6 Notice to Company of Disqualifying Disposition. Each Participant who
receives an ISO agrees to notify the Company in writing immediately after the
Participant makes a Disqualifying Disposition of any Shares received pursuant
to the exercise of an ISO. The term Disqualifying Disposition means any
disposition (including any sale) of Shares before the later of (a) two years
after the Participant was granted the ISO under which the Participant acquired
such Shares, or (b) one year after the Participant acquired the Shares by
exercising the ISO.
6.4.7 Substitute Options. Notwithstanding the provisions of Section 6.4.1,
in the event that the Company, its Parent (if any) or any Subsidiary
consummates a transaction described in Section 424(a) of the Code (relating to
the acquisition of property or stock from an unrelated corporation),
individuals who become employees or consultants of the Company, its Parent (if
any) or any Subsidiary on account of such transaction may be granted ISOs in
substitution for options granted by their former employer. The Board, in its
sole discretion and consistent with Section 424(a) of the Code, shall
determine the exercise price of such substitute Options.
6.5 NQO Presumption. Options granted pursuant to the Plan shall be presumed
to be NQOs unless expressly designated ISOs in the Award Agreement.
SECTION 7 GRANT OF STOCK APPRECIATION RIGHTS
Subject to the terms and provisions of the Plan, the Board may award SARs in
tandem with another Award (at or after the Grant Date of the other Award), or
alone and unrelated to another Award, and may determine the terms and
conditions applicable thereto, including the form of payment.
SECTION 8 PERFORMANCE SHARES
8.1 Grant of Performance Shares. The Board may award Performance Shares to
Participants and determine the performance goals applicable to each such
Award, the number of Shares for each Performance Cycle, the duration of each
Performance Cycle and all other limitations and conditions applicable to the
awarded Performance Shares. The payment value of each Performance Share shall
be equal to the Fair Market Value of one Share on the date the Performance
Share is earned or, in the discretion of the Board, on the date the Board
determines that the Performance Share has been earned.
8.2 Adjustment of Performance Goals. Except as provided in an Award, during
any Performance Cycle, the Board may adjust the performance goals for the
Performance Cycle as it deems equitable in recognition of unusual or non-
recurring events affecting the Company or its Shares, changes in applicable
tax laws or accounting principles, or such other factors as the Board shall
determine.
A-4
<PAGE>
8.3 Written Certification. As soon as practical after the end of a
Performance Cycle, the Board shall certify in writing the extent to which the
performance goals applicable to each Participant for the Performance Cycle
were achieved or exceeded and the number of Performance Shares which have been
earned on the basis of performance in relation to the established performance
goals.
SECTION 9 RESTRICTED STOCK
9.1 Grant of Restricted Stock. The Board may award Shares of Restricted
Stock and determine the purchase price, if any, therefor, the duration of the
Restricted Period, the conditions under which the Shares may be forfeited to
or repurchased by the Company and any other terms and conditions of the
Awards. The Board may modify or waive any restrictions, terms and conditions
with respect to any Restricted Stock. Shares of Restricted Stock may be issued
for whatever consideration is determined by the Board, subject to applicable
law.
9.2 Transferability. Shares of Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered, except as permitted by the
Board, during the Restricted Period.
9.3 Evidence of Award. Shares of Restricted Stock shall be evidenced in such
manner as the Board may determine. Any certificates issued in respect of
Shares of Restricted Stock shall be registered in the name of the Participant
and unless otherwise determined by the Board, deposited by the Participant,
together with a stock power endorsed in blank, with the Company. At the
expiration of the Restricted Period, the Company shall deliver the
certificates and stock power to the Participant.
9.4 Shareholder Rights. A Participant shall have all the rights of a
shareholder with respect to Restricted Stock awarded, including voting and
dividend rights, unless otherwise provided in the Award Agreement.
SECTION 10 STOCK UNITS
10.1 Grant of Stock Units. Subject to the terms and provisions of the Plan,
the Board may award Stock Units subject to such terms, restrictions,
conditions, performance criteria, vesting requirements and payment rules as
the Board shall determine.
10.2 Consideration. Shares awarded in connection with a Stock Unit shall be
issued for whatever consideration is determined by the Board, subject to
applicable law.
SECTION 11 OTHER AWARDS
The Board shall have the authority to specify the terms and provisions of
other forms of equity-based or equity-related Awards not described above which
the Board determines to be consistent with the purposes of the Plan and the
interests of the Company, which Awards may provide for cash payments based in
whole or in part on the value or future value of Shares, for the acquisition
or future acquisition of Shares, or any combination thereof. Other Awards may
also include cash payments (including the cash payment of dividend
equivalents) under the Plan which may be based on one or more criteria
determined by the Board that are unrelated to the value of the Shares and that
may be granted in tandem with, or independent of, other Awards under the Plan.
SECTION 12 GENERAL PROVISIONS APPLICABLE TO AWARDS
12.1 Legal and Regulatory Matters. The delivery of Shares shall be subject
to compliance with (i) applicable federal and state laws and regulations, (ii)
if the outstanding Shares are listed at the time on any stock exchange, the
listing requirements of such exchange, and (iii) the Company's counsel's
approval of all other legal matters in connection with the issuance and
delivery of the Shares. If the sale of the Shares has not been registered
under the 1933 Act, the Company may require, as a condition to delivery of the
Shares, such representations or agreements as counsel for the Company may
consider appropriate to avoid violation of such Act and may require that the
certificates evidencing the Shares bear an appropriate legend restricting
transfer.
A-5
<PAGE>
12.2 Award Agreement. The terms and provisions of an Award shall be set
forth in an Award Agreement approved by the Board and delivered or made
available to the Participant as soon as practicable following the Grant Date.
12.3 Determination of Restrictions on the Award. The vesting,
exercisability, payment and other restrictions applicable to an Award (which
may include, without limitation, restrictions on transferability or provision
for mandatory resale to the Company) shall be determined by the Board and set
forth in the applicable Award Agreement. Notwithstanding the foregoing, the
Board may accelerate (i) the vesting or payment of any Award (including an
ISO), (ii) the lapse of restrictions on any Award (including an Award of
Restricted Stock) and (iii) the date on which any Option or SAR first becomes
exercisable.
12.4 Mergers, etc. Notwithstanding any other provisions of the Plan, in the
event that a merger or other transaction occurs that results or will result
after making necessary filings with the Securities and Exchange Commission in
the Common Stock not being registered under Section 12 of the 1934 Act, all
Awards shall terminate upon the completion of the transaction, provided,
however, that 20 days prior to the effective date of any such merger or other
transaction all Awards outstanding under the Plan that are not otherwise fully
exercisable and realizable shall become immediately exercisable and realizable
in full. If the transaction is intended to be treated as a pooling of
interests for accounting purposes, the Board shall cause the acquiring or
surviving corporation or one of its affiliates to grant replacement Awards. In
all other transactions, the Board may either arrange for replacement Awards or
provide for a cash payment in connection with the termination of the Awards.
Replacement Awards for ISOs shall satisfy any applicable requirements of the
Code.
12.5 Termination of Employment. For purposes of the Plan, the following
events shall not be deemed a termination of employment of a Participant: (i) a
transfer to the employment of the Company from its Parent (if any) or from a
Subsidiary, or from the Company to its Parent (if any) or to a Subsidiary, or
from one Subsidiary to another, or from the Company's Parent (if any) to a
Subsidiary, or from a Subsidiary to the Company's Parent (if any); or (ii) an
approved leave of absence for military service or sickness, or for any other
purpose approved by the Company, if the Participants right to employment is
guaranteed either by a statute or by contract or under the policy pursuant to
which the leave of absence was granted or if the Board otherwise so provides
in writing. For purposes of the Plan, employees of a Subsidiary or Parent (if
any) shall be deemed to have terminated their employment on the date on which
such Subsidiary or Parent ceases to be a Subsidiary or Parent of the Company,
as the case may be.
12.6 Date of and Effect of Termination of Employment. The date of a
Participants termination of employment for any reason shall be determined in
the sole discretion of the Board. The Board shall have full authority to
determine and specify in the applicable Award Agreement the effect, if any,
that a Participants termination of employment for any reason will have on the
vesting, exercisability, payment or lapse of restrictions applicable to an
outstanding Award.
12.7 Grant of Awards. Each Award may be made alone, in addition to or in
relation to any other Award. The terms of each Award need not be identical,
and the Board need not treat Participants uniformly.
12.8 Settlement of Awards. No Shares shall be delivered pursuant to any
exercise of an Award until payment in full of the price therefor, if any, is
received by the Company. Such payment may be made in whole or in part in cash
or by certified or bank check or, to the extent permitted by the Board at or
after the Grant Date, by delivery of a note or Shares, including Restricted
Stock, valued at their Fair Market Value on the date of delivery, or such
other lawful consideration as the Board shall determine.
12.9 Withholding Requirements and Arrangements. The Participant shall pay to
the Company or make provision satisfactory to the Board for payment of any
taxes required by law to be withheld in respect of Awards under the Plan no
later than the date of the event creating the tax liability. In the Boards
discretion, such tax obligations may be paid in whole or in part in Shares,
including Shares retained from the Award creating the tax obligation, valued
at their Fair Market Value on the date of delivery. The Company may, to the
extent permitted by law, deduct any such tax obligations from any payment of
any kind otherwise due to the Participant.
A-6
<PAGE>
12.10 No Effect on Employment. The Plan shall not give rise to any right on
the part of any Participant to continue in the employ of the Company, its
Parent (if any) or any Subsidiary. The loss of existing or potential profit in
Awards granted under the Plan shall not constitute an element of damages in
the event of termination of the relationship of a Participant even if the
termination is in violation of an obligation of the Company to the Participant
by contract or otherwise.
12.11 No Rights as Shareholder. Subject to the provisions of the Plan and
the applicable Award Agreement, no Participant shall have any rights as a
shareholder with respect to any Shares to be distributed under the Plan until
he or she becomes the holder thereof.
12.12 Adjustments. Upon the happening of any of the following described
events, a Participant's rights with respect to Awards granted hereunder shall
be adjusted as hereinafter provided, unless otherwise specifically provided in
the Award Agreement.
12.12.1 Stock Splits and Recapitalizations. In the event the Company issues
any of its Shares as a stock dividend upon or with respect to the Shares, or
in the event Shares shall be subdivided or combined into a greater or smaller
number of Shares, or if, upon a merger or consolidation (except those
described in Section 12.4), reorganization, split-up, liquidation,
combination, recapitalization or the like of the Company, Shares shall be
exchanged for other securities of the Company, securities of another entity,
cash or other property, each Participant upon exercising an Award (for the
purchase price to be paid under the Award) shall be entitled to purchase such
number of Shares, other securities of the Company, securities of such other
entity, cash or other property as the Participant would have received if the
Participant had been the holder of the Shares with respect to which the Award
is exercised at all times between the Grant Date of the Award and the date of
its exercise, and appropriate adjustments shall be made in the purchase price
per Share.
12.12.2 Restricted Stock. If any person owning Restricted Stock receives new
or additional or different shares or securities (New Securities) in connection
with a corporate transaction described in Section 12.12.1 as a result of
owning such Restricted Stock, the New Securities shall be subject to all of
the conditions and restrictions applicable to the Restricted Stock with
respect to which such New Securities were issued.
12.12.3 Board Determination. Notwithstanding any provision to the contrary,
no adjustments shall be made pursuant to this Section 12.12 with respect to
ISOs unless (i) the Board, after consulting with counsel for the Company,
determines that such adjustments would not constitute a modification,
extension or renewal of such ISOs as such terms are defined in Section 424 of
the Code, (ii) would cause any adverse tax consequences for the holders of
such ISOs or (iii) the holders of such ISOs consent to the adjustment. No
adjustments to ISOs shall be made for dividends paid in cash or in property
other than securities of the Company.
12.12.4 Fractional Shares. No fractional Shares shall be issued under the
Plan. Any fractional Shares which, but for this Section, would have been
issued shall be deemed to have been issued and immediately sold to the Company
for their Fair Market Value, and the Participant shall receive from the
Company cash in lieu of such fractional Shares.
12.12.5 Other Distributions. The Board may adjust the number of Shares
subject to outstanding Awards and the exercise price and the terms of
outstanding Awards to take into consideration material changes in accounting
practices or principles, extraordinary dividends, acquisitions or dispositions
of stock or property, or any other event if it is determined by the Board that
such adjustment is appropriate to avoid distortion in the operation of the
Plan.
12.12.6 Further Adjustment. Upon the happening of any of the events
described in Sections 12.12.1 or 12.12.5, the class and aggregate number of
Shares set forth in Sections 5.1 and 5.3 hereof that are subject to Awards
which previously have been or subsequently may be granted under the Plan shall
be appropriately adjusted to reflect the events described in such Sections.
The Board shall determine the specific adjustments to be made under this
Section 12.12.6.
A-7
<PAGE>
SECTION 13 AMENDMENT AND TERMINATION
13.1 Amendment, Suspension, Termination of the Plan. The Board may modify,
amend, suspend or terminate the Plan in whole or in part at any time;
provided, however, that no modification, amendment, suspension or termination
of the Plan shall be made without shareholder approval if such approval is
necessary to comply with any applicable tax or regulatory requirement;
provided, further, that such modification, amendment, suspension or
termination shall not, without a Participants consent, affect adversely the
rights of such Participant with respect to any Award previously made.
13.2 Amendment, Suspension, Termination of an Award. The Board may modify,
amend or terminate any outstanding Award, including, without limitation,
substituting therefor another Award of the same or a different type, changing
the date of exercise or realization and converting an ISO to a NQO; provided,
however, that the Participants consent to such action shall be required unless
the Board determines that the action, taking into account any related action,
would not materially and adversely affect the Participant.
SECTION 14 LEGAL CONSTRUCTION
14.1 Captions. The captions provided herein are included solely for
convenience of reference and shall not affect the meaning of any of the
provisions of the Plan or serve as a basis for interpretation or construction
of the Plan.
14.2 Severability. In the event any provision of the Plan is held invalid or
illegal for any reason, the illegality or invalidity shall not affect the
remaining provisions of the Plan, and the Plan shall be construed and enforced
as if the illegal or invalid provision had not been included.
14.3 Governing Law. The Plan and all rights under the Plan shall be
construed in accordance with and governed by the internal laws of the State of
Delaware.
A-8
<PAGE>
PROXY PROXY FOR ANNUAL MEETING OF STOCKHOLDERS PROXY
TO BE HELD JUNE 3, 1998
CAREY INTERNATIONAL, INC.
The undersigned, having received the Notice of Annual Meeting of
Stockholders and the Board of Directors' Proxy Statement (the "Proxy
Statement"), hereby appoint(s) Vincent A. Wolfington and Don R. Dailey, and each
of them, Proxies of the undersigned (with full power of substitution) to attend
the Annual Meeting of Stockholders of Carey International, Inc. to be held June
3, 1998, and all adjournments thereof (the "Meeting"), and there to vote all
shares of Common Stock of Carey International, Inc. that the undersigned would
be entitled to vote, if personally present, in regard to all matters which may
come before the meeting.
The undersigned hereby confer(s) upon the Proxies, and each of them,
discretionary authority (i) to consider and act upon such business, matters or
proposals other than the business set forth below as may properly come before
the Meeting and (ii) with respect to the election of directors in the event that
any of the nominees is unable or unwilling to serve. The Proxy when properly
executed will be voted in the manner specified herein. If no specification is
made, the Proxies intend to vote FOR all nominees for director and for approval
of the 1997 Equity Incentive Plan, as amended.
Please mark vote as in this example.
1. For the election of all nominees listed below (except as otherwise
indicated).
|_| FOR all nominees |_| WITHHOLD from all nominees
Nomine Dennis I. Meyer, Joseph V. Vittoria
----------------------------------------------------------------------
FOR all nominees, except those listed on the line above
2. For the approval of the Company's 1997 Equity Incentive Plan, as amended.
|_| FOR the amendment |_| AGAINST the amendment |_| ABSTAIN
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Mark here for address change and note below. |_|
Signature Date
Signature Date
In signing, please write name(s) exactly as appearing in the imprint on
this card. For shares held jointly, each joint owner should sign. If
signing as executor, or in any other representative capacity, or as an
officer of a corporation, please indicate your full title as such.
