SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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 Rule 14a-12
COMMODORE HOLDINGS LIMITED
-----------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(1)
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>
[COMMODORE LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 28, 2000
Notice is hereby given that the Annual Meeting of Stockholders of
Commodore Holdings Limited (the "Company") will be held on Monday, February 28,
2000, at 9:30 a.m., Eastern Standard Time, at the offices of Broad and Cassel,
Miami Center, Suite 3000, 201 South Biscayne Boulevard, Miami, Florida 33131,
for the following purposes, as described in the attached proxy statement:
A. To elect two directors to serve on the Company's Board of
Directors until the annual meeting of stockholders to be held
in 2003, and until their successors are elected and qualified;
B. To appoint Grant Thornton LLP, as the Company's independent
auditors for the Company's 2000 fiscal year and to authorize
the directors to approve the auditors' fee;
C. To consider and vote upon a proposal to adopt the Company's
1999 Stock Plan; and
D. To transact such other business as may properly come before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on January 20,
2000, as the record date for the determination of stockholders entitled to
notice of and to vote at the meeting and at any adjournment thereof.
Accordingly, only stockholders of record at the close of business on that date
will be entitled to vote at the meeting.
Under applicable Bermuda law and the Company's Bye-Laws, if a quorum is
present, the favorable vote of a simple majority of the votes cast by holders of
the Company's Common Stock, voting together as a single class in person or by
proxy at the Annual Meeting of Stockholders, will be required in order to
approve the election of two directors, the appointment of Grant Thornton LLP,
the adoption of the 1999 Stock Plan and to transact other business properly
presented at the meeting or any adjournment thereof.
The independent auditors' report and financial statements for the
Company's 1999 fiscal year will also be presented at the Annual Meeting of
Stockholders.
By order of the Board of Directors.
BLANCA SANTOS
January 28, 2000 Secretary
YOU ARE URGED TO COMPLETE, DATE, SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY IN
THE ACCOMPANYING POSTAGE-FREE ENVELOPE.
<PAGE>
COMMODORE HOLDINGS LIMITED
4000 Hollywood Boulevard
Suite 385, South Tower
Hollywood, Florida 33021
(954) 967-2100
---------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 28, 2000
---------------------
This Proxy Statement has been prepared and is furnished by the Board of
Directors of Commodore Holdings Limited (the "Company") in connection with the
solicitation of proxies for the Annual Meeting of Stockholders of the Company to
be held on February 28, 2000, and at any adjournment thereof, for the purposes
set forth in the accompanying notice of meeting (the "Annual Meeting").
It is anticipated that this Proxy Statement and the accompanying form
of proxy will be mailed to stockholders on or about January 28, 2000. The
Company's Annual Report, including audited financial statements for the fiscal
year ended September 30, 1999, is being mailed or delivered concurrently with
this Proxy Statement. The Annual Report is not to be regarded as proxy
soliciting material.
Only holders of record of the Company's common stock, $.01 par value
(the "Common Stock"), on the books of the Company at the close of business on
January 20, 2000 (the "Record Date"), are entitled to vote at the Annual
Meeting. On that date, there were 7,649,118 issued and outstanding shares of
Common Stock. The holder of each share of Common Stock is entitled to one vote
on each matter to be presented at the Annual Meeting.
Shares represented by a properly executed proxy received in time to
permit its use at the Annual Meeting will be voted in accordance with the
instructions indicated therein. If no instructions are indicated, the shares
represented by the proxy will be voted for the election of all nominees for
director, for the appointment of Grant Thornton LLP as the Company's independent
auditors and the authorization of the directors to approve the auditors' fee,
for the adoption of the Company's 1999 Stock Plan (the "1999 Plan") and, in the
discretion of the proxy holders, as to any other matter which may properly come
before the Annual Meeting. A stockholder who has given a proxy may revoke it at
any time before it is voted at the Annual Meeting by giving written notice of
revocation to the Secretary, by submitting a proxy bearing a later date, or by
attending the Annual Meeting and voting in person.
The expense of soliciting proxies will be borne by the Company. Proxies
will be solicited principally by mail, but directors, officers and regular
employees of the Company may solicit proxies personally, by telephone or by
facsimile transmissions. The Company will reimburse custodians, nominees or
other persons for their out-of-pocket expenses in sending proxy material to
beneficial owners.
In determining the presence of a quorum at the Annual Meeting,
abstentions are counted and broker non-votes are not. The Company's Bye-Laws
provide that the affirmative vote of a majority of the
<PAGE>
votes cast shall be the act of the stockholders, except as otherwise provided,
among other things, by the Bermuda Companies Act, 1981, as amended (the "Act").
The Act, together with the Company's Bye-Laws, provide that directors are
elected, auditors are appointed and the 1999 Plan adopted by a majority of the
votes cast. Under the Act, abstentions do not count as votes cast. Therefore,
under the Act and the Company's Bye-Laws, as to all matters to be voted on by
stockholders at the Annual Meeting, abstentions and broker non-votes will have
no legal effect on whether a matter is approved.
In order to assure that your interests will be represented, you are
requested, regardless of the number of shares you hold, to sign the proxy and
return it promptly in the enclosed envelope.
2
<PAGE>
PRINCIPAL STOCKHOLDERS AND
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock, as of January 20, 2000, by
each person known by the Company to be the beneficial owner of more than 5% of
the Company's outstanding Common Stock, by each director or nominee for
director, by each named executive officer, and by all directors and officers of
the Company as a group. Except as indicated below, (i) the address for each 5%
stockholder is c/o Commodore Holdings Limited, 4000 Hollywood Boulevard, Suite
385, South Tower, Hollywood, Florida 33021; and (ii) all shares are owned
directly with sole voting and dispositive power.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- ------------------------------------------------------- ---------------------------- -----------------
<S> <C> <C>
Jeffrey I. Binder and Rosalie Binder(1) (2) 855,455 10.4%
JeMJ Financial Services, Inc.(3) 872,634 11.1
9350 South Dixie Highway, Suite 1220
Miami, FL 33156
Ralph V. De Martino(2) 30,000 *
Richard A. Dipple(2) 20,000 *
Mark J. Maged(2) 30,000 *
Frederick A. Mayer(2) 560,000 7.1
Alan Pritzker(2) 75,000 1.0
Jeffrey B. Rabin(2)(4) 159,000 2.1
James R. Sullivan(2) 150,000 2.0
All directors and officers as a group(5) 2,804,176 31.0
(10 persons including those named above)
</TABLE>
- ----------------
* Represents less than 1%.
(1) Mr. Binder owns 285,000 shares of Common Stock together with his wife,
as tenants-by-the-entireties. This amount includes 520,455 shares of
Common Stock that Mr. Binder and his wife have a right to purchase
pursuant to warrants, which warrants are presently exercisable.
(2) This amount includes shares of Common Stock that may be purchased
pursuant to stock options and/or warrants held by such person that are
either presently exercisable or become exercisable within 60 days after
January 20, 2000 as follows: Jeffrey I. Binder, 50,000; Ralph V.
DeMartino, 30,000; Mark J. Maged, 30,000; Frederick A. Mayer, 275,000;
Alan Pritzker, 75,000; Jeffrey B. Rabin, 10,000; James R. Sullivan,
150,000; and Richard A. Dipple, 20,000.
3
<PAGE>
(3) JeMJ Financial Services, Inc. is a company controlled by Mr. Binder.
This amount includes 640,000 shares of Common Stock and warrants to
purchase 232,634 shares of Common Stock, which warrants are presently
exercisable.
(4) This amount includes 110,000 shares of Common Stock, which Mr. Rabin
jointly owns with a business associate. Pursuant to a power of
attorney, Mr. Rabin has sole voting and dispositive authority with
regard to such shares of Common Stock.
(5) Includes warrants and options to purchase 1,445,176 shares of Common
Stock, which warrants and options are presently exercisable, or become
exercisable within 60 days after January 20, 2000.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Company's knowledge, based solely on a review of the copies of
the reports furnished to the Company and written representations that no other
reports were required during the fiscal year ended September 30, 1999, Mr.
Jeffrey B. Rabin, one of the Company's directors, failed to file one Form 4,
which reflected one sale of the Company's Common Stock, on a timely basis. The
remaining directors and executive officers of the Company complied with all
applicable filing requirements of Section 16(a) of the Securities Exchange Act
of 1934.
4
<PAGE>
ELECTION OF DIRECTORS
The persons named in the accompanying form of proxy intend to vote all
valid proxies received in favor of the election of each of the persons named
below as nominees for director unless authority is withheld. Directors elected
at the Annual Meeting will serve until the Annual Meeting of Stockholders to be
held in the year 2003, and until their successors are elected and qualified. In
the event that any nominee is unable or unwilling to serve, discretionary
authority is reserved to the persons named in the accompanying form of proxy to
vote for substitute nominees. Management does not anticipate that such an event
will occur. Each director shall be elected by a majority of the votes cast.
The Board of Directors is divided into three classes. There are two
directors in each class, and each class is elected every third year. There is
presently one vacancy in the class of directors whose term expires in 2002 due
to the death of Mr. Stern during 1999. The Board of Directors has not yet filled
this vacancy. Directors who are voted into a class during the term of the class
may serve less than a three-year term. Each Director will hold office for the
term to which he is elected and until his successor is duly elected and
qualified. The terms of Messrs. Ralph V. DeMartino and Mark J. Maged expire at
this Annual Meeting and they are nominees for re-election. The Board of
Directors elects officers annually and such officers serve at the discretion of
the Board of Directors.
(a) NOMINEES FOR DIRECTOR
<TABLE>
<CAPTION>
AGE AS OF BUSINESS EXPERIENCE CURRENT
DECEMBER 31, DURING PAST FIVE YEARS DIRECTOR TERM
NAME 1999 AND DIRECTORSHIPS SINCE EXPIRES
---- ---- ----------------- ----- -------
<S> <C> <C> <C> <C>
Ralph V. De Martino (1) 45 Principal of DeMartino Finkelstein 1996 2000
Rosen & Virga since 1983 and managing
partner since 1987; member of the
Committee on Corporate, Banking and
Business Law of the Bar Association of
the District of Columbia and the
American Bar Association.
Mark J. Maged(2) 68 Chairman of MJM Associates, LLC, a 1996 2000
financial consulting firm, since 1995;
Chairman of Internet Tradeline, Inc.,
an internet-based electronic commerce
company, since 1995; international
investment and financial advisor to a
number of private and public
institutions and corporations since
1984; President and Chief Executive
Officer of Schroders, Inc., the U.S.
arm of the British merchant bank,
Schroders PLC, between 1974 and 1984.
</TABLE>
5
<PAGE>
(b) CONTINUING DIRECTORS
<TABLE>
<CAPTION>
AGE AS OF BUSINESS EXPERIENCE CURRENT
DECEMBER 31, DURING PAST FIVE YEARS DIRECTOR TERM
NAME 1999 AND DIRECTORSHIPS SINCE EXPIRES
---- ---- ----------------- ----- -------
<S> <C> <C> <C> <C>
Jeffrey I. Binder(2) 53 Chairman of the Board since 1995; 1995 2001
Chairman of the Board of Tel-Med, Inc.,
a company which developed medical
products and provided medical related
services, from 1991 to 1997; Chairman
of the Board and a director of H.P.
America, Inc., a private holding
company which owns medical practice
companies, from 1995 to December 1999;
Chairman of the Board and a director of
JeMJ Financial Services, Inc., a
private holding company, since 1989.
Frederick A. Mayer 65 Vice Chairman of the Board and Chief 1995 2001
Executive Officer since 1995;
Co-founder and Vice Chairman of Regency
Cruises Inc. ("Regency") between 1984
and April 1995; President of Exprinter
International USA, a travel
organization, between 1969 and 1995;
President of Marmara Marine, Inc.,
which owned the S/S United States,
between 1992 and 1996. In November
1995, Regency filed for Chapter 11
bankruptcy protection.
Jeffrey B. Rabin(1) (2) 51 Chief Financial Officer of DiMare 1999 2002
Homestead, Inc., an agricultural
company, since 1991; Certified Public
Accountant.
</TABLE>
- ------------------
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
6
<PAGE>
BOARD OF DIRECTORS
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During fiscal 1999, the Board of Directors held five formal meetings
and acted by unanimous written consent on eleven occasions. The Board has a
Compensation Committee and an Audit Committee. The Compensation Committee met
two times and the Audit Committee met four times during fiscal 1999. The Board
of Directors does not have a nominating or similar committee. During fiscal
1999, no director attended or participated in fewer than 75% of the meetings and
actions by the Board and any committee on which such director served.
The Compensation Committee reviews and sets the level for executive
compensation for the ensuing year; reviews and recommends the terms of the
employment agreements for the Company's executives; sets bonuses for the
Company's executives; and determines the number of stock options and the terms
of such options to be awarded to the Company's executives and eligible
employees. The Audit Committee performs the following principal functions:
recommends to the Board of Directors the engagement of independent auditors for
the ensuing year; reviews the scope of the annual audit; reviews with auditors
the results of the audit engagement, including review of the financial
statements and the management letter; and reviews the scope of and compliance
with the Company's internal controls.
COMPENSATION
Each independent director (a director who is not an officer or employee
of the Company) receives $10,000 per year, paid quarterly, for service on the
Company's Board of Directors and the committees thereof. Directors who are
officers or employees of the Company receive no additional compensation for
attendance at Board or committee meetings.
7
<PAGE>
COMPENSATION OF OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth information with respect to total
compensation earned or paid by the Company to the Chief Executive Officer of the
Company during the fiscal years ended September 30, 1997, 1998 and 1999, and
each of the Company's four other most highly compensated executive officers or
significant employees whose total annual salary and bonus exceeded $100,000
during such fiscal year.
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
---------- ALL
SECURITIES OTHER
NAME & PRINCIPAL FISCAL SALARY BONUS OTHER ANNUAL UNDERLYING COMPEN-
POSITION YEAR ($) ($) COMPENSATION OPTIONS/WARRANTS SATION(1)
- --------------------- ---- -------- -------- ------- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
Frederick A. Mayer, 1999 $213,616 $ 13,780 * 100,000(2) $ 52
Vice Chairman of 1998 190,736 12,250 * 0 52
the Board and Chief 1997 175,000 12,250 * 75,000(3) 53
Executive Officer
Jeffrey I. Binder, 1999 183,100 11,811 * 100,000(2) 52
Chairman of the 1998 163,488 10,500 * 0 52
Board 1997 150,000 10,500 * 50,000(3) 53
James A. Sullivan, 1999 162,525 10,920 * 50,000(2) 52
President of New 1998 156,000 13,500 * 0 52
Commodore Cruise 1997 150,000 10,500 * 50,000(3) 53
Lines Limited
Alan Pritzker, 1999 148,916 10,500 * 50,000(2) 52
Vice President 1998 132,254 10,996 * 0 52
Finance and Chief 1997 119,192 7,851 * 50,000(3) 53
Financial Officer
Richard A. Dipple, 1999 102,658 6,000 * 40,000(4) 52
Senior Vice President 1998 -- -- -- -- --
Hotel Operations 1997 -- -- -- -- --
</TABLE>
- --------------------
* Aggregate amount of Other Annual Compensation for each person is less
than the lesser of $50,000 or 10% of such person's annual salary and
bonus.
(1) All Other Compensation represents premiums paid for life insurance for
the named executive officers.
(2) This number represents options granted to the named executive officer
under the 1999 Plan, which are exercisable in annual one-third
increments, beginning on March 30, 2000.
(3) This number represents options granted to the named executive officer
under the Company's 1995 Stock Plan, which are exercisable in annual
one-third increments, beginning on October 1, 1997.
(4) This number represents options granted to the named executive officer
under the 1999 Plan, which are exercisable in two equal increments on
March 1, 2000 and September 1, 2000.
8
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information regarding the grant of stock
options to the named executive officers in fiscal year 1999. In addition,
hypothetical gains of 5% and 10% are shown for these stock options. These
hypothetical gains are based on assumed rates of annual compound stock price
appreciation of 5% and 10% from the date the stock options were granted (when
the market price was $5.00 per share) over the full option term. No stock
appreciation rights were granted during the 1999 fiscal year.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED ANNUAL
OPTIONS RATES OF STOCK PRICE
GRANTED TO APPRECIATION FOR
NUMBER OF EMPLOYEES EXERCISE OPTION TERM(1)
OPTIONS IN FISCAL PRICE PER EXPIRATION -----------------------
NAME GRANTED YEAR 1999 SHARE DATE 5% 10%
- --------------------- ------- ----- ------ ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Frederick A. Mayer(2) 100,000 15.8% $ 5.00 3/29/09 $314,450 $796,870
Jeffrey I. Binder(2) 100,000 15.8 $ 5.00 3/29/09 314,450 796,870
James A. Sullivan(2) 50,000 7.9 $ 5.00 3/29/09 157,225 398,435
Alan Pritzker(2) 50,000 7.9 $ 5.00 3/29/09 157,225 398,435
Richard A. Dipple(3) 40,000 6.3 $ 5.00 2/28/09 125,780 318,748
</TABLE>
- ------------------
(1) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term, which is
assumed to be 10 years for this purpose. These gains are based on
assumed rates of stock price appreciation of 5% and 10% compounded
annually from the date that the respective options were granted through
their assumed expiration date. Actual gains, if any, on stock options
exercises will depend on the future performance of the Common Stock.
(2) The options, which were granted under the Company's 1999 Stock Plan,
are exercisable in annual increments of one-third, beginning on March
30, 2000.
(3) The options, which were granted under the Company's 1999 Stock Plan,
are exercisable in two equal increments on March 1, 2000 and September
1, 2000.
9
<PAGE>
AGGREGATED STOCK OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
Set forth below is certain information pertaining to stock options and
warrants held by the named executive officers as of September 30, 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS/WARRANTS OPTIONS/WARRANTS
NAME ON EXERCISE AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
- ----------------- ---------- --------------------------- --------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---------- ------- --------- ------
<S> <C> <C> <C> <C> <C>
Frederick A. Mayer 0 275,000 100,000 $1,020,313 $ 18,750
Jeffrey I. Binder 200,000(2) 803,089(3) 100,000 1,957,529 18,750
James A. Sullivan 0 150,000 50,000 540,625 9,375
Alan Pritzker 0 75,000 50,000 226,563 9,375
Richard A. Dipple 0 20,000 20,000 3,750 3,750
</TABLE>
- ------------------
(1) Based on a fair market value of $5.1875 per share for the Common Stock,
as determined by using the closing bid quotation on The Nasdaq National
Market on September 30, 1999.
(2) JeMJ Financial Services, Inc., a company controlled by Mr. Binder,
acquired these shares upon the cashless exercise of warrants to
purchase 312,821 shares of Common Stock.
(3) Of these options and warrants, 232,634 are held by JeMJ Financial
Services, Inc., a company controlled by Mr. Binder.
BOARD OF DIRECTORS' REPORT ON EXECUTIVE COMPENSATION
GENERAL. The Company's management compensation philosophy is to attract
and retain quality executives through a combination of competitive base salaries
and performance-based bonuses. The Company also believes that its officers and
key employees should have an equity interest in the Company, either through
direct stock ownership or through ownership of stock options. As a result, the
Company grants stock options to its officers and key employees.
BASE SALARY. The Company's approach to base compensation is to offer
competitive salaries in comparison to market standards. The Company establishes
base salaries for new management employees by evaluating the responsibilities of
the position, the experience of the individual and the base salaries for
comparable positions at similar companies. In 1995, the Company conducted a
survey of the salaries of officers of publicly held companies in the Company's
industry and established officer salaries pursuant to employment contracts at
levels somewhat lower than these companies, to reflect the Company's smaller
size and short operating history. The employment contracts generally contained
annual increases of four percent to gradually increase each executive's salary
to market level as the Company grew and prospered. In each of May 1996 and 1997,
the Company's executives entitled to such increases waived them to enhance
stockholder value, and the first such increase was implemented in October 1997.
Increases in base compensation for executives without long-term contracts are
based on the performance of the executive, the performance of the Company and
salaries paid to officers of similar companies. Mr. Mayer, the Company's Chief
Executive Officer, has a five-year employment contract with the Company that
expires in May 2002. His salary was established based on the criteria described
above.
10
<PAGE>
BONUS COMPENSATION. The Company periodically rewards its executive
officers with bonuses based on the performance of the Company. Following the
conclusion of a fiscal year, management recommends to the Compensation Committee
whether bonuses should be awarded and suggests appropriate amounts. The
Compensation Committee then reviews such proposal and makes its bonus decisions.
In January 1999, the Company paid each executive officer a bonus equal to
approximately seven percent of each executive officer's fiscal 1999 salary.
STOCK OPTIONS. Stock options are currently the Company's principal
vehicle for payment of long-term incentive compensation. Stock options generally
are granted at a minimum of the prevailing market price on the date of grant and
will have value only if the Company's stock price increases. Options granted
under the Company's stock plans generally vest in annual increments over three
or four years beginning one year after the date of the grant. Grants of stock
options generally are based upon the performance of the Company, the level of
the executive's position within the Company and an evaluation of the executive's
past and expected future performance. The Company grants stock options
periodically, but not necessarily on an annual basis. During fiscal 1999, the
Company granted stock options to each of its named executive officers, including
Mr. Mayer, who received options to purchase 100,000 shares of Common Stock. The
Company also granted options to a broad range of its employees.
Jeffrey I. Binder
Mark J. Maged
Jeffrey B. Rabin
EMPLOYMENT AGREEMENTS
On July 15, 1997, the Company amended its employment agreement with its
Chairman of the Board, Mr. Jeffrey I. Binder, to extend the term of Mr. Binder's
employment until May 3, 2002. The terms of Mr. Binder's original employment
agreement dated May 3, 1995 remain unchanged and provide Mr. Binder with a
current annual salary of $175,000, which will be increased by four percent
annually, and certain perquisites. Upon termination of Mr. Binder's employment,
he has agreed not to compete with the Company for one year under certain
circumstances described therein. In the event a change of control of the Board
of Directors of the Company occurs, he shall receive compensation for the
greater of one year or the remainder of his employment term.
On May 3, 1997, the Company amended its employment agreement with Mr.
Frederick A. Mayer, its Vice-Chairman of the Board of Directors and Chief
Executive Officer, to extend the term of Mr. Mayer's employment until May 3,
2002. The terms of Mr. Mayer's original employment agreement dated May 3, 1995
remain unchanged and provide Mr. Mayer with a current annual salary of $205,000
which will be increased four percent annually, and certain perquisites. Upon
termination of Mr. Mayer's employment, he has agreed not to compete with the
Company for one year under certain circumstances described therein. In the event
a change of control of the Board of Directors of the Company occurs, he shall
receive compensation for the greater of one year or the remainder of his
employment term.
As of May 17, 1999, the Company entered into a new two-year employment
agreement with Mr. James A. Sullivan to serve as President of New Commodore
Cruise Lines Limited, one of the Company's wholly owned subsidiaries. Pursuant
to the terms of Mr. Sullivan's employment agreement, Mr. Sullivan receives a
current annual salary of $175,000, which will be increased by four percent
annually, and certain perquisites. Upon termination of Mr. Sullivan's
employment, he has agreed not to compete with the Company for one year under
certain circumstances described therein. In the event a change of control of the
Board of Directors of the Company occurs, he shall receive compensation for the
greater of one year or the remainder of his employment term.
11
<PAGE>
As of May 1, 1999, the Company entered into a new three-year employment
agreement with Mr. Alan Pritzker to serve as the Company's Vice President
Finance and Chief Financial Officer. Mr. Pritzker receives an annual salary of
$156,000 and certain perquisites. Upon termination of his employment, Mr.
Pritzker has agreed not to compete with the Company for one year under certain
circumstances described therein. In the event a change in control of the Board
of Directors of the Company occurs, he shall receive compensation for the
greater of one year or the remainder of his employment term.
As of March 1, 1999, the Company entered into an employment agreement
with Mr. Richard A. Dipple for a term of two and one-half years to serve as the
Company's Senior Vice President Hotel Operations. Mr. Dipple receives an annual
salary of $110,000 per year and certain prerequisites.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company has a Compensation Committee that sets the compensation
levels for the Company's executive officers. Messrs. Jeffrey I. Binder, Mark J.
Maged and Jeffrey B. Rabin serve on the Compensation Committee. Mr. Binder is
also an executive officer of the Company. Mr. Binder abstains from voting on
issues concerning his own proposed compensation.
STOCK PERFORMANCE GRAPH
In accordance with Securities and Exchange Commission regulations, the
following graph compares the cumulative total stockholder return to the
Company's stockholders during the thirty-eight month period ended September 30,
1999 to the Nasdaq Stock Market (U.S.) and the Nasdaq Non-Financial Index.
COMPARISON OF THE THIRTY-EIGHT MONTH CUMULATIVE TOTAL RETURN(1)
AMONG COMMODORE HOLDINGS LIMITED, NASDAQ (U.S.) STOCK MARKET AND NASDAQ
NON-FINANCIAL INDEX FOR THE THIRTY-EIGHT MONTHS ENDED SEPTEMBER 30, 1999
[INSERT GRAPH]
<TABLE>
<CAPTION>
MONTH AND YEAR JULY 16, 1996 SEPT. 1996 SEPT. 1997 SEPT. 1998 SEPT. 1999
- ----------------------------- ----------------- -------------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Nasdaq US 100 117 160 163 265
Nasdaq Non-Financial 100 107 143 144 244
Commodore Holdings 100 54 51 113 106
</TABLE>
- --------------------
(1) Assumes that the value of the investment in the Company and each index
was $100 on July 16, 1996, (the date the Company's Common Stock was
first publicly traded), and that all dividends are reinvested.
12
<PAGE>
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Effective March 1, 1999, the Company purchased 70 shares of stock from
Seahawk Limited ("Seahawk"), a company that is affiliated with Messrs. Richard
A. Dipple and Rodolfo Spinelli, two of the Company's executive officers, in
exchange for nominal consideration, the agreement by the Company to enter into
employment agreements with each of the executive officers, and the Company's
agreement to manage Seahawk Asia Limited ("Seahawk Asia"), which is also
affiliated with such executive officers. The shares purchased by the Company
represent 70% of the outstanding stock of Seahawk, and Messrs. Dipple and
Spinelli continue to own the remaining stock in Seahawk and all of the stock in
Seahawk Asia. As a result of these transactions, all of the profits of Seahawk
Asia will be paid to Seahawk and Messrs. Dipple and Spinelli will each receive
15% of the profits of Seahawk. The Company has guaranteed that the portion of
Seahawk's annual profits due to each of Messrs. Dipple and Spinelli will be not
less than $90,000 for each of the two years ending March 31, 2000 and 2001.
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors recommends that the firm of Grant Thornton LLP,
Certified Public Accountants, 2700 South Commerce Parkway, Suite 300, Weston,
Florida 33331-3621, be appointed to serve as independent auditors of the Company
for the ensuing fiscal year. In addition, the Board of Directors recommends that
the stockholders authorize the Board of Directors to approve the auditors' fee.
Grant Thornton LLP was the independent public auditor of the Company for the
fiscal year ended September 30, 1999. A representative of Grant Thornton LLP is
expected to be present at the Annual Meeting, will have an opportunity to make a
statement if such representative desires to do so and is expected to be
available to respond to appropriate questions. The affirmative vote of a
majority of the votes cast is necessary to appoint Grant Thornton LLP and to
authorize the Board of Directors to approve the auditors' fee.
PROPOSAL TO ADOPT THE 1999 STOCK PLAN
On April 26, 1995, the Company adopted its 1995 Stock Plan (the "1995
Plan"). At present the Company has granted options to purchase all 500,000
shares of Common Stock reserved for issuance under the 1995 Plan. In order to
continue to effectively attract and retain employees and directors, the Board of
Directors believes that the Company needs to continue to grant options to
purchase shares of the Company's Common Stock. As a result, on March 30, 1999,
the Board of Directors adopted the 1999 Plan. Pursuant to the 1999 Plan, the
Company may grant options to purchase up to an aggregate of 1,000,000 shares of
Common Stock to eligible persons. The Company's ability to grant "incentive
stock options" under the 1999 Plan is subject to the approval of the
stockholders at the Annual Meeting. The Board of Directors recommends that the
1999 Plan be adopted by the stockholders.
SUMMARY OF THE PLAN
The following is a general description of the terms and provisions of
the 1999 Plan and does not purport to be complete. All such statements are
qualified in their entirety by reference to the full text of the 1999 Plan,
which is attached hereto as EXHIBIT A.
The purpose of the 1999 Plan is to provide the employees, directors,
independent contractors and consultants of the Company and its subsidiaries with
an added incentive to provide their services to the Company and its subsidiaries
and to induce them to exert their maximum efforts toward the Company's success.
13
<PAGE>
The 1999 Plan provides for the issuance of incentive stock options
("Incentive Stock Options") and nonqualified stock options ("Nonqualified Stock
Options"). An Incentive Stock Option is an option to purchase Common Stock that
meets the definition of "incentive stock option" set forth in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). A Nonqualified Stock
Option is an option to purchase Common Stock that meets certain requirements in
the 1999 Plan but does not meet the definition of an "incentive stock option"
set forth in Section 422 of the Code. Nonqualified Stock Options and Incentive
Stock Options are sometimes referred to herein as "Options."
The number of shares of Common Stock that may be issued pursuant to
Options granted under the Plan is 1,000,000. If any Option granted pursuant to
the Plan terminates or expires for any reason without having been exercised in
full or shall cease for any reason to be exercisable in whole or in part, the
shares subject to the unexercised portion of such Option shall again be
available to underlie the grant of Options.
The 1999 Plan is administered by a committee of the Board of Directors
comprised of at least two outside directors (the "Committee") or the Board of
Directors of the Company. The Committee has the right to determine, among other
things, the persons to whom Options are granted, the number of shares of Common
Stock subject to Options, the exercise price of Options and the term thereof.
All employees of the Company and its subsidiaries, including officers,
directors, consultants and independent contractors to the Company, are eligible
to receive grants of Options under the 1999 Plan; however, no Incentive Stock
Option may be granted to non-employee directors, consultants, independent
contractors or individuals who are not also employees of the Company or any of
its subsidiaries. There are presently three non-employee directors, seven
executive officers and employee directors, and approximately 1,297 other
employees of the Company and its subsidiaries. The Company cannot determine the
number of independent contractors and consultants eligible to receive Options.
In addition, it is not possible to state the number of persons who will receive
grants since the selection of participants rests within the discretion of the
Committee. Upon receiving a grant of Options, each holder of the Options (the
"Optionee") shall enter into an option agreement with the Company, which
contains the terms and conditions of the Options established by the Committee.
TERMS AND CONDITIONS OF OPTIONS
EXERCISE PRICE. The exercise price for any Incentive Stock Option
granted under the 1999 Plan may not be less than the fair market value of the
Common Stock on the date such Option is granted, as described in the 1999 Plan.
On January 20, 2000, there were 7,649,118 shares of Common Stock outstanding and
the closing price of the Company's Common Stock as reported by The Nasdaq
National Market was $5.25 per share.
EXERCISE OF OPTIONS. Each Option is exercisable in such amounts, at
such intervals and upon such terms as the Committee or Board may determine. In
no event may an Option be exercisable after ten years from the date of grant.
Unless otherwise provided in an Option, each outstanding Option shall become
immediately fully exercisable in the event that the Optionee's employment with
the Company is terminated by the Company subsequent to a "Change in Control" of
the Company, as defined in the 1999 Plan.
The exercise price for Options must be paid for in cash, by certified
or official bank check payable to the order of the Company, or at the discretion
of the Committee, by delivery of exercisable Options and/or shares of Common
Stock having a fair market value equal to the exercise price, or a combination
of the above.
14
<PAGE>
NONTRANSFERABILITY. Options granted under the 1999 Plan are not
transferable by an Optionee other than by will or the laws of descent and
distribution, and Options are exercisable during an Optionee's lifetime only by
the Optionee.
TERMINATION OF OPTIONS. The expiration date of an Option is determined
by the Committee or Board at the time of the grant and is set forth in the
applicable stock option agreement. In no event may an Option be exercisable
after ten years from the date it is granted. The 1999 Plan provides that if an
Optionee's employment is terminated due to retirement, then the unexercised
portion of the Optionee's vested Options shall terminate three months after the
date of such termination. If an Optionee's employment is terminated by reason of
the Optionee's death or permanent disability, the unexercised portion of the
Optionee's vested Options shall terminate 12 months after such termination. In
addition, upon the death of an Optionee, half of any unvested Options shall
vest. Upon termination of employment for any other reason, all unexercised
Options shall terminate on the date of such termination.
AMENDMENT OF PLAN
The Board may amend, modify or terminate the 1999 Plan; however, the
Board may not increase the number of shares of Common Stock reserved for Options
or materially change the standards of eligibility under the Plan unless the
Board also obtains the approval of the holders of a majority of the shares of
Common Stock of the Company, represented in person or by proxy at a meeting duly
noticed at which a quorum is present. Except in accordance with the 1999 Plan,
no amendment or termination of the 1999 Plan may, without the consent of the
participant, impair the rights of the participant with respect to Options
granted prior to such amendment or termination.
OUTSTANDING OPTIONS
On March 30, 1999, when the Board of Directors adopted the 1999 Plan,
the Committee granted options to purchase 597,000 shares of Common Stock under
the 1999 Plan at an exercise price of $5.00 per share. The Committee granted the
options as Nonqualified Stock Options, but stated that such Options would
automatically convert to Incentive Stock Options if and when the 1999 Plan was
approved by the Company's stockholders.
As of the Record Date, Options to purchase a total of 615,012 shares of
Common Stock have been granted pursuant to the 1999 Plan, none of which have
been exercised or are exercisable. Outstanding Options under the Plan, which are
held by approximately 72 persons, are exercisable at $5.00 per share, and expire
in March 2009.
The following table sets forth information with respect to Options held
by each named executive officer of the Company, all executive officers as a
group, all non-employee directors as a group, each nominee director, each
associate of the foregoing people, each person who has received five percent of
the Options under the Plan and all non-executive officer employees as a group.
If the Company's stockholders approve the 1999 Plan, 426,000 of these Options,
which were granted as Nonqualified Stock Options, will automatically convert to
Incentive Stock Options.
15
<PAGE>
STOCK PLAN TABLE
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK VALUE OF
NAME AND POSITION UNDERLYING OPTIONS OPTIONS(1)
- ---------------------------------------------------- ------- -------
<S> <C> <C>
Frederick A. Mayer, Vice Chairman of the Board 100,000 $25,000
and Chief Executive Officer
Jeffrey I. Binder, Chairman of the Board 100,000 25,000
James Sullivan, President of New Commodore Cruise 50,000 12,500
Lines Limited
Alan Pritzker, Vice President Finance and Chief 50,000 12,500
Financial Officer
Richard A. Dipple, Senior Vice President Hotel 40,000 10,000
Operations
Executive Officers as a Group (7 persons) 399,012 99,753
Non-Employee Directors as a Group (3 persons) 70,000 17,500
Ralph V. De Martino 30,000 7,500
Mark J. Maged 30,000 7,500
Non-Executive Officer Employees 146,000 36,500
</TABLE>
- ---------------------
(1)Based on a fair market value of the Common Stock of $5.25 per share as on
January 20, 2000.
FEDERAL INCOME TAX EFFECTS
The 1999 Plan is not qualified under the provisions of Section 401(a)
of the Code, nor is it subject to any of the provisions of the Employee
Retirement Income Security Act of 1974, as amended.
INCENTIVE STOCK OPTIONS. Incentive Stock Options are "incentive stock
options" as defined in Section 422 of the Code. Under the Code, an Optionee
generally is not subject to ordinary income tax upon the grant or exercise of an
Incentive Stock Option. However, an employee who exercises an Incentive Stock
Option by delivering shares of Common Stock previously acquired pursuant to the
exercise of an Incentive Stock Option is treated as making a Disqualifying
Disposition (defined below) of such shares if the employee delivers such shares
before the expiration of the holding period applicable to such shares. The
applicable holding period is the longer of two years from the date of grant or
one year from the date of exercise. The effect of this provision is to prevent
"pyramiding" the exercise of an Incentive Stock Option (i.e., the exercise of
the Incentive Stock Option for one share and the use of that share to make
successive exercises of Incentive Stock Options until it is completely
exercised) without the imposition of current income tax.
16
<PAGE>
The amount by which the fair market value of the shares acquired at the
time of exercise of an Incentive Stock Option exceeds the purchase price of the
shares under such Option will be treated as an item of adjustment included in
the Optionee's alternative minimum taxable income for purposes of the
alternative minimum tax. If, however, there is a Disqualifying Disposition in
the year in which the Option is exercised, the maximum amount of the item of
adjustment for such year is the gain on the disposition of the shares. If there
is a Disqualifying Disposition in a year other than the year of exercise, the
dispositions will not result in an item of adjustment for such other year.
If, subsequent to the exercise of an Incentive Stock Option (whether
paid for in cash or in shares), the Optionee holds the shares received upon
exercise for a period that exceeds (a) two years from the date such Incentive
Stock Option was granted or, if later, (b) one year from the date of exercise
(the "Required Holding Period"), the difference (if any) between the amount
realized from the sale of such shares and their tax basis to the holder will be
taxed as long-term capital gain or loss. If the holder is subject to the
alternative minimum tax in the year of disposition, such holder's tax basis in
his or her shares will be increased for purposes of determining his or her
alternative minimum tax for such year, by the amount of the item of adjustment
recognized with respect to such shares in the year the Option was exercised.
In general, if, after exercising an Incentive Stock Option, an employee
disposes of the shares so acquired before the end of the Required Holding Period
(a "Disqualifying Disposition"), such Optionee would be deemed in receipt of
ordinary income in the year of the Disqualifying Disposition, in an amount equal
to the excess of the fair market value of the shares at the date the Incentive
Stock Option was exercised less the exercise price. If the Disqualifying
Disposition is a sale or exchange which would permit a loss to be recognized
under the Code (were a loss in fact to be sustained), and the sales proceeds are
less than the fair market value of the shares on the date of exercise, the
Optionee's ordinary income would be limited to the gain (if any) from the sale.
If the amount realized upon disposition exceeds the fair market value of the
shares on the date of exercise, the excess would be treated as short-term or
long-term capital gain, depending on whether the holding period for such shares
exceeded one year.
An income tax deduction is not allowed to the Company with respect to
the grant or exercise of an Incentive Stock Option or the disposition, after the
Required Holding Period, of shares acquired upon exercise. In the event of a
Disqualifying Disposition, a Federal income tax deduction will be allowed to the
Company in an amount equal to the ordinary income to be recognized by the
Optionee, provided that such amount constitutes an ordinary and necessary
business expense to the Company and is reasonable, and the Company satisfies its
withholding obligation with respect to such income.
NONQUALIFIED STOCK OPTIONS. An Optionee granted a Nonqualified Stock
Option under the 1999 Plan will generally recognize, at the date of exercise of
such Nonqualified Stock Option, ordinary income equal to the difference between
the exercise price and the fair market value of the shares of Common Stock
subject to the Nonqualified Stock Option. This taxable ordinary income will be
subject to Federal income tax withholding. A Federal income tax deduction will
be allowed to the Company in an amount equal to the ordinary income to be
recognized by the Optionee, provided that such amount constitutes an ordinary
and necessary business expense to the Company and is reasonable, and the Company
satisfies its withholding obligation with respect to such income.
If an Optionee exercises a Nonqualified Stock Option by delivering
other shares, the Optionee will not recognize gain or loss with respect to the
exchange of such shares, even if the then fair market value is different from
the Optionee's tax basis. The Optionee, however, will be taxed as described
above with respect to the exercise of the Nonqualified Stock Option as if he had
paid the exercise price in cash, and the Company likewise generally will be
entitled to an equivalent tax deduction. Provided a separate identifiable stock
certificate is issued therefor, the Optionee's tax basis in that number of
shares received on such exercise which is equal to the number of shares
surrendered on such exercise will be equal to his
17
<PAGE>
tax basis in the shares surrendered and his holding period for such number of
shares received will include his holding period for the shares surrendered. The
Optionee's tax basis and holding period for the additional shares received on
exercise of a Nonqualified Stock Option paid for, in whole or in part, with
shares will be the same as if the Optionee had exercised the Nonqualified Stock
Option solely for cash.
The discussion set forth above does not purport to be a complete
analysis of the potential tax consequences relevant to the Optionees or to the
Company, or to describe tax consequences based on particular circumstances. It
is based on Federal income tax law and interpretational authorities as of the
date of this Proxy Statement, which are subject to change at any time. In
addition, due to the federal tax exempt nature of a majority of the Company's
revenue, it is unlikely that the Company would gain a material benefit from the
above-mentioned tax deductions.
The 1999 Plan has been approved by the Board of Directors. The Company
has and may continue to grant Nonqualified Stock Options under the 1999 Plan
without obtaining the approval of the 1999 Plan by the Company's stockholders.
In order for the Company to grant Incentive Stock Options under the 1999 Plan;
however, the Company must obtain stockholder approval. Such approval requires
the affirmative vote of a majority of the votes cast.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
STOCKHOLDER PROPOSALS
Stockholder proposals that are to be considered for inclusion in the
proxy materials of the Company for its 2001 Annual Meeting of Stockholders must
be received by the Company by September 30, 2000. Such proposals must comply
with requirements as to the form and substance established by applicable law and
regulations in order to be included in the proxy statement.
ADDITIONAL INFORMATION
The Board of Directors is not aware of any matters to be presented at
the Annual Meeting other than the matters described herein and does not intend
to bring any other matters before the Annual Meeting. However, if any other
matters should come before the meeting, or any adjournment thereof, the persons
named in the enclosed proxy will have discretionary authority to vote all
proxies in accordance with their best judgment.
Kindly date, sign and return the enclosed proxy card.
By Order of the Board of Directors
BLANCA SANTOS
Secretary
January 28, 2000
Hollywood, Florida
18
<PAGE>
EXHIBIT A
COMMODORE HOLDINGS LIMITED
1999 STOCK PLAN
1. PURPOSES.
The COMMODORE HOLDINGS LIMITED 1999 STOCK PLAN (the "Plan") is intended
to provide the employees, directors, independent contractors and consultants of
Commodore Holdings Limited (the "Company") and its subsidiaries with an added
incentive to provide their services to the Company and its subsidiaries and to
induce them to exert their maximum efforts toward the Company's success. By thus
encouraging employees, directors, independent contractors and consultants and
promoting their continued association with the Company and its subsidiaries, the
Plan may be expected to benefit the Company and its stockholders. The Plan
allows the Company to grant Incentive Stock Options ("ISOs") (as defined in
Section 422(b) of the Internal Revenue Code of 1986, as amended (the "Code") to
employees of the Company and its subsidiaries, and NonQualified Stock Options
("NQSOs") not intended to qualify under Section 422(b) of the Code (ISOs and
NQSOs are hereinafter collectively referred to as the "Options") to employees,
directors, independent contractors and consultants of the Company and its
subsidiaries.
2. SHARES SUBJECT TO THE PLAN.
The total number of shares of common stock of the Company, $.01 par
value per share (the "Common Stock"), that may be subject to Options granted
under the Plan shall be 1,000,000 shares, subject to adjustment as provided in
Paragraph 8 hereunder. The Company shall at all times while the Plan is in force
reserve such number of shares of Common Stock as will be sufficient to satisfy
the requirement of outstanding Options granted under the Plan. In the event any
Option granted under the Plan shall expire or terminate for any reason without
having been exercised in full or shall cease for any reason to be exercisable in
whole or in part, the unpurchased shares subject thereto shall again be
available for the granting of Options.
3. ELIGIBILITY.
ISOs may be granted from time to time under the Plan to one or more
employees of the Company or of a "subsidiary" or "parent" of the Company, as the
quoted terms are defined within Section 424 of the Code. An officer is an
employee for the above purposes. NQSOs may be granted from time to time under
the plan to one or more employees of the Company, officers, members of the Board
of Directors, independent contractors, consultants and other individuals who are
not employees of, but are involved in the continuing development and success of
the Company and/or of a subsidiary of the Company.
4. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Board of Directors of the
Company ("the Board"), or a committee of the Board of Directors (the
"Committee"), comprised solely of two or more outside directors in accordance
with the requirements of Rule 16b-3 promulgated under the Securities Exchange
Act of 1934 (the "Exchange Act"). Within the limits of the express provisions of
the Plan, the Board or Committee shall have the authority, in its discretion, to
determine the individuals to whom, and the time or times at which Options shall
be granted, the character of such Options (whether ISOs or NQSOs), the number of
shares of Common Stock to be subject to each Option, and the vesting period for
each Option and to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to the Plan, to determine the terms and provisions of
option agreements that may be entered into in connection with Options (which
need not be identical), subject to the limitation that option agreements
granting ISOs must
A-1
<PAGE>
be consistent with the requirements for the ISOs being qualified as "incentive
stock options" as provided in Section 422 of the Code, and to make all other
determinations and take all other actions necessary or advisable for the
administration of the Plan. In making such determinations, the Board or
Committee may take into account the nature of the services rendered by such
individuals, their present and potential contributions to the Company's success,
and such other factors as the Board or Committee, in its discretion, shall deem
relevant. The Board's or the Committee's determinations on the matters referred
to in this paragraph shall be conclusive.
(b) Notwithstanding anything contained herein to the contrary, the
Board or the Committee, (which shall be deemed to be the Company's Compensation
Committee for the purposes of this subparagraph) if no Committee exists, shall
have the exclusive right to grant Options to persons subject to Section 16 of
the Exchange Act and set forth the terms and conditions thereof. With respect to
persons subject to Section 16 of the Exchange Act, transactions under the Plan
are intended to comply with all applicable conditions of Rule 16b-3, as amended
from time to time (and its successor provisions, if any) under the Exchange Act.
To the extent any provision of the Plan or action by the Board or Committee
fails to comply, it shall be deemed null and void to the extent required by law
and to the extent deemed advisable by the Board and/or the Committee.
5. TERMS AND OPTIONS.
Within the limits of the express provisions of the Plan, the Board or
Committee may grant either ISOs to employees of the Company or its subsidiaries
or NQSOs to employees, directors, independent contractors and consultants. An
ISO or an NQSO enables the optionee to purchase from the Company, at any time
during a specified exercise period, a specified number of shares of Common Stock
at a specified price (the "Option Price"). The character and terms of each
Option granted under the Plan shall be determined by the Board or Committee
consistent with the provisions of the Plan, including the following:
(a) An Option granted under the Plan must be granted within 10 years
from the date the Plan is adopted by the Board, or the date the Plan is approved
by the stockholders of the Company, whichever is earlier.
(b) The Option Price of the shares of Common Stock subject to each
Option shall not be less than the fair market value of such shares of Common
Stock as of the date such ISO is granted. Such fair market value shall be
determined by the Board and if the shares of Common Stock are listed as of such
date on a national securities exchange, the fair market value shall be the
closing price on such date. If the shares are not then listed on a national
securities exchange and if the shares of Common Stock are then listed on The
Nasdaq Stock Market ("Nasdaq") or traded on the over-the-counter market, the
fair market value shall be the closing bid price on Nasdaq, or the mean of the
closing bid and asked prices of the shares of Common Stock on the
over-the-counter market, as reported by Nasdaq, the National Association of
Securities Dealers OTC Bulletin Board or the National Quotation Bureau, Inc., as
the case may be, on the day on which the Option is granted or, if there is no
closing bid price or bid or asked price on that day, the closing bid price or
mean of the closing bid and asked price on the most recent day preceding the day
on which the Option is granted for which such prices are available. If an ISO is
granted to any individual who, immediately before the ISO is to be granted, owns
(directly or through attribution) more than 10% of the total combined voting
power of all classes of capital stock of the Company or a subsidiary or parent
of the Company, the Option Price of the shares of Common Stock subject to such
ISO shall not be less than 110% of the fair market value per share of the shares
of Common Stock on the date such ISO is granted.
A-2
<PAGE>
(c) In no event shall any Option granted under the Plan have an
expiration date later than 10 years from the date of its grant, and all Options
granted under the Plan shall be subject to earlier termination as expressly
provided in Section 6 hereof. If an ISO is granted to any individual, who
immediately before the ISO is granted, owns (directly or through attribution)
more than 10% of the total combined voting power of all classes of capital stock
of the Company or of a subsidiary or parent of the Company, such ISO shall by
its terms expire and shall not be exercisable after the expiration of five (5)
years from the date of its grant.
(d) Unless otherwise provided in any option agreement under the Plan,
an Option granted under the Plan shall become exercisable, in whole at any time
or in part from time to time, but in no case may an Option: (i) be exercised as
to less than one hundred (100) shares of Common Stock at any one time, or the
remaining shares of Common Stock covered by the Option if less than one hundred
(100), and (ii) become fully exercisable more than ten years from the date of
its grant.
(e) An Option granted under the Plan shall be exercised by the delivery
by the holder thereof to the Company at its principal office (to the attention
of the Secretary) of written notice of the number of full shares of Common Stock
with respect to which the Option is being exercised, accompanied by payment in
full, in cash or by certified or bank check payable to the order of the Company,
of the Option Price of such shares of Common Stock, or, at the discretion of the
Board or the Committee, by the delivery of exercisable Options and/or shares of
Common Stock having a fair market value equal to the Option Price, or at the
option of the Board or the Committee, by a combination of cash and such
exercisable Options and/or shares (subject to the restriction above) held by an
optionee that have a fair market value together with such cash that shall equal
the Option Price, and, in the case of a NQSO, at the discretion of the Board or
Committee by having the Company withhold from the shares of Common Stock to be
issued upon exercise of the Option that number of shares having a fair market
value equal to the tax withholding amount due, or otherwise provide for
withholding as set forth in Section 10(c) hereof. The Option Price may also be
paid in full by a broker-dealer to whom the optionee has submitted an exercise
notice consisting of a fully endorsed Option, or through any other medium of
payment as the Board or the Committee, in its discretion, shall authorize.
(f) The holder of an Option shall have none of the rights of a
stockholder with respect to the shares of Common Stock covered by such holder's
Option until such shares of Common Stock shall be issued to such holder upon the
exercise of the Option.
(g) All Options granted under the Plan shall not be transferable
otherwise than by will or the laws of descent and distribution, and any Option
granted under the Plan may be exercised during the lifetime of the holder
thereof only by the holder. No Option granted under the Plan shall be subject to
execution, attachment or other process.
(h) The aggregate fair market value, determined as of the time any ISO
is granted and in the manner provided for by subsection (b) of this Section 5,
of the shares of Common Stock with respect to which ISOs granted under the Plan
are exercisable for the first time during any calendar year and under incentive
stock options qualifying as such in accordance with Section 422 of the Code
granted under any other incentive stock option plan maintained by the Company or
its parent or subsidiary corporations, shall not exceed $100,000. Any grant of
Options in excess of such amount shall be deemed a grant of NQSOs.
6. DEATH, TERMINATION OF EMPLOYMENT, OR DISABILITY; CHANGE IN CONTROL.
(a) Except as otherwise provided herein, upon termination of employment
with the Company due to retirement, a holder of an Option under the Plan may
exercise such Options to the extent such Options
A-3
<PAGE>
were exercisable as of the date of termination at any time within three (3)
months after the date of such termination, subject to the provisions of
subsection (b) of this Section 6. Upon termination of employment due to death or
permanent disability, the aforementioned time period shall be extended to twelve
(12) months after the date of termination. Notwithstanding anything contained
herein to the contrary, any options granted hereunder to an optionee and then
outstanding shall immediately terminate in the event the optionee is convicted
of a felony committed against the Company, and the provisions of this subsection
(a) shall not be applicable thereto. In addition, notwithstanding anything
contained to the contrary, upon termination of employment or retention with the
Company other than pursuant to death, permanent disability or retirement, all
Options must be exercised by the time of such termination, subject to the
provisions of subsection (b) of this Section 6. In addition, and anything
contained herein to the contrary notwithstanding, the term during which an
optionee may exercise Options subsequent to the date of termination may, in the
Board's or Committee's discretion, be modified, subject to applicable law and
regulation, from the term specified above, as specified in an option agreement
evidencing the grant of Options under the Plan.
(b) An Option may not be exercised pursuant to this Section 6 except to
the extent that the holder was entitled to exercise the Option at the time of
termination of employment or death, and in any event may not be exercised after
the original expiration date of the Option.
(c) Notwithstanding anything in this Plan to the contrary, any Options
granted hereunder and then outstanding shall become immediately exercisable in
full in the event the optionee's employment with the Company is terminated by
the Company subsequent to a Change in Control, as defined below, and shall
terminate 90 days after the consummation of such Change in Control, which time
period may be extended in the discretion of the Board of Directors; provided
however, that if in the opinion of counsel to the Company the immediate
exercisability of such Options when taken into consideration with all other
"parachute payments" as defined in Section 280G of the Code would result in an
"excess parachute payment" as defined in such Section, as well as an excise tax
imposed by Section 4999 of the Code, such Options shall not become immediately
exercisable, except as and to the extent the Board or the Committee, in its sole
discretion, shall otherwise determine and which determination by the Board or
the Committee shall be based solely upon maximizing the after-tax benefits to be
received by any such optionee. For purposes of this subsection, a "Change in
Control" shall have occurred if:
(1) any "person" within the meaning of Section 14(d) of the
Exchange Act becomes the "beneficial owner" as defined in Rule 13d-3 thereunder,
directly or indirectly, of more than 15% of the Company's Common Stock (other
than a person owning, in excess of such amount on November 1, 1997);
(2) any "person" acquires by proxy or otherwise the right to
vote more than 15% of the Company's Common Stock for the election of Directors
(other than a person owning in excess of such amount on November 1, 1997) other
than solicitation of proxies by the Incumbent Board (as hereinafter defined),
for any merger or consolidation of the Company or for any other matter or
question;
(3) during any two-year period, individuals who constitute the
Board of the Company (the "Incumbent Board") as of the beginning of the period
cease for any reason to constitute at least a majority thereof, provided that
any person becoming a Director during such period whose election or nomination
for election by the Company's stockholders was approved by a vote of at least
three quarters of the Incumbent Board (either by specific vote or by approval of
the proxy statement of the Company in which such person is named as a nominee
for Director without objection to such nomination) shall be, for purposes of
this clause (3), considered as though such person were a member of the Incumbent
Board; or
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(4) the Company's stockholders have approved the sale of all
or substantially all of the assets of the Company.
(d) In addition, and notwithstanding anything contained herein to the
contrary, in the event an optionee dies during such time as the optionee is
employed by the Company, then fifty percent (50%) of any outstanding Options
which have not vested and are not exercisable by the optionee as of the date of
death shall be automatically deemed vested and exercisable by the optionee's
estate and/or his legatees in accordance with subsection 6(a) hereof.
7. LEAVE OF ABSENCE.
For the purposes of the Plan, an individual who is on military or sick
leave or other bona fide leave of absence (such as temporary employment by the
government) shall be considered as remaining in the employ of the Company or of
a subsidiary or parent corporation for ninety (90) days or such longer period as
such individual's right to reemployment is guaranteed either by statute or by
contract.
8. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
(a) In the event that the outstanding shares of Common Stock are
hereinafter changed by reason of recapitalization, reclassification, stock
split, combination or exchange of shares of Common Stock or the like, or by the
issuance of dividends payable in shares of Common Stock, an appropriate
adjustment shall be made by the Board or the Committee, in the aggregate number
of shares of Common Stock available under the Plan, in the number of shares of
Common Stock issuable upon exercise of outstanding Options, and the Option Price
per share. In the event of any consolidation or merger of the Company with or
into another company, or the conveyance of all or substantially all of the
assets of the Company to another company, each then outstanding Option shall
upon exercise thereafter entitle the holder thereof to such number of shares of
Common Stock or other securities or property to which a holder of shares of
Common Stock of the Company would have been entitled to upon such consolidation,
merger or conveyance; and in any such case appropriate adjustment, as determined
by the Board or the Committee shall be made as set forth above with respect to
any future changes in the capitalization of the Company or its successor entity.
In the event of the proposed dissolution or liquidation of the Company, all
outstanding Options under the Plan will automatically terminate, unless
otherwise provided by the Board of the Company or any authorized committee
thereof.
(b) Any adjustment in the number of shares of Common Stock shall apply
proportionately to only the unexercised portion of the Options granted
hereunder. If fractions of shares of Common Stock would result from any such
adjustment, the adjustment shall be revised to the next higher whole number of
shares of Common Stock.
9. FURTHER CONDITIONS OF EXERCISE.
(a) Unless the shares of Common Stock issuable upon the exercise of an
Option under the Plan have been registered with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Act"), prior to
the exercise of the Option, an optionee must represent in writing to the Company
that such shares of Common Stock are being acquired for investment purposes only
and not with a view towards the further resale or distribution thereof, and must
supply to the Company such other documentation as may be required by the
Company, unless in the opinion of counsel to the Company such representation,
agreement or documentation is not necessary to comply with said Act.
(b) The Company shall not be obligated to deliver any shares of Common
Stock until they have been listed on each securities exchange or automatic
quotation system on which the shares of
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Common Stock may then be listed or until there has been qualification under or
compliance with such state, federal or foreign laws, rules or regulations as the
Company may deem applicable. The Company shall use reasonable efforts to obtain
such listing, qualification and compliance.
(c) The Board or Committee may make such provisions and take such steps
as it may deem necessary or appropriate for the withholding of any taxes that
the Company is required by any law or regulation of any governmental authority,
whether federal, state or local, domestic or foreign, to withhold in connection
with the exercise of any Option, including, but not limited to: (i) the
withholding of delivery of shares of Common Stock upon exercise of Options until
the holder reimburses the Company for the amount the Company is required to
withhold with respect to such taxes, (ii) the canceling of any number of shares
of Common Stock issuable upon exercise of such Options in an amount sufficient
to reimburse the Company for the amount it is required to so withhold, or (iii)
withholding the amount due such person.
10. TERMINATION, MODIFICATION AND AMENDMENT.
(a) The Plan (but not Options previously granted under the Plan) shall
terminate ten (10) years from the earliest of the date of its adoption by the
Board, or the date the Plan is approved by the stockholders of the Company, and
no Option shall be granted after termination of the Plan.
(b) The Plan may from time to time be terminated, modified or amended
by the affirmative vote of the holders of a majority of the shares of Common
Stock of the Company, represented in person or by proxy at a meeting duly
noticed, at which a quorum is present.
(c) The Board may at any time, prior to ten (10) years from the earlier
of the date of the adoption of the Plan by the Board or the date the Plan is
approved by the stockholders, terminate the Plan or from time to time make such
modifications or amendments of the Plan as it may deem advisable; provided,
however, that the Board shall not, without approval by the affirmative vote of
the holders of a majority of the shares of Common Stock of the Company,
represented in person or by proxy at a meeting duly noticed, at which a quorum
is present, increase the maximum number of shares of Common Stock as to which
Options may be granted under the Plan (except as provided by Section 8, with
respect to which stockholder approval is not required) or materially change the
standards of eligibility under the Plan. Any amendment to the Plan which, in the
opinion of counsel to the Company, will be deemed to result in the adoption of a
new Plan, will not be effective until approved by the affirmative vote of the
holders of a majority of the shares of Common Stock of the Company, represented
in person or by proxy at a meeting duly noticed, at which a quorum is present.
(d) No termination, modification or amendment of the Plan may adversely
affect the rights under any outstanding Option without the consent of the
individual to whom such Option shall have been previously granted.
11. EFFECTIVE DATE OF THE PLAN.
The Plan shall become effective upon adoption by the Board of the
Company as to the grant of NQSOs. ISOs may also be granted under this Plan, but
such ISOs shall be treated as NQSOs unless and until the Plan is approved by the
affirmative vote of the holders of a majority of the shares of Common Stock of
the Company, represented in person or by proxy at a meeting duly noticed, at
which a quorum is present, within one year after adoption of the Plan by the
Board. Prior to the approval of the Plan by the Company's shareholders, as
described above, the Company may also grant NSQOs, which will automatically
convert to ISOs, if and when the Plan is approved by the Company's shareholders,
and if
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the number of shares of Common Stock underlying such NSQOs and the exercise
price thereof remain fixed at the amounts set on the date of grant of the NSQOs.
12. NOT A CONTRACT OF EMPLOYMENT.
Nothing contained in the Plan or in any option agreement executed
pursuant hereto shall be deemed to confer upon any individual to whom an Option
is or may be granted hereunder any right to remain in the employ of the Company
or of a subsidiary or parent of the Company or in any way limit the right of the
Company, or of any parent or subsidiary thereof, to terminate the employment of
an employee, or to terminate any other relationship with an Optionee, including
that of independent contractor or consultant. Notwithstanding anything contained
herein to the contrary, and except as otherwise provided at the time of grant,
all references hereunder to termination of employment shall with respect to
consultants and independent contractors mean the termination of retention of
their services with or for the Company.
13. OTHER COMPENSATION PLANS.
The adoption of the Plan shall not affect any other stock option plan,
incentive plan or any other compensation plan in effect for the Company, nor
shall the Plan preclude the Company from establishing any other form of stock
option plan, incentive plan or any other compensation plan.
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<PAGE>
COMMODORE HOLDINGS LIMITED
4000 Hollywood Boulevard
Suite 385, South Tower
Hollywood, Florida 33021
This proxy is solicited on behalf of the Board of Directors.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 28, 2000
The undersigned hereby appoints Jeffrey I. Binder and Frederick A
Mayer, and each of them with the power to appoint his substitute, as proxies,
and hereby authorizes either of them to represent and to vote all shares of
common stock of the Company held of record by the undersigned on January 20,
2000, at the Annual Meeting of Stockholders to be held on February 28, 2000, or
any adjournment thereof, upon the matters referred to on the reverse side, and
in their discretion, upon any other business that may come before the meeting.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
A [X] Please mark your
votes as in this
example
FOR all
nominees WITHHOLD
listed at right AUTHORITY
(except as to vote for all Nominees:
marked to such nominees listed
the contrary) at right
1. Election [ ] [ ] Ralph V. De Martino
of
Directors [ ] [ ] Mark J. Maged
For Against Abstain
2. To appoint Grant Thornton LLP as auditor of the [ ] [ ] [ ]
Company's financial statements for the fiscal year
ending September 30, 2000 and to authorize the
directors to approve the auditors' fee.
3. To adopt the Company's 1999 Stock Plan. [ ] [ ] [ ]
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment
thereof.
</TABLE>
This Proxy is solicited on behalf of the Board of Directors of
COMMODORE HOLDINGS LIMITED. This Proxy when executed will be voted in the manner
directed herein by the undersigned
<PAGE>
stockholder. If no director is made, this Proxy will be voted FOR the nominees
listed in Proposal 1 and FOR Proposals 2 and 3.
The undersigned stockholder hereby acknowledges receipt of the Notice
of Annual Meeting and Proxy Statement dated January 28, 2000 and hereby revokes
any proxy or proxies heretofore given. This proxy may be revoked at any time
prior to the Annual Meeting. If you received more than one proxy card, please
date, sign and return all cards in the accompanying envelope.
Signature(s) of Stockholder
------------------------------
Signature(s) of Stockholder Date:
------------------------------ ---------------
NOTE: Please date and sign exactly as your name appears above. When shares
are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as
such. If a corporation, please sign in the corporate name by President
or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
