FINE HOST CORP, 424B2, 1996-06-20

FINE HOST CORP
424B2, 1996-06-20
EATING PLACES

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Filed pursuant to Rule 424(b)(2)
Registration No. 33-2906
4,030,000 SHARES

[LOGO]

FINE HOST CORPORATION

COMMON STOCK

Of the 4,030,000 shares of Common Stock being offered hereby, 2,890,218
shares are being sold by Fine Host Corporation and 1,139,782 shares are being
sold by the Selling Stockholders. See "Principal and Selling Stockholders." The
Company will not receive any of the proceeds from the sale of shares by the
Selling Stockholders.

Prior to this offering, there has been no public market for the Common Stock
of the Company. See "Underwriting" for a discussion of factors considered in
determining the initial public offering price. The Common Stock has been
approved for quotation on the Nasdaq National Market under the symbol "FINE."

SEE "RISK FACTORS" COMMENCING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.

-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

[CAPTION]
<TABLE>
=======================================================================================================
Price Underwriting Proceeds to Proceeds to Selling
to Public Discount (1) Company (2) Stockholders
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
Per Share.................. $12.00 $0.84 $11.16 $11.16
Total (3).................. $48,360,000 $3,385,200 $32,254,833 $12,719,967
=======================================================================================================
</TABLE>

(1) See "Underwriting" for information concerning indemnification of the
Underwriters and other matters.

(2) Before deducting expenses payable by the Company estimated at $1,050,000.

(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 604,500 additional shares of Common Stock solely to cover
over-allotments, if any. If the Underwriters exercise this option in full,
the Price to Public will total $55,614,000, the Underwriting Discount will
total $3,892,980 and the Proceeds to Company will total $39,001,053. See
"Underwriting."

The shares of Common Stock are offered by the several Underwriters named
herein, subject to receipt and acceptance by them and subject to their right to
reject any order in whole or in part. It is expected that delivery of the
certificates representing such shares will be made against payment therefor at
the office of Montgomery Securities on or about June 25, 1996.

-------------------

MONTGOMERY SECURITIES OPPENHEIMER & CO., INC.

June 19, 1996

<PAGE>
SELECTED RECREATION AND LEISURE

GREAT WOODS [PHOTO] ORANGE
AMPHITHEATER COUNTY
MANSFIELD, MA CONVENTION
CENTER
[PHOTO] ORLANDO, FL

[PHOTO]

JOE ROBBIE STADIUM
MIAMI, FL

[PHOTO]

<PAGE>

& CONVENTION CENTER FACILITIES

A FINE HOST [PHOTO]
CHEF

[PHOTO]

ALBUQUERQUE
CONVENTION CENTER
ALBUQUERQUE, NM

[PHOTO] [PHOTO]

OREGON WORLD TRADE
CONVENTION CENTER CENTER
PORTLAND, OR BOSTON, MA

<PAGE>

[LOGO]

FINE HOST
CORPORATION

[Graphics]

FINE HOST CORPORATION provides food and beverage services at
more than 190 facilities located in 31 states.

The Company intends to distribute to its stockholders annual reports
containing audited financial statements and quarterly reports containing
unaudited interim financial information for the first three quarters of each
fiscal year of the Company.

-------------------

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

2
<PAGE>
PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to the more
detailed information and Consolidated Financial Statements, including the notes
thereto, appearing elsewhere in this Prospectus. Unless the context indicates or
requires otherwise, references in this Prospectus to the "Company" or "Fine
Host" are to Fine Host Corporation and its subsidiaries. Unless otherwise
indicated, all information in this Prospectus (a) assumes that the Underwriters'
over-allotment option is not exercised and (b) has been adjusted to give effect
to (i) a 7-for-1 stock split effected in the form of a stock dividend prior to
the closing of the offering made by this Prospectus (the "Offering"), (ii) the
automatic conversion upon the closing of the Offering of all outstanding shares
of Series A Convertible Preferred Stock into an aggregate of 939,197 shares of
Common Stock (the "Preferred Stock Conversion"), (iii) the exercise immediately
prior to the closing of the Offering of warrants to purchase 123,585 shares of
Common Stock which will be sold by certain Selling Stockholders in the Offering
(the "Warrant Exercise"), (iv) the repurchase by the Company upon the closing of
the Offering of warrants to purchase 593,453 shares of Common Stock and (v) the
amendment of the Company's Restated Certificate of Incorporation upon the
closing of the Offering.

THE COMPANY

Fine Host Corporation is a leading contract food service management company,
providing food and beverage concession and catering services at more than 190
facilities located in 31 states, primarily through multi-year contracts. Fine
Host targets four distinct markets within the contract food service industry:
the recreation and leisure market (arenas, stadiums, amphitheaters, civic
centers and other recreational facilities); the convention center market; the
education market (colleges, universities and public and private schools); and
the corporate dining market (corporate cafeterias, office complexes and
manufacturing plants). The Company is the exclusive provider of food and
beverage services at substantially all of the facilities it serves.

The Company estimates that the United States contract food service industry
had annual revenues of approximately $96 billion in 1995, of which approximately
$60 billion was in markets in which the Company presently competes. In this
industry, the facility owner, rather than the food service provider, is
primarily responsible for attracting patrons. As a result, the Company does not
incur the expense of marketing to the broader public and is able to focus on
operations, client satisfaction, account retention and new account development.

Fine Host was founded as a start-up Company in 1985 by experienced contract
food service industry executives and has grown to a business with net sales of
$95.5 million in fiscal 1995. Throughout its history, the Company has focused
its efforts exclusively on the contract food service industry, unlike most of
its national competitors. The Company achieved early success in the industry by
focusing on facilities generating $1 million to $4 million in annual food and
beverage sales. The Company believes that these "middle-market" facilities
generally provide greater profit margins and require less capital investment
than larger facilities. Middle-market facilities serviced by the Company include
the Albuquerque Convention Center in Albuquerque, New Mexico; the Bayside
Exposition Center in Dorchester, Massachusetts; the Pyramid Arena in Memphis,
Tennessee; and Xavier University in New Orleans, Louisiana. This middle-market
focus has been supplemented by several contracts at larger facilities such as
Joe Robbie Stadium (home of the Miami Dolphins and the Florida Marlins and the
site of two Super Bowls) and the Orange County Convention Center in Orlando,
Florida (one of the largest convention centers in the world). Servicing these
larger facilities gives the Company high visibility in the industry and
strengthens its credibility when bidding on new contracts or pursuing
acquisitions.

3
<PAGE>
Fine Host has developed and implemented various operating strategies and
systems, including labor and product cost management, quality control programs,
facility-design and customized menu design capabilities and extensive on-site
marketing support. The Company believes that these operating techniques have led
to significant increases in sales at many of the facilities it serves. The
Company's operating strategies and systems are implemented by localized
management teams that are given the freedom and authority to make operational
decisions. The Company emphasizes flexibility and responsiveness in consistently
providing high quality and client satisfaction while tightly controlling labor
and overhead costs at the local level. As the Company has grown, it has been
able to achieve economies of scale and develop a strong corporate image and
national reputation.

The Company has increased its net sales and profits by successfully bidding
on new targeted accounts, by renewing existing contracts and by making
acquisitions. The Company believes its ability to obtain new contracts is
enhanced by the experience of its management team, its geographic diversity and
market penetration, its recent expansion into the education and corporate dining
markets and its establishment of an international presence. The Company believes
that its strong operating performance and focus on client satisfaction have
enabled it to retain and renew contracts. Fine Host has retained the food and
beverage business at each of the 24 public convention centers at which it has
been awarded a contract without the loss of any such contract, and has renewed
each of the 12 convention center contracts that have come up for renewal. Since
1993, the Company has completed four acquisitions of companies in the contract
food service industry, which have accounted for a significant part of the
Company's growth. Fine Host believes there are other opportunities to expand its
business through acquisition, particularly in the education and corporate dining
markets, as well as in markets where the Company does not primarily operate,
such as hospitals, healthcare facilities and correctional facilities. The
Company believes that it can integrate acquired companies successfully without a
significant increase in general and administrative expenses. See "Risk
Factors--Risk of Inability to Operate or Integrate Acquired Businesses; Expenses
Associated with Acquisition Strategy" and "Business--Growth Opportunities."

The Company was incorporated in Delaware in November 1985 and its principal
executive offices are located at 3 Greenwich Office Park, Greenwich, Connecticut
06831. Its telephone number is (203) 629-4320.

THE OFFERING

Common Stock offered by the Company............... 2,890,218 shares

Common Stock offered by the Selling
Stockholders...................................... 1,139,782 shares

Common Stock to be outstanding after the
Offering.......................................... 6,034,600 shares(1)

Use of Proceeds................................... To repay outstanding
indebtedness and to
repurchase outstanding
warrants. See "Use of
Proceeds."

Nasdaq National Market symbol..................... FINE

- ------------

(1) Includes 7,500 shares of Common Stock issuable to certain directors of the
Company upon the closing of the Offering. Does not include 143,444 shares of
Common Stock issuable upon the exercise of outstanding stock options,
133,756 shares of Common Stock issuable upon the exercise of outstanding
warrants and 276,750 shares of Common Stock subject to stock options to be
granted to employees of the Company upon the closing of the Offering. An
aggregate of 219,250 additional shares of Common Stock has been reserved for
future grants under the Company's stock plans. See "Management--Compensation
Pursuant to Plans" and "Description of Capital Stock-- Warrants."

4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEARS (1) ------------------------------------
--------------------------------------------------------------- PRO FORMA
PRO FORMA MARCH 29 MARCH 27, MARCH 27,
1991 1992 1993 1994 1995 1995 (2)(3) 1995 1996 1996 (3)(4)
------- ------- ------- -------- -------- ----------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE AND CONTRACT DATA)
STATEMENT OF INCOME
DATA:
Net sales.............. $35,471 $39,429 $61,212 $ 82,119 $ 95,462 $ 117,718 $ 23,429 $ 24,160 $ 28,201
Gross profit........... 3,176 4,031 5,396 8,286 9,886 11,639 2,134 2,530 2,819
Income from
operations............. 795 949 2,747 4,880 6,260 5,933 1,044 1,194 1,090
Net income............. $ 215 $ 340 $ 1,084 $ 1,866 $ 2,196 $ 1,414 $ 208 $ 259 $ 70
Net income (loss) per
share assuming full
dilution (5).......... $ 0.10 $ 0.17 $ 0.28 $ 0.49 $ 0.39 $ 0.15 $ 0.04 $ (0.22 ) $ (0.28)
Average number of
shares of Common Stock
outstanding assuming
full dilution......... 2,048 2,048 3,087 3,287 3,330 3,356 3,158 3,510 3,523
Supplemental pro forma
net income (loss) per
share assuming full
dilution (6).......... $ 0.39 $ (0.13)

SELECTED OPERATING
DATA:
EBITDA (7)............. $ 1,932 $ 2,154 $ 4,631 $ 7,563 $ 10,416 $ 10,536 $ 2,004 $ 2,199 $ 2,247
Net cash provided by
(used in) operating
activities............ $ 1,099 $ 1,676 $ 3,765 $ 2,570 $ 2,971 $ (264 ) $ 1,630
Net cash used in
investing
activities............ $(2,371) $(2,295) $(7,669) $ (9,046) $ (8,124) $ (10 ) $ (6,725 )
Net cash provided by
financing
activities............ $ 1,852 $ 463 $ 2,737 $ 7,632 $ 4,255 $ 525 $ 5,823
Total contracts (at end
of period) (8)........ 21 28 42 81 95 156 81 156 156
</TABLE>

<TABLE>
<CAPTION>
MARCH 27, 1996
----------------------------
ACTUAL AS ADJUSTED (9)
------- ---------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)........................................... $(6,595) $ (6,595)
Total assets........................................................ 73,757 73,757
Total debt.......................................................... 36,599 7,697
Stockholders' equity................................................ 10,971 43,263
</TABLE>

- ------------

(1) The Company's fiscal year ends on the last Wednesday of December. The 1992
fiscal year was a 53-week period.

(2) Gives effect to the following transactions and events as if they had
occurred as of the beginning of the fiscal year ended December 27, 1995: (i)
the acquisition of Northwest Food Service, Inc. ("Northwest"), acquired in
June 1995, and Sun West Services, Inc. ("Sun West"), acquired in March 1996;
(ii) the adjustment to reflect interest expense as if borrowings to purchase
Northwest and Sun West had taken place at the beginning of the fiscal year;
and (iii) the related tax effects of the foregoing.

(3) Subsequent to the acquisition of Northwest, the Company terminated certain
of Northwest's unprofitable food service contracts. The Company also
eliminated certain redundant operations through closings of offices and
termination of excess personnel in connection with the integration of
Northwest and is in the process of doing so with respect to Sun West. Pro
forma amounts do not give effect to these actions.

(4) Gives effect to the following transactions and events as if they had
occurred as of the beginning of the period ended March 27, 1996: (i) the
acquisition of Sun West; (ii) the adjustment to reflect interest expense as
if borrowings to purchase Sun West had taken place at the beginning of the
period; and (iii) the related tax effects of the foregoing.

(5) Net income (loss) per share assuming full dilution is calculated based upon
net income less accretion to the redemption value of warrants issued in
fiscal 1993. Accretion to redemption value of warrants was $230 ($0.07 per
share), $250 ($0.08 per share), $900 ($0.27 per share) and $900 ($0.27 per
share) for fiscal 1993, 1994, 1995 and pro forma 1995 and $72 ($0.02 per
share), $1,040 ($0.30 per share) and $1,040 ($0.30 per share) for the three
months ended March 29, 1995, March 27, 1996 and pro forma March 27, 1996,
respectively.

(6) Supplemental pro forma net income (loss) per share assuming full dilution is
calculated based upon (i) net income adjusted for the reduction in interest
expense resulting from the application of the net proceeds of the Offering
to reduce indebtedness of the Company and for the accretion to the
redemption value of warrants issued in fiscal 1993 and (ii) the average
number of shares of Common Stock outstanding assuming full dilution, as
adjusted to reflect the sale by the Company of a number of shares in the
Offering resulting in net proceeds sufficient to pay such indebtedness. See
"Use of Proceeds."

(7) Represents earnings before interest expense, income tax expense and
depreciation and amortization ("EBITDA"). EBITDA is not a measurement in
accordance with generally accepted accounting principles ("GAAP") and should
not be considered an alternative to, or more meaningful than, income from
operations, net income or cash flows as defined by GAAP or as a measure of
the Company's profitability or liquidity. The Company has included
information concerning EBITDA herein because management believes EBITDA
provides useful information regarding the cash flow of the Company and its
ability to service debt.

(8) Represents total contracts other than contracts for one-time or special
events.

(9) Gives effect to the Preferred Stock Conversion, the Warrant Exercise, the
sale of 2,890,218 shares of Common Stock offered by the Company hereby and
the application of the estimated net proceeds therefrom. See "Use of
Proceeds."

5
<PAGE>
RISK FACTORS

In addition to the other information in this Prospectus, prospective
investors should carefully consider the following risk factors in evaluating an
investment in the Company and its business before purchasing any shares of
Common Stock offered hereby.

SIGNIFICANT VARIABILITY OF QUARTERLY RESULTS

The Company's revenues and operating results have varied, and are expected
to continue to vary, significantly from quarter to quarter as a result of
seasonal patterns, the unpredictability in the number, timing and type of new
contracts, the timing of contract expirations and special one-time events at
facilities served by the Company. The Company's business is seasonal in nature,
with many recreation and leisure facilities experiencing slack periods in March,
April and May and convention centers generally hosting a lower number of
conventions from May through September. Results of operations for any particular
quarter may not be indicative of results of operations for future periods. There
can be no assurance that future seasonal and quarterly fluctuations will not
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Quarterly Results of Operations."

RISK OF INABILITY TO OPERATE OR INTEGRATE ACQUIRED BUSINESSES; EXPENSES
ASSOCIATED WITH ACQUISITION STRATEGY

A significant portion of the Company's growth to date has been achieved
through acquisitions. The Company acquired Fanfare, Inc. ("Fanfare") in 1993,
Creative Food Management, Inc. ("Creative") in 1994, Northwest Food Service,
Inc. ("Northwest") in 1995 and Sun West Services, Inc. ("Sun West") on March 25,
1996. A key component of the Company's strategy is to continue to pursue
acquisitions. There can be no assurance, however, that the Company will be able
to identify, negotiate and consummate acquisitions or that acquired businesses
can be operated profitably or integrated successfully into the Company's
operations. In addition, acquisitions by the Company are subject to various
risks generally associated with the acquisition of businesses, including the
financial impact of expenses associated with the integration of acquired
businesses. There can be no assurance that the Company's historic or future
acquisitions will not have an adverse impact on the Company's business,
financial condition or results of operations. If suitable opportunities arise,
the Company anticipates that it would finance future acquisitions through
available cash, bank lines of credit or through additional debt or equity
financing. There can be no assurance that such debt or equity financing would be
available to the Company on acceptable terms when, and if, suitable strategic
opportunities arise. If the Company were to consummate one or more significant
acquisitions in which part or all of the consideration consisted of equity,
stockholders of the Company could suffer a significant dilution of their
interests in the Company. In addition, many of the acquisitions the Company is
likely to pursue, if accounted for as a purchase, would result in substantial
amortization charges to the Company. To the extent the Company expands
internationally, the Company will be subject to additional risks of doing
business abroad, including fluctuations in currency exchange rates, difficulties
in obtaining licenses and sourcing products and labor, and economic and
political uncertainties. See "Business--Growth Opportunities."

ADVERSE EFFECTS OF AN INABILITY TO RETAIN EXISTING CONTRACTS AND OBTAIN NEW
CONTRACTS

The Company's success will depend on its ability to retain and renew
existing client contracts and to obtain and successfully negotiate new client
contracts. Certain of the Company's corporate dining contracts, representing
approximately 3.6% of the Company's fiscal 1995 historical net sales, are
terminable after a short notice period. Excluding such contracts terminable on
short notice, contracts representing approximately 6.3% and 7.2% of the
Company's fiscal 1995 historical net sales are

6
<PAGE>
scheduled to expire in fiscal 1996 and fiscal 1997, respectively. There can be
no assurance that the Company will be able to retain and renew existing client
contracts or obtain new contracts or that such contracts will be profitable. The
Company's failure to retain and renew existing contracts or obtain new contracts
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business--Growth Opportunities."

ADVERSE EFFECTS OF AN INABILITY TO MANAGE GROWTH

Fine Host has experienced rapid growth and expansion, which has resulted in
an increase in the level of responsibility for existing management personnel.
Future growth and expansion could place a significant strain on its personnel
and resources. The Company seeks to manage its current and anticipated growth
through the recruitment of additional management personnel and the
implementation of internal systems and controls. The failure to manage growth
effectively could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business-- Growth
Opportunities."

DEPENDENCE ON CLIENTS; INVESTMENT IN CLIENT CONTRACTS AND ADVANCES TO CLIENTS

The Company depends on municipalities, corporations, educational
institutions and facility owners to attract and retain tenants and users of
their facilities and to operate their facilities on a sound financial and
business basis. The failure of these parties to attract and retain tenants and
users of their facilities could have a material adverse effect on the Company's
business, financial condition and results of operations. In connection with
certain contracts, the Company is required to make an investment in the client's
facilities or make advances to its clients. While these contracts typically
require the client to repay any advance and to reimburse the Company for any
unamortized invested capital in the event the contract terminates or expires,
there can be no assurance that the client will repay such advance or reimburse
the Company for any unamortized invested capital. See "Business--Contracts."

On May 31, 1996, one of the Company's customers filed for protection from
its creditors under Chapter 11 of the United States Bankruptcy Code. The client
had previously executed mortgages on its facility in favor of the Company to
secure its obligation to repay the unamortized amount of the Company's
investment in the facility, which was approximately $1.0 million as of May 31,
1996. The Company does not believe that the impact, if any, of the customer's
bankruptcy filing is likely to be material to the Company's consolidated
financial position or results of operations, although there can be no assurance
that such filing will not have a material adverse effect.

DEPENDENCE ON KEY PERSONNEL

The Company's future success depends to a significant extent on the efforts
and abilities of its executive officers. The loss of the services of certain of
these individuals could have a material adverse effect on the Company's
business, financial condition and results of operations. The Company believes
that its future success also will depend significantly upon its ability to
attract, motivate and retain additional highly skilled managerial personnel.
Competition for such personnel is intense, and there can be no assurance that
the Company will be successful in attracting, assimilating and retaining the
personnel it requires to grow and operate profitably. See "Business-- Employees"
and "Management-- Executive Officers and Directors."

CONSTRAINTS AND EXPENSES ASSOCIATED WITH AN UNAVAILABILITY OF LABOR

From time to time, the Company must hire a large number of qualified,
temporary workers to provide food service at a particular event or events. The
Company may encounter difficulty in hiring sufficient numbers of qualified,
temporary workers to staff these events, which could result in lower sales at
these events, constraints to growth and significant expense or otherwise could
have a material adverse

7
<PAGE>
effect on the Company's business, financial condition and results of operations.
See "Business--Growth Opportunities."

ADVERSE EFFECTS OF COMPETITION

The Company encounters significant competition in each area of the contract
food service market in which it operates. Certain of the Company's competitors
compete with the Company on both a national and international basis and have
significantly greater financial and other resources than the Company.
Competition may result in price reductions, decreased gross margins and loss of
market share. In addition, existing or potential clients may elect to "self
operate" their food service, eliminating the opportunity for the Company to
compete for the account. There can be no assurance that the Company will be able
to compete successfully in the future or that competition will not have a
material adverse effect on the Company's business, financial condition or
results of operations. See "Business-- Competition."

GOVERNMENT REGULATION

The Company's business is subject to various governmental regulations
incidental to its operations, such as environmental, employment and health and
safety regulations. The Company also holds liquor licenses at many facilities at
which it provides services, and is subject to the liquor license requirements of
the states in which it holds liquor licenses, including "dram-shop" statutes.
"Dram-shop" statutes generally provide a person injured by an intoxicated person
the right to recover damages from an establishment that wrongfully served
alcoholic beverages to the intoxicated person. While the Company maintains
insurance for such liability, there can be no assurance that such insurance will
be adequate to cover any potential liability or that such insurance will
continue to be available on commercially acceptable terms. The loss of one or
more liquor licenses could have a material adverse effect on the Company's
business, financial condition or results of operations. There can be no
assurance that additional federal or state regulation would not limit the
activities of the Company in the future or significantly increase the cost of
regulatory compliance. See "Business--Government Regulation."

RISKS ASSOCIATED WITH GENERAL ECONOMIC CONDITIONS

Although most of the Company's contracts provide for minimum annual price
increases for products and services provided by the Company, the Company could
be adversely impacted during inflationary periods if the rate of contractual
increases are lower than the inflation rate. In addition, a significant
recession could cause users of, and persons attending events held at, facilities
at which the Company operates to cancel, reduce or postpone their use of the
facilities or cause patrons to reduce their spending on food and beverages while
at such facilities.

CONCENTRATION OF STOCK OWNERSHIP

Following the Offering, the officers and directors of the Company will
beneficially own approximately 26% of the outstanding shares of Common Stock
(approximately 24% of the outstanding shares of Common Stock if the
Underwriters' over-allotment option is exercised in full). See "Principal and
Selling Stockholders." Because of such share ownership, these stockholders,
acting in concert, may continue to be able to exercise significant influence
over the election of members of the Company's Board of Directors and other
corporate actions requiring stockholder approval.

SHARES ELIGIBLE FOR FUTURE SALE; POTENTIAL FOR ADVERSE EFFECT ON STOCK PRICE;
REGISTRATION RIGHTS

Sales of a substantial number of shares of Common Stock in the public market
or the prospect of such sales could adversely affect prevailing market prices
for the Common Stock. Of the 6,034,600 shares of Common Stock to be outstanding
after the Offering, the 4,030,000 shares of Common Stock to

8
<PAGE>
be sold in the Offering will be freely tradable without restriction. Of the
remaining 2,004,600 outstanding shares of Common Stock, at least 1,906,600
shares will be subject to lock-up agreements under which the holders of such
shares have agreed not to sell or otherwise dispose of any of their shares for a
period of 180 days after the date of this Prospectus without the prior written
consent of Montgomery Securities. In its sole discretion and at any time without
notice, Montgomery Securities may release all or any portion of the shares
subject to the lock-up agreements. Of the shares not subject to the lock-up
agreements, 98,000 will be available for sale in the public markets immediately
after the Offering. Upon the expiration of the lock-up agreements, an additional
1,635,200 shares of Common Stock will become eligible for sale in the public
market, subject to the provisions of Rules 144(k) and 144 under the Securities
Act. Promptly after the closing of the Offering, the Company intends to file a
registration statement under the Securities Act covering the sale of 619,000
shares of Common Stock reserved for issuance under the Company's existing stock
plans. Upon completion of the Offering, there will be outstanding options to
purchase a total of 420,194 shares of Common Stock. See
"Management--Compensation Pursuant to Plans." The Company has granted certain
stockholders registration rights with respect to approximately 1,309,756 shares
of Common Stock and has agreed to file a shelf registration statement after the
one-year anniversary of the closing of the Offering with respect to 238,000
shares of Common Stock. See "Description of Common Stock--Registration Rights."
The sale of such shares could have a material adverse effect on the Company's
ability to raise capital in the public markets. See "Shares Eligible for Future
Sale."

ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER AND BY-LAW PROVISIONS

Effective upon the closing of the Offering, the Company will amend its
Restated Certificate of Incorporation to provide for a classified Board of
Directors and to authorize the issuance of Preferred Stock without stockholder
approval and upon such terms as the Board of Directors may determine. These
provisions could have the effect of making it more difficult for a third party
to acquire, or of discouraging a third party from acquiring or making a proposal
to acquire, a majority of the outstanding stock of the Company and could
adversely affect the prevailing market price of the Common Stock. The rights of
the holders of Common Stock will be subject to, and may be adversely affected
by, the rights of holders of Preferred Stock that may be issued in the future.
The Company has no present plans to issue any shares of Preferred Stock. See
"Description of Capital Stock--Preferred Stock."

IMMEDIATE AND SUBSTANTIAL DILUTION TO NEW INVESTORS

Investors purchasing shares of Common Stock in the Offering will incur
substantial and immediate dilution in the pro forma net tangible book value of
the Common Stock from the initial public offering price and will incur
additional dilution upon the exercise of outstanding stock options. See
"Dilution."

NO PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to the Offering, there has been no public market for the Common Stock.
There can be no assurance that an active trading market for the Common Stock
will develop or be sustained following the Offering or that the market price of
the Common Stock will not decline below the initial public offering price. The
initial public offering price has been determined by negotiation between the
Company and the Representatives of the Underwriters based upon several factors
and may not be indicative of future market prices. The price at which the Common
Stock will trade will depend upon a number of factors, including, but not
limited to, the Company's historical and anticipated operating results and
general market and economic conditions, some of which factors are beyond the
Company's control. Factors such as quarterly fluctuations in the Company's
financial and operating results, announcements by the Company or others and
developments affecting the Company, its clients or the industry generally, could
also cause the market price of the Common Stock to fluctuate substantially. In
addition, the stock market has from time to time experienced extreme price and
volume fluctuations. These broad market fluctuations may adversely affect the
market price of the Common Stock. See "Underwriting."

9
<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the sale of the 2,890,218 shares of
Common Stock offered by it hereby are estimated to be approximately $31.2
million (approximately $38.0 million if the Underwriters' over-allotment option
is exercised in full). The Company will not receive any proceeds from the sale
of shares of Common Stock by the Selling Stockholders.

The net proceeds of the Offering to be received by the Company (including
the net proceeds to be received by the Company upon the Warrant Exercise) will
be used to repay indebtedness of the Company of approximately $28.9 million and
to repurchase outstanding warrants for an aggregate purchase price of
approximately $2.9 million. If the over-allotment option is exercised, up to
$1.6 million of net proceeds may be used to finance the proposed acquisition of
a contract food service provider operating primarily at educational facilities.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources." The Company has no agreement,
understanding or arrangement to acquire or effect any material acquisition. Of
the Company's aggregate indebtedness to be repaid, approximately $22.4 million
is senior indebtedness bearing interest at the prime rate plus 1.25% to 1.50%
per annum, payable to the Company's senior bank lending group and maturing from
1997 to 2002, and $6.5 million consists of subordinated notes with interest at a
fixed rate of 12.79% per annum, maturing from 1998 to 2001 and required to be
prepaid upon the closing of the Offering.

Upon the closing of the Offering, holders of warrants to acquire 296,726.5
shares of Common Stock will be obligated to sell such warrants to the Company at
a price equal to the difference between the initial public offering price of
$12.00 per share and the exercise price for such warrants ($4.93 with respect to
280,003.5 shares and $.01 with respect to 16,723 shares), multiplied by the
number of shares of Common Stock issuable upon exercise of such warrants. In
addition, the Company will have the right, upon the closing of the Offering, to
repurchase warrants to acquire an additional 296,726.5 shares of Common Stock on
or before June 30, 1996 for an aggregate repurchase price of $700,000. The
Company will repurchase these warrants upon the closing of the Offering.

Pending application of the proceeds as described above, the Company intends
to invest such proceeds in government securities and other short-term
interest-bearing securities.

DIVIDEND POLICY

The Company has never paid cash dividends on its Common Stock and presently
does not intend to declare any cash dividends on the Common Stock in the
foreseeable future. It is the current policy of the Company's Board of Directors
to retain earnings to finance the operations and expansion of the Company's
business. In addition, certain of the Company's financing agreements restrict
the Company's ability to pay dividends to its stockholders and it is anticipated
that future financing agreements will have similar restrictions. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

10
<PAGE>
CAPITALIZATION

The following table sets forth the capitalization of the Company as of March
27, 1996 on an actual basis and as adjusted to give effect to the Preferred
Stock Conversion, the Warrant Exercise, the sale by the Company of the 2,890,218
shares of Common Stock offered by it hereby and the application of the estimated
net proceeds therefrom. See "Use of Proceeds." This table should be read in
conjunction with the consolidated financial statements of the Company and notes
thereto appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
MARCH 27, 1996
----------------------------
ACTUAL AS ADJUSTED
------------ ------------
<S> <C> <C>
Short-term obligations:
Current portion of long-term debt................................ $ 4,003 $ --
Current portion of subordinated debt............................. 2,026 2,026
------------ ------------
Total........................................................ $ 6,029 $ 2,026
------------ ------------
------------ ------------
Long-term obligations:
Long-term debt................................................... $ 20,399 $ 2,000
Subordinated debt................................................ 10,171 3,671
------------ ------------
Total........................................................ 30,570 5,671

Stock warrants..................................................... 2,420 --

Stockholders' equity:
Preferred Stock, $.01 par value, 1,000,000 shares authorized(1);
134,171 issued and outstanding actual, none issued and
outstanding as adjusted........................................ 1 --
Common Stock, $.01 par value, 25,000,000 shares authorized(1);
2,074,100 issued and outstanding actual and 6,034,600 issued
and outstanding as adjusted(2)................................. 21 60
Additional paid-in capital....................................... 9,302 41,556
Retained earnings................................................ 1,836 1,836
Receivables from stockholders for purchase of
Common Stock................................................... (189) (189)
------------ ------------
Total stockholders' equity................................... 10,971 43,263
------------ ------------
Total capitalization....................................... $ 43,961 $ 48,934
------------ ------------
------------ ------------
</TABLE>

- ------------

(1) Gives effect to an amendment to the Company's Restated Certificate of
Incorporation to be filed upon the closing of the Offering.

(2) Includes 7,500 shares of Common Stock issuable to certain directors of the
Company upon the closing of the Offering. Does not include 143,444 shares of
Common Stock issuable upon the exercise of outstanding stock options,
133,756 shares of Common Stock issuable upon the exercise of outstanding
warrants and 276,750 shares of Common Stock subject to stock options to be
granted to employees of the Company upon the closing of the Offering. An
aggregate of 219,250 additional shares of Common Stock has been reserved for
future grants under the Company's stock plans. See "Management--Compensation
Pursuant to Plans" and "Description of Capital Stock-- Warrants."

11
<PAGE>
DILUTION

The pro forma net tangible book deficit of the Company at March 27, 1996 was
$(4,111,000) or approximately $(1.31) per share. Pro forma net tangible book
deficit per share represents the amount of total assets, excluding intangibles
(excess of cost over fair value of net assets acquired), less total liabilities,
divided by the number of shares of Common Stock outstanding as of March 27,
1996, on a pro forma basis after giving effect to the Preferred Stock Conversion
and the Warrant Exercise. After giving effect to the receipt of the net proceeds
from the sale of the 2,890,218 shares of Common Stock offered by the Company
hereby, and after deducting the underwriting discount and estimated offering
expenses to be paid by the Company, the pro forma net tangible book value of the
Company at March 27, 1996 would have been $25,761,000, or $4.27 per share. This
represents an immediate increase in net tangible book value of $5.58 per share
of Common Stock to existing stockholders and an immediate dilution of
approximately $7.73 per share to new investors purchasing shares in the
Offering. The following table illustrates the per share dilution:

<TABLE>
<S> <C> <C>
Initial public offering price per share.................................... $12.00
Pro forma net tangible book deficit per share before the Offering........ $(1.31)
Increase per share attributable to new investors......................... 5.58
------
Pro forma net tangible book value per share after the Offering............. 4.27
------
Dilution per share to new investors........................................ $ 7.73
------
------
</TABLE>

The following table sets forth, on a pro forma basis as of March 27, 1996,
the number of shares of Common Stock purchased from the Company, the total
consideration paid to the Company and the average price per share paid by
existing stockholders and by the new investors purchasing shares of Common Stock
from the Company in the Offering (before deducting the underwriting discount and
estimated offering expenses):

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
-------------------- ---------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
--------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders................. 3,144,382 52.1% $10,501,000 23.2% $ 3.34
New investors......................... 2,890,218 47.9 34,682,616 76.8 12.00
--------- ------- ----------- -------
Total............................... 6,034,600 100.0% $45,183,616 100.0%
--------- ------- ----------- -------
--------- ------- ----------- -------
</TABLE>

The foregoing tables assume no exercise of the Underwriters' over-allotment
option and exclude shares that were issuable upon exercise of options and
warrants outstanding at March 27, 1996, except for shares to be issued upon the
Warrant Exercise. As of March 27, 1996, there were options and warrants
outstanding to purchase an aggregate of 277,200 shares at a weighted average
exercise price of $3.20 per share. See "Management--Compensation Pursuant to
Plans" and "Description of Capital Stock--Warrants." To the extent that
outstanding options and warrants are exercised in the future, there will be
further dilution to new investors.

12
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data of the Company as of
December 28, 1994 and December 27, 1995 and for each of the three years in the
period ended December 27, 1995 were derived from the consolidated financial
statements of the Company and the notes thereto, included elsewhere in this
Prospectus, which have been audited by Deloitte & Touche LLP, independent
auditors. The following selected consolidated financial data of the Company as
of March 29, 1995 and March 27, 1996 and for each of the three-month periods
then ended were derived from the unaudited consolidated financial statements of
the Company and the notes thereto, included elsewhere in this Prospectus. The
following selected consolidated financial data of the Company should be read in
conjunction with the consolidated financial statements of the Company and the
notes thereto, the pro forma consolidated financial data and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
FISCAL YEARS (1) THREE MONTHS ENDED
------------------------------------------------------ -------------------------------
PRO FORMA
PRO FORMA MARCH 27,
1995 MARCH 29, MARCH 27, 1996
1991 1992 1993 1994 1995 (2)(3) 1995 1996 (3)(4)
------- ------- ------- ------- ------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AND CONTRACT DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales................... $35,471 $39,429 $61,212 $82,119 $95,462 $117,718 $23,429 $24,160 $28,201
Cost of sales............... 32,295 35,398 55,816 73,833 85,576 106,079 21,295 21,630 25,382
------- ------- ------- ------- ------- --------- --------- --------- ---------
Gross profit................ 3,176 4,031 5,396 8,286 9,886 11,639 2,134 2,530 2,819
General and administrative
expenses................... 2,381 3,082 2,649 3,406 3,626 5,706 1,090 1,336 1,729
------- ------- ------- ------- ------- --------- --------- --------- ---------
Income from operations...... 795 949 2,747 4,880 6,260 5,933 1,044 1,194 1,090
Interest expense, net....... 442 393 834 1,629 2,479 3,172 696 767 902
------- ------- ------- ------- ------- --------- --------- --------- ---------
Income before tax provision
and extraordinary item..... 353 556 1,913 3,251 3,781 2,761 348 427 188
Tax provision............... 138 216 829 1,385 1,585 1,347 140 168 118
------- ------- ------- ------- ------- --------- --------- --------- ---------
Income before extraordinary
item....................... 215 340 1,084 1,866 2,196 1,414 208 259 70
Extraordinary item.......... -- -- 112 -- -- -- -- -- --
------- ------- ------- ------- ------- --------- --------- --------- ---------
Net income.................. 215 340 972 1,866 2,196 1,414 208 259 70
Accretion to redemption
value of warrants.......... -- -- (230) (250) (900) (900 ) (72) (1,040) (1,040)
------- ------- ------- ------- ------- --------- --------- --------- ---------
Net income available to
Common Stockholders........ $ 215 $ 340 $ 742 $ 1,616 $ 1,296 $ 514 $ 136 $ (781) $ (970)
------- ------- ------- ------- ------- --------- --------- --------- ---------
------- ------- ------- ------- ------- --------- --------- --------- ---------
Net income (loss) per share
assuming full dilution(5).. $ 0.10 $ 0.17 $ 0.24 $ 0.49 $ 0.39 $ 0.15 $ 0.04 $ (0.22) $ (0.28)
------- ------- ------- ------- ------- --------- --------- --------- ---------
------- ------- ------- ------- ------- --------- --------- --------- ---------
Average number of shares of
Common Stock outstanding
assuming full dilution..... 2,048 2,048 3,087 3,287 3,330 3,356 3,158 3,510 3,523
------- ------- ------- ------- ------- --------- --------- --------- ---------
------- ------- ------- ------- ------- --------- --------- --------- ---------
Supplemental pro forma net
income (loss) per share
assuming full dilution(6).. $ 0.39 $ (0.13)
--------- ---------
--------- ---------
</TABLE>

13
<PAGE>
<TABLE>
<CAPTION>
FISCAL YEARS (1) THREE MONTHS ENDED
------------------------------------------------------ -------------------------------
PRO FORMA
PRO FORMA MARCH 27,
1995 MARCH 29, MARCH 27, 1996
1991 1992 1993 1994 1995 (2)(3) 1995 1996 (3)(4)
------- ------- ------- ------- ------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AND CONTRACT DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA:
EBITDA(7)................... $ 1,932 $ 2,154 $ 4,631 $ 7,563 $10,416 $10,536 $ 2,004 $ 2,199 $ 2,247
Net cash provided by (used
in) operating activities... $ 1,099 $ 1,676 $ 3,765 $ 2,570 $ 2,971 $ (264) $ 1,630
Net cash used in investing
activities................. $(2,371) $(2,295) $(7,669) $(9,046) $(8,124) $ (10) $(6,725)
Net cash provided by
financing activities....... $ 1,852 $ 463 $ 2,737 $ 7,632 $ 4,255 $ 525 $ 5,823
Total contracts (at end of
period)(8)................. 21 28 42 81 95 156 81 156 156

BALANCE SHEET DATA (AT END
OF PERIOD):
Working capital (deficit)... $ 1,772 $ 843 $ (33) $(4,056) $(4,499) $(5,005 ) $(3,119) $(6,595)
Total assets................ 17,868 19,938 29,174 53,153 60,581 70,473 52,137 73,757
Total debt.................. 10,296 10,759 13,358 25,518 28,931 34,583 26,153 36,599
Stockholders' equity........ 2,618 2,726 6,970 8,586 11,382 11,752 8,722 10,971
</TABLE>

- ------------
(1) The Company's fiscal year ends on the last Wednesday of December. The 1992
fiscal year was a 53-week period.

(2) The pro forma statement of income data give effect to the following
transactions and events as if they had occurred as of the beginning of the
fiscal year ended December 27, 1995: (i) the acquisition of Northwest,
acquired in June 1995, and Sun West, acquired in March 1996; (ii) the
adjustment to reflect interest expense as if borrowings to purchase
Northwest and Sun West had taken place at the beginning of the fiscal year;
and (iii) the related tax effects of the foregoing. The pro forma balance
sheet data give effect to the acquisition of Sun West as if it had occurred
on December 27, 1995 and the Preferred Stock Conversion.

(7) Represents earnings before interest expense, income tax expense and
depreciation and amortization. EBITDA is not a measurement in accordance
with GAAP and should not be considered an alternative to, or more meaningful
than, income from operations, net income or cash flows as defined by GAAP or
as a measure of the Company's profitability or liquidity. The Company has
included information concerning EBITDA herein because management believes
EBITDA provides useful information regarding the cash flow of the Company
and its ability to service debt.

(8) Represents total contracts other than contracts for one-time or special
events.

14
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA

The following unaudited pro forma consolidated financial data should be read
in conjunction with the consolidated financial statements of the Company and the
notes thereto and other financial information set forth herein.

The pro forma consolidated statement of income for the fiscal year ended
December 27, 1995 gives effect to the following transactions and events as if
they occurred as of the beginning of the fiscal year: (i) the acquisition of
Northwest, acquired in June 1995, and Sun West, acquired in March 1996; (ii) the
adjustment to reflect interest expense as if borrowings to purchase Northwest
and Sun West had taken place at the beginning of the fiscal year; and (iii) the
related tax effects of the foregoing. The pro forma consolidated balance sheet
gives effect to the acquisition of Sun West as if it had occurred on December
27, 1995 and to the Preferred Stock Conversion.

The pro forma consolidated statement of income for the three months ended
March 27, 1996 gives effect to the following transactions and events as if they
had occurred as of the beginning of the period: (i) the acquisition of Sun West,
acquired March 25, 1996; (ii) the adjustment to reflect interest expense as if
borrowings to purchase Sun West had taken place at the beginning of the quarter;
and (iii) the related tax effects of the foregoing.

Management believes the assumptions used provide a reasonable basis on which
to present the pro forma consolidated financial data. The pro forma financial
data are provided for informational purposes only and should not be construed to
be indicative of the Company's results of operations or financial position had
the transactions and events described above been consummated on the dates
assumed and do not project the Company's results of operations or financial
position for any future date or period.

15
<PAGE>
PRO FORMA
CONSOLIDATED STATEMENT OF INCOME
FISCAL YEAR ENDED DECEMBER 27, 1995
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
PRO FORMA PRO
NORTHWEST SUN WEST ADJUSTMENTS FORMA
FINE HOST (NOTE 1) (NOTE 1) (NOTE 2) (NOTE 3)
----------- --------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Net sales............................. $95,462 $ 5,213 $ 17,043 $ $117,718
Cost of sales......................... 85,576 4,692 15,481 330(a) 106,079
----------- --------- -------- ----------- --------
Gross profit.......................... 9,886 521 1,562 (330) 11,639
General and administrative expenses... 3,626 419 1,661 5,706
----------- --------- -------- ----------- --------
Income (loss) from operations......... 6,260 102 (99) (330) 5,933
Interest expense, net................. 2,479 32 115 546(b) 3,172
----------- --------- -------- ----------- --------
Income (loss) before tax provision
(benefit)............................ 3,781 70 (214) (876) 2,761
Tax provision (benefit)............... 1,585 56 (58) (236)(c) 1,347
----------- --------- -------- ----------- --------
Net income (loss)..................... 2,196 14 (156) (640) 1,414
----------- --------- -------- ----------- --------
Accretion to redemption value of
warrants (Note 4).................... (900) -- -- -- (900)
----------- --------- -------- ----------- --------
Net income available to Common
Stockholders......................... $ 1,296 $ 14 (156) (640) 514
----------- --------- -------- ----------- --------
----------- --------- -------- ----------- --------
Net income per share assuming full
dilution (Note 5).................... $ 0.39 $ 0.15
----------- --------
----------- --------
Average number of shares of Common
Stock outstanding assuming full
dilution (Note 5)................... 3,330 3,356
----------- --------
----------- --------
</TABLE>

See notes to unaudited pro forma consolidated financial data.

16
<PAGE>
PRO FORMA
CONSOLIDATED BALANCE SHEET
DECEMBER 27, 1995
(UNAUDITED)
(IN THOUSANDS)

<TABLE>
<CAPTION>
PRO FORMA
SUN WEST ADJUSTMENTS PRO
FINE HOST (NOTE 6) (NOTE 7) FORMA
--------- -------- ----------- -------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash................................................ $ 634 $ 343 $ $ 977
Accounts receivable................................. 7,548 2,285 9,833
Notes receivable.................................... 520 520
Inventories......................................... 2,099 229 2,328
Prepaid and other current assets.................... 1,893 152 2,045
--------- -------- ----------- -------
Total current assets............................ 12,694 3,009 15,703
Contract rights, net................................. 12,866 22 2,620(a) 15,508
Fixtures and equipment, net.......................... 15,829 203 16,032
Notes receivable..................................... 1,391 1,391
Excess of cost over fair value of net assets
acquired, net........................................ 13,406 4,038(a) 17,444
Other assets......................................... 4,395 4,395
--------- -------- ----------- -------
Total assets.................................... $60,581 $3,234 $ 6,658 $70,473
--------- -------- ----------- -------
--------- -------- ----------- -------
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses............... $12,467 $2,259 $ 500(a) $15,226
Current portion of long-term debt................... 2,981 2,981
Current portion of subordinated debt................ 1,745 756 2,501
--------- -------- ----------- -------
Total current liabilities....................... 17,193 3,015 500 20,708
Deferred income taxes................................ 6,421 13 1,098(a) 7,532
Long-term debt....................................... 15,326 2,880(a) 18,206
Subordinated debt.................................... 8,879 28 1,988(a) 10,895
--------- -------- ----------- -------
Total liabilities............................... 47,819 3,056 6,466 57,341

Stock warrants....................................... 1,380 1,380

Redeemable Class B Common Stock...................... -- 253 (253)(a) --

Stockholders' equity:
Convertible Preferred Stock......................... 1 (1)(b) --
Common Stock........................................ 20 10(b) 30
Additional paid-in capital.......................... 8,933 75 (75)(a) 9,294
370(a)
(9)(b)
Retained earnings................................... 2,617 (150) 150(a) 2,617
Receivables from stockholders for purchase of Common
Stock.............................................. (189) (189)
--------- -------- ----------- -------
Total stockholders' equity...................... 11,382 (75) 445 11,752
--------- -------- ----------- -------
Total liabilities and stockholders'
equity..................................... $60,581 $3,234 $ 6,658 $70,473
--------- -------- ----------- -------
--------- -------- ----------- -------
</TABLE>

See notes to unaudited pro forma consolidated financial data.

17
<PAGE>
NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL DATA
FOR THE FISCAL YEAR ENDED DECEMBER 27, 1995

]1. NORTHWEST FOOD SERVICES, INC. AND SUN WEST SERVICES, INC.

Represents the historical results of Northwest from the beginning of the
fiscal year through June 28, 1995, the date of its acquisition, and Sun West for
the entire fiscal year.

2. ADJUSTMENTS--PRO FORMA CONSOLIDATED STATEMENT OF INCOME

(a) The amortization of excess of cost over fair value of net assets
acquired.

(b) The increase in interest expense related to the borrowings to finance
the acquisitions.

3. ACTIONS SUBSEQUENT TO THE ACQUISITIONS

Subsequent to the acquisition of Northwest, the Company terminated certain
of Northwest's unprofitable food service contracts. The Company also eliminated
certain redundant operations by office closings and termination of excess
personnel in connection with the integration of Northwest and is in the process
of doing so with respect to Sun West.

4. ACCRETION TO REDEMPTION VALUE OF WARRANTS

Represents the accretion to carrying value of certain warrants to purchase
Common Stock of the Company at an exercise price of $4.93 per share. The holders
of these warrants have the right to require the Company to repurchase these
warrants for an amount based upon the fair market value of the underlying shares
at any time beginning April 1997 and earlier upon the occurrence of certain
events, including a qualified public offering. The warrant is accreted to the
highest estimated redemption price based on time remaining to April 1997.

5. NET INCOME PER SHARE

Pro forma net income per share for fiscal 1995 has been computed as if all
shares of Common Stock and Common Stock equivalents outstanding at December 27,
1995 and the shares of Common Stock issued as part of the Sun West acquisition
were outstanding effective at the beginning of the fiscal year presented. Net
income and pro forma net income per share assuming full dilution is calculated
based upon net income and pro forma net income less accretion to the redemption
value of warrants of $900,000 ($0.27 per share).

6. SUN WEST SERVICES, INC.

Represents the financial position of Sun West at December 31, 1995.

7. ADJUSTMENTS--PRO FORMA CONSOLIDATED BALANCE SHEET

(a) Purchase accounting adjustments relating to the acquisition of Sun West
and the long-term borrowings of $2.9 million, the issuance of subordinated debt
in the amount of $1.9 million to the sellers and the issuance of 25,900 shares
of Common Stock to the sellers, all in connection with the acquisition of Sun
West.

Sun West was acquired for a purchase price of approximately $5.2 million,
consisting of cash, five-year subordinated notes to the sellers with interest at
7% and 25,900 shares of Common Stock valued at $14.29 each. Costs and fees
related to the acquisition were approximately $500,000. Assets and liabilities
(as of December 27, 1995) acquired are summarized as follows (in thousands).

Current assets....................................................... $ 3,009
Contract rights, net................................................. 2,642
Fixtures and equipment, net.......................................... 203
Current liabilities.................................................. (3,015)
Deferred income taxes................................................ (1,111)
Subordinated debt.................................................... (28)
-------
Net assets acquired.................................................. $ 1,700
-------
-------

The purchase price was allocated to the assets acquired and liabilities
assumed based on their fair value at the time of acquisition. The excess of the
purchase price over the fair value of the assets and liabilities acquired was
$4.0 million. Upon consummation of the acquisition, the Redeemable Class B
Common Stock of Sun West was cancelled.

(b) The Preferred Stock Conversion.

18
<PAGE>
PRO FORMA
CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 27, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
PRO
PRO FORMA FORMA
SUN WEST ADJUSTMENTS (NOTE
FINE HOST (NOTE 1) (NOTE 2) 3)
--------- -------- ----------- -------
<S> <C> <C> <C> <C>
Net sales......................................... $24,160 $ 4,041 $28,201
Cost of sales..................................... 21,630 3,637 $ 115(a) 25,382
--------- -------- ----------- -------
Gross profit...................................... 2,530 404 (115) 2,819
General and administrative expenses............... 1,336 393 1,729
--------- -------- ----------- -------
Income from operations............................ 1,194 11 (115) 1,090
Interest expense, net............................. 767 17 118(b) 902
--------- -------- ----------- -------
Income (loss) before tax provision................ 427 (6) (233) 188
Tax provision..................................... 168 -- (50)(c) 118
--------- -------- ----------- -------
Net income (loss)................................. 259 (6) (183) 70
Accretion to redemption value of warrants (Note
4)............................................... (1,040) -- -- (1,040)
--------- -------- ----------- -------
Net loss available to Common Stockholders......... $ (781) $ (6) $(183) $ (970)
--------- -------- ----------- -------
--------- -------- ----------- -------
Net loss per share assuming full dilution (Note
5)............................................... $ (0.22) $ (0.28)
--------- -------
--------- -------
Average number of shares of Common
Stock outstanding assuming full
dilution (Note 5)............................... 3,510 3,523
--------- -------
--------- -------
</TABLE>

See notes to unaudited pro forma consolidated statement of income.

19
<PAGE>
NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 27, 1996

1. SUN WEST SERVICES, INC.

Represents the historical results of Sun West for the three months ended
March 25, 1996.

2. ADJUSTMENTS--PRO FORMA CONSOLIDATED STATEMENT OF INCOME

(a) The amortization of excess of cost over fair value of net assets
acquired.

(b) The increase in interest expense related to the borrowings to finance
the acquisition.

3. ACTIONS SUBSEQUENT TO THE ACQUISITION

The Company is in the process of eliminating certain redundant operations by
office closings and termination of excess personnel in connection with the
integration of Sun West.

4. ACCRETION TO REDEMPTION VALUE OF WARRANTS

5. NET LOSS PER SHARE

Pro forma net loss per share for the three months ended March 27, 1996 has
been computed as if all shares of Common Stock and Common Stock equivalents
outstanding at March 27, 1996 and the shares of Common Stock issued as part of
the Sun West acquisition were outstanding effective at the beginning of the
fiscal quarter presented. Net loss and pro forma net loss per share assuming
full dilution is calculated based upon net income and pro forma net income less
accretion to the redemption value of warrants of $1,040,000 ($0.30 per share).

20
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

The Company was formed in 1985 and has grown to become a leading provider of
food and beverage concession and catering services to more than 190 facilities
in 31 states. The Company targets four distinct markets within the contract food
service industry: the recreation and leisure market ("Recreation and Leisure"),
serving arenas, stadiums, amphitheaters, civic centers and other recreational
facilities; the convention center market ("Convention Centers"); the educational
facilities market ("Education"), which the Company entered in 1994, serving
colleges, universities and public and private schools; and the corporate dining
market ("Corporate Dining"), which the Company entered in 1994, serving
corporate cafeterias, office complexes and manufacturing plants.

A significant portion of the Company's growth to date has been derived from
acquisitions. In 1993, the Company acquired Fanfare, which primarily serves
recreation and leisure facilities, for approximately $8.2 million in cash and
subordinated notes. In 1994, the Company acquired Creative, which serves the
education, corporate dining and recreation and leisure areas, for approximately
$7.0 million in subordinated notes and cash. In 1995, the Company acquired
Northwest, which serves the education and corporate dining areas, for
approximately $2.5 million in subordinated notes and cash. On March 25, 1996,
the Company acquired Sun West, which provides food and beverage concession and
catering services to more than 60 facilities located primarily in the
southwestern United States, including education facilities, as well as jails and
other institutions. The purchase price was approximately $5.2 million,
consisting of cash, five-year subordinated notes to the sellers and shares of
Common Stock. Subsequent to the acquisition of Northwest, the Company terminated
certain of Northwest's unprofitable food service contracts. The Company also
eliminated certain redundant operations through closings of offices and
termination of excess personnel in connection with the integration of Northwest
and is in the process of doing so with respect to Sun West.

The Company generally enters into one of three types of contracts for its
food services: profit and loss contracts ("P&Ls"), profit sharing contracts and
management fee contracts. Under P&L contracts, all food and beverage sales are
recorded in net sales. P&Ls require the Company to bear all the expenses of the
operation, including rent paid to the client (usually calculated as a fixed
percentage of various categories of sales). While Fine Host often benefits from
greater upside potential with a P&L contract, it is responsible for the costs of
running the food-service operation and consequently bears greater risk than with
a management fee or profit sharing contract. Under profit sharing contracts, the
Company receives a percentage of profits earned at the facility plus a fixed fee
or percentage of sales as an administrative fee. Under this type of contract,
all food and beverage sales generated at a location are recorded in net sales.
Management fee contracts provide for a fixed fee. Fine Host is also reimbursed
for all of its on-site expenses incurred in providing food and beverage services
under management fee contracts. Certain of the Company's management fee
contracts provide for an additional incentive fee based on a percentage of sales
over a base threshold level. In the case of a management fee contract, the
Company records only the fixed and incentive fee, if any, as net sales. Under
profit sharing and management fee contracts, Fine Host does not bear
responsibility for losses incurred, if any.

The length of contracts varies depending on the type of facility, type of
contract and financial investment. Contracts for Recreation and Leisure
facilities typically include the largest capital investment by the Company and
generally have a term of three to ten years. Contracts for Convention Centers
generally have a term of three to five years. Education contracts generally have
a term of one to five years. Corporate Dining contracts, which generally require
the smallest capital investment by the Company, typically have a shorter term
than those in the Recreation and Leisure, Convention Center and Education areas,
and generally contain a provision allowing either party to terminate for
convenience after a short notice period, typically ranging from 30 to 90 days.
Corporate Dining contracts representing approximately 3.6% of the Company's
fiscal 1995 historical net sales are terminable after a

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<PAGE>
short notice period. Excluding such contracts terminable on short notice,
contracts representing approximately 6.3% and 7.2% of the Company's fiscal 1995
historical net sales are scheduled to expire in fiscal 1996 and fiscal 1997,
respectively.

Cost of sales for P&L and profit sharing contracts includes wages and
benefits for on-site employees, all on-site costs for food and beverages, rent
paid to clients, other operating expenses and depreciation and amortization of
both contract rights and excess of cost over fair value of net assets acquired.
Cost of sales for management fee contracts includes only the amortization of
invested capital.

General and administrative expenses include all costs associated with the
region managers, the accounting processing centers and the corporate office in
Greenwich, Connecticut. The corporate office includes senior management, sales
and marketing and administrative functions such as purchasing, legal, human
resources, management information systems and training.

The Company capitalizes certain directly attributable costs, primarily
direct payments to clients to acquire contracts and costs of licenses and
permits, in obtaining contracts with clients. The unamortized value of such
capitalized costs related to internally generated contracts was approximately
$8.2 million at December 27, 1995, consisting of costs related to 34 contracts.
The value of contract rights acquired through acquisitions has been determined
through independent valuation based on projected cash flows discounted at a rate
that market participants would use to determine fair value. The unamortized
value of contract rights acquired through acquisitions was approximately $4.7
million at December 27, 1995, consisting of rights relating to 65 contracts.
Generally, contracts acquired through acquisitions are smaller in size and
generate less annual cash flow than internally developed contracts. Sales volume
and related cash flows are typically larger for the internally generated
contracts.

This Prospectus contains forward-looking statements which involve risks and
uncertainties relating to future events. Prospective investors are cautioned
that the Company's actual events or results may differ materially from the
results discussed in the forward-looking statements. Factors that might cause
actual results to differ materially from those indicated by such forward-looking
statements include the matters set forth under the caption "Risk Factors."

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain financial
data as a percentage of the Company's net sales:
<TABLE>
<CAPTION>
FISCAL YEARS THREE MONTHS ENDED
----------------------- ----------------------
MARCH 29, MARCH 27,
1993 1994 1995 1995 1996
----- ----- ----- --------- ---------
<S> <C> <C> <C> <C> <C>
Net sales......................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales..................................... 91.2 89.9 89.6 90.9 89.5
----- ----- ----- --------- ---------
Gross profit...................................... 8.8 10.1 10.4 9.1 10.5
General and administrative expenses............... 4.3 4.1 3.8 4.7 5.5
----- ----- ----- --------- ---------
Income from operations............................ 4.5 6.0 6.6 4.4 5.0
Interest expense, net............................. 1.4 2.0 2.6 3.0 3.2
----- ----- ----- --------- ---------
Income before tax provision and extraordinary
item............................................. 3.1 4.0 4.0 1.4 1.8
Tax provision..................................... 1.3 1.7 1.7 0.6 0.7
----- ----- ----- --------- ---------
Income before extraordinary item.................. 1.8% 2.3% 2.3% 0.8% 1.1%
----- ----- ----- --------- ---------
----- ----- ----- --------- ---------
</TABLE>

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<PAGE>
The following table sets forth net sales attributable to the Company's
principal operating markets, expressed in dollars (in thousands) and as a
percentage of total net sales:
<TABLE>
<CAPTION>
FISCAL YEARS THREE MONTHS ENDED
----------------------------------------------------- ----------------------------------
MARCH 29, MARCH 27,
1993 1994 1995 1995 1996
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Recreation and
Leisure.............. $37,897 61.9% $45,773 55.7% $42,657 44.7% $ 9,561 40.8% $ 6,898 28.6%
Convention Centers.... 23,315 38.1 30,443 37.1 34,746 36.4 9,629 41.1 11,835 49.0
Education............. 2,715 3.3 8,902 9.3 1,853 7.9 3,068 12.6
Corporate Dining...... 3,188 3.9 9,157 9.6 2,386 10.2 2,359 9.8
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Total................ $61,212 100.0% $82,119 100.0% $95,462 100.0% $23,429 100.0% $24,160 100.0%
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
</TABLE>

The following table sets forth the net sales and gross profit attributable
to the Company's principal types of contracts (in thousands):
<TABLE>
<CAPTION>
FISCAL YEARS THREE MONTHS ENDED
------------------------------------------------- --------------------------------
MARCH 29, MARCH 27,
1993 1994 1995 1995 1996
--------------- --------------- --------------- --------------- ---------------
SUMMARY BY NET GROSS NET GROSS NET GROSS NET GROSS NET GROSS
CONTRACT TYPE SALES PROFIT SALES PROFIT SALES PROFIT SALES PROFIT SALES PROFIT
- ------------------------------- ------- ------ ------- ------ ------- ------ ------- ------ ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
P&L............................ $18,069 $2,261 $40,197 $4,960 $53,312 $6,784 $12,663 $1,412 $15,562 $1,712
Profit sharing................. 42,284 2,273 39,694 2,023 39,354 2,030 9,981 504 7,854 428
Management fee................. 859 862 2,228 1,303 2,796 1,072 785 218 744 390
------- ------ ------- ------ ------- ------ ------- ------ ------- ------
$61,212 $5,396 $82,119 $8,286 $95,462 $9,886 $23,429 $2,134 $24,160 $2,530
------- ------ ------- ------ ------- ------ ------- ------ ------- ------
------- ------ ------- ------ ------- ------ ------- ------ ------- ------
</TABLE>

THREE MONTHS ENDED MARCH 27, 1996 COMPARED TO THREE MONTHS ENDED MARCH 29, 1995

Net Sales The Company's net sales increased 3.1%, from $23.4 million for the
three months ended March 29, 1995 to $24.2 million for the three months ended
March 27, 1996. Net sales increased in all market areas, except Recreation and
Leisure. Recreation and Leisure net sales decreased 27.9%, primarily because one
of the Company's clients opted to self-operate its food service. Net sales from
Convention Centers increased 22.9% primarily as a result of increased sales from
existing contracts and the impact of new contracts signed in 1995. Net sales
from Education increased, primarily as a result of the impact of the acquisition
of Northwest and new accounts signed in 1995. Net sales from Corporate Dining
was unchanged.

Gross Profit. Gross profit as a percentage of net sales increased to 10.5%
for the three months ended March 27, 1996 from 9.1% for the three months ended
March 29, 1995. The increase was primarily attributable to the benefit of
continued economies of scale from national purchasing programs and effective
labor cost controls.

General and Administrative Expenses. General and administrative expenses
increased from $1.1 million (or 4.7% of net sales) for the three months ended
March 29, 1995 to $1.3 million (or 5.5% of net sales) for the three months ended
March 27, 1996. The increase was attributable primarily to the requirement for
additional clerical support for new accounts and acquisitions and the addition
of a training department.

Operating Income. Operating income increased 14.4%, from $1.0 million for
the three months ended March 29, 1995 to $1.2 million for the three months ended
March 27, 1996, primarily for the reasons mentioned above.

Interest Expense. Interest expense increased approximately $71,000 for the
three months ended March 27, 1996, due primarily to increased debt levels to
finance investments in new accounts and acquisitions.

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<PAGE>
FISCAL 1995 COMPARED TO FISCAL 1994

Net Sales. The Company's net sales increased 16.2%, from $82.1 million in
fiscal 1994 to $95.5 million in fiscal 1995. Net sales increased in fiscal 1995
in all market areas, except Recreation and Leisure. Recreation and Leisure net
sales decreased 6.8% in fiscal 1995 as compared to fiscal 1994, primarily from
the continued effects of the Major League Baseball lock-out as well as a decline
in attendance at Florida Marlins games, partially offset by the effects of new
contracts signed in 1994 and
1995. The Company's contract at Joe Robbie Stadium in Miami, Florida, the home
of the Miami Dolphins and the Florida Marlins, accounted for $13.0 million of
net sales in fiscal 1995, compared to $16.0 million in fiscal 1994. Net sales
from Convention Centers increased 14.1% in fiscal 1995 as compared to fiscal
1994 primarily as a result of increased sales from existing contracts and the
impact of new contracts signed in 1994 and in 1995. Net sales from Education and
Corporate Dining increased in fiscal 1995 as compared to fiscal 1994, primarily
as a result of the full year impact of the acquisition of Creative and the
impact of the acquisition of Northwest.

Gross Profit. Gross profit as a percentage of net sales increased to 10.4%
in fiscal 1995 from 10.1% in fiscal 1994 primarily attributable to the benefit
of continued economies of scale from national purchasing programs, effective
labor cost controls and an increase in management fee contracts.

General and Administrative Expenses. General and administrative expenses
increased from $3.4 million (or 4.1% of net sales) in fiscal 1994 to $3.6
million (or 3.8% of net sales) in fiscal 1995. The dollar increase was
attributable primarily to the increase in clerical support for new accounts and
acquisitions. The percentage decrease resulted from a proportionally greater
increase in net sales relative to general and administrative expenses.

Operating Income. Operating income increased 28.3%, from $4.9 million in
fiscal 1994 to $6.3 million in fiscal 1995, primarily for the reasons mentioned
above.

Interest Expense. Interest expense increased approximately $850,000, due
primarily to increased debt levels to finance investments in new accounts and
acquisitions as well as an increase in the prime rate and the reset of the
interest rate on its variable rate subordinated notes from 9.8% to 12.79%.

FISCAL 1994 COMPARED TO FISCAL 1993

Net Sales. The Company's net sales increased 34.2%, from $61.2 million in
fiscal 1993 to $82.1 million in fiscal 1994. Net sales increased in fiscal 1994
in all market areas. Recreation and Leisure net sales increased by 20.8% in
fiscal 1994 as compared to fiscal 1993 primarily due to the signing of new
contracts in 1994, the full-year effect of the acquisition of Fanfare and the
full-year impact of the signing of new contracts in 1993, partially offset by
the Major League Baseball lock-out beginning in late summer of 1994. The
Company's contract at Joe Robbie Stadium accounted for $16.0 million of net
sales in fiscal 1994, compared to $21.0 million in fiscal 1993. The decrease
resulted primarily from a decline in attendance at Florida Marlins games. Net
sales from Convention Centers increased by 30.6% in fiscal 1994 as compared to
fiscal 1993 as a result of new contracts signed in 1993 and 1994, an increase in
sales from existing contracts and the full-year impact of the Fanfare
acquisition. Net sales from Education and Corporate Dining increased in fiscal
1994, as a result of the Creative acquisition.

Gross Profit. Gross profit as a percentage of net sales increased to 10.1%
in 1994 from 8.8% in 1993 primarily as a result of the improvements in national
purchasing programs, labor cost efficiencies and the increase in management fee
contracts.

General and Administrative Expenses. General and administrative expenses
increased from $2.6 million (or 4.3% of total net sales) in fiscal 1993 to $3.4
million (or 4.1% of net sales) in fiscal 1994. The dollar increase was
attributable primarily to the addition of clerical personnel needed to support
the new contracts signed and the acquisitions of Fanfare and Creative in 1993
and 1994, respectively.

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<PAGE>
Operating Income. Operating income increased 77.6%, from $2.7 million in
fiscal 1993 to $4.9 million in fiscal 1994, due primarily to the reasons
mentioned above.

Interest Expense. Interest expense increased $795,000 in fiscal 1994 from
fiscal 1993 due primarily to higher borrowing levels for acquisitions and
investments in new accounts.

QUARTERLY RESULTS OF OPERATIONS

The Company's net sales and operating results vary significantly from
quarter to quarter as a result of seasonal patterns, the unpredictability in the
number, timing and type of new contracts, the timing of contract expirations and
special one-time events at facilities served by the Company. Results of
operations for any particular quarter may not be indicative of results of
operations for future periods. There can be no assurance that future seasonal
and quarterly fluctuations will not have a material adverse effect on the
Company's business, financial condition and results of operations.

The following table sets forth unaudited selected consolidated income
statement data for the periods indicated, as well as such data expressed as a
percentage of net sales for the same periods. This information has been derived
from unaudited consolidated financial statements and, in the opinion of
management, includes all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of such information.
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------------------------------
1994 1995 1996
------------------------------------- ------------------------------------- -------
FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH FIRST
------- ------- ------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales................. $13,908 $17,854 $24,061 $26,296 $23,429 $20,090 $26,340 $25,603 $24,160
Cost of sales............. 12,486 16,507 21,686 23,154 21,295 18,422 23,002 22,857 21,630
------- ------- ------- ------- ------- ------- ------- ------- -------
Gross profit.............. 1,422 1,347 2,375 3,142 2,134 1,668 3,338 2,746 2,530
General and administrative
expenses................. 890 814 1,031 671 1,090 923 870 743 1,336
------- ------- ------- ------- ------- ------- ------- ------- -------
Income from operations.... 532 533 1,344 2,471 1,044 745 2,468 2,003 1,194
Interest expense, net..... 275 338 424 592 696 633 642 508 767
------- ------- ------- ------- ------- ------- ------- ------- -------
Income before tax
provision................ 257 195 920 1,879 348 112 1,826 1,495 427
Tax provision............. 94 70 355 866 140 38 781 626 168
------- ------- ------- ------- ------- ------- ------- ------- -------
Net income................ $ 163 $ 125 $ 565 $ 1,013 $ 208 $ 74 $ 1,045 $ 869 $ 259
------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- -------
<CAPTION>

(AS A PERCENTAGE OF NET SALES)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales............. 89.8 92.5 90.1 88.1 90.9 91.7 87.3 89.3 89.5
------- ------- ------- ------- ------- ------- ------- ------- -------
Gross profit.............. 10.2 7.5 9.9 11.9 9.1 8.3 12.7 10.7 10.5
General and administrative
expenses................. 6.4 4.5 4.3 2.5 4.6 4.6 3.3 2.9 5.5
------- ------- ------- ------- ------- ------- ------- ------- -------
Income from operations.... 3.8 3.0 5.6 9.4 4.5 3.7 9.4 7.8 5.0
Interest expense, net..... 2.0 1.9 1.8 2.2 3.0 3.2 2.5 2.0 3.2
------- ------- ------- ------- ------- ------- ------- ------- -------
Income before tax
provision................ 1.8 1.1 3.8 7.2 1.5 0.5 6.9 5.8 1.8
Tax provision............. 0.7 0.4 1.5 3.3 0.6 0.2 3.0 2.4 0.7
------- ------- ------- ------- ------- ------- ------- ------- -------
Net income................ 1.1% 0.7% 2.3% 3.9% 0.9% 0.3% 3.9% 3.4% 1.1%
------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- -------
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

The Company has funded its capital requirements from a combination of
operating cash flow and debt and equity financing. Net cash provided by
operating activities was $3.8 million, $2.6 million and $3.0 million in fiscal
1993, 1994 and 1995, respectively. The increase in net cash provided by
operating activities in fiscal 1995 was attributable primarily to the
improvement in the Company's net income. Cash flow from operating activities
improved from a use of funds of $264,000 for the three months ended March 29,
1995 to a source of funds of $1.6 million for the three months ended March 27,
1996.

25
<PAGE>
This resulted from an increase in trade payables and an improvement in operating
profits. EBITDA was $4.6 million, $7.6 million and $10.4 million in fiscal 1993,
1994 and 1995, and $2.0 and $2.2 for the three months ended March 29, 1995 and
March 27, 1996, respectively. EBITDA represents earnings before interest
expense, income tax expense and depreciation and amortization. EBITDA is not a
measurement in accordance with GAAP and should not be considered an alternative
to, or more meaningful than, income from operations, net income or cash flows as
defined by GAAP or as a measure of the Company's profitability or liquidity. The
Company has included information concerning EBITDA herein because management
believes EBITDA provides useful information regarding the cash flow of the
Company and its ability to service debt. EBITDA information should be read in
conjunction with the Consolidated Statements of Cash Flows of the Company
included in the consolidated financial statements of the Company elsewhere in
this Prospectus.

Cash flows used in investing activities was $7.7 million, $9.0 million and
$8.1 million in fiscal 1993, 1994 and 1995, respectively. In 1993, $6.7 million
was used in connection with the Fanfare acquisition and in 1995, $3.5 million
was used to acquire Northwest. In fiscal 1993, 1994 and 1995, $1.0 million, $6.3
million and $3.3 million, respectively, was used for additions to fixtures and
equipment. In 1994, the Company made advances aggregating $2.3 million to two
clients in accordance with their food service contracts.

Cash flows used in investing activities was $10,000 and $6.8 million for the
three months ended March 29, 1995 and March 27, 1996, respectively. In fiscal
1996, $3.2 million was used in connection with the Sun West acquisition and $1.1
million was used for additions to fixtures and equipment.

In April 1993, the Company entered into a subordinated loan agreement, as
amended (the "Subordinated Loan Agreement"), pursuant to which the Company sold
$8.5 million of its variable rate subordinated notes, together with warrants to
purchase a maximum of 867,230 shares of a new class of non-voting common stock.
The proceeds of the issuance of the subordinated notes were used to repay
existing indebtedness. The notes are due April 30, 2001, with mandatory
principal payments of $2.1 million due on April 30 of each year commencing in
1998 and ending in 2001. As part of a senior debt refinancing in April 1995, a
$2.0 million prepayment was made in order of maturity and, therefore, the April
30, 1998 mandatory payment has been reduced to $125,000. On April 21, 1995 in
accordance with the terms of the Subordinated Loan Agreement, the rate of
interest was reset at 12.79% from 9.875% for the remainder of the term of the
notes.

In April 1993, the Company consummated the sale of (i) 86,942 shares of
Series A Convertible Preferred Stock to an investor and (ii) 15,650 shares of
Series A Convertible Preferred Stock to one of its directors (as nominee of a
partnership of which he is general partner), all at a price of $34.50 per share.
The net consideration received by the Company with respect to these sales was
$3,493,901, of which $2,953,976 was received in cash from the investor and the
balance, $539,925, was a reduction of a note payable owed by the Company to such
partnership. Upon the closing of the Offering, these shares will be converted
automatically into an aggregate of 718,144 shares of Common Stock.

In conjunction with the refinancing of its senior bank indebtedness on April
24, 1995, the Company sold 31,579 shares of Series A Convertible Preferred Stock
to Interlaken Investment Partners, L.P. at a price of $47.50 per share, and used
the proceeds thereof to reduce the amount of the Notes outstanding under the
Subordinated Loan Agreement. Upon the closing of the Offering, these shares will
be converted automatically into an aggregate of 221,053 shares of Common Stock.

The Company's bank agreement was amended on April 24, 1995 as part of a
refinancing ("Amended Bank Agreement") and provides for (i) a term loan in the
amount of $10.5 million (the "Term Loan"), (ii) a working capital revolving
credit line (the "Working Capital Line") for general obligations of the Company
expiring on March 31, 1997, in the maximum amount of $6.0 million, (iii) a line
of credit to provide for future expansion by the Company (the "Guidance Line")
in the maximum amount of $11.5 million, and (iv) requirements that the bank
issue up to $2.0 million in letters of credit

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<PAGE>
("Letters of Credit") on the Company's behalf. The maximum borrowing under the
Amended Bank Agreement was $30.0 million as of December 27, 1995.

The Company's obligations under the Amended Bank Agreement are
collateralized both by a pledge of shares of Common Stock and Preferred Stock
owned by certain current and former officers and directors of the Company and an
affiliate, and the common stock of the Company's subsidiaries. The loan is also
collateralized by certain fixtures and equipment, notes receivable and other
assets, as well as the receipt, if any, of certain funds paid to the Company
with respect to the termination of client contracts prior to their expiration.

In March 1996, the Amended Bank Agreement was further amended to increase
maximum borrowings thereunder to $32.5 million by increasing the Working Capital
Line to $9.4 million and the Guidance Line to $13.0 million and by resetting the
Term Loan to $8.6 million and the Letter of Credit facility to $1.5 million.

In June 1996, the Amended Bank Agreement was further amended to increase
maximum borrowings thereunder to $35.0 million by increasing the Working Capital
Line to $10.9 million and the Guidance Line to $14.0 million.

As of June 1, 1996, the Company has approximately $3.5 million of unused
committed credit availability under the Amended Bank Agreement. In connection
with the Offering, the Company has entered into an amended credit facility to
increase its maximum borrowing available upon the closing of the Offering to
$75.0 million. The Company's obligations under the amended credit facility will
be collateralized by a pledge of shares of the common stock or other equity
interests of the Company's subsidiaries, as well as by certain fixtures and
equipment, notes receivable and other assets, as well as the receipt, if any, of
certain funds paid to the Company with respect to the termination of client
contracts prior to their expiration.

Fine Host is often required to provide a capital commitment in its bid to
win a new facility contract. This commitment most often takes the form of an
investment in food service equipment and leasehold facilities, which upgrades
the facility itself and can increase the returns to both Fine Host and the
facility owner by generating increased sales. Occasionally, the Company makes
loans or advances to the client, the proceeds of which are generally used to
improve an existing facility or to complete a new facility. These loans are
sometimes collateralized by other assets in the facility. When the Company makes
an investment, loan or advance to a facility under either a profit sharing or
management fee contract, the amount of the commitment, together, in certain
cases, with interest, is repaid to the Company out of the revenues generated by
the food service operation in accordance with an amortization schedule set forth
in the contract. The Company's capital expenditures and other costs associated
with obtaining and retaining contracts totaled $3.0 million, $8.8 million and
$6.8 million in fiscal 1993, 1994 and 1995, and was $434,000 and $3.5 million
for the three months ended March 29, 1995 and March 27, 1996, respectively. The
Company expects these costs to be approximately $11.5 million in fiscal 1996 and
approximately $11.0 million in fiscal 1997. The Company expects to fund these
costs for fiscal 1996 and fiscal 1997 with its operating cash flow and debt
facilities. The Company believes that the proceeds of the Offering, internally
generated funds and amounts available under anticipated lines of credit will be
sufficient to satisfy the Company's capital requirements for at least the next
12 months.

At December 27, 1995, the Company's current liabilities exceeded its current
assets, resulting in a working capital deficit of $4.5 million. The Company
believes that negative working capital is typical of operators in the food
service business. The Working Capital Line provides funds for liquidity,
seasonal borrowing needs and other general corporate purposes.

On April 17, 1996, the Company entered into a non-binding letter of intent
to purchase all of the issued and outstanding stock of a contract food service
provider operating primarily at Education facilities. The estimated purchase
price is $3.4 million, comprised of $1.6 million payable in cash, $1.4

27
<PAGE>
million payable pursuant to the terms of a promissory note, payable in quarterly
installments over four years and bearing interest at 8 1/4% per annum, and
$400,000 payable pursuant to a two-year consulting agreement.

NEW ACCOUNTING PRONOUNCEMENTS

In March 1995, the FASB issued Statement of Financial Accounting Standards
("SFAS") No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of. SFAS No. 121 establishes accounting
standards for recognizing the impairment of long-lived assets, certain
identifiable intangibles and for long-lived assets and certain identifiable
intangibles to be disposed of. SFAS No. 121 is effective for financial
statements for fiscal years beginning after December 15, 1995. The adoption of
SFAS No. 121 is not expected to materially affect the financial position or
results of operations of the Company.

In October 1995, the FASB issued SFAS No. 123, Accounting for Stock-Based
Compensation. SFAS No. 123 encourages all entities to adopt a fair value based
method of accounting for stock-based compensation plans in which compensation
cost is measured at the date the award is granted based on the value of the
award and is recognized over the employee service period. However, SFAS No. 123
allows an entity to continue to use the intrinsic value based method prescribed
by Accounting Principles Board Opinion ("APB") No. 25, with pro forma
disclosures of net income and earnings per share as if the fair value based
method has been applied. SFAS No. 123 is effective for financial statements for
fiscal years beginning after December 15, 1995. The Company currently plans to
continue to apply the method prescribed by APB No. 25.

INFLATION

The Company believes that inflation has not had a material effect on its
results of operations.

SEASONALITY

The Company's business is seasonal in nature. Many Recreation and Leisure
facilities experience slack periods in March, April and May due to fewer
sporting events in these months, and Convention Centers generally host fewer
conventions from May through September. Among other things, the Company adjusts
its labor scheduling and staffing to compensate for these fluctuations.

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BUSINESS

GENERAL

INDUSTRY OVERVIEW

The Company estimates that the United States contract food service industry
had annual revenues of approximately $96 billion in 1995, of which approximately
$60 billion was in markets in which the Company presently competes. The
remaining $36 billion consisted of sales primarily to hospitals and health care
facilities, correctional facilities, military facilities, child-care facilities
and transportation facilities such as airports, train stations and bus depots.
In the contract food service industry, the facility owner, rather than the food
service provider, is primarily responsible for attracting patrons. All of the
markets in which the Company operates are highly fragmented. The contract food
service industry has been experiencing consolidation in recent years.

BUSINESS STRATEGY

The Company's objective is to become the leading contract food service
management company serving middle-market locations. The Company's business
strategy is comprised of the following key elements:

Exclusive Focus on Contract Food Service. Unlike most of its national
competitors, the Company focuses exclusively on the contract food service
industry. Management believes that its focus has allowed it to develop superior
operating techniques, hire and retain high quality unit, regional and senior
managers and maintain a greater awareness of and responsiveness to changing
market conditions.

Middle-Market Focus. The Company focuses on obtaining new contracts
principally at facilities generating $1 million to $4 million in annual food and
beverage sales. The Company believes that these "middle-market" facilities
generally provide greater profit margins and require less capital investment
than larger facilities. On a selective basis, the Company will attempt to obtain
additional larger accounts which give the Company high visibility in the
industry and strengthen its credibility when bidding on new contracts or
pursuing acquisitions.

Superior Operating Techniques. Fine Host has developed and implemented
various operating strategies and systems including (i) labor cost management
techniques that include forecasting labor costs on an event-by-event basis and
moving full-time employees between nearby facilities in response to changes in
demand, (ii) product cost management programs to reduce costs by establishing
national agreements with food manufacturers, distributors and equipment
manufacturers, (iii) quality control programs to ensure client satisfaction,
(iv) a facility design capability that maximizes point-of-sale contacts and uses
portable sales locations to increase sales, (v) customized menu design that
entails working closely with facility management to determine food and beverage
selection and pricing that meets client needs and (vi) extensive on-site
marketing and support, including an on-site salesperson at certain locations to
oversee food and beverage functions and to help sell unutilized space. The
Company believes that its operating techniques have led to significant increases
in sales and profits at many of the facilities it serves.

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Empowered Local Management. Fine Host's decentralized management approach
assigns operating responsibility to the Company's general manager at each
facility. The Company's general managers and region managers, each of whom is
compensated in significant part through a bonus program tied closely to the
financial performance of the facilities, are given the freedom and authority to
make operational decisions. At convention centers and certain recreation and
leisure facilities, the Company typically employs an on-site salesperson who is
available to the convention or event manager to oversee the operation of food
and beverage functions and to help sell unutilized space.

Responsiveness to Clients. Consistent with the Company's client-oriented
approach, the Company is flexible in structuring the key terms of contracts in
order to satisfy client objectives. Senior management seeks to establish and
maintain close working relationships with clients, which the Company believes
enhance its ability to renew contracts. Monthly visits by region managers serve
to enhance the client relationship.

Account Diversity. The Company provides food service management at more than
190 facilities, including recreation and leisure facilities, convention centers,
educational facilities and corporate dining facilities of varying sizes. These
facilities are located domestically in 31 states and internationally in Bangkok,
Thailand. The Company believes this diversity, in terms of both type of facility
and geographic region, enhances the Company's ability to withstand localized
economic pressures and downturns associated with a particular market.

Cost Controls and Economies of Scale. The Company focuses on controlling
labor and overhead costs and capitalizing on economies of scale. As the number
of facilities served by the Company has increased, the Company has reduced labor
costs by transferring employees between nearby facilities during off-peak
periods. The Company centralizes various functions, including legal, finance,
contract administration, human resources, training, regulatory compliance,
marketing, purchasing and accounting services, in order to control overhead
costs. The Company's size has allowed it to procure national purchasing and
distribution arrangements with vendors that include national pricing available
to all Fine Host locations.

GROWTH OPPORTUNITIES

The Company believes that substantial opportunities for continued growth
exist through the addition of new contracts, the renewal of existing contracts
and acquisitions.

Obtaining New Contracts. The Company believes that the expertise and
experience of its management team enable it to identify new contract
opportunities and negotiate and implement facility contracts in a disciplined
manner. The Company believes that its ability to obtain new contracts is
enhanced by the following factors:

. Industry Growth. The Company believes that opportunities to obtain new
contracts will come from both the growing number of newly constructed and
expanded facilities, especially stadiums, arenas, amphitheaters and
convention centers, and the large number of existing facilities in each of
the Company's principal operating markets which are expected to put their
food service contracts out for bid in the near term.

. Increased Market Penetration. The Company's presence at a significant
facility within a city or region often results in additional business from
other facilities in the area because (i) other facilities may select the
Company based on the reputation the Company has gained in the area and (ii)
other accounts which were not economically viable for the Company to manage
on a stand-alone basis may now be managed by the Company's local management
team. By leveraging its established market presence, the Company is able to
bid more competitively for local business.

. Expanded Presence in Education and Corporate Dining. The Company's
recent entry through acquisition into the education and corporate dining
markets provides the Company with

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operating experience which the Company believes will facilitate further
penetration into these highly fragmented markets.

. International Expansion. In 1994, the Company established a joint
venture with a Thai facilities management company to jointly market their
services throughout Asia, and obtained the food service contract for the
Queen Sirikit National Convention Center in Bangkok, Thailand. The Company
believes that the rapid growth of the Asian economy, including the increased
construction of recreation and leisure facilities and convention centers,
provides the Company with further opportunities for expansion on an
international basis due to the lack of both food service technology and
sophistication within the Asian contract food service industry.

Renewal of Contracts. The Company believes that its strong operating
performance and focus on client satisfaction have enabled it to achieve a
favorable contract renewal rate. Fine Host's sales and marketing staff maintains
on-going relationships with facility owners and typically seeks renewal of
existing contracts months in advance of the scheduled termination date. The
Company's senior management handles principal aspects of contract negotiations,
enabling the Company to be responsive in negotiations. Fine Host has retained
the food and beverage business at each of the 24 public convention centers at
which it has been awarded a contract without the loss of any such contract, and
has renewed each of the 12 convention center contracts that have come up for
renewal. The Company believes that its ability to renew convention center
contracts is particularly significant because public authorities choosing the
food service provider put great emphasis on the level of quality and service
offered. These aspects are viewed as critical factors in the decision-making
process of convention organizers and meeting planners when making site
selections.

Acquisitions. The Company believes there are significant opportunities to
expand its business through the acquisition of companies in the contract food
service industry, particularly in the education and corporate dining markets, as
well as in markets where the Company does not primarily operate, such as
hospitals and healthcare facilities and correctional facilities. Senior
management of the Company has been primarily responsible for identifying,
pursuing and negotiating potential acquisition opportunities and integrating
acquired operations. The Company believes that it can integrate such companies
into the Company's management structure and diversified operations successfully
without a significant increase in general and administrative expense. There can
be no assurance, however, that the Company's acquisition strategy can be
implemented successfully. See "Risk Factors--Risk of Inability to Operate or
Integrate Acquired Businesses; Expenses Associated with Acquisition Strategy."

SERVICES AND OPERATIONS

The Company provides a wide array of food services, ranging from concession
food and beverages, such as hot dogs, sandwiches, soda and beer, to
sophisticated catering and fine dining in a formal setting. At its convention
center locations, the Company routinely serves banquets attended by thousands of
persons.

The Company is the exclusive provider of food and beverages at substantially
all of the facilities it serves and is responsible for hiring, training and
supervising food service personnel and ordering, receiving, preparing and
serving all items of food and beverage sold. At facilities serviced by the
Company, the client attracts patrons on an event-specific basis at recreation
and leisure facilities and convention centers and on a continuing basis at
education and corporate dining facilities. As a result, the Company does not
incur the expense of marketing to the broader public, and is able to focus on
operations, client satisfaction, account retention and new account development.

Fine Host has developed and implemented various operating strategies and
systems to quickly and efficiently provide food and beverages to a large number
of people in a short period of time and in a cost-effective manner, including:

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Labor Cost Management. The Company focuses on tight management of on-site
costs, particularly with respect to labor. The Company requires its general
managers to forecast labor requirements on an event-by-event basis and has the
ability to tailor labor costs to specific events and venues. For example,
managers reduce labor during individual events when operationally desirable,
such as after half time of a football game. In addition, as the number of
locations managed by the Company has grown, the Company has been able to achieve
labor savings by moving full-time employees between nearby facilities during
off-peak periods at one or more of the facilities.

Product Cost Management. The Company focuses on reducing total product
costs, including distribution costs and raw product costs. The Company has
implemented a program to control its distribution costs of grocery products
pursuant to national distribution contracts, while at the same time it has
negotiated agreements with the manufacturers of many of the principal products
needed at its facility locations. As the Company has grown, it has been able to
achieve economies of scale, including national pricing from manufacturers, food
distributors and food equipment manufacturers. The Company also manages its
product costs by carefully monitoring the size of food and beverage portions
against predetermined standards.

Quality Control. The Company has instituted a quality control program to
ensure client satisfaction and monitor quality levels at each of its locations.
The Company requires its region managers to visit each of the locations for
which he or she is responsible at least once monthly. The region manager is
required to submit to senior management a written summary of each visit,
including a report on the level of quality and service being maintained at each
location, as well as the client's view of Fine Host's performance. In addition,
the Company surveys meeting planners, convention organizers, fans and students
using its food and beverage services, enabling the Company to track levels of
satisfaction and to respond rapidly as problems arise.

Facility Design Capability. The Company has expertise in designing appealing
and efficient food service facilities, including food courts, kitchens and
permanent and portable concession stands. The Company believes that its design
of concession stands and use of systems and equipment such as portable
concession stands have enabled it to increase sales and improve client
satisfaction at many facilities.

Customized Menu Design. Fine Host works closely with each facility's
management to customize concession and catering menus and prices and to create
catering brochures that meet the needs of prospective users of the facility and
accommodate the tastes of the region in which the facility is located. Menus and
prices are further refined and upgraded during meetings between Fine Host
on-site management and facility patrons in accordance with the patron's
individual desires.

On-Site Marketing and Support. At convention centers and certain recreation
and leisure facilities, the Company's on-site salesperson is available to the
convention or event manager to oversee the operation of food and beverage
functions. This commissioned salesperson also assists the convention center in
selling unutilized space for events requiring food service, such as meetings,
luncheons and weddings. This cooperative effort can result in incremental income
for both Fine Host and its client.

Training and Recruiting. The Company has established a training program for
its facility general managers and their staffs to establish a consistent level
of quality at its facilities. The Company's training programs enable it to train
a large number of temporary employees in a short period of time. The Company has
developed and implemented numerous training programs, including an alcohol
awareness program which requires that all servers of alcohol products receive
special training, as well as a "train the trainer" program, which develops a
management employee at each location capable of conducting the Company's on-site
training programs.

Accounting Systems and Controls. The Company's management information system
is based on open hardware platforms that allow the Company to choose from a wide
variety of software, system utilities and development tools. The Company's time
management, inventory management (such as

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beverage yield analysis and food cost analysis) and retail point-of-sale control
systems provide data for posting directly to the Company's general ledger and to
other accounting subsystems. The automated general ledger system provides
management reports on a timely basis which compare current and prior operating
results and measure actual performance against predetermined operating budgets.
The results are reported to and reviewed by regional and corporate management.
Such reporting includes weekly and monthly forecasts of revenues and expenses
and detailed performance reports.

CLIENTS

The Company provides contract food services principally to recreation and
leisure facilities, convention centers, education facilities and corporate
dining accounts. As of June 1, 1996, the Company provided contract food service
management at 197 locations, including 74 recreation and leisure facilities, 24
convention centers, 54 education facilities and 22 corporate dining locations,
as well as 23 other types of facilities.

Recreation and Leisure Facilities. The Company offers food and beverage
concession and catering services to arenas, stadiums, amphitheaters, civic
centers and other recreational facilities. These facilities typically select a
food service provider on the basis of its ability to generate increased volume
from concession sales while maintaining high quality and attendee satisfaction.
The Company employs its facility design capability and other operating
techniques to serve its recreation and leisure venues and to increase total
sales and profitability. The Company believes that, as a result of the growing
popularity of minor league sports, significant opportunities exist at stadiums
and arenas at which minor league baseball and hockey teams play. As of June 1,
1996, the Company provided services to facilities hosting eight minor league
baseball teams and seven minor league hockey teams. The Company further believes
that more major college athletic programs will seek to outsource food and
beverage concession operations at on-campus stadiums and arenas. Recreation and
leisure facilities served by the Company presently include Joe Robbie Stadium in
Miami, Florida (home of the Miami Dolphins and Florida Marlins), Sun Devil
Stadium in Tempe, Arizona (home of the Arizona Cardinals) and the Great Woods
Center for the Performing Arts in Mansfield, Massachusetts. The Company also
provides concession services to recreation and leisure facilities at colleges
and universities including Arizona State University, Northwestern University and
the University of Minnesota.

Convention Centers. Food service offered in convention centers consists
primarily of large scale catering and banquet functions held in the facility's
ballroom and banquet halls, catering and concession services to functions held
in meeting rooms, and concession services offered to convention and trade show
attendees. The Company's convention center operations focus on providing
consistent high quality and client satisfaction in all food service areas,
particularly with respect to catering and banquet services. The Company believes
that its ability to renew convention center contracts is particularly
significant because public authorities choosing the food service provider put
great emphasis on the level of quality and service offered. These aspects are
viewed as critical factors in the decision-making process of convention
organizers and meeting planners when making site selections. The Company also
encourages convention organizers to choose other convention centers serviced by
Fine Host for subsequent events. The Company believes it is well positioned to
gain incremental sales at existing convention centers which are expanding their
banquet and ballroom capacities, and to obtain additional contracts at newly
constructed convention centers. Major convention center clients include the
Albuquerque Convention Center in Albuquerque, New Mexico; the Austin Convention
Center in Austin, Texas; the Bayside Exposition Center in Dorchester,
Massachusetts; the Orange County Convention Center in Orlando, Florida; the
Oregon Convention Center in Portland, Oregon; and the Wisconsin Center in
Milwaukee, Wisconsin.

Education. The Company provides food and beverage concession and catering
services to college, university and secondary and public school dining halls,
student cafeterias, food courts, snack bars and clubs. College student dining
habits have changed dramatically in recent years, with students tending to eat
smaller meals throughout the day and evening, often paying with debit cards in
lieu of cash or

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traditional board plans. In response to these changes, the Company now offers
increased quality and choices among food and beverage items at educational
facilities, including recognized brand name foods served in education facilities
by the Company's employees. The Company has contractual arrangements with Subway
Corporation, Pizza Hut, Inc. and Taco Bell Corp. to offer their products at
various dining locations at educational institutions. The Company presently
provides dining services to students at colleges and universities including
Morris Brown College in Atlanta, Georgia; Mt. Hood Community College in Gresham,
Oregon; Wayne State University in Detroit, Michigan; and Xavier University in
New Orleans, Louisiana.

Corporate Dining. Fine Host provides food and beverage services to corporate
dining rooms and cafeterias, office complexes and manufacturing plants.
Corporate dining facilities are increasingly offering upscale, quality food and
beverage items and are often subsidized by employers seeking to shorten employee
meal breaks and increase productivity. The Company seeks to capitalize on this
trend by providing high quality food and beverage service at its corporate
client dining locations. The Company serves a diversified mix of large corporate
clients, focusing on more upscale office dining. Clients include facilities of
Chrysler Corporation, General Motors Corporation, Ore-Ida Foods, Inc. and
Whirlpool Corporation.

The following table represents the Company's clients by market and location,
indicating in parentheses those clients for whom Fine Host serves multiple
facilities:

RECREATION AND LEISURE

Allen County War Memorial Complex
(Fort Wayne, IN)(3)

Arizona State University Athletic Facilities
(Tempe, AZ)(6)

Battle Creek Complex (Battle Creek, MI)(3)

Bell County Expo Center (Belton, TX)

Boy Scouts of America (Cimmeron, NM )

B.S.A. Camp Lawton (Mt. Lemmon, AZ)

Camp Elliott Barker (Eagle Nest, NM)

Camp Of The Tall Pines (Cloudcroft, NM)

Camp Shaver (Jemez Springs, NM)

Charleston Civic Center Complex
(Charleston, WV)(3)

Cimmarroncita Ranch Camp for Girls (Ute Park, NM)

City of Palms Park (Fort Myers, FL)

Concord Pavilion (Concord, CA)

Coral Sky Amphitheater (West Palm Beach, FL)

Dutchess County Stadium
(Wappingers Falls, NY)

Ft. Worth/Tarrant County Convention Center
(Fort Worth, TX)

Great Woods Center for the Performing Arts
(Mansfield, MA)

Joe Robbie Stadium (Miami, FL)

King Richard's Faire (Carver, MA)

Lackawanna Coal Mine Tour (Scranton, PA)

Lackawanna County Stadium (Scranton, PA)

Les Bois Racetrack (Boise, ID)

Louisiana Purchase Gardens and Zoo (Monroe, LA)

Lucas County Recreational Center Facilities
(Maumee, OH)(4)

Montage Mountain (Moosic, PA)

Montlure Camping Council (Greer, AZ)

Northwestern University Athletic Facilities
(Evanston, IL)(3)

Onondaga County--War Memorial, Mulroy Civic Center

(Syracuse, NY)(2)

Oregon Coast Aquarium (Newport, OR)

Orpheum Theater (Boston, MA)

Palace Theater (Louisville, KY)

Palmer Auditorium (Austin, TX)(2)

Plainfield Greyhound Park (Plainfield, CT)

Port of Seattle (Seattle, WA)

Portland Center for the Performing Arts (Portland, OR)

Portland Civic Stadium & Expo Center
(Portland, OR)(2)

Pyramid Arena (Memphis, TN)

Rancho Del Chaparral Girl Scout Camp (Cuba, NM)

Rice University Athletic Facilities
(Houston, TX)(2)

Sioux City Convention Center Complex
(Sioux City, IA)(3)

South Commons Complex (Columbus, GA)(3)

Springfield Civic Center & Symphony Hall
(Springfield, MA)(2)

Tulsa Convention Center Complex
(Tulsa, OK)

Twin City Queen (Monroe, LA)

University of Minnesota Athletic Facilities
(Minneapolis, MN) (3)

Western Idaho Fairgrounds
(includes Expo Building) (Boise, ID)(2)

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CONVENTION CENTERS

Albuquerque Convention Center
(Albuquerque, NM)

Allen County War Memorial Coliseum
(Fort Wayne, IN)

Arlington Convention Center (Arlington, TX)

Austin Convention Center (Austin, TX)

Bayside Exposition Center (Dorchester, MA)

Charleston Civic Center (Charleston, WV)

Columbus Georgia Convention and Trade Center
(Columbus, GA)

Dayton Convention Center (Dayton, OH)

Des Moines Convention Center (Des Moines, IA)

El Paso Convention Center & Performing Arts Center
(El Paso, TX)

Ft. Worth/Tarrant County Convention Center
(Fort Worth, TX)

Lansing Center (Lansing, MI)

Lawrence Convention Center (Pittsburgh, PA)

M.C. Benton Jr. Convention & Civic Center
(Winston-Salem, NC)

Monroe Civic Center (Monroe, LA)

Onondaga County--ON Center (Syracuse, NY)

Orange County Convention/Civic Center (Orlando, FL)

Oregon Convention Center (Portland, OR)

Queen Sirikit National Convention Center
(Bangkok, Thailand)

Sioux City Convention Center (Sioux City, IA)

Tulsa Convention Center (Tulsa, OK)

Virginia Beach Pavilion (Virginia Beach, VA)

Wisconsin Center (Milwaukee, WI)

World Trade Center Boston (Boston, MA)

EDUCATION

COLLEGES

Albertson College (Caldwell, ID)

Brevard Community College (Melbourne, FL)(2)

College of the Siskiyous (Weed, CA)

College of Southern Idaho (Twin Falls, ID)

DeKalb College (Clarkston, GA)

Evergreen State College (Olympia, WA)

Huston-Tillotson College (Austin, TX)

Lassen College (Susanville, CA)

Northwest College (Powell, WY)

Morris Brown College (Atlanta, GA)

Mt. Hood Community College (Gresham, OR)

Navajo Community College (Shiprock, NM)

Navajo Community College (Tsaile, AZ)

Philander Smith College (Little Rock, AR)

Pierce College (Tacoma, WA)

St. Edward's University (Austin, TX)

San Juan College (Farmington, NM)

Siena Heights College (Adrian, MI)

Southwestern Indian Polytechnic Institute
(Albuquerque, NM)

Tacoma Community College (Tacoma, WA)

Treasure Valley Community College (Ontario, OR)

Wayne State University (Detroit, MI)

Wenatchee Valley College (Wenatchee, WA)

Westminster College (Salt Lake City, UT)

Xavier University (New Orleans, LA)

PUBLIC AND PRIVATE SCHOOLS

Archuleta School District #50
(Pagosa Springs, CO)

Boysville of Michigan (Clinton, MI)

Blue Ridge School District (Lakeside, AZ)

Buckeye Union High School (Buckeye, AZ)

Casa Grande Union High School
(Casa Grande, AZ)

Cedar Unified School District
(Keams Canyon, AZ)

Eunice Public School (Eunice, NM)

Ganado Public School (Ganado, AZ)

Hayden-Winkelman Schools (Winkelman, AZ)

Ignacio Public Schools (Ignacio, CO)

Kayenta Unified School District (Kayenta, AZ)

Marana Public Schools (Marana, AZ)

McNary Schools (McNary, AZ)

Miami School District (Miami, AZ)

Navajo Preparatory School (Farmington, NM)

Pinon Unified School District (Pinon, AZ)

Pojoaque Valley Schools (Santa Fe, NM)

Red Mesa School District (Teec Nos Pos, AZ)

St. Francis High School (Toledo, OH)

St. John's High School (Toledo, OH)

St. Michael's Catholic School (St. Michaels, AZ)

St. Michael's High School (Santa Fe, NM)

San Carlos Unified School District
(San Carlos, AZ)

Sanders Unified School District (Sanders, AZ)

Sherman Indian High School (Riverside, CA)

Snowflake School District (Snowflake, AZ)

Wellton Public School (Wellton, AZ)

Window Rock Unified School Dstrict
(Fort Defiance, AZ)

CORPORATE DINING

Allied Signal, Inc.(Perrysburg, OH)

Blue Cross of Washington (Mountlake Terrace, WA)

Carl D. Perkins Rehabilitation Center (Thelma, KY)

Chrysler Corporation Toledo Plant
(Perrysburg, OH)

Dana Corp. (Toledo, OH)

Dana Tech Center (Ottawa Lake, MI)

Data I/O Corporation (Redmond, WA)

Ford Motor Company, Inc. (Maumee, OH)

Frank Russell Co. (Tacoma, WA)

General Motors Corporation (Defiance, OH)

Greenwich Office Park (Greenwich, CT)

Holnam, Inc. (Dundee, MI)

J.R. Simplot Company, Inc. (Caldwell, ID)

King County Medical Examiners Office (Seattle, WA)

KIRO, Inc. (Seattle, WA)

Lane, Powell, Spears, Lubersky (Seattle, WA)

Libbey-Owens-Ford Co., Inc. (Toledo, OH)(2)

Ore-Ida Foods, Inc. (Boise, ID)

Pierce County Medical Center (Tacoma, WA)

Trinova Corporation (Maumee, OH)

Univar Corporation (Kirkland, WA)

Whirlpool Corporation (Clyde, OH)

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OTHER

Apache County Jail (St. Johns, AZ)

Chaves County Detention Center (Roswell, NM)

Colfax County Jail (Raton, NM)

Curry County Jail (Clovis, NM)

Devereux-Santa Barbara (Goleta, CA)

Devereux-Scottsdale (Scottsdale, AZ)

Dona Ana County Jail (Las Cruces, NM)

Gila County Jail (Globe, AZ)

Golden Plains Community Hospital (Borger, TX)

Graham County Jail (Safford, AZ)

Gray County Jail (Pampa, TX)

Holy Cross Hospital (Taos, NM)

LaPaz County Jail (Parker, AZ)

Navajo County Jail (Holbrook, AZ)

New Mexico Youth Diagnostic and Development Center
(Albuquerque, NM)

Otero County Detention Center (Alamogordo, NM)

Pinal County Jail (Florence, AZ)

Quay County Detention Center (Tucumcari, NM)

Sandoval County Detention (Bernalillo, NM)

Santa Cruz County Jail (Nogales, AZ)

Sequoyah Treatment Center (Albuquerque, NM)

Springer Boys' School (Springer, NM)

Winslow City Jail (Winslow, AZ)

CONTRACTS

The Company generally enters into one of three types of contracts: profit
and loss contracts, profit sharing contracts and management fee contracts.

Profit and Loss Contracts ("P&Ls"). Under P&Ls, the Company receives all the
revenues and bears all the expenses of the operation. These expenses include
rent paid to the client, typically calculated as a fixed percentage of various
categories of sales. While Fine Host often benefits from greater upside
potential with a P&L contract, it is responsible for all costs of running the
food service operation and consequently bears greater risk than with a
management fee or profit sharing contract. As of June 1, 1996, the Company had
93 P&L contracts.

Profit Sharing Contracts. Under profit sharing contracts, the Company
receives a percentage of profits earned at the facility plus a fixed fee or
percentage of sales as an administrative fee. Under this type of contract, Fine
Host does not bear responsibility for losses incurred, if any. As of June 1,
1996, the Company had 13 profit sharing contracts.

Management Fee Contracts. Revenues derived under management fee contracts
are based upon a fixed fee. Fine Host is reimbursed for all its on-site expenses
incurred in providing food and beverage services under management fee contracts.
A number of the Company's management fee contracts provide for an additional
incentive fee based on a percentage of sales over a base threshold level. The
benefit of this type of contract is that risks associated with food and beverage
operations at the facility are generally not borne by Fine Host. As of June 1,
1996, the Company had 55 management fee contracts.

Fine Host often provides a capital commitment in its bid to win a new
facility contract. This commitment most frequently takes the form of an
investment in food service equipment and leasehold facilities, which upgrade the
facility itself and can increase the returns to both Fine Host and the facility
owner by generating increased sales. Occasionally, the Company makes loans or
advances to the client, the proceeds of which are generally used to improve an
existing facility or to complete a new facility. These loans are sometimes
collateralized by other assets in the facility. When the Company makes an
investment, loan or advance to a facility under either a management fee or
profit sharing contract, the amount of the commitment, together, in certain
cases, with interest, is repaid to the Company out of the revenues generated by
the food service operation in accordance with an amortization schedule set forth
in the contract. P&L contracts do not require the repayment of invested capital
to the Company during the contract term. All of the Company's contracts require
the client to reimburse the Company for any unamortized invested capital in the
event of the expiration or termination of the contract for any reason, and Fine
Host keeps title to the subject assets until such payment is made. Invested
capital is usually amortized over a period of time equal to or greater than the
term of the contract. The Company believes that its willingness to make
selective investments can provide it with a competitive advantage in bidding for
new contracts. There can be no assurance, however, that any such investments
will enhance returns and not result in losses for the Company. See "Risk
Factors--Dependence on Clients; Investment in Client Contracts and Advances to
Clients."

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On May 31, 1996, one of the Company's customers filed for protection from
its creditors under Chapter 11 of the United States Bankruptcy Code. The client
had previously executed mortgages on its facility in favor of the Company to
secure its obligation to repay the unamortized amount of the Company's
investment in the facility, which was approximately $1.0 million as of May 31,
1996. The Company does not believe that the impact, if any, of the customer's
bankruptcy filing is likely to be material to the Company's consolidated
financial position or results of operations, although there can be no assurance
that such filing will not have a material adverse effect.

The length of contracts varies depending on the type of facility, type of
contract and financial investment. Contracts for recreation and leisure
facilities typically include the largest capital investment by the Company and
generally have a term of three to ten years. Contracts for convention centers
generally have a term of three to five years. Education contracts generally have
a term of one to five years. Corporate dining accounts, which generally require
the smallest capital investment by the Company, typically have a shorter term
than those in the recreation and leisure, convention center and education areas,
and generally contain a provision allowing either party to terminate for
convenience after a short notice period, typically ranging from 30 to 90 days.
Corporate dining contracts representing approximately 3.6% of the Company's
fiscal 1995 historical net sales are terminable after a short notice period.
Excluding such contracts terminable on short notice, contracts representing
approximately 6.3% and 7.2% of the Company's fiscal 1995 historical net sales
are scheduled to expire in fiscal 1996 and fiscal 1997, respectively.

Certain municipalities and governmental authorities require that a certain
percentage of food service contract bids be from minority-owned and/or
women-owned businesses ("MBEs" and "WBEs," respectively). The Company has
entered into joint ventures with four MBEs/WBEs to operate facilities in
Orlando, Florida; Portland, Oregon; Fort Worth, Texas; and Milwaukee, Wisconsin.
It is likely that the Company will be required to partner with additional
MBEs/WBEs in the future as a precondition to winning certain municipal and
governmental authority facility food service contracts.

SALES AND MARKETING

The Company selectively bids for both privately owned facility contracts and
contracts awarded by governmental and quasi-governmental agencies. The privately
negotiated transactions are usually competitive in nature, with a privately
owned facility owner or operator soliciting proposals from Fine Host and several
of its competitors. These bids often require a Fine Host team to formulate a
rapid response and make a proposal encompassing, among other things, a capital
investment and other financial terms. In certain cases, a private facility owner
may choose to negotiate with the Company exclusively for a period of time. The
Company believes that its flexibility with clients has helped it in these
instances. See "--Business Strategy." Governmental contracts are usually awarded
pursuant to a request-for-proposal process. Bidding in publicly controlled
venues often requires more than a year of effort by a Fine Host team, focusing
on building meaningful relationships in the local community in which the venue
is located and raising the profile of the Fine Host name with the decision
makers within that community. During this bidding period, the Company expends
substantial time, effort and funds preparing a contract proposal and negotiating
the contract. See "Risk Factors--Adverse Effects of an Inability to Retain
Existing Contracts and Obtain New Contracts." The Company's sales and marketing
team consists of three senior sales executives and four sales and marketing
professionals. The entire team is involved at various stages in formulating
sales proposals and operating plans and negotiating new contracts.

Members of the Company's sales and marketing team maintain a high degree of
visibility in various industry trade associations. Virtually all of the
Company's clients and potential clients in facilities operated by governmental
and quasi-governmental authorities are members of these trade groups. The
Company regularly exhibits at industry trade shows held for and by groups
comprised of recreation and leisure facility owners, convention center managers
and representatives of colleges and

37
<PAGE>
universities. Fine Host also advertises on a regular basis in magazines and
periodicals that focus on the public facilities industry.

COMPETITION

The Company encounters significant competition in each area of contract food
service market in which it operates. Food service companies compete for clients
on the basis of quality and service standards, innovative approaches to food
service facilities design, maximization of sales and price (including the making
of loans, advances and investments in client facilities and equipment).
Competition may result in price reductions, decreased gross margins and loss of
market share. Certain of the Company's competitors compete with the Company on
both a national and international basis and have significantly greater financial
and other resources than the Company. In addition, existing or potential clients
may elect to "self operate" their food service, eliminating the opportunity for
the Company to compete for the account. There can be no assurance that the
Company will be able to compete successfully in the future or that competition
will not have a material adverse effect on the Company's business, financial
condition or results of operations.

EMPLOYEES

As of June 1, 1996, the Company had 398 full-time salaried employees,
including 241 in operations, 134 in administration and 23 in sales. During May
1996, approximately 7,000 employees were part-time or hired on an event-by-event
basis. The number of part-time employees can vary significantly from time to
time. The Company believes that its future success will depend in large part
upon the continued service of its senior management personnel and upon the
Company's continuing ability to attract and retain highly qualified managerial
personnel. Competition for highly qualified personnel is intense and there can
be no assurance that the Company will be able to retain its key managerial
personnel or that it will be able to attract and retain additional managerial
personnel in the future. Approximately 10% of the Company's total employees
(including full and part-time) are covered by collective bargaining agreements.
The Company has not experienced any work stoppage and considers its relations
with its employees to be satisfactory. The Company has hired and expects to
continue to need to hire a large number of qualified, temporary workers at
particular events. See "Risk Factors--Adverse Effects of an Inability to Manage
Growth" and "--Constraints and Expenses Associated with an Unavailability of
Labor."

GOVERNMENT REGULATION

The Company's business is subject to various governmental regulations
incidental to its operations, such as environmental, employment and health and
safety regulations. Since it serves alcoholic beverages at many convention
centers and recreation and leisure facilities, the Company also holds liquor
licenses incidental to its contract food service business and is subject to the
liquor license requirements of the states in which it holds a liquor license. As
of June 1, 1996, the Company and its affiliates held liquor licenses in 21
states. While the application procedures and requirements for a liquor license
vary by state, the Company has received an alcoholic beverage license with
respect to each of the approximately 30 applications it has submitted, and has
never had an alcoholic beverage license revoked or suspended.

Typically, liquor licenses must be renewed annually and may be revoked or
suspended for cause at any time. Alcoholic beverage control regulations relate
to numerous aspects of the Company's operations, including minimum age of
patrons and employees, hours of operation, advertising, wholesale purchasing,
inventory control and handling, and storage and dispensing of alcoholic
beverages. The Company has not encountered any material problems relating to
alcoholic beverage licenses to date. The failure to receive or retain a liquor
license in a particular location could adversely affect the Company's ability to
obtain such a license elsewhere.

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<PAGE>
The Company is subject to "dram-shop" statutes in the states in which
facilities are located. These statutes generally provide a person injured by an
intoxicated person the right to recover damages from an establishment which
wrongfully served alcoholic beverages to the intoxicated individual. The Company
carries liquor liability coverage as part of its existing comprehensive general
liability insurance which it believes is adequate. While the Company maintains
such insurance, there can be no assurance that such insurance will be adequate
to cover any potential liability or that such insurance will continue to be
available on commercially acceptable terms. See "Risk Factors--Government
Regulation."

The cost of the Company's compliance with governmental regulations has not
been material. However, there can be no assurance that additional federal or
state legislation, or changes in regulatory implementation, would not limit the
activities of the Company in the future or significantly increase the cost of
regulatory compliance. See "Risk Factors--Government Regulation."

PROPERTIES

The Company leases its corporate headquarters in Greenwich, Connecticut
pursuant to a lease expiring in June 2004. The Company also maintains accounting
processing centers in Toledo, Ohio, Boise, Idaho and Tempe, Arizona. The Company
leases the space for each of these facilities. The Company believes that the
properties which are currently under lease are adequate to serve the Company's
business operations for the foreseeable future. The Company believes that if it
were unable to renew the lease on any of these facilities, other suitable
facilities would be available to meet the Company's needs.

LITIGATION

In January 1996, the Company was served with a complaint naming it as one of
five defendants in a lawsuit brought by multiple plaintiffs in the New York
Supreme Court alleging damages arising out of the Woodstock II Festival held in
August 1994 in Saugerties, New York. The promoter of the festival is also a
defendant. The plaintiffs were hired by the Company (which had a concession
agreement with the promoters of the festival) as subcontractors of food,
beverage and/or merchandise. In their complaint, which seeks approximately $5.9
million, the plaintiffs allege damages arising primarily from the failure to
provide adequate security and prevent festival attendees from bringing food and
beverages in to the festival. The Company has made claim for indemnification
under applicable provisions of the concession agreement, which has been rejected
by the promoter. On April 4, 1996, the other defendants named in the suit
answered the complaint and asserted cross-claims for contribution and
indemnification against the Company.

The Company has also sued a former client in the Jefferson Circuit Court of
the Commonwealth of Kentucky for certain amounts owed by the former client under
the food service contract between the parties, and the former client has filed a
counterclaim against the Company seeking unspecified damages for the Company's
alleged tortious interference with a prospective contractual relationship with
another food service provider.

The Company is involved in certain other legal proceedings incidental to the
normal conduct of its business. The Company does not believe that any
liabilities relating to any of the legal proceedings to which it is a party are
likely to be, individually or in the aggregate, material to its consolidated
financial position or results of operations.

39
<PAGE>
MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers and directors of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Richard E. Kerley(1)....................... 54 President, Chief Executive Officer and
Director
Randy B. Spector........................... 44 Executive Vice President--Administration
Randall K. Ziegler......................... 54 Executive Vice President--International
Division and Director
Nelson A. Barber........................... 40 Senior Vice President and Chief Financial
Officer
Robert Barney.............................. 56 Senior Vice President--Education and
Corporate Dining
Ronald C. Holliday......................... 50 Senior Vice President--Sales
William R. Berkley(1)(2)................... 50 Chairman of the Board of Directors
Ronald E. Blaylock(3)...................... 36 Director Nominee
Andrew M. Bursky(2)........................ 39 Director
Catherine B. James......................... 43 Director
Jack H. Nusbaum(3)......................... 55 Director Nominee
Joshua A. Polan(1)(2)...................... 48 Director
</TABLE>

- ------------
(1) Member of Executive Committee.

(2) Member of Compensation Committee.

(3) To be appointed director upon the closing of the Offering.

RICHARD E. KERLEY has been the President and Chief Executive Officer of Fine
Host since 1991. He previously served as Chief Financial Officer of the Company
from 1990 to 1991. He has been a director of the Company since 1994. Mr. Kerley
has 21 years of experience in the food services industry. Prior to joining the
Company in 1990, Mr. Kerley held a series of senior management positions at
Ogden Corporation, a contract food service provider, including head of business
development, logistic support and accounting.

RANDY B. SPECTOR has been Executive Vice President--Administration of the
Company since 1993. From 1990 to 1993, Mr. Spector was Senior Vice
President--Law and Corporate Affairs of the Company. From 1987 to 1990, Mr.
Spector served as Vice President and General Counsel of the Company. Before
joining Fine Host in 1987, Mr. Spector spent five years as Vice President and
General Counsel of Dellwood Foods, Inc., a processor and distributor of milk and
dairy products in the New York City metropolitan area.

RANDALL K. ZIEGLER has been Executive Vice President--International Division
of the Company since 1995. He previously served as President of the Company's
Food Services Division from 1990 to 1995. From 1985 to 1990, Mr. Ziegler served
as Vice President--Sales of the Company. Mr. Ziegler has been a director of the
Company since 1994. Prior to joining the Company in 1985, he held a number of
senior management positions at Service America Corporation, a contract food
service provider, including head of new business development.

NELSON A. BARBER has been Senior Vice President and Chief Financial Officer
of the Company since 1995. He previously served as Treasurer of the Company from
1993 to 1995. From 1989 to 1993, Mr. Barber was Chief Financial Officer and
Treasurer of GEV Corporation (now known as Pioneer Companies, Inc.) and from
1987 to 1989 he was Director of Corporate and International Accounting at
Combustion Engineering Inc., a diversified industrial services company.

40
<PAGE>
ROBERT BARNEY has been Senior Vice President--Education and Corporate Dining
of the Company since 1995. Prior to joining Fine Host in 1995, Mr. Barney
founded Northwest Food Services, Inc. in 1976, and served as its President and
Chief Executive Officer until its sale to Fine Host in 1995.

RONALD C. HOLLIDAY has been Senior Vice President--Sales since 1993. From
1991 to 1993, Mr. Holliday worked for ARA Leisure Services Corporation, a
contract food service provider as Vice President of Sales. Mr. Holliday has held
several senior management positions at Spectacor Management Group, a facilities
management company, and Ogden Leisure Services Corporation, a contract food
service provider. In each case, he was responsible for new business development.
Mr. Holliday is a former professional football player who played for the San
Diego Chargers, Buffalo Bills and Kansas City Chiefs.

WILLIAM R. BERKLEY has been Chairman of the Board of the Company since 1994
and a director of the Company since 1985. He also serves as Chairman of the
Board of several companies which he controls or founded. These include W.R.
Berkley Corporation, a property and casualty insurance holding company,
Interlaken Capital, Inc. ("Interlaken Capital"), a private investment and
consulting firm, and Pioneer Companies, Inc. ("PCI"), a publicly traded company
engaged in the manufacture and marketing of chlorine and caustic soda and
related products. Mr. Berkley is also a director of Strategic Distribution, Inc.
("Strategic Distribution"), a publicly traded industrial service and
distribution business. Mr. Berkley is Vice-Chairman of the Board of Trustees of
the University of Connecticut, a director of Georgetown University, a trustee of
New York University and a member of the Board of Overseers of the New York
University Stern School of Business.

RONALD E. BLAYLOCK will become a director of the Company upon the closing of
the Offering. Mr. Blaylock has been President and Chief Executive Officer of
Blaylock & Partners, L.P., an investment banking firm, since he founded the firm
in September 1993. Prior to September 1993, Mr. Blaylock was a founding partner
and Executive Vice President of Utendahl Capital Partners, a minority-owned
broker dealer, where he specialized in taxable fixed-income securities, from
1991 to 1993. Prior to such time, Mr. Blaylock was a First Vice President at
PaineWebber Incorporated from 1988 to 1991 and a Vice President at Citibank
Capital Markets from 1982 to 1988. Mr. Blaylock is a director of Georgetown
University, where he was a member of an NCAA Final Four basketball team, and
also serves as a director of Harbourton Mortgage Corp. and Covenant House.

ANDREW M. BURSKY has been a director of the Company since 1986. He
previously served as Secretary and Treasurer of the Company from 1985 to 1990.
Mr. Bursky has been a Managing Director of Interlaken Capital since May 1980.
Mr. Bursky is a director of PCI and has been Chairman of the Board of Strategic
Distribution since July 1988.

CATHERINE B. JAMES has been a director of the Company since 1994. She has
served as Chief Financial Officer of Strategic Distribution since February 1996,
as Executive Vice President of Strategic Distribution since January 1989 and as
Secretary and Treasurer of Strategic Distribution since December 1989. She has
served as a member of the Board of Directors of Strategic Distribution since
1990. She was Chief Financial Officer of Strategic Distribution from January
1989 until September 1993. Ms. James has been a Managing Director of Interlaken
Capital since January 1990. From 1982 through 1988, she was employed by Morgan
Stanley & Co. Incorporated, serving as a Managing Director in the corporate
finance area during the last two years of her tenure.

JACK H. NUSBAUM will become a director of the Company upon the closing of
the Offering. Mr. Nusbaum is the Chairman of the New York law firm of Willkie
Farr & Gallagher, where he has been a partner for more than the past twenty-five
years. He is also a director of PCI, W.R. Berkley Corporation, Prime Hospitality
Corp. and The Topps Company, Inc. Mr. Nusbaum is also a trustee of Prep for
Prep, the Joseph Collins Foundation and the Robert Steel Foundation.

JOSHUA A. POLAN has been a director of the Company since 1994. Mr. Polan has
served as an executive officer of Interlaken Capital since June 1988, currently
serving as a Managing Director. He

41
<PAGE>
has served as a member of the Board of Directors of Strategic Distribution since
1988. For more than five years prior to June 1988, Mr. Polan was a partner in
the accounting firm of Touche Ross & Co.

Mr. Bursky, Ms. James and Mr. Polan are executive officers of Idle Wild
Farm, Inc., a privately owned company that was formerly engaged in the
manufacture of frozen foods which, in October 1993, filed a chapter 11 petition
for reorganization under federal bankruptcy laws. Mr. Bursky is an executive
officer of Blue Lustre Products, Inc., a privately owned company which is
engaged in the sale and leasing of carpet cleaning equipment and other carpet
cleaning products which, in October 1995, filed a chapter 11 petition for
reorganization under federal bankruptcy laws.

Effective upon the closing of the Offering, the Board of Directors will be
divided into three classes. One class of directors will be elected each year at
the annual meeting of stockholders for terms of office expiring after three
years. Messrs. Nusbaum and Polan will serve in the class whose terms expire in
1997; Mr. Blaylock, Mr. Bursky and Ms. James will serve in the class whose terms
expire in 1998; and Messrs. Kerley, Ziegler and Berkley will serve in the class
whose terms expire in 1999. Each director serves until the expiration of his
term and thereafter until his successor is duly elected and qualified. The
classified Board of Directors could have the effect of making it more difficult
for a third party to acquire, or of discouraging a third party from acquiring or
making a proposal to acquire, a majority of the outstanding stock of the
Company. Executive officers of the Company are elected annually by the Board of
Directors and serve at their discretion or until their successors are duly
elected and qualified. There are no family relationships among any of the
executive officers and directors of the Company.

The Board of Directors has established a Compensation Committee (the
"Compensation Committee"), which provides recommendations concerning salaries
and incentive compensation for employees of, and consultants to, the Company and
administers the 1994 Stock Option Plan and the 401(k) Plan. The Board of
Directors will also establish an Audit Committee, which will review the results
and scope of the annual audit of the Company's financial statements conducted by
the Company's independent accountants, the scope of other services provided by
the Company's independent accountants, proposed changes in the Company's
financial and accounting standards and principles, and the Company's policies
and procedures with respect to its internal accounting, auditing and financial
controls and will make recommendations to the Board of Directors on the
engagement of the independent accountants, as well as other matters which may
come before the Audit Committee or at the direction of the Board of Directors.
The independent directors are expected to comprise a majority of the members of
the Audit Committee.

DIRECTORS' ANNUAL COMPENSATION

During the fiscal year ended December 27, 1995, members of the Board of
Directors received no directors' fees. The Company is obligated to reimburse its
Board members for all reasonable expenses incurred in connection with their
attendance at directors' meetings. No director made any claim for reimbursement
in fiscal 1995. Following the Offering, members of the Board of Directors who
are not officers or employees of the Company will receive $2,500 per meeting and
participate in the 1996 Non-Employee Director Stock Plan. See "--Compensation
Pursuant to Plans."

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee is currently composed of Messrs. Berkley, Bursky
and Polan. Mr. Berkley is Chairman of the Board of the Company. Mr. Bursky
served as an executive officer of the Company from 1985 to 1990. Following the
Offering, Messrs. Berkley, Bursky and Polan will receive compensation for their
service as directors as set forth under "--Directors' Annual Compensation." Mr.
Berkley, Chairman of the Board of the Company, is also Chairman of the Board and
a member of the Compensation Committee of PCI and a director of Strategic
Distribution. Mr. Bursky, an executive officer of Strategic Distribution, serves
on the Compensation Committee of the Company. See "Certain

42
<PAGE>
Transactions" for a description of certain transactions between the Company and
certain other entities, of which Messrs. Berkley, Bursky and Polan are officers,
directors or partners.

EXECUTIVE COMPENSATION

The following table sets forth information regarding the compensation of the
Company's Chief Executive Officer and the four other most highly compensated
executive officers (the "Executive Officer Group") for the fiscal year ended
December 27, 1995.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
(1)
-------------------- ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION (2)
- -------------------------------------------------------- -------- -------- ----------------
<S> <C> <C> <C>
Richard E. Kerley....................................... $185,000 $125,000 $1,440
President and CEO
Randall K. Ziegler...................................... 180,000 52,500 1,440
Executive Vice President
Randy B. Spector........................................ 155,000 62,500 510
Executive Vice President
Douglas M. Stabler...................................... 155,000 50,000 870
Executive Vice President
Ronald C. Holliday...................................... 80,000 126,115 383
Senior Vice President
</TABLE>

- ------------

(1) Other annual compensation in the form of perquisites and other personal
benefits has been omitted because the aggregate amount of such perquisites
and other personal benefits was less than $50,000 and constituted less than
10% of the executive's total annual salary and bonus.

(2) Represents premiums of excess group life insurance provided by the Company.

AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES

The following table sets forth information concerning the number and value
of unexercised stock options held at year end by each member of the Executive
Officer Group. No stock options were granted to or exercised by members of the
Executive Officer Group during the fiscal year ended December 27, 1995.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT FISCAL YEAR END FISCAL YEAR END (1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Richard E. Kerley........... 7,583 15,167 $42,248 $84,002
Randall K. Ziegler.......... 2,916 5,834 16,246 32,504
Randy B. Spector............ 5,250 10,500 29,250 58,500
Douglas M. Stabler.......... 5,250 10,500 29,250 58,500
Ronald C. Holliday.......... 2,916 5,834 16,246 32,504
</TABLE>

- ------------

(1) There was no public trading market for the Common Stock on December 27,
1995. Accordingly, solely for purposes of this table, these values have been
calculated on the basis of the initial public offering price of $12.00, less
the aggregate exercise price of the options.

Upon the closing of the Offering, the Company intends to grant stock options
to officers and certain employees of the Company pursuant to the 1994 Stock
Option Plan, including stock options covering 54,000 shares for Mr. Kerley,
15,000 shares for Mr. Ziegler, 22,000 shares for Mr. Spector and 14,500 shares
for Mr. Holliday. These options will have an exercise price equal to the initial
public offering price per share set forth on the cover of this Prospectus. See
"--Compensation Pursuant to Plans."

43
<PAGE>
COMPENSATION PURSUANT TO PLANS

1994 Stock Option Plan: The Company's Amended and Restated 1994 Stock Option
Plan (the "1994 Stock Plan") is open to participation by directors, officers and
key employees of the Company and its subsidiaries, except members of the
Compensation Committee. The number of shares of Common Stock reserved for
issuance under the 1994 Stock Plan is 569,000 shares. Either incentive stock
options or options that do not qualify as incentive stock options may be granted
under the 1994 Stock Plan. The 1994 Stock Plan expires in November 2004.

The 1994 Stock Plan is administered by the Compensation Committee, which
determines, in its discretion, those persons to be granted options and the
number of options to be received, the times when recipients of options
("Optionees") may exercise the options, the expiration dates of the options and
whether the options will be incentive stock options. The Compensation Committee
may determine the option price of the stock options; provided that (i) the
option price of an incentive stock option may not be less than the fair market
value of the Common Stock on the date of grant and (ii) the option price of an
option which is not an incentive stock option shall not be less than 85% of the
fair market value. Unless an option agreement provides otherwise, in the event
of a Change in Control (as defined in the 1994 Stock Plan) the outstanding
options shall immediately become exercisable. As of June 1, 1996, options to
purchase an aggregate of 115,500 shares of Common Stock have been granted under
the 1994 Stock Plan.

Upon the closing of the Offering, the Company intends to grant stock options
representing an aggregate of 276,750 shares of Common Stock to officers and key
employees of the Company at an exercise price equal to the initial public
offering price per share set forth on the cover of this Prospectus.

1996 Non-Employee Director Stock Plan: The 1996 Non-Employee Director Stock
Plan (the "Directors Plan") authorizes the grant of an aggregate of 50,000
shares of Common Stock. Common Stock is granted pursuant to the Directors Plan
only to members of the Board of Directors who are not officers or employees of
the Company ("Non-Employee Directors"). The Directors Plan is administered by
the Compensation Committee. As of the closing of the Offering, six members of
the Board of Directors will be eligible for participation in the Directors Plan,
including Mr. Berkley.

Upon consummation of the Offering, each Non-Employee Director will be
automatically granted a number of shares of Common Stock equal to $15,000
divided by the initial public offering price per share in the Offering (1,250
shares). Thereafter, for the remainder of the term of the Directors Plan and
provided he or she remains a director of the Company, on the date of each of the
Company's annual meeting of Stockholders, each Non-Employee Director will be
automatically granted, without further action by the Board of Directors, a
number of shares of Common Stock equal to $15,000 divided by the Fair Market
Value (as defined in the Director's Plan) of one share of Common Stock on the
date of grant.

Common Stock granted under the Directors Plan will be restricted and
nontransferable for the period of one year from the date of grant. In the event
that a Non-Employee Director ceases to be a member of the Board of Directors,
other than because of his or her death or Disability (as defined in the
Directors Plan), all shares of Common Stock granted to him or her pursuant to
the Directors Plan whose restrictions have not lapsed shall be forfeited back to
the Company. Upon a Non-Employee Director's death or Disability all restrictions
on shares of Common Stock granted to him pursuant to the Directors Plan shall
lapse and all such shares shall become freely transferable. In the event of a
Change in Control (as defined in the Directors Plan), all restrictions with
respect to shares of Common Stock previously granted pursuant to the Directors
Plan will immediately lapse and all such shares will become immediately
transferable.

44
<PAGE>
CERTAIN TRANSACTIONS

ADVISORY AGREEMENT WITH INTERLAKEN CAPITAL

The Company has paid Interlaken Capital, Inc. ("Interlaken Capital"), a
private investment and consulting firm affiliated with Interlaken Investment
Partners, L.P. ("Interlaken Partners"), a stockholder of the Company, an
advisory fee of $150,000 during each of the last three fiscal years, for certain
administrative services provided by Interlaken Capital to the Company. The
Company will pay Interlaken Capital this annual advisory fee after the Offering
pursuant to an advisory services agreement terminable by either party with
respect to the next succeeding calendar year upon two months' notice. Mr.
Berkley, a director of the Company, is the sole owner and President of
Interlaken Capital, and each of Mr. Bursky, Ms. James and Mr. Polan, each a
director of the Company, is a managing director of Interlaken Capital. Messrs.
Berkley and Bursky are also directors of Interlaken Capital. Each of Mr.
Berkley, Mr. Bursky, Ms. James and Mr. Polan, directors of the Company, are
limited partners of Interlaken Management Partners, L.P., the general partner of
Interlaken Partners.

EMPLOYEE NOTES AND REGISTRATION

In 1987 and 1991, Messrs. Kerley, Spector and Ziegler, executive officers of
the Company, purchased Common Stock from the Company in exchange for promissory
notes payable to the Company in the original principal amounts of $86,545,
$77,412 and $34,618 and having outstanding principal amounts of $81,995, $74,208
and $32,796 as of June 1, 1996, respectively. These notes bear interest at the
rate of 10% per annum and mature on June 30, 1996. In addition, in 1985, Messrs.
Stabler and Ziegler purchased Common Stock with funds borrowed from Interlaken
Capital Partners Limited Partnership ("ICPLP"), of which Messrs. Berkley and
Bursky are general partners, evidenced by notes each in the original principal
amount and having an outstanding principal amount as of June 1, 1996 of $16,779.
Upon the closing of the Offering, pursuant to the terms of the employee notes to
the Company and ICPLP, interest on the notes (aggregating $38,947 for Mr.
Kerley, $35,248 for Mr. Spector, $23,548 for Mr. Ziegler and $7,970 for Mr.
Stabler) will be forgiven and interest will thereafter cease to accrue. In
addition, the employee notes will be amended to extend their maturity for three
years. The Company has agreed to file a shelf registration statement after the
one-year anniversary of the closing of the Offering relating to an aggregate of
238,000 shares of Common Stock held by Messrs. Kerley, Spector, Stabler and
Ziegler, which would entitle them to sell such shares within the volume
limitations of Rule 144 under the Securities Act. See "Description of Capital
Stock-- Registration Rights." The Company believes these arrangements assist it
in retaining qualified management personnel.

BANK OF AMERICA AND ING ARRANGEMENTS

In April 1993, the Company entered into a subordinated loan agreement with
Continental Bank, N.A. (now known as Bank of America Illinois ("BAI")) pursuant
to which the Company sold $8.5 million of its variable rate subordinated notes
and issued warrants to acquire 733,467 shares of non-voting common stock at an
exercise price of $4.93 per share and warrants to acquire 133,763 shares of
non-voting common stock at an exercise price of $.01 per share. The notes are
due April 30, 2001 with mandatory principal payments of $2,125,000 due on April
30 of each year commencing in 1998 and ending in 2001. In connection with the
amendment to the Company's credit agreement in April 1995, a $2.0 million
prepayment of principal was made, reducing the 1998 mandatory prepayment to
$125,000. On April 21, 1995, the rate of interest was reset at 12.79% for the
remainder of the term of the notes. BAI agreed in April 1995 to reduce the
number of shares of Common Stock represented by certain of the warrants. In
addition, the terms of certain of the warrants provided for a reduction in the
number of shares issuable upon exercise thereof in the event the Company
satisfied certain financial conditions. As of March 29, 1996, an aggregate of
593,453 of the warrants remain outstanding.

45
<PAGE>
On March 22, 1996, in connection with the transfer by BAI of the $6.5
million variable rate subordinated notes to ING Capital Corp. ("ING"), BAI
transferred to ING one-half of its warrants to acquire shares of non-voting
common stock at an exercise price of $4.93 per share and one-half of its
warrants to acquire shares of non-voting common stock at an exercise price of
$.01 per share. All warrants held by BAI and ING will be repurchased by the
Company upon the closing of the Offering. See "Use of Proceeds" and "Description
of Capital Stock--Warrants."

FANFARE FINANCING

In connection with the financing of the acquisition of Fanfare in 1993, the
Company issued to The Berkley Family Limited Partnership (the "Partnership")
15,650 shares of Series A Convertible Preferred Stock, a warrant to acquire
21,294 shares of Common Stock at an exercise price of $4.93 per share and a
warrant to acquire 81,613 shares of Common Stock at an exercise price of $0.01
per share. In addition, the Company issued to GRD Corporation ("GRD") 86,942
shares of Series A Convertible Preferred Stock, a warrant to acquire 118,307
shares of Common Stock at an exercise price of $4.93 per share and a warrant to
acquire 453,432 shares of Common Stock at an exercise price of $0.01 per share
(collectively, the "Fanfare Financing"). Upon the closing of the Offering, the
shares of Series A Convertible Preferred Stock held by the Partnership and GRD
will be converted into 109,550 and 608,594 shares of Common Stock, respectively.
The consideration for the issuance and sale of such securities to the
Partnership consisted of the reduction of $539,925 in principal amount of a
promissory note made by the Company and payable to the Partnership, and the
consideration for the issuance and sale of such securities to GRD was
$2,999,499. In connection with the Fanfare Financing, the Company granted the
Partnership and GRD certain registration rights relating to the shares of Common
Stock owned by them. See "Description of Capital Stock--Registration Rights."

The terms of the warrants acquired by the Partnership and GRD provided for a
reduction in the number of shares issuable upon exercise thereof in the event
the Company satisfied certain financial conditions. As of March 29, 1996, the
Partnership's warrant to acquire 21,294 shares of Common Stock had been reduced
to 18,851 shares, the Partnership's warrant to acquire 81,613 shares of Common
Stock had been reduced to 20,398 shares, GRD's warrant to acquire 118,307 shares
of Common Stock had been reduced to 104,734 shares and GRD's warrant to acquire
453,432 shares of Common Stock had been reduced to 113,358 shares. See
"Description of Capital Stock--Warrants."

INTERLAKEN PARTNERS INVESTMENT

In April 1995, Interlaken Partners purchased 31,579 shares of Series A
Convertible Preferred Stock from the Company for a price of $47.50 per share.
Upon the closing of the Offering, the shares of Series A Convertible Preferred
Stock held by Interlaken Partners will be converted into 221,053 shares of
Common Stock. In connection with the April 1995 financing, the Company granted
Interlaken Partners certain registration rights relating to the shares acquired
by it. See "Description of Capital Stock--Registration Rights."

SHAREHOLDERS AGREEMENT

Ms. James and Messrs. Berkley, Bursky, Kerley, Polan, Spector and Ziegler,
Joseph A. Scarmuzzi and certain other stockholders of the Company are parties to
a Shareholders Agreement, dated as of November 14, 1985, as amended, with the
Company providing for, among other things, restrictions on transfer of shares of
Common Stock, repurchase rights and preemptive rights. The Shareholders
Agreement will be terminated upon the closing of the Offering.

46
<PAGE>
OTHER

The Company has retained the law firm of Willkie Farr & Gallagher as its
counsel with respect to certain matters, including the Offering, and anticipates
it will continue to do so in the future. Mr. Nusbaum, who will become a director
of the Company upon the closing of the Offering, is the Chairman of Willkie Farr
& Gallagher. See "Legal Matters."

Fine Host is a participating employer in the Interlaken Capital Retirement
401(k) Savings Plan.

The Company believes that all transactions between the Company and its
officers, directors and principal stockholders or affiliates thereof, in light
of the circumstances of the transactions, have been and will in the future be on
terms no less favorable to the Company than could be obtained from unaffiliated
third parties. Such transactions will in the future be subject to the approval
of a majority of the disinterested directors of the Company.

47
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information with regard to the
beneficial ownership of the Common Stock as of June 1, 1996 and as adjusted to
reflect the sale of the shares of Common Stock offered hereby, by (i) each
person known by the Company to own beneficially more than 5% of the outstanding
shares of Common Stock, (ii) each director of the Company and each member of the
Executive Officer Group, (iii) all directors and officers of the Company as a
group and (iv) each Selling Stockholder. Except as otherwise noted, the named
beneficial owner has sole voting and investment power.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO THE OFFERING (1) AFTER THE OFFERING (1)
NAME AND ADDRESS ------------------------------- SHARES -----------------------------
OF BENEFICIAL OWNER SHARES PERCENTAGE OFFERED SHARES PERCENTAGE
- ------------------------------- ----------- ---------- ------- --------- ----------
<S> <C> <C> <C> <C> <C>
William R. Berkley............. 1,525,454 (2) 50.3% 349,454(3) 1,177,250(4) 19.5%
165 Mason Street
Greenwich, CT 06830

GRD Corporation ............... 713,328 (5) 22.9 713,328(6) -- --
c/o General Re Corporation
695 East Main Street
Stamford, CT 06901

Bank of America Illinois....... 296,726.5(7) 9.0 -- -- --
231 South LaSalle Street
Chicago, IL 60697

ING Capital Corporation........ 296,726.5(8) 9.0 -- -- --
c/o Internationale Nederlanden
(U.S.) Capital Corporation
135 East 57th Street
New York, NY 10022

Interlaken Investment Partners,
L.P. ......................... 221,053 7.3 221,053 -- --
165 Mason Street
Greenwich, CT 06830

Joseph A. Scarmuzzi............ 179,200 5.9 -- 179,200 3.0
1500 Fern Court #307
Vero Beach, FL 32963
The Berkley Family Limited

Partnership.................... 128,401 (9) 4.2 128,401(10) -- *
Edgar W. Blanch, Jr............ 21,000 * 21,000 -- --
The McLeland Living Trust...... 21,000 * 21,000 -- --
John L. Read................... 28,000 * 14,000 14,000 *
Klara Silverstein.............. 21,000 * 21,000 -- --
Richard E. Kerley.............. 77,583 (11) 2.6 -- 77,583 1.3
Randall K. Ziegler............. 72,916 (12) 2.4 -- 72,916 1.2
Randy B. Spector............... 61,250 (13) 2.0 -- 61,250 1.0
Douglas M. Stabler............. 47,250 (14) 1.6 -- 47,250 *
Ronald C. Holliday............. 2,916 (15) * -- 2,916 *
Ronald E. Blaylock............. -- -- -- 1,250(16) *
Andrew M. Bursky............... 70,000 2.3 -- 71,250(4) 1.2
Catherine B. James............. 42,000 1.4 -- 43,250(4) *
Jack H. Nusbaum................ -- -- -- 1,250(16) *
Joshua A. Polan................ 42,000 1.4 -- 43,250(4) *
All directors and executive
officers as a group (12
persons)...................... 1,899,368 (2)(17) 61.7% 349,454 1,557,414(18) 25.6%
</TABLE>

- ------------
* Less than 1%.

48
<PAGE>
(1) Under the rules of the Securities and Exchange Commission, shares are
deemed to be "beneficially owned" by a person if such person directly or
indirectly has or shares (i) the power to vote or dispose of such shares,
whether or not such person has any pecuniary interest in such shares, or
(ii) the right to acquire the power to vote or dispose of such shares
within 60 days, including any right to acquire through the exercise of any
option, warrant or right.

(2) Includes 221,053 shares of Common Stock beneficially owned by Interlaken
Investment Partners, L.P. and 128,401 shares of Common Stock beneficially
owned by The Berkley Family Limited Partnership. Mr. Berkley is the sole
owner of a company that indirectly controls Interlaken Investment Partners,
L.P. and is a general partner of The Berkley Family Limited Partnership; as
such, he may be deemed to be the beneficial owner of shares of Common Stock
beneficially owned by such entities.

(3) Represents 221,053 shares of Common Stock to be sold by Interlaken
Investment Partners, L.P., and 128,401 shares of Common Stock to be sold by
The Berkley Family Limited Partnership.

(4) Includes 1,250 shares of Common Stock to be issued upon the closing of the
Offering pursuant to the Directors Plan.

(5) Includes 104,734 shares of Common Stock to be issued upon exercise of
warrants at the closing of the Offering. GRD Corporation is a wholly owned
subsidiary of General Re Corporation.

(6) Includes 104,734 shares of Common Stock to be issued upon exercise of
warrants at the closing of the Offering.

(7) Consists of 296,727 shares of Common Stock issuable upon exercise of
warrants, such warrants to be repurchased by the Company upon the closing
of the Offering for a purchase price derived from the initial public
offering price per share in the Offering. See "Use of Proceeds."

(8) Consists of 296,727 shares of Common Stock issuable upon exercise of
warrants, such warrants to be repurchased by the Company upon the closing
of the Offering for a purchase price of $700,000. ING Capital Corporation
is an indirect wholly owned subsidiary of ING Bank N.V. See "Use of
Proceeds."

(9) Includes 18,851 shares of Common Stock issuable upon exercise of warrants.

(10) Includes 18,851 shares of Common Stock to be issued upon exercise of
warrants at the closing of the Offering.

(11) Includes 7,583 shares of Common Stock issuable upon exercise of stock
options.

(12) Includes 2,916 shares of Common Stock issuable upon exercise of stock
options.

(13) Includes 5,250 shares of Common Stock issuable upon exercise of stock
options.

(14) Includes 5,250 shares of Common Stock issuable upon exercise of stock
options.

(15) Consists of 2,916 shares of Common Stock issuable upon exercise of stock
options.

(16) Consists of 1,250 shares of Common Stock to be issued upon the closing of
the Offering pursuant to the Directors Plan.

(17) Includes 62,728 shares of Common Stock issuable upon exercise of stock
options or warrants beneficially owned by directors and executive officers
of the Company.

(18) Includes 7,500 shares of Common Stock to be issued upon the closing of the
Offering pursuant to the Directors Plan.

49
<PAGE>
DESCRIPTION OF CAPITAL STOCK

GENERAL

The authorized capital stock of the Company currently consists of 25,000,000
shares of Common Stock, par value $.01 per share, 250,000 shares of Non-Voting
Common Stock, par value $.01 per share, 250,000 shares of Series A Convertible
Preferred Stock, par value $.01 per share and 1,000,000 additional shares of
Preferred Stock, par value $.01 per share. As of June 1, 1996, there were
2,074,100 shares of Common Stock outstanding held of record by 27 persons and
134,171 shares of Series A Convertible Preferred Stock outstanding held of
record by three persons. Each share of Series A Convertible Preferred Stock will
be converted automatically upon the closing of the Offering into seven shares of
Common Stock. No shares of Non-Voting Common Stock have been issued.

Effective upon the closing of the Offering and after giving effect to the
amendment to the Company's Restated Certificate of Incorporation (the "Restated
Certificate"), the authorized capital stock of the Company will consist of
25,000,000 shares of Common Stock and 1,000,000 shares of Preferred Stock, par
value $.01 per share. Upon the closing of the Offering, there will be 6,034,600
shares of Common Stock and no shares of Preferred Stock outstanding.

COMMON STOCK

Holders of Common Stock are entitled to one vote per share in all matters to
be voted on by the stockholders of the Company and do not have cumulative voting
rights. Subject to preferences that may be applicable to any Preferred Stock
outstanding at the time, holders of Common Stock are entitled to receive ratably
such dividends, if any, as may be declared from time to time by the Board of
Directors out of funds legally available therefor. See "Dividend Policy." In the
event of a liquidation, dissolution or winding up of the Company, holders of
Common Stock are entitled to share ratably in all assets remaining after payment
of the Company's liabilities and the liquidation preference, if any, of any
outstanding Preferred Stock. All of the outstanding shares of Common Stock are,
and the shares offered by the Company in the Offering will be, when issued and
paid for, fully paid and non-assessable. Holders of Common Stock have no
preemptive, subscription, redemption or conversion rights. The rights,
preferences and privileges of holders of Common Stock are subject to, and may be
adversely affected by, the rights of the holders of shares of any series of
Preferred Stock which the Company may designate and issue in the future.

PREFERRED STOCK

Effective upon the closing of the Offering and after giving effect to the
amendment to the Restated Certificate, the Board of Directors will have the
authority, without any further vote or action by the stockholders, to provide
for the issuance of up to 1,000,000 shares of Preferred Stock from time to time
in one or more series with such designations, rights, preferences and
limitations as the Board of Directors may determine, including the consideration
received therefor. The Board also will have the authority to determine the
number of shares comprising each series, dividend rates, redemption provisions,
liquidation preferences, sinking fund provisions, conversion rights and voting
rights without approval by the holders of Common Stock. Although it is not
possible to state the effect that any issuance of Preferred Stock might have on
the rights of holders of Common Stock, the issuance of Preferred Stock may have
one or more of the following effects: (i) to restrict Common Stock dividends if
Preferred Stock dividends have not been paid, (ii) to dilute the voting power
and equity interest of holders of Common Stock to the extent that any series of
Preferred Stock has voting rights or is convertible into Common Stock or (iii)
to prevent current holders of Common Stock from participating in the Company's
assets upon liquidation until any liquidation preferences granted to holders of
Preferred Stock are satisfied. In addition, the issuance of Preferred Stock may,
under certain circumstances, have the effect of discouraging a change in control
of the Company by, for example, granting

50
<PAGE>
voting rights to holders of Preferred Stock that require approval by the
separate vote of the holders of Preferred Stock for any amendment to the
Restated Certificate or any reorganization, consolidation, merger or other
similar transaction involving the Company. As a result, the issuance of such
Preferred Stock may discourage bids for the Common Stock at a premium over the
market price therefor, and could have a materially adverse effect on the market
value of the Common Stock. See "Risk Factors-- Anti-Takeover Effect of Certain
Charter and By-Law Provisions."

WARRANTS

The Company currently has warrants outstanding to acquire an aggregate of
850,794 shares of Common Stock, 683,592 of which are exercisable at a price of
$4.93 per share (the "$4.93 Warrants") and 167,202 of which are exercisable at a
price of $.01 per share (the "$.01 Warrants" and, together with the $4.93
Warrants, the "Warrants"). The holders of the Warrants are entitled to receive
an adjustment in the number of shares as to which the Warrant relates and the
exercise price upon the occurrence of certain events, including the issuance by
the Company of equity securities at a price below the then existing exercise
price or the "appraised value" of such securities (as defined in the Warrants).

Upon the closing of the Offering, holders of Warrants to acquire an
aggregate of 296,726.5 shares of Common Stock (280,003.5 at $4.93 per share and
16,723 at $.01 per share) are obligated to sell these Warrants to the Company at
a price equal to the difference between the initial public offering price as set
forth on the cover of this Prospectus and the exercise price of the respective
Warrant, multiplied by the number of shares of Common Stock purchasable under
the respective Warrant (approximately $2.2 million). In addition, the Company
will have the right, upon the closing of the Offering, to repurchase Warrants to
acquire an aggregate of 296,726.5 additional shares of Common Stock (280,003.5
at $4.93 per share and 16,723 at $.01 per share) on or before June 30, 1996 for
an aggregate repurchase price of $700,000. The Company will repurchase these
Warrants upon the closing of the Offering. See "Use of Proceeds." Holders of
$4.93 Warrants to acquire an aggregate of 123,585 shares of Common Stock have
agreed to exercise their Warrants immediately prior to the Offering and to sell
such shares in the Offering.

Accordingly, following the closing of the Offering, the Company will have
outstanding Warrants to purchase an aggregate of 133,756 shares of Common Stock
at a purchase price of $.01 per share. In the event the Company's consolidated
net income before income taxes (subject to certain adjustments set forth in the
$.01 Warrants) is equal to or greater than $5.9 million for the fiscal year
ending December 25, 1996, the $.01 Warrants will be canceled and of no further
force or effect. The $.01 Warrants may not be exercised before April 15, 1997.

REGISTRATION RIGHTS

In connection with the issuance and sale of the Warrants and the Series A
Convertible Preferred Stock, the Company entered into two registration rights
agreements (the "Registration Rights Agreements") with Continental Bank N.A.
(whose shares were subsequently acquired by BAI), GRD and William R. Berkley,
and Interlaken Partners (collectively, the "Holders"). Following the Offering,
the Holders will be entitled, with respect to 1,309,756 shares, to demand up to
three registrations, the expenses of which will be borne by the Company. In
addition, the Holders have incidental or "piggyback" registration rights with
respect to certain registrations of equity securities by the Company. The
registration rights are not available if the shares of Common Stock then held by
the Holder can be sold in any 90-day period pursuant to Rule 144 under the
Securities Act (without giving effect to the provisions of Rule 144(k)).

As part of one of the Registration Rights Agreements, each of Continental
Bank N.A. and GRD also agreed to provide the Company and certain stockholders
with a right of first offer in the event such Holder decides to sell any Warrant
or shares of Common Stock issuable upon exercise of the Warrants.

51
<PAGE>
The Company has agreed to file a shelf registration statement after the
one-year anniversary of the closing of the Offering relating to an aggregate of
238,000 shares of Common Stock, held by certain employees of the Company, which
would entitle them to sell such shares within the volume limitations of Rule 144
under the Securities Act.

LIMITATIONS ON DIRECTORS' LIABILITY

The Restated Certificate and By-laws, which will go into effect upon the
closing of the Offering, limit the liability of directors to the maximum extent
permitted by Delaware law. Delaware law provides that directors of a corporation
will not be personally liable for monetary damages for breach of their fiduciary
duties as directors, including gross negligence, except liability for (i) breach
of the directors' duty of loyalty, (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of the law, (iii)
the unlawful payment of a dividend or unlawful stock purchase or redemption and
(iv) any transaction from which the director derives an improper personal
benefit. Delaware law does not permit a corporation to eliminate a director's
duty of care, and this provision of the Company's Restated Certificate has no
effect on the availability of equitable remedies, such as injunction or
rescission, based upon a director's breach of the duty of care.

These provisions will not limit liability under state or federal securities
laws. The Company believes that these provisions will assist the Company in
attracting and retaining qualified individuals to serve as directors.

CLASSIFIED BOARD OF DIRECTORS; PREFERRED STOCK

Effective upon the closing of the Offering, the Company will amend its
Restated Certificate of Incorporation to create a classified Board of Directors
and to authorize the issuance of Preferred Stock without stockholder approval
and upon such terms as the Board of Directors may determine. These amendments
could have the effect of making it more difficult for a third party to acquire,
or of discouraging a third party from acquiring or making a proposal to acquire,
a majority of the outstanding stock of the Company. The rights of the holders of
Common Stock will be subject to, and may be adversely affected by, the rights of
holders of Preferred Stock that may be issued in the future. The Company has no
present plans to issue any shares of Preferred Stock. See "Description of
Capital Stock--Preferred Stock" and "Risk Factors--Anti-Takeover Effect of
Certain Charter and By-Law Provisions."

SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW

The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law ("Section 203"). Under Section 203, certain "business
combinations" between a Delaware corporation whose stock generally is publicly
traded or held of record by more than 2,000 stockholders and an "interested
stockholder" are prohibited for a three-year period following the date that such
a stockholder became an interested stockholder, unless (i) the corporation has
elected in its original certificate of incorporation not to be governed by
Section 203 (the Company did not make such an election), (ii) the business
combination was approved by the Board of Directors of the corporation before the
other party to the business combination became an interested stockholder, (iii)
upon consummation of the transaction that made it an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the commencement of the transaction (excluding voting stock owned
by directors who are also officers or held in employee benefit plans in which
the employees do not have a confidential right to tender or vote stock held by
the plan) or (iv) the business combination was approved by the Board of
Directors of the corporation and ratified by two-thirds of the voting stock
which the interested stockholder did not own. The three-year prohibition also
does not apply to certain business combinations proposed by an interested
stockholder following the announcement or notification of certain extraordinary
transactions involving the corporation and a person who had not been an

52
<PAGE>
interested stockholder during the previous three years or who became an
interested stockholder with the approval of the majority of the corporation's
directors. The term "business combination" is defined generally to include
mergers or consolidations between a Delaware corporation and an "interested
stockholder," transactions with an "interested stockholder" involving the assets
or stock of the corporation or its majority-owned subsidiaries and transactions
which increase an interested stockholder's percentage ownership of stock. The
term "interested stockholder" is defined generally as a stockholder who,
together with affiliates and associates, owns (or, within three years prior, did
own) 15% or more of a Delaware corporation's voting stock. Section 203 could
prohibit or delay a merger, takeover or other change in control of the Company
and therefore could discourage attempts to acquire the Company.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar of the Common Stock is Continental Stock
Transfer and Trust Company.

INCLUSION IN THE NASDAQ NATIONAL MARKET

The Common Stock has been approved for quotation on the Nasdaq National
Market under the symbol "FINE."

53
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

Upon the closing of the Offering, the Company will have outstanding
6,034,600 shares of Common Stock, assuming no exercise of the Underwriters'
over-allotment option. Of such outstanding shares, the 4,030,000 shares sold in
the Offering will be freely tradeable in the United States without restriction
under the Securities Act, except that shares purchased by an "affiliate" of the
Company, within the meaning of the rules and regulations adopted under the
Securities Act, may be subject to resale restrictions. The remaining outstanding
shares are "restricted securities," as that term is defined under such rules and
regulations, and may not be sold unless they are registered under the Securities
Act or they are sold in accordance with Rule 144 under the Securities Act or
some other exemption from such registration requirement. As those restrictions
under the Securities Act lapse, such shares may be sold to the public pursuant
to Rule 144.

Approximately 403,200 of the outstanding shares of Common Stock are
restricted securities (of which 305,200 shares are subject to the lock-up
agreements described below) which will be eligible for sale in the public market
as of the date of this Prospectus in reliance on Rule 144(k) under the
Securities Act. Beginning 90 days after the date of this Prospectus, an
additional 1,330,000 of these shares (all of which are subject to lock-up
agreements) will become eligible for sale subject to the provisions of Rule 144.
The Company and certain of its executive officers, directors and stockholders
have agreed that, for a period of 180 days after the date of this Prospectus
(the "lock-up period"), they will not dispose of any shares of Common Stock or
securities convertible or exchangeable into or exercisable for any shares of
Common Stock without the prior written consent of Montgomery Securities. See
"Underwriting." Upon the expiration of the lock-up period (or earlier with the
consent of Montgomery Securities), 1,635,200 restricted shares will become
eligible for sale subject to the provisions of Rules 144 and 144(k).

In general, under Rule 144, beginning 90 days after the date of this
Prospectus, subject to certain conditions with respect to the manner of sale,
the availability of current public information concerning the Company and other
matters, each of the existing stockholders who has beneficially owned shares of
Common Stock for at least two years will be entitled to sell within any three
month period that number of such shares which does not exceed the greater of 1%
of the total number of then outstanding shares of Common Stock (approximately
60,346 shares immediately after the Offering) or the average weekly trading
volume of shares of Common Stock during the four calendar weeks preceding the
date on which notice of the proposed sale is sent to the Securities and Exchange
Commission (the "Commission"). Moreover, each of the existing stockholders who
is not deemed to be an affiliate of the Company at the time of the proposed sale
and who has beneficially owned his or her shares of Common Stock for at least
three years will be entitled to sell such shares under Rule 144(k) without
regard to such volume limitations.

The Commission has proposed certain amendments to Rule 144 that would reduce
by one year the holding periods required for shares subject to Rule 144 to
become eligible for resale in the public market. This proposal, if adopted,
would increase the number of shares of Common Stock eligible for immediate
resale following expiration of the lock-up agreements described above. No
assurance can be given concerning whether or when the proposal will be adopted
by the Commission.

The Company intends to file as soon as practicable after the closing of the
Offering a registration statement on Form S-8 under the Securities Act to
register approximately 569,000 and 50,000 shares of Common Stock reserved for
issuance under the 1994 Stock Plan and the Directors Plan, respectively,
including, in some cases, shares for which an exemption under Rule 144 would
also be available, thus permitting the resale of shares issued under the 1994
Stock Plan and the Directors Plan by non-affiliates in the public market without
restriction under the Securities Act. Such registration statement is expected to
become effective immediately upon filing, whereupon shares registered thereunder
will become eligible for sale in the public market, subject to vesting and, in
certain cases, subject to the lock-

54
<PAGE>
up agreements described above. At the date of this Prospectus, options to
purchase an aggregate of 115,500 shares of Common Stock are outstanding under
the 1994 Stock Plan. Upon the closing of the Offering, options to purchase an
additional 276,750 shares of Common Stock will be granted to employees of the
Company and 7,500 shares of Common Stock will be granted to certain directors of
the Company. See "Management--Compensation Pursuant to Plans."

The holders of approximately 1,176,000 shares and warrants to purchase
133,756 shares are entitled to certain registration rights with respect to their
shares. The Company has agreed to file a shelf registration statement after the
one-year anniversary of the closing of the Offering relating to an aggregate of
238,000 shares of Common Stock. See "Description of Capital Stock--Registration
Rights."

Prior to the Offering, there has been no public market for the Common Stock.
No assurance can be given that such a market will develop or, if it develops,
will be sustained after the Offering or that the purchasers of the shares of
Common Stock will be able to resell such shares of Common Stock at a price
higher than the initial public offering or otherwise. If such a market develops,
no prediction can be made as to the effect, if any, that future sales of shares
of Common Stock, or the availability of shares of Common Stock for future sale,
to the public will have on the market price of the Common Stock prevailing from
time to time. Sales of substantial amounts of presently outstanding or
subsequently issued stock, or the perception that such sales could occur, could
adversely affect prevailing market prices for the Common Stock and could impair
the Company's ability to raise capital in the future through an offering of its
additional shares of Common Stock that may be offered for sale or sold to the
public in the future.

<PAGE>
UNDERWRITING

The Underwriters named below, represented by Montgomery Securities and
Oppenheimer & Co., Inc. (the "Representatives") have severally agreed, subject
to the terms and conditions set forth in the underwriting agreement (the
"Underwriting Agreement"), to purchase from the Company and the Selling
Stockholders the number of shares of Common Stock indicated below opposite their
respective names at the initial public offering price less the underwriting
discount set forth on the cover page of this Prospectus. The Underwriting
Agreement provides that the obligations of the Underwriters are subject to
certain conditions precedent and that the Underwriters are committed to purchase
all of such shares if they purchase any.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
- ------------ ---------
<S> <C>
Montgomery Securities........................................... 1,190,000
Oppenheimer & Co., Inc.......................................... 1,190,000
Alex. Brown & Sons Incorporated................................. 150,000
Dean Witter Reynolds Inc. ...................................... 150,000
Morgan Keegan & Company, Inc. .................................. 150,000
Robertson, Stephens & Company LLC .............................. 150,000
Schroder Wertheim & Co. Incorporated............................ 150,000
Smith Barney Inc. .............................................. 150,000
Arnhold and S. Bleichroeder Inc. ............................... 100,000
J.C. Bradford & Co. ............................................ 100,000
Equitable Securities Corporation................................ 100,000
Piper Jaffray Inc. ............................................. 100,000
Raymond James & Associates, Inc. ............................... 100,000
Wessels, Arnold & Henderson, L.L.C. ............................ 100,000
George K. Baum & Company........................................ 50,000
Hanifen, Imhoff Inc. ........................................... 50,000
Johnson Rice & Company.......................................... 50,000
---------
Total....................................................... 4,030,000
---------
---------
</TABLE>

The Representatives have advised the Company and the Selling Stockholders
that the Underwriters propose initially to offer the Common Stock to the public
on the terms set forth on the cover page of this Prospectus. The Underwriters
may allow to selected dealers a concession of not more than $0.49 per share; and
the Underwriters may allow, and such dealers may reallow, a concession of not
more than $0.10 per share to certain other dealers. After the initial public
offering, the offering price and other selling terms may be changed by the
Representatives. The Common Stock is offered subject to receipt and acceptance
by the Underwriters, and to certain other conditions, including the right to
reject orders in whole or in part.

The Company has granted an option to the Underwriters, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to a maximum
of 604,500 additional shares of Common Stock to cover over-allotments, if any,
at the same price per share as the initial shares to be purchased by the
Underwriters. To the extent that the Underwriters exercise this option, the
Underwriters will be committed, subject to certain conditions, to purchase such
additional shares in approximately the same proportion as set forth in the above
table. The Underwriters may purchase such shares only to cover over-allotments
made in connection with the Offering.

The Underwriting Agreement provides that the Company and the Selling
Stockholders will indemnify the Underwriters against certain liabilities,
including civil liabilities under the Securities Act, or will contribute to
payments the Underwriters may be required to make in respect thereof.

Stockholders of the Company who will hold an aggregate of at least 1,906,600
shares of Common Stock following the completion of this Offering (plus 90,543
shares of Common Stock issuable upon the exercise of stock options that will
have vested within 180 days from the date of this Prospectus),

56
<PAGE>
including all of the directors and executive officers of the Company, have
agreed that they will not, without the prior written consent of Montgomery
Securities, directly or indirectly, offer, sell, contract to sell, make any
short sale, pledge, establish an open "put equivalent position" within the
meaning of Rule 16a-1(h) under the Exchange Act, or otherwise dispose of any
shares of Common Stock, options to acquire new shares of Common Stock or any
securities convertible or exchangeable for shares of Common Stock, or publicly
announce the intention to do any of the foregoing, for a period of 180 days
after the date of this Prospectus. In addition, the Company has agreed in the
Underwriting Agreement that, without the prior written consent of Montgomery
Securities, it will not issue, offer, sell, or grant shares of Common Stock or
options to purchase such shares (other than options or shares granted or issued
pursuant to the Company's 1994 Stock Plan and the Directors Plan) or otherwise
dispose of the Company's equity securities, or any other securities convertible
into or exchangeable for the Company's Common Stock or other equity securities
for a period of 180 days after the date of this Prospectus.

The Representatives have informed the Company that the Underwriters do not
expect to make sales of Common Stock offered by this Prospectus to accounts over
which they exercise discretionary authority in excess of 5% of the Offering.

Prior to the Offering, there has been no public market for the Common Stock.
Consequently, the initial public offering price was determined by negotiations
among the Company, the Selling Stockholders and the Representatives. Among the
factors considered in such negotiations were the history of, and the prospects
for, the Company and the industry in which it competes, an assessment of the
Company's management, the Company's past and present operations, its past and
present earnings and the trend of such earnings, the prospects for future
earnings of the Company, the present state of the Company's development, the
general condition of the securities markets at the time of the Offering and the
market prices of publicly traded common stocks of comparable companies in such
periods.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by Willkie Farr & Gallagher, New York, New York. Jack H. Nusbaum, who
upon the closing of the Offering will become a director of the Company and will
beneficially own 1,250 shares of Common Stock, is the Chairman of Willkie Farr &
Gallagher. Certain legal matters relating to the Offering will be passed upon
for the Underwriters by Hale and Dorr, Boston, Massachusetts.

EXPERTS

The financial statements as of December 28, 1994 and December 27, 1995 and
for each of the three years in the period ended December 27, 1995 of Fine Host
included in this Prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report appearing herein, and have been
so included in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.

The financial statements as of December 31, 1994 and 1995 and for each of
the three years in the period ended December 31, 1995 of Sun West included in
this Prospectus have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report appearing herein, and have been so included
in reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.

The financial statements as of December 31, 1993 and for the year ended
December 31, 1993 of Creative included in this Prospectus have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report appearing
herein, and have been so included in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.

57
<PAGE>
ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission under the
Securities Act a Registration Statement on Form S-1 with respect to the Common
Stock offered hereby. This Prospectus does not contain all of the information
set forth in the Registration Statement in accordance with the rules and
regulations of the Commission. For further information pertaining to the Company
and the Common Stock offered hereby, reference is made to the Registration
Statement, including the exhibits thereto and the financial statements, notes
and schedules filed as a part thereof. Statements contained in this Prospectus
as to the contents of any contract or other document are not necessarily
complete and, in each instance, reference is made to the copy of such contract
or document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference. The Registration
Statement may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549
and at the Commission's Regional Offices in New York (Seven World Trade Center,
New York, New York 10007) and Chicago (Suite 1400, Citicorp Center, 500 West
Madison Street, Chicago, Illinois 60611). Copies of such material can be
obtained from the public reference section of the Commission at prescribed rates
by writing to the Public Reference Section of the Commission at 450 Fifth
Street, N.W. Washington, D.C. 20549.

58
<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----

<S> <C>
THE COMPANY

Independent Auditors' Report....................................................... F-3

Consolidated Balance Sheets as of December 28, 1994 and December 27, 1995.......... F-4

Consolidated Statements of Income for the fiscal years ended December 29, 1993,
December 28, 1994 and December 27, 1995.............................................. F-5

Consolidated Statements of Stockholders' Equity for the fiscal years ended December
29, 1993, December 28, 1994 and December 27, 1995................................ F-6

Consolidated Statements of Cash Flows for the fiscal years ended December 29, 1993,
December 28, 1994 and December 27, 1995.............................................. F-7

Notes to Consolidated Financial Statements......................................... F-8

Consolidated Balance Sheets as of December 27, 1995 and March 27, 1996
(unaudited).......................................................................... F-23

Unaudited Consolidated Statements of Income for the three months ended March 29,
1995 and March 27, 1996.............................................................. F-24

Unaudited Consolidated Statements of Stockholders' Equity for the three months
ended March 29, 1995 and March 27, 1996.......................................... F-25

Unaudited Consolidated Statements of Cash Flows for the three months ended March
29, 1995 and March 27, 1996...................................................... F-26

Notes to Unaudited Consolidated Financial Statements............................... F-27

SUN WEST SERVICES, INC.

Independent Auditors' Report....................................................... F-31

Balance Sheets as of December 31, 1994 and 1995.................................... F-32

Statements of Operations for the fiscal years ended
December 31, 1993, 1994 and 1995................................................. F-33

Statements of Stockholders' Equity (Capital Deficiency) for the fiscal years ended
December 31, 1993, 1994 and 1995..................................................... F-34

Statements of Cash Flows for the fiscal years ended December 31, 1993, 1994 and
1995................................................................................. F-35

Notes to Financial Statements...................................................... F-36

Balance Sheets as of December 31, 1995 and March 25, 1996 (unaudited).............. F-42

Unaudited Statements of Operations for the three months ended March 31, 1995 and
March 25, 1996....................................................................... F-43

Unaudited Statements of Cash Flows for the three months ended
March 31, 1995 and March 25, 1996................................................ F-44

Notes to Unaudited Financial Statements............................................ F-45

CREATIVE FOOD MANAGEMENT, INC.

Independent Auditors' Report....................................................... F-47

Consolidated Balance Sheet as of December 31, 1993................................. F-48
</TABLE>

F-1
<PAGE>

<TABLE>
<S> <C>
Statement of Operations for the fiscal year ended December 31, 1993................ F-49

Statement of Cash Flows for the fiscal year ended December 31, 1993................ F-50

Notes to Financial Statements...................................................... F-51

Consolidated Balance Sheets as of December 31, 1993 and July 1, 1994 (unaudited)... F-56

Unaudited Consolidated Statements of Operations for the six months ended July 2,
1993 and July 1, 1994............................................................ F-57

Unaudited Consolidated Statements of Cash Flows for the six months ended July 2,
1993 and July 1, 1994............................................................ F-58

Notes to Unaudited Financial Statements............................................ F-59
</TABLE>

F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
FINE HOST CORPORATION

We have audited the accompanying consolidated balance sheets of Fine Host
Corporation and subsidiaries (the "Company") as of December 28, 1994 and
December 27, 1995, and the consolidated statements of income, stockholders'
equity and cash flows for each of the three years in the period ended December
27, 1995. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well a evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Fine Host Corporation and
subsidiaries as of December 28, 1994 and December 27, 1995 and the results of
their operations and their cash flows for each of the three years in the period
ended December 27, 1995 in conformity with generally accepted accounting
principles.

Deloitte & Touche LLP
New York, New York
May 24, 1996

F-3
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 28, 1994 DECEMBER 27, 1995
----------------- -----------------
<S> <C> <C>
ASSETS
Current assets:
Cash..................................................... $ 1,532 $ 634
Accounts receivable...................................... 6,750 7,548
Notes receivable......................................... 1,964 520
Inventories.............................................. 2,218 2,099
Prepaid expenses and other current assets................ 2,121 1,893
-------- --------
Total current assets................................. 14,585 12,694

Contract rights, net....................................... 9,715 12,866
Fixtures and equipment, net................................ 13,372 15,829
Notes receivable........................................... 2,059 1,391
Excess of cost over fair value of net assets acquired,
net........................................................ 10,455 13,406
Other assets............................................... 2,967 4,395
-------- --------
Total assets......................................... $53,153 $60,581
-------- --------
-------- --------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable and accrued expenses.................... $13,565 $12,467
Current portion of long-term debt........................ 3,738 2,981
Current portion of subordinated debt..................... 1,338 1,745
-------- --------
Total current liabilities............................ 18,641 17,193

Deferred income taxes...................................... 5,004 6,421
Long-term debt............................................. 8,289 15,326
Subordinated debt.......................................... 12,153 8,879
-------- --------
Total liabilities.................................... 44,087 47,819

Commitments and contingencies

Stock warrants............................................. 480 1,380

Stockholders' equity:
Convertible Preferred Stock, $.01 par value, 250,000
shares authorized, 102,592 and 134,171 issued and
outstanding at December 28, 1994 and December 27, 1995,
respectively............................................... 1 1
Common Stock, $.01 par value, 7,000,000 shares
authorized, 2,048,200 issued and outstanding........... 20 20
Additional paid-in capital............................... 7,433 8,933
Retained earnings........................................ 1,321 2,617
Receivables from stockholders for purchase of Common
Stock...................................................... (189) (189)
-------- --------
Total stockholders' equity........................... 8,586 11,382
-------- --------
Total liabilities and stockholders' equity......... $53,153 $60,581
-------- --------
-------- --------
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
FISCAL YEARS ENDED
--------------------------------------------
DECEMBER 29, DECEMBER 28, DECEMBER 27,
1993 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
Net sales.............................................. $ 61,212 $ 82,119 $ 95,462
Cost of sales.......................................... 55,816 73,833 85,576
------------ ------------ ------------
Gross profit........................................... 5,396 8,286 9,886
General and administrative expenses.................... 2,649 3,406 3,626
------------ ------------ ------------
Income from operations................................. 2,747 4,880 6,260
Interest expense, net.................................. 834 1,629 2,479
------------ ------------ ------------
Income before tax provision and extraordinary item..... 1,913 3,251 3,781
Tax provision.......................................... 829 1,385 1,585
------------ ------------ ------------
Income before extraordinary item....................... 1,084 1,866 2,196
Extraordinary item (net of related tax benefit of
$74)................................................... 112 -- --
------------ ------------ ------------
Net income............................................. 972 1,866 2,196
Accretion to redemption value of warrants (Note 2)..... (230) (250) (900)
------------ ------------ ------------
Net income available to Common Stockholders............ $ 742 $ 1,616 $ 1,296
------------ ------------ ------------
------------ ------------ ------------
Earnings per share of Common Stock:
Income before extraordinary item..................... $ 0.28 $ 0.50 $ 0.39
Extraordinary item................................... (0.04) -- --
------------ ------------ ------------
Net income........................................... $ 0.24 $ 0.50 $ 0.39
------------ ------------ ------------
------------ ------------ ------------
Average number of shares of Common Stock outstanding... 3,087 3,230 3,307
------------ ------------ ------------
------------ ------------ ------------
Earnings per share assuming full dilution:
Income before extraordinary item..................... $ 0.28 $ 0.49 $ 0.39
Extraordinary item................................... (0.04) -- --
------------ ------------ ------------
Net income........................................... $ 0.24 $ 0.49 $ 0.39
------------ ------------ ------------
------------ ------------ ------------
Average number of shares of Common Stock outstanding
assuming full dilution................................. 3,087 3,287 3,330
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
RECEIVABLES
FROM
CONVERTIBLE STOCKHOLDERS
PREFERRED STOCK COMMON STOCK ADDITIONAL RETAINED FOR PURCHASE
---------------- ------------------ PAID-IN EARNINGS OF COMMON
SHARES AMOUNT SHARES AMOUNT CAPITAL (DEFICIT) STOCK
------- ------ --------- ------ ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 30, 1992............. $ 2,048,200 $ 20 $3,940 $ (1,037) $ (197)
Shares issued......................... 102,592 1 3,493
Stock warrant accretion............... (230)
Payments by stockholders.............. 8
Net income............................ 972
--
------- ------ --------- ---------- -------- -----
Balance, December 29, 1993............. 102,592 1 2,048,200 20 7,433 (295) (189)
Stock warrant accretion............... (250)
Net income............................ 1,866
--
------- ------ --------- ---------- -------- -----
Balance, December 28, 1994............. 102,592 1 2,048,200 20 7,433 1,321 (189)
Stock warrant accretion............... (900)
Shares issued......................... 31,579 1,500
Net income............................ 2,196
--
------- ------ --------- ---------- -------- -----
Balance, December 27, 1995............. 134,171 $ 1 2,048,200 $ 20 $8,933 $ 2,617 $ (189)
--
--
------- ------ --------- ---------- -------- -----
------- ------ --------- ---------- -------- -----

TOTAL
STOCKHOLDERS'
EQUITY
-------------
<S> <C>
Balance, December 30, 1992............. $ 2,726
Shares issued......................... 3,494
Stock warrant accretion............... (230)
Payments by stockholders.............. 8
Net income............................ 972

-------------
Balance, December 29, 1993............. 6,970
Stock warrant accretion............... (250)
Net income............................ 1,866

-------------
Balance, December 28, 1994............. 8,586
Stock warrant accretion............... (900)
Shares issued......................... 1,500
Net income............................ 2,196

-------------
Balance, December 27, 1995............. $11,382

-------------
-------------
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
FISCAL YEARS ENDED
------------------------------------------
DECEMBER 29, DECEMBER 28, DECEMBER 27,
1993 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 972 $ 1,866 $ 2,196
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization........................... 1,609 2,379 3,804
Deferred income tax provision........................... 738 1,359 1,536
Changes in operating assets and liabilities:
Accounts receivable................................... (279) (2,238) (372)
Inventories........................................... (164) (367) 306
Prepaid expenses and other current assets............. (301) (1,001) (473)
Accounts payable and accrued expenses................. 1,313 2,100 (2,627)
Increase in other assets.................................. (123) (1,528) (1,399)
------------ ------------ ------------
Net cash provided by operating activities............... 3,765 2,570 2,971
------------ ------------ ------------
Cash flows from investing activities:
Increase in contract rights............................... (2,039) (234) (3,446)
Purchases of fixtures and equipment....................... (974) (6,303) (3,329)
Disposal of fixed assets.................................. 349 -- --
Acquisition of business, net of cash acquired............. (6,662) (777) (3,478)
Collection of notes receivable............................ 1,657 548 2,129
Issuance of notes receivable.............................. -- (2,280) --
------------ ------------ ------------
Net cash used in investing activities................... (7,669) (9,046) (8,124)
------------ ------------ ------------
Cash flows from financing activities:
Issuance of convertible preferred stock................... 2,954 -- 1,500
Borrowings under long-term debt agreement................. 1,017 10,739 8,580
Issuance of subordinated debt............................. 8,500 -- --
Payment of long-term debt................................. (9,742) (1,529) (2,300)
Payment of subordinated debt.............................. -- (1,578) (3,525)
Collection of subscriptions receivable.................... 8 -- --
------------ ------------ ------------
Net cash provided by financing activities............... 2,737 7,632 4,255
------------ ------------ ------------
(Decrease) increase in cash............................... (1,167) 1,156 (898)
Cash, beginning of year................................... 1,543 376 1,532
------------ ------------ ------------
Cash, end of year......................................... $ 376 $ 1,532 $ 634
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

See accompanying notes to consolidated financial statements.

F-7
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

1. DESCRIPTION OF BUSINESS

Fine Host Corporation and its subsidiaries (the "Company") is a provider of
contract food service management to recreation and leisure facilities, which
include civic centers, arenas, stadiums and amphitheaters, convention centers,
education facilities and corporate dining facilities primarily in the United
States.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation--The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries. All significant
intercompany transactions and accounts have been eliminated.

Inventories--Inventories are stated at the lower of cost, determined on a
first-in, first-out (FIFO) basis, or market.

Contract Rights--Certain directly attributable costs, primarily direct
payments to clients to acquire contracts and costs of licenses and permits,
incurred by the Company in obtaining contracts with clients are recorded as
contract rights and are amortized over the contract life of each such contract
without consideration of future renewals. The costs of licenses and permits are
amortized over the shorter of the related contract life or the term of the
license/permit. The unamortized value of such capitalized costs was $8,155 at
December 27, 1995, consisting of costs related to 34 contracts. Contract rights
are being amortized over a range of 3 to 20 years, with an average amortization
period of 8 years as of December 27, 1995. Licenses and permits are being
amortized over a range of 3 to 10 years. The value of contract rights acquired
through acquisitions has been determined through independent valuation based on
projected cash flows discounted at a rate that market participants would use to
determine fair value and is being amortized over the projected lives as
determined through the valuation process, with an average amortization period of
10 years as of December 27, 1995. The unamortized value of contract rights
acquired through acquisitions was $4,711 at December 27, 1995, consisting of
rights relating to 65 contracts. Accumulated amortization was $2,237 and $3,949
at December 28, 1994 and December 27, 1995, respectively. The carrying value of
the asset would be reduced if it is probable that management's best estimate of
future cash flows from related operations over the remaining amortization
period, on an undiscounted basis, will be less than the carrying amount of the
asset, plus allocated goodwill if acquired in a business combination. Any such
impairment loss would be measured as the amount by which the carrying value of
the asset exceeds the fair value determined as the present value of estimated
expected future cash flow discounted at a rate that market participants would
use to determine fair value.

Fixtures and Equipment--Acquisitions of fixtures and equipment are recorded
at cost and are depreciated using the straight line method over the shorter of
estimated useful lives of the assets or the term of the customer concession and
catering contract. Fixtures and equipment is periodically reviewed to determine
recoverability by comparing the carrying value to expected future cash flows.

Excess of Cost Over Fair Value of Net Assets Acquired--The excess of cost
over fair value of net assets acquired is amortized using the straight line
method over periods generally ranging from 20 to 30 years. Accumulated
amortization was $512 and $848 at December 28, 1994 and December 27, 1995,

F-8
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
respectively. The carrying value of the net asset would be reduced if it is
probable that management's best estimate of future cash flows from related
operations, on an undiscounted basis, will be less than the carrying amount of
the asset over the remaining amortization period. Any such impairment loss would
be measured as the amount by which the carrying value of the asset exceeds the
fair value determined as the present value of estimated expected future cash
flow.

Revenue Recognition and Cost of Sales--Sales from food and beverage
concession and catering contract food services are recognized as the services
are provided.

The Company generally enters into one of three types of contracts for its
food services: profit and loss contracts ("P&Ls"), profit sharing contracts and
management fee contracts. Under P&L contracts, all food and beverage sales are
recorded in net sales. P&Ls require the Company to bear all the expenses of the
operation, including rent paid to the client (usually calculated as a fixed
percentage of various categories of sales). Under the profit sharing contracts,
the Company receives a percentage of profits earned at the facility after the
payment of all expenses of the operation plus a fixed fee or percentage of sales
as an administrative fee. Under this type of contract, the fixed and
administrative fees and all food and beverage sales generated at a location are
recorded in net sales. Management fee contracts provide for a fixed fee. Fine
Host is also reimbursed for all of its on-site expenses incurred in providing
food and beverage services under management fee contracts. Certain of the
Company's management fee contracts provide for an additional incentive fee based
on a percentage of sales over a base threshold level. In the case of a
management fee contract, the Company records only the fixed and incentive fee,
if any, as net sales.

Cost of sales is composed of the following:

<TABLE>
<CAPTION>
FISCAL YEARS ENDED
-----------------------------
<S> <C> <C> <C>
1993 1994 1995
------- ------- -------
Wages and benefits............................................. $14,011 $20,079 $27,024
Food and beverages............................................. 13,733 18,463 24,670
Rent paid to clients........................................... 21,270 25,345 22,035
Other operating expenses....................................... 5,193 7,567 8,259
Depreciation and amortization.................................. 1,609 2,379 3,588
------- ------- -------
$55,816 $73,833 $85,576
------- ------- -------
------- ------- -------
</TABLE>

P&L and profit sharing contracts include all on-site costs for the above
items. Management fee contracts include only the amortization of invested
capital.

Income Taxes--Deferred tax assets or liabilities (shown net) are recognized
for the estimated future tax effects attributable to temporary differences,
principally depreciation, amortization of contract rights and operating loss
carryforwards. A temporary difference is the difference between the tax basis of
an asset or liability and its reported amount in the financial statements.

Earnings Per Share--Earnings per share of Common Stock is computed based on
the weighted average number of common equivalent shares outstanding during each
year. The Series A Convertible Preferred Stock has been considered to be the
equivalent of Common Stock from the time of its issuance in 1993. The number of
shares issuable on conversion of Preferred Stock was added to the number of
shares of Common Stock. The number of shares of Common Stock was also increased
by the number of shares issuable on the exercise of options and warrants when
the fair value of the Common Stock exceeds the exercise price of the options and
warrants. Fair value was estimated through analysis of transactions in the
Company's stock involving third parties. This increase in the number of shares
of

F-9
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Common Stock was reduced by the number shares of Common Stock which are assumed
to have been purchased with the proceeds from the exercise of the warrants.
These purchases were assumed to have been made at the average fair value of the
Common Stock during the year. Earnings per share assuming full dilution gives
effect to the assumed exercise of all dilutive stock options and the assumed
conversion of dilutive convertible securities (warrants) as of the beginning of
the respective year except when their effect is antidilutive; outstanding shares
were increased as described above for the option and warrant conversions except
that the purchases of Common Stock are assumed to have been made at the year-end
fair value if it was higher than the average fair value. In calculating earnings
per share, net income has been reduced for the accretion to the redemption value
of warrants by $230, $250 and $900 in fiscal 1993, 1994 and 1995, respectively
(see Note 11).

Fiscal Year--The Company's fiscal year ends on the last Wednesday in
December.

Reclassification--Prior year balances have been restated to conform to the
current presentation.

3. ACQUISITIONS

On March 25, 1996, the Company acquired 100% of the outstanding stock of Sun
West Services, Inc. ("Sun West"). Sun West provides contract food and beverage
services primarily in the education market as well as to other institutional
clients. The purchase price was approximately $5,200 consisting of cash,
five-year subordinated notes to the sellers with interest at 7% and 25,900
shares of Common Stock.

In July 1995, the Company acquired 100% of the outstanding stock of
Northwest Food Service, Inc. ("Northwest"). Northwest provides contract food and
beverage services, primarily in the education and corporate dining markets. The
purchase price was approximately $2,500 consisting of subordinated notes to the
seller and cash.

In September 1994, the Company acquired 100% of the outstanding stock of VGE
Acquisition Corporation ("VGE") and its wholly owned subsidiary, Creative Food
Management, Inc. (collectively, "Creative"). Creative provides contract food and
beverage services, primarily in the education, corporate dining and recreation
and leisure markets. The purchase price, reduced in the third quarter of 1995
for certain post-acquisition adjustments, was approximately $7,000 consisting
primarily of subordinated notes to the sellers (see Note 9) and cash. Following
the acquisition, VGE and Creative were merged, with Creative as the surviving
entity.

In April 1993, the Company acquired 100% of the stock of Fanfare, Inc. and
Global Fanfare, Inc. (collectively, "Fanfare"). Fanfare provides contract food
and beverage services, primarily in the recreation and leisure market. The
purchase price was approximately $8,200 in cash and subordinated notes to the
sellers.

In connection with the Fanfare acquisition, the Company executed a stock
option agreement with one of the principal shareholders of Fanfare which allows
the option holder to purchase a maximum of 27,944 shares of Common Stock at
$4.93 per share.

The aforementioned acquisitions have been accounted for under the purchase
method of accounting and, accordingly, the accompanying consolidated financial
statements reflect the fair values of the assets acquired and liabilities
assumed or incurred as of the effective date of the acquisitions. The results of
operations of the acquired companies are included in the accompanying
consolidated financial statements since their respective dates of acquisition.

The following table summarizes pro forma information as follows: (i) with
respect to the income statement data for fiscal 1994, as if the acquisitions of
Northwest and Creative had been completed as

F-10
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

3. ACQUISITIONS--(CONTINUED)
of the beginning of the fiscal year and (ii) with respect to the income
statement data for fiscal 1995, as if the acquisition of Northwest had been
completed as of the beginning of the fiscal year:

<TABLE>
<CAPTION>
FISCAL YEARS ENDED
----------------------------
DECEMBER 28, DECEMBER 27,
1994 1995
------------ ------------
<S> <C> <C>
SUMMARY STATEMENT OF INCOME DATA:
Net sales......................................... $105,841 $100,675
Income from operations............................ $ 5,173 $ 6,362
Net income........................................ $ 1,537 $ 2,210
Net income per share assuming full dilution....... $ 0.39 $ 0.39
</TABLE>

4. INVENTORIES

The components of inventories are as follows:

<TABLE>
<CAPTION>
DECEMBER 28, DECEMBER 27,
1994 1995
------------ ------------
<S> <C> <C>
Food and liquor................................... $1,465 $1,333
Beverage.......................................... 498 447
Other............................................. 255 319
------------ ------------
Total..................................... $2,218 $2,099
------------ ------------
------------ ------------
</TABLE>

5. NOTES RECEIVABLE

From time to time, the Company advances funds to its clients to assist them
in funding construction and for working capital needs. Substantially all of
these advances are collateralized by assets and/or are subject to immediate and
full repayment under the terms of related concession agreements. Included among
the advances the Company has outstanding are the following:

. A non-interest bearing advance made in 1990 in the amount of $708 that was
discounted at 8.5%. The advance is being repaid in 120 equal monthly
installments. The amount outstanding was $264, of which $214 was
classified as long-term at December 27, 1995. The Company retains title to
the assets purchased by the client with the proceeds of the advance until
the advance is repaid in full.

. Advances made in early 1994 to a client in the aggregate amount of $1,280
with interest at 1.5% over the prime rate. Principal is due and payable in
four equal annual installments with interest due quarterly commencing
March 31, 1994. The amount outstanding at December 27, 1995 was $960, of
which $640 was classified as long-term.

. A non-interest bearing advance made in the second quarter of 1994 in the
aggregate amount of $1,000. In conjunction with a contract modification
during the third quarter of 1995, the note was modified to require
repayments over the remaining four years of the food service contract. The
balance at December 27, 1995 was $680, $530 of which was classified as
long-term.

The estimated fair value approximated the carrying amount of notes
receivable at December 28, 1994 and December 27, 1995. Considerable judgment was
required in interpreting market data to develop the estimates of fair value. In
addition, the use of different market assumptions and/or estimation
methodologies may have had a material effect on the estimated fair value
amounts. Accordingly, the estimated fair value of notes receivable as of
December 28, 1994 and December 27,

F-11
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

5. NOTES RECEIVABLE--(CONTINUED)
1995 is not necessarily indicative of the amounts that the Company could realize
in a current market exchange.

Interest earned during fiscal 1993, 1994 and 1995 was $274, $304 and $352,
respectively.

6. FIXTURES AND EQUIPMENT

Fixtures and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 28, DECEMBER 27,
1994 1995
------------ ------------
<S> <C> <C>
Furniture and fixtures............................ $ 14,155 $ 16,309
Office equipment.................................. 1,445 1,811
Leasehold improvements............................ 709 1,114
Smallwares........................................ 1,757 2,306
------------ ------------
18,066 21,540
Less: accumulated depreciation.................... 4,694 5,711
------------ ------------
Fixtures and equipment, net....................... $ 13,372 $ 15,829
------------ ------------
------------ ------------
</TABLE>

The Company invests in fixtures and equipment at various locations. Upon
termination of a concession agreement, the client is generally required to
purchase the assets from the Company for an amount equal to their net book
value.

All fixtures and equipment are depreciated over their useful lives ranging
from 3 to 20 years, except smallwares which are depreciated over periods ranging
from 3 to 5 years.

7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consists of the following:

<TABLE>
<CAPTION>
DECEMBER 28, DECEMBER 27,
1994 1995
------------ ------------
<S> <C> <C>
Accounts payable.................................. $ 3,941 $ 5,197
Accrued wages and benefits........................ 1,299 1,607
Accrued rent to clients........................... 4,484 2,576
Accrued other..................................... 3,841 3,087
------------ ------------
Total....................................... $ 13,565 $ 12,467
------------ ------------
------------ ------------
</TABLE>

8. LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 28, DECEMBER 27,
1994 1995
------------ ------------
<S> <C> <C>
Term Loan......................................... $ 906 $ 9,100
Working Capital Line.............................. 1,700 6,000
Guidance Line..................................... 9,325 3,207
Notes payable..................................... 96 --
------------ ------------
12,027 18,307
Less: current portion............................. 3,738 2,981
------------ ------------
Total....................................... $ 8,289 $ 15,326
------------ ------------
------------ ------------
</TABLE>

F-12
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

8. LONG-TERM DEBT--(CONTINUED)
The Company's bank agreement was amended on April 24, 1995 as part of a
refinancing (the "Amended Bank Agreement") and provides for (i) a term loan in
the amount of $10,500 (the "Term Loan") which is repayable in 60 equal monthly
installments commencing May 1, 1995, (ii) a working capital revolving credit
line (the "Working Capital Line") for general obligations of the Company
expiring on March 31, 1997, in the maximum amount of $6,000, (iii) a line of
credit to provide for future expansion by the Company (the "Guidance Line") in
the maximum amount of $11,500, and (iv) requirements that the bank issue up to
$2,000 in letters of credit ("Letters of Credit") on the Company's behalf. The
maximum borrowing under the Amended Bank Agreement was $30,000 as of December
27, 1995.

As part of a new food service contract requiring the Company to invest
$2,000 on or before January 1, 1996, a temporary Letter of Credit was required
from the Company. The Letter of Credit was provided by the Company on August 2,
1995. The Guidance Line was used to provide this Letter of Credit. On December
29, 1995, the Company invested the $2,000 by borrowing under the Guidance Line
and canceled the Letter of Credit.

In March 1996, the Amended Bank Agreement was further amended to increase
the maximum borrowing under the Amended Bank Agreement to $32,500 by increasing
the Working Capital Line to $9,425 and the Guidance Line to $13,000, and
resetting the Term Loan to $8,575 and the Letter of Credit facility to $1,500.

The Amended Bank Agreement contains various financial and other
restrictions, including, but not limited to, restrictions on indebtedness,
capital expenditures and commitments. Additional obligations require maintenance
of certain financial ratios, including the ratio of total debt to operating cash
flow, operating cash flow to cash interest expense, and minimum net worth and
operating cash flow. The Amended Bank Agreement also contains prohibitions on
both the payment of dividends and changes in control of the Company.

The Company's obligations under the Amended Bank Agreement are
collateralized both by a pledge of shares of Common Stock owned by officers and
directors of the Company and an affiliate, and the common stock of the Company's
subsidiaries. The loan is also collateralized by certain fixtures and equipment,
notes receivable and other assets, as well as the receipt, if any, of certain
funds paid to the Company with respect to the termination of client contracts
prior to their expiration.

On December 27, 1995, the prime rate was 8.5%. Interest payable on the Term
Loan, Working Capital Line and Guidance Line is the prime rate plus 1.5%, 1.25%
and 1.5%, respectively.

Long-term debt at December 27, 1995 is payable as follows:

YEAR ENDING AMOUNT
----------- ------
December 25, 1996........................................ $ 2,981
December 31, 1997........................................ 8,981
December 30, 1998........................................ 2,785
December 29, 1999........................................ 2,569
December 27, 2000........................................ 991
-------
Total.............................................. $18,307
-------
-------

Interest paid on long-term debt was $447, $639 and $1,645 for fiscal 1993,
1994 and 1995, respectively.

F-13
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

9. SUBORDINATED DEBT

Subordinated debt consists of the following:

(a) In July 1995, as part of the purchase price of Northwest (see Note 3),
the Company issued a $1,350 note to the seller with a 6% interest rate payable
in six equal annual installments. The note was discounted to present value using
a market rate of 12.5% and had a balance at December 27, 1995 of $1,166, of
which $937 was classified as long-term.

(b) In September 1994, as part of the acquisition of Creative (see Note 3),
the Company issued to the stockholders of Creative the following: (1)
subordinated promissory notes ("Promissory Notes") with a face value of $2,552
payable in four installments beginning in September 1995; (2) convertible
subordinated promissory notes ("Convertible Notes") with a face value of $855,
convertible into common stock of the Company at a price of $7.86 per share; and
(3) a four year term note in the amount of $593 payable in annual monthly
installments and bearing interest at the prime rate plus 1%.

The Promissory Notes and the Convertible Notes were canceled in November
1995 in accordance with negotiations between the Company and the sellers of
Creative as a direct result of the breach of seller representations and
warranties and the subsequent renegotiation of the purchase price , and two new
non-interest bearing Subordinated Term Notes ("Creative Term Notes") were issued
in their place. The first of the Creative Term Notes is in the principal amount
of $756 payable in equal monthly installments over 36 months, and the second
Creative Term Note is in the principal amount of $1,440 payable in equal monthly
installments over 48 months. The Creative Term Notes have been discounted to
their present value using a market rate of 10%. The balance at December 27, 1995
was $1,877 of which $1,413 was classified as long term.

In addition, as part of the Creative acquisition, the Company assumed the
following Creative obligations: (1) a third party promissory note which was
settled in October 1995 as part of an agreement between Creative and the lender;
and (2) a four year term note with interest at the prime rate plus 1.5%. The
balance at December 27, 1995 was $87.

(c) In connection with the acquisition of Fanfare in 1993 (see Note 3), the
Company issued to the sellers of Fanfare subordinated notes with a face value of
$2,250, payable in three equal annual installments beginning in April 1994. The
notes payable are non-interest bearing and were discounted to present value at
7.5%. At December 27, 1995, the outstanding balance of the notes was $732.

(d) In April 1993, the Company entered into a subordinated loan agreement,
as amended (the "Subordinated Loan Agreement"), pursuant to which the Company
sold $8,500 of its variable rate subordinated notes (the "Notes"), together with
detachable warrants to purchase a maximum of 867,230 shares of a new class of
Non-Voting Common Stock. The proceeds of the issuance of the subordinated notes
were used to repay existing indebtedness. The notes are due April 30, 2001, with
mandatory principal payments of $2,125 due on April 30 of each year commencing
in 1998 and ending in 2001. As part of the refinancing discussed in Note 7, a
$2,000 prepayment was made in order of maturity and, therefore, the April 30,
1998 mandatory payment has been reduced to $125. On April 21, 1995, in
accordance with the Subordinated Loan Agreement, the rate of interest was reset
at 12.79% from 9.875% for the remainder of the term of the notes.

In conjunction with the refinancing of its senior bank indebtedness on April
24, 1995, the Company sold 31,579 shares of Series A Convertible Preferred Stock
(convertible into 221,046 shares of Common Stock) (see Note 10) to an investment
partnership (the general partner of which is controlled by one of the Company's
directors) at a price of $47.50 per share ($6.79 per share of Common Stock), and
used the proceeds thereof to reduce the amount of the Notes outstanding under
the Subordinated Loan Agreement.

F-14
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

9. SUBORDINATED DEBT--(CONTINUED)
On April 24, 1995, as part of the refinancing discussed above, the
Subordinated Loan Agreement was amended to allow for an increase in available
borrowing under the Amended Bank Agreement up to $32,500, without prior approval
by the subordinated note holder. The Subordinated Loan Agreement, as amended,
contains various financial and other restrictions including provisions similar
to those contained in the Amended Bank Agreement.

The estimated fair value approximated the carrying amount of subordinated
debt at December 28, 1994 and December 27, 1995. Considerable judgment was
required in interpreting market data to develop the estimates of fair value. In
addition, the use of different market assumptions and/or estimation
methodologies may have had a material effect on the estimated fair value
amounts. Accordingly, the estimated fair value of subordinated debt as of
December 27, 1995 and December 28, 1994 is not necessarily indicative of the
amounts that the Company could realize in a current market exchange.

Subordinated debt at December 27, 1995 is payable as follows:

YEAR ENDING AMOUNT
----------- -------
December 25, 1996........................................ $ 1,745
December 31, 1997........................................ 954
December 30, 1998........................................ 865
December 29, 1999........................................ 2,711
December 27, 2000........................................ 2,375
Thereafter............................................... 2,125
-------
10,775
Less: discount on subordinated note...................... 151
-------
Total.............................................. $10,624
-------
-------

Interest paid on subordinated debt was $661, $1,253 and $1,427 for fiscal
1993, 1994 and 1995, respectively.

10. STOCKHOLDERS' EQUITY

Common Stock--Holders of Common Stock are entitled to one vote per share in
all matters to be voted on by the stockholders of the Company. Subject to
preferences that may be applicable to any Preferred Stock outstanding at the
time, holders of Common Stock are entitled to receive ratably such dividends, if
any, as may be declared from time to time by the Board of Directors out of funds
legally available therefor.

Preferred Stock--Holders of the Series A Convertible Preferred Stock are
entitled to receive, when and as declared, out of the net profits of the
Company, dividends in an amount per share equal to the aggregate per share
amount of all cash dividends declared on the Common Stock multiplied by the
number of shares of Common Stock into which a share of Series A Convertible
Preferred Stock is convertible on the date on which such dividend is to be paid
in full. All dividends declared upon Series A Convertible Preferred Stock shall
be declared pro rata per share. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the holders of the shares
of Series A Convertible Preferred Stock then outstanding shall be entitled to
share ratably with holders of the shares of Common Stock in any distribution of
the assets and funds of the Company. Each share of Series A Convertible
Preferred Stock is convertible into seven shares of Common Stock, subject to
certain adjustments.

Three officers of the Company have purchased in 1987 and 1991 an aggregate
of 154,000 shares of Common Stock for cash and notes at prices ranging from
$0.32 to $1.40 per share. The subject notes have an aggregate outstanding
balance of $189 and are due on June 30, 1999.

F-15
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

11. STOCK OPTIONS AND WARRANTS

Stock Options--The 1994 Stock Option Plan authorizes the grant to key
employees of options to purchase shares of Common Stock. The maximum number of
shares which may be subject to options under this plan is 175,000. Options are
granted at no less than the fair market value at the time of grant for a period
not in excess of ten years. In addition, included in the table are 27,944
options issued in connection with the Fanfare acquisition in 1993 (see Note 3).

Combined information with respect to stock options is as follows:

SHARES
-------
Balance, December 29, 1993....................................... 27,944
Granted........................................................ 105,000
-------
Balance, December 28, 1994....................................... 132,944
Granted........................................................ 10,500
-------
Balance, December 27, 1995
($4.93--$7.14 per share)....................................... 143,444
-------
-------
Currently exercisable, December 27, 1995......................... 46,597
-------
-------

At December 27, 1995, there were 59,500 shares available for grant.

Warrants--Warrants issued and outstanding to purchase, at specified prices,
shares of Common Stock at December 27, 1995 consist of the following:

EXERCISE PRICE
--------------------
$4.93 $.01
-------- --------
(a) Holders of Subordinated Notes: 733,467 133,763
Less redemptions................................ (173,460) (66,878)
-------- --------
560,007 66,885
-------- --------
(b) Holders of Series A Convertible Preferred Stock:
Investor........................................ 118,307 453,432
Director........................................ 21,294 81,613
-------- --------
139,601 535,045
-------- --------
Less redemptions................................ (16,016) (267,526)
-------- --------
123,585 267,519
-------- --------
Warrants issued and outstanding................... 683,592 334,404
-------- --------
-------- --------
(a) Holders of Subordinated Notes

Pursuant to the issuance and sale of the Notes (see Note 9), the purchaser
received warrants to purchase 733,467 and 133,763 shares of Non-Voting Common
Stock at exercise prices of $4.93 a share (the "$4.93 Warrants") and $.01 a
share (the "$.01 Warrants"), respectively. The warrants were valued at $230. The
warrants are exercisable from the date of issue through the periods ended April
29, 2001 and April 29, 2003, respectively. The Company may earn back portions of
the respective warrants if

F-16
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

11. STOCK OPTIONS AND WARRANTS--(CONTINUED)
certain performance targets are achieved. Both the number of shares and exercise
price are subject to adjustment under various antidilution provisions.

During a specified repurchase period, the Company is obligated (the "Put
Repurchase"), subject to certain conditions, to repurchase all or a designated
portion of the issuable warrant shares within 120 days after notification of a
put option exercise. The Put Repurchase period begins on the earlier of (i)
April 29, 1997, (ii) the prepayment of 50% of the original principal amount of
the Notes issued under the Subordinated Loan Agreement, or (iii) a Change of
Control, as defined, of the Company. The Put Repurchase price is based upon the
greater of the Appraised Value (as defined in the warrant agreement) of the
Common Stock, and the result obtained by dividing a multiple of the Company's
adjusted earnings, as defined, by the number of fully diluted shares of Common
Stock. The Put Repurchase is being accreted to its highest estimated redemption
price based on the time remaining to April 29, 1997, the earliest redemption
date of the Put Repurchase.

The warrant allows the Company, at its option, to repurchase (the "Call
Repurchase") any or all of the issuable warrant shares beginning April 29, 1998.
The Call Repurchase price to be paid by the Company is based upon the greater of
(i) 110% of the Appraised Value (as defined) of the Common Stock, (ii) the
result obtained by dividing a multiple of the Company's earnings, as defined, by
the number of fully diluted shares of Common Stock, or (iii) $10.12 per share.

Upon achieving specified levels of earnings in each of fiscal 1993 and 1994,
the Company had the right to earn back, in respect of each such year, the
portion of the $4.93 Warrants issued to the purchaser of the Notes representing
the right to acquire 1% of the fully diluted Common Stock. The Company achieved
the required earnings level specified for those fiscal years. Accordingly, in
each of May 1994 and June 1995, respectively, the Company canceled $4.93
Warrants to acquire the equivalent of 1% of the fully diluted Common Stock, or
approximately 43,365 shares (in each year). As a result of the refinancing
discussed in Notes 8 and 9, the Company redeemed an additional amount of the
$4.93 Warrants equal to 2% of the fully diluted Common Stock, or 86,730 shares.

Upon achieving specified levels of earnings in each of fiscal 1993, 1994,
1995 and 1996, the Company has the right to earn back the total of the $.01
Warrant issued (133,763) to the Note holder. Since the Company achieved the
required earnings level specified for fiscal 1993 and 1994, the Company, in each
of fiscal 1994 and 1995, respectively, earned back and canceled 33,439 of the
$.01 Warrants held by the purchaser of the Notes.

The total of these $4.93 Warrants and $.01 Warrants redeemed in fiscal 1994
and 1995 was 173,460 and 66,878, respectively (or 240,338).

Warrants Assigned Subsequent to December 27, 1995

In March 1996, the holder of the Notes sold the Notes to a non-affiliate of
the Company. The purchaser also acquired 280,003.5 $4.93 Warrants and 16,723
$.01 Warrants. In connection with this transaction, the purchaser granted the
Company an option to purchase all of the warrants for $500 in the event that the
Notes are fully redeemed before June 30, 1996, for $750 in the event the Notes
are fully redeemed between July 1 and August 15, 1996, for $1,000 in the event
the Notes are fully redeemed between August 16 and September 30, 1996 and for
$1,500 in the event the Notes are fully redeemed between October 1 and December
31, 1996.

F-17
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

11. STOCK OPTIONS AND WARRANTS--(CONTINUED)
In the event the Company increases its bank borrowings in excess of $32,500,
the option price will increase by $200 for each additional $2,500 of borrowings,
subject to a maximum increase in the option price of $600.

(b) Holders of Series A Convertible Preferred Stock

In connection with the sale in fiscal 1993 by the Company of the Series A
Convertible Preferred Stock to an investor and one of its directors (described
in Note 9), each purchaser received warrants to purchase Common Stock. The
investor received 118,307 of the $4.93 Warrants and 453,432 of the $.01
Warrants. The director received 21,294 of the $4.93 Warrants and 81,613 of the
$.01 Warrants. Both the number of shares and exercise price are subject to
adjustment under various antidilution provisions.

The $4.93 Warrants issued by the Company to the investor and the director
(139,601 in total) are subject to cancellation to the extent that the Company
earns back $4.93 Warrants issued to the purchaser of its Notes (see above).
Since the Company has achieved the earnings level specified for fiscal 1993 and
1994 required under the Notes, 8,253 of these $4.93 Warrants, the maximum
allowed during the 1993 reduction period, were canceled in June 1994, and an
additional 7,763, the maximum allowed during the 1994 reduction period, were
canceled in June 1995.

Upon achieving specified levels of earnings in fiscal 1993, 1994, 1995 and
1996, the Company has the right to earn back the total of the $.01 Warrants
(535,045 in the aggregate) issued to the holders of the Series A Convertible
Preferred Stock. Since the Company achieved the required earnings level
specified for each of fiscal 1993 and 1994, the Company in each of April 1994
and March 1995, respectively, canceled 133,763 of these warrants, representing
113,358 warrants for the investor and 20,405 for the director.

The total of these $4.93 Warrants and $.01 Warrants redeemed in fiscal 1994
and 1995 from the investor was 240,289 and from the director was 43,253,
respectively.

Warrants Redeemed Subsequent to December 27, 1995

The Company has achieved the specified earnings in fiscal 1995 as required
under the $.01 Warrants. As a result, in fiscal 1996, the Company will redeem
and cancel 33,440.75 of the $.01 Warrants held by the Note holder, 113,358 held
by the investor and 20,403.25 held by the director (167,202 in total). As of
March 29, 1996, after the above redemption, there were 167,202 $.01 Warrants and
683,592 $4.93 Warrants outstanding.

12. COMMITMENTS AND CONTINGENCIES

The Company operates principally at its clients' premises pursuant to
written contracts ("Client Contracts"). The length of Client Contracts generally
ranges from one to ten years with options to renew for periods of one to ten
years. Certain of these Client Contracts provide for base rent and contingent
rent. Aggregate rent expense under these agreements for fiscal 1993, 1994 and
1995 was $21,270, $25,345 and $22,035, respectively.

F-18
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

12. COMMITMENTS AND CONTINGENCIES--(CONTINUED)
Future minimum commitments as of December 27, 1995 for all noncancelable
operating leases and Client Contracts are as follows:

YEAR AMOUNT
- ---- -------
1996..................................................... $ 3,098
1997..................................................... 2,921
1998..................................................... 1,807
1999..................................................... 791
2000..................................................... 666
Thereafter............................................... 1,198
-------
Total.............................................. $10,481
-------
-------

Pursuant to its contracts with various clients, the Company is committed to
spend approximately $4,987 for equipment and capital improvements as of December
27, 1995. At December 27, 1995, the Company was contingently liable for the
following: (1) a standby Letter of Credit for $1,000, the principal amount of
which is reduced annually pursuant to its terms, (2) a $1,000 Letter of Credit
which collateralized the Company's ability to have written on its behalf an
aggregate of $4,000 in performance bonds, (3) performance bonds in the aggregate
amount of $2,600, and (4) an additional $2,000 Letter of Credit which was
converted to a loan under the Guidance Line (see Note 8) in January 1996.

The Company has entered into purchasing agreements with various national and
regional suppliers pursuant to which the Company agreed to purchase its
requirements of products (as defined in the agreements). If the Company exceeds
the agreed-upon purchasing levels, additional rebates and promotional allowances
may be payable by the suppliers. If the Company fails to meet agreed-upon
purchasing levels during the term of the agreements, the suppliers may elect to
extend the term of the agreements by one year, or a longer period, if necessary,
to reach agreed-upon purchasing levels.

13. INCOME TAXES

The income tax provision consists of the following:

F-19
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

13. INCOME TAXES--(CONTINUED)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities are presented below:

<TABLE>
<CAPTION>
DECEMBER 28, DECEMBER 27,
1994 1995
------------ ------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards................ $ 600 $1,100
------------ ------------
Total deferred tax assets................... 600 1,100

Deferred tax liabilities:
Tax in excess of book depreciation.............. 1,000 1,500
Excess tax deduction attributable to contract
rights............................................ 2,780 3,194
Other........................................... 624 627
------------ ------------
Total deferred tax liabilities.............. 4,404 5,321
------------ ------------
Total..................................... $5,004 $6,421
------------ ------------
------------ ------------
</TABLE>

The Company's effective income tax rate differed from the Federal statutory
rate as follows:
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
----------------------------------------------
DECEMBER 29, DECEMBER 28, DECEMBER 27,
1993 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
Federal statutory rate........... 34.0% 34.0% 34.0%
Excess of cost over net assets
acquired......................... 2.5 4.8 4.2
State & local taxes net of
Federal tax benefits........... 7.2 4.2 4.2
Other, net....................... (0.4) (0.4) (0.5)
--- --- ---
Effective income tax rate........ 43.3% 42.6% 41.9%
--- --- ---
--- --- ---
</TABLE>

At December 27, 1995, the Company had, for Federal income tax reporting, an
estimated net operating loss carryforward of approximately $2,900 that will
begin to expire in 2008. Certain costs of acquisitions were charged to excess of
cost over fair market value of assets acquired, which are deductible for tax
purposes. At December 27, 1995, the net estimated tax effect of these costs
($679 for financial statement reporting) was recorded as a reduction of excess
of cost over fair market value of assets acquired.

Income taxes paid in fiscal 1993, 1994 and 1995 were $16, $26 and $49,
respectively.

14. LITIGATION

In January 1993, the Company received a letter from a client terminating its
agreement with the Company. In the letter, the client offered to resolve the
situation by paying the Company an amount which the Company rejected as
inadequate. The concession agreement stated that in the event the agreement was
terminated for any reason, the Company was entitled to immediate repayment of
amounts loaned to the client under the terms of certain promissory notes, as
well as both amounts invested by the Company for equipment and for services
rendered by the Company to the client. The Company sued to compel repayment of
these amounts, and the Court granted the Company's motion for

F-20
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

14. LITIGATION--(CONTINUED)
summary judgment for the principal amount of the promissory notes plus accrued
interest and costs, and in August 1995, the Company received the sum of $1,180
in satisfaction thereof. The Company is seeking an additional judgment with
respect to the other amounts owed it under the terms of the concession
agreement, and the client has brought a counterclaim alleging that the Company
interfered with a prospective contractual relationship between the client and
another food service provider.

In January 1996, the Company was served with a complaint naming it as one of
five defendants in a lawsuit brought by multiple plaintiffs alleging damages
arising out of the Woodstock II Festival held in August 1994 in Saugerties, New
York. The promoter of the Festival is also a defendant. Plaintiffs were hired by
the Company (which had a concession agreement with the promoters of Woodstock
II) as subcontractors of food, beverage and/or merchandise. In their complaint,
which seeks approximately $5,900, plaintiffs allege damages arising primarily
from the failure to (i) provide adequate security; and (ii) prevent Festival
attendees from bringing food and beverages in to the Festival. The Company's
concession agreement with the promoter made the promoter solely responsible for
providing security and preventing food and beverage from being brought onto the
premises, and the Company has made claim for indemnification under applicable
provisions of the concession agreement, which has been rejected by the promoter.
On April 4, 1996, the other defendants named in the suit answered the complaint
and asserted cross-claims for contribution and indemnification against the
Company. The Company believes that its ultimate liability, if any, will not be
material.

15. RELATED PARTY TRANSACTION

For each of fiscal 1993, 1994 and 1995, the Company incurred $150 in
advisory fees with a company whose sole owner is the Chairman of the Board of
the Company.

16. MAJOR CLIENT

During fiscal 1993, 1994 and 1995, one client represented 35.9%, 19.5% and
13.7% of net sales, respectively.

F-21
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

17. QUARTERLY RESULTS (UNAUDITED)

The following summary shows the quarterly results of operations of the
Company for fiscal 1994 and 1995.

<TABLE>
<CAPTION>
FISCAL QUARTERS
----------------------------------------
FIRST SECOND THIRD FOURTH
------- ------- ------- -------
<S> <C> <C> <C> <C>
1994:
Net sales............................................. $13,908 $17,854 $24,061 $26,296
Gross profit.......................................... 1,422 1,347 2,375 3,142
Net income............................................ $ 163 $ 125 $ 565 $ 1,013
Net income per share(a)............................... $ 0.05 $ 0.03 $ 0.12 $ 0.30
Net income per share assuming full dilution(a)........ $ 0.04 $ 0.03 $ 0.12 $ 0.30

1995:
Net sales............................................. $23,429 $20,090 $26,340 $25,603
Gross profit.......................................... 2,134 1,668 3,338 2,746
Net income............................................ $ 208 $ 74 $ 1,045 $ 869
Net income per share(a)............................... $ 0.05 $ 0.01 $ 0.26 $ 0.07
Net income per share assuming full dilution(a)........ $ 0.04 $ 0.01 $ 0.26 $ 0.07
</TABLE>

- ------------

(a) Each period calculated separately.

18. SUBSEQUENT EVENTS

On March 29, 1996, the Board of Directors authorized the filing of a
registration statement with the Securities and Exchange Commission for the sale
by the Company of 2,890,218 shares of Common Stock to the public. In connection
therewith, the Company's Board of Directors has declared a 7-for-1 stock split
in the form of a stock dividend to be effected prior to the offering. Current
and prior year information has been restated to reflect this stock split. If the
offering is consummated, all of the currently outstanding Series A Convertible
Preferred Stock will convert automatically into 939,197 shares of Common Stock
as discussed in Note 10.

The Company plans to issue 2,890,218 shares at an assumed price of $13.00
per share, generating net proceeds of approximately $33,900, after deducting the
estimated underwriting discount and offering expenses to be paid by the Company.
The net proceeds will be used to repay obligations under the Amended Bank
Agreement and the subordinated notes as well as the amount required to
repurchase certain warrants (see Note 11). Any remaining funds will be used for
general corporate purposes.

F-22
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 27, 1995 MARCH 27, 1996
----------------- --------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash....................................................... $ 634 $ 1,362
Accounts receivable........................................ 7,548 9,557
Notes receivable........................................... 520 470
Inventories................................................ 2,099 2,515
Prepaid expenses and other current assets.................. 1,893 1,652
-------- --------------
Total current assets................................... 12,694 15,556

Contract rights, net......................................... 12,866 17,558
Fixtures and equipment, net.................................. 15,829 16,377
Notes receivable............................................. 1,391 1,421
Excess of cost over fair value of net assets acquired, net... 13,406 17,502
Other assets................................................. 4,395 5,343
-------- --------------
Total assets........................................... $60,581 $ 73,757
-------- --------------
-------- --------------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable and accrued expenses...................... $12,467 $ 16,122
Current portion of long-term debt.......................... 2,981 4,003
Current portion of subordinated debt....................... 1,745 2,026
-------- --------------
Total current liabilities.............................. 17,193 22,151

Deferred income taxes........................................ 6,421 7,645
Long-term debt............................................... 15,326 20,399
Subordinated debt............................................ 8,879 10,171
-------- --------------
Total liabilities...................................... 47,819 60,366

Commitments and contingencies

Stock warrants............................................... 1,380 2,420

Stockholders' equity:
Convertible Preferred Stock, $.01 par value, 250,000 shares
authorized, 134,171 and 134,171 issued and outstanding at
December 27, 1995 and March 27, 1996, respectively........... 1 1
Common Stock, $.01 par value, 7,000,000 shares authorized,
2,048,200 and 2,074,100 issued and outstanding at
December 27, 1995 and March 27, 1996, respectively........... 20 21
Additional paid-in capital................................. 8,933 9,302
Retained earnings.......................................... 2,617 1,836
Receivables from stockholders for purchase of Common
Stock........................................................ (189) (189)
-------- --------------
Total stockholders' equity............................. 11,382 10,971
-------- --------------
Total liabilities and stockholders' equity........... $60,581 $ 73,757
-------- --------------
-------- --------------
</TABLE>

See accompanying notes to unaudited consolidated financial statements.

F-23
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------
MARCH 29, MARCH 27,
1995 1996
--------- ---------
<S> <C> <C>
Net sales............................................................... $23,429 $24,160
Cost of sales........................................................... 21,295 21,630
--------- ---------
Gross profit............................................................ 2,134 2,530
General and administrative expenses..................................... 1,090 1,336
--------- ---------
Income from operations.................................................. 1,044 1,194
Interest expense, net................................................... 696 767
--------- ---------
Income before tax provision............................................. 348 427
Tax provision........................................................... 140 168
--------- ---------
Net income.............................................................. 208 259
Accretion to redemption value of warrants............................... (72) (1,040)
--------- ---------
Net income (loss) available to Common Stockholders...................... $ 136 $ (781)
--------- ---------
--------- ---------
Earnings (loss) per share of Common Stock............................... $ 0.04 $ (0.23)
--------- ---------
--------- ---------
Average number of shares of Common Stock outstanding.................... 3,139 3,408
--------- ---------
--------- ---------
Earnings (loss) per share assuming full dilution........................ $ 0.04 $ (0.22)
--------- ---------
--------- ---------
Average number of shares of Common Stock outstanding assuming full
dilution................................................................ 3,158 3,510
--------- ---------
--------- ---------
</TABLE>

See accompanying notes to unaudited consolidated financial statements.

F-24
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
RECEIVABLES
FROM
CONVERTIBLE STOCKHOLDERS
PREFERRED STOCK COMMON STOCK ADDITIONAL RETAINED FOR
---------------- ------------------ PAID-IN EARNINGS PURCHASE OF
SHARES AMOUNT SHARES AMOUNT CAPITAL (DEFICIT) COMMON STOCK
------- ------ --------- ------ ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 24, 1994............. 102,592 $1 2,048,200 $ 20 $7,433 $ 1,321 $ (189)
Stock warrant accretion............... (72)
Net income............................ 208
- --
------- --------- ---------- -------- -----
Balance, March 29, 1995................ 102,592 $1 2,048,200 $ 20 $7,433 $ 1,457 $ (189)
- --
- --
------- --------- ---------- -------- -----
------- --------- ---------- -------- -----
Balance, December 27, 1995............. 134,171 $1 2,048,200 $ 20 $8,933 $ 2,617 $ (189)
Stock warrant accretion............... (1,040)
Shares issued......................... 25,900 1 369
Net income............................ 259
- --
------- --------- ---------- -------- -----
Balance, March 27, 1996................ 134,171 $1 2,074,100 $ 21 $9,302 $ 1,836 $ (189)
- --
- --
------- --------- ---------- -------- -----
------- --------- ---------- -------- -----

TOTAL
STOCKHOLDERS'
EQUITY
-------------
<S> <C>
Balance, December 24, 1994............. $ 8,586
Stock warrant accretion............... (72)
Net income............................ 208

-------------
Balance, March 29, 1995................ $ 8,722

-------------
-------------
Balance, December 27, 1995............. $11,382
Stock warrant accretion............... (1,040)
Shares issued......................... 370
Net income............................ 259

-------------
Balance, March 27, 1996................ $10,971

-------------
-------------
</TABLE>

See accompanying notes to unaudited consolidated financial statements.

F-25
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------
MARCH 29, MARCH 27,
1995 1996
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................................ $ 208 $ 259
Adjustments to reconcile net income to net cash (used in) provided by
operating activities:
Depreciation and amortization........................................... 916 957
Deferred income tax provision........................................... 137 167
Changes in operating assets and liabilities:
Accounts receivable................................................... 666 26
Inventories........................................................... 58 (195)
Prepaid expenses and other current assets............................. (496) 578
Accounts payable and accrued expenses................................. (692) 833
Increase in other assets.................................................. (1,061) (995)
--------- ---------
Net cash (used in) provided by operating activities..................... (264) 1,630
--------- ---------
Cash flows from investing activities:
Increase in contract rights............................................... -- (2,462)
Purchases of fixtures and equipment....................................... (434) (1,067)
Acquisition of business, net of cash acquired............................. -- (3,215)
Collection of notes receivable............................................ 424 19
--------- ---------
Net cash used in investing activities................................... (10) (6,725)
--------- ---------
Cash flows provided by financing activities:
Borrowings under long-term debt agreement................................. 1,415 6,909
Payment of long-term debt................................................. (827) (814)
Payment of subordinated debt.............................................. (63) (272)
--------- ---------
Net cash provided by financing activities............................... 525 5,823
--------- ---------
Increase in cash.......................................................... 251 728
Cash, beginning of period................................................. 1,532 634
--------- ---------
Cash, end of period....................................................... $ 1,783 $ 1,362
--------- ---------
--------- ---------
</TABLE>

See accompanying notes to unaudited consolidated financial statements.

F-26
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 29, 1995 AND MARCH 27, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation--The unaudited consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries. All
significant intercompany transactions and accounts have been eliminated.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted. The unaudited financial statements include all
adjustments, all of which are of a normal recurring nature, which, in the
opinion of management, are necessary for a fair presentation of the results of
operations for the three months ended March 29, 1995 and March 27, 1996. The
accompanying unaudited consolidated financial statements should be read in
conjunction with the consolidated financial statements of the Company and notes
thereto included elsewhere in this prospectus for the fiscal year ended December
27, 1995.

Earnings (Loss) Per Share--Earnings (loss) per share of Common Stock is
computed based on the weighted average number of common and common equivalent
shares outstanding during each year. Earnings (loss) per share assuming full
dilution gives effect to the assumed exercise of all dilutive stock options and
the assumed conversion of dilutive convertible securities (warrants) except when
their effect is antidilutive. In calculating earnings (loss) per share, net
income has been reduced for the accretion to the redemption value of warrants by
$72 and $1,040 for the three months ended March 29, 1995 and March 27, 1996,
respectively.

2. ACQUISITIONS

The aforementioned acquisitions have been accounted for under the purchase
method of accounting and, accordingly, the accompanying unaudited consolidated
financial statements reflect the fair values of the assets acquired and
liabilities assumed or incurred as of the effective date of the acquisitions.
The results of operations of the acquired companies are included in the
accompanying unaudited consolidated financial statements since their respective
dates of acquisition.

The following table summarizes pro forma information as follows: (i) with
respect to the income statement data for the three months ended March 29, 1995,
as if the acquisitions of Sun West and

F-27
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE THREE MONTHS ENDED MARCH 29, 1995 AND MARCH 27, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

2. ACQUISITIONS--(CONTINUED)
Northwest had been completed as of the beginning of such period; and (ii) with
respect to the income statement data for the three months ended March 27, 1996,
as if the acquisition of Sun West had been completed as of the beginning of such
period:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------
MARCH 29, MARCH 27,
1995 1996
--------- ---------
<S> <C> <C>
SUMMARY STATEMENT OF INCOME DATA:
Net sales........................................ $30,614 $28,201
Income from operations........................... 858 435
Net income....................................... 150 115
Net income (loss) per share assuming full
dilution......................................... 0.04 (0.29)
</TABLE>

3. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consists of the following:

<TABLE>
<CAPTION>
DEC. 27, MARCH 27,
1995 1996
-------- ---------
<S> <C> <C>
Accounts payable....................................... $ 5,197 $ 6,129
Accrued wages and benefits............................. 1,607 2,904
Accrued rent to clients................................ 2,576 3,163
Accrued other.......................................... 3,087 3,926
-------- ---------
Total............................................ $ 12,467 $16,122
-------- ---------
-------- ---------
</TABLE>

4. LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DEC. 27, MARCH 27,
1995 1996
-------- ---------
<S> <C> <C>
Term Loan.............................................. $ 9,100 $ 8,575
Working Capital Line................................... 6,000 7,214
Guidance Line.......................................... 3,207 8,613
Notes payable.......................................... -- --
-------- ---------
18,307 24,402
Less: current portion.................................. 2,981 4,003
-------- ---------
Total............................................ $ 15,326 $20,399
-------- ---------
-------- ---------
</TABLE>

The Company's bank agreement was amended on April 24, 1995 as part of a
refinancing (the "Amended Bank Agreement") and provides for (i) a term loan in
the amount of $10,500 (the "Term Loan") which is repayable in 60 equal monthly
installments commencing May 1, 1995, (ii) a working capital revolving credit
line (the "Working Capital Line") for general obligations of the Company

F-28
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE THREE MONTHS ENDED MARCH 29, 1995 AND MARCH 27, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

4. LONG-TERM DEBT--(CONTINUED)
expiring on March 31, 1997, in the maximum amount of $6,000, (iii) a line of
credit to provide for future expansion by the Company (the "Guidance Line") in
the maximum amount of $11,500, and (iv) requirements that the bank issue up to
$2,000 in letters of credit ("Letters of Credit") on the Company's behalf. The
maximum borrowing under the Amended Bank Agreement was $30,000 as of March 27,
1996.

In connection with the Offering, the Company has received a commitment from
certain lenders to revise its credit facility to increase its maximum borrowing
available upon the closing of the Offering to $75.0 million.

On March 27, 1996, the prime rate was 8.25%. Interest payable on the Term
Loan, Working Capital Line and Guidance Line is the prime rate plus 1.5%, 1.25%
and 1.5%, respectively.

5. SUBORDINATED DEBT

In March 1996, as part of the acquisition of Sun West (see Note 3), the
Company issued to the stockholders of Sun West the following: (1) a subordinated
promissory note with a face value of $1,350 with a 7% interest rate payable in
four annual installments beginning in 1998; and (2) a subordinated promissory
note with a face value of $638 with a 7% interest rate payable in three annual
installments beginning in 1997. The notes were discounted to present value using
a market rate of 10%. The respective balances at March 27, 1996 were $1,199 and
$590, of which $1,199 and $318 were classified as long term.

In July 1995, as part of the purchase price of Northwest (see Note 3), the
Company issued a $1,350 note to the seller with a 6% interest rate payable in
six equal annual installments. The note was discounted to present value using a
market rate of 12.5% and had a balance at March 27, 1996 of $1,176, of which
$947 was classified as long-term.

6. STOCKHOLDERS' EQUITY

F-29
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE THREE MONTHS ENDED MARCH 29, 1995 AND MARCH 27, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

6. STOCKHOLDERS' EQUITY--(CONTINUED)
the Amended Bank Agreement and the subordinated notes as well as the amount
required to repurchase certain warrants. Any remaining funds will be used for
general corporate purposes.

7. INCOME TAXES

The income tax provision consists of the following:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------
MARCH 29, MARCH 27,
1995 1996
--------- ---------
<S> <C> <C>
Current:
Federal............................................................... $-- $--
State and local....................................................... 3 1
--------- ---------
Total current..................................................... 3 1
--------- ---------
Deferred:
Federal............................................................... 113 124
State and local....................................................... 24 43
--------- ---------
Total deferred.................................................... 137 167
--------- ---------
Total........................................................... $ 140 $ 168
--------- ---------
--------- ---------
</TABLE>

At March 27, 1996, the Company had, for Federal income tax reporting, an
estimated net operating loss carryforward of approximately $2,900 that will
begin to expire in 2008. Certain costs of acquisitions were charged to excess of
cost over fair market value of assets acquired, which are deductible for tax
purposes. At March 27, 1996, the net estimated tax effect of these costs ($679
for financial statement reporting) was recorded as a reduction of excess of cost
over fair market value of assets acquired.

8. MAJOR CLIENT

During the three months ended March 29, 1995 and March 27, 1996, one client
represented 10.45% and 14.96% of net sales, respectively.

9. SUBSEQUENT EVENTS

On April 17, 1996, the Company signed a letter of intent to acquire all the
outstanding common stock of a food service provider with estimated annual
revenue of $8,000 in the education market, primarily servicing school districts
in the northeastern United States. The estimated purchase price is $3,400.

F-30
<PAGE>
INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
Sun West Services, Inc.
Phoenix, Arizona

We have audited the accompanying balance sheets of Sun West Services, Inc.
as of December 31, 1994 and 1995, and the related statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Sun West Services, Inc. at December 31, 1994
and 1995, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.

DELOITTE & TOUCHE LLP
Phoenix, Arizona
March 15, 1996 (March 25, 1996 as to the last paragraphs of Notes 3 and 9)

F-31
<PAGE>
SUN WEST SERVICES, INC.
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1994 1995
------ ------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................................ $ 169 $ 343
Accounts receivable, net................................................. 2,367 2,285
Inventories.............................................................. 238 229
Prepaid expenses and other current assets................................ 102 69
Deferred income taxes.................................................... 39 83
------ ------
Total current assets................................................. 2,915 3,009
Property and equipment, net................................................ 225 203
Contract rights, net....................................................... 59 22
------ ------
Total assets......................................................... $3,199 $3,234
------ ------
------ ------

LIABILITIES AND STOCKHOLDERS' EQUITY
(CAPITAL DEFICIENCY)
Current liabilities:
Accounts payable......................................................... $1,723 $1,893
Accrued expenses......................................................... 270 366
Income taxes payable..................................................... 37 --
Line of credit........................................................... 676 708
Current portion of long-term debt and capital lease obligations.......... 41 48
------ ------
Total current liabilities............................................ 2,747 3,015
------ ------
Long-term debt and capital lease obligations, net of current portion....... 62 28
Deferred income taxes...................................................... 20 13
------ ------
Total liabilities.................................................... 2,829 3,056
------ ------
Commitments and contingencies (Notes 5 and 7)
Redeemable Class B Common Stock, $.01 par value, 200,000 shares
authorized; 7,216 and 6,327 issued and outstanding at December 31, 1994
and 1995, respectively................................................... 289 253
------ ------
Stockholders' equity (capital deficiency):
Class A Common Stock, $.01 par value, 1,000,000 shares authorized;
25,000 shares issued and outstanding,.................................. -- --
Additional paid-in capital............................................... 75 75
Retained earnings (deficit).............................................. 6 (150)
------ ------
Total stockholders' equity (capital deficiency)...................... 81 (75)
------ ------
Total liabilities and stockholders' equity (capital
deficiency)................................................................ $3,199 $3,234
------ ------
------ ------
</TABLE>

See accompanying notes to financial statements.

F-32
<PAGE>
SUN WEST SERVICES, INC.
STATEMENTS OF OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1993 1994 1995
------- ------- -------
<S> <C> <C> <C>
Net sales................................................... $12,696 $16,241 $17,043
Cost of sales............................................... 11,197 14,493 15,481
------- ------- -------
Gross profit................................................ 1,499 1,748 1,562
General and administrative expenses......................... 1,296 1,486 1,661
------- ------- -------
Income (loss) from operations............................... 203 262 (99)
Interest expense............................................ 84 89 115
------- ------- -------
Income (loss) before tax provision (benefit)................ 119 173 (214)
Tax provision (benefit)..................................... 44 60 (58)
------- ------- -------
Net income (loss)........................................... $ 75 $ 113 $ (156)
------- ------- -------
------- ------- -------
</TABLE>

See accompanying notes to financial statements.

F-33
<PAGE>
SUN WEST SERVICES, INC.
STATEMENTS OF STOCKHOLDERS EQUITY (CAPITAL DEFICIENCY)
YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
CLASS A
COMMON STOCK ADDITIONAL RETAINED
--------------------- PAID-IN EARNINGS
SHARES PAR VALUE CAPITAL (DEFICIT) TOTAL
-------- --------- ---------- --------- -----
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1993..................... 25,000 $ -- $ 75 $(182) $(107)
Net income................................. 75 75
-------- --------- --- --------- -----
Balance, December 31, 1993................... 25,000 -- 75 (107) (32)
Net income................................. 113 113
-------- --------- --- --------- -----
Balance, December 31, 1994................... 25,000 -- 75 6 81
Net loss................................... (156) (156)
-------- --------- --- --------- -----
Balance, December 31, 1995................... 25,000 $ -- $ 75 $(150) $ (75)
-------- --------- --- --------- -----
-------- --------- --- --------- -----
</TABLE>

See accompanying notes to financial statements.

F-34
<PAGE>
SUN WEST SERVICES, INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
----------------------
1993 1994 1995
----- ---- -----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)................................................... $ 75 $113 $(156)
Adjustments to reconcile net income (loss) to net cash (used in)
provided by operating activities:
Depreciation and amortization..................................... 43 77 117
Deferred income tax provision..................................... 11 16 (58)
Changes in operating assets and liabilities:
Accounts receivable............................................... (466) (476) 82
Inventories....................................................... (20) (87) 9
Prepaid expenses and other current assets......................... (30) 17 33
Accounts payable.................................................. 256 679 171
Accrued expenses and other current liabilities.................... 116 72 66
----- ---- -----
Net cash (used in) provided by operating activities............. (15) 411 264
----- ---- -----
Cash flows from investing activities:
Increase in contract rights......................................... -- (81) --
Purchases of property and equipment................................. (103) (43) (37)
----- ---- -----
Net cash used in operating activities........................... (103) (124) (37)
----- ---- -----
Cash flows from financing activities:
Net borrowings (repayments) on line of credit....................... 232 (165) 28
Issuance of long-term debt.......................................... -- 111 --
Payments of long-term debt and capital lease obligations............ (5) (36) (46)
Redemption of Class B Common Stock.................................. (30) (33) (35)
----- ---- -----
Net cash provided by (used in) financing activities............. 197 (123) (53)
----- ---- -----
Increase in cash and cash equivalents................................. 79 164 174
Cash and cash equivalents, beginning of year.......................... (74) 5 169
----- ---- -----
Cash and cash equivalents, end of year................................ $ 5 $169 $ 343
----- ---- -----
----- ---- -----
</TABLE>

See accompanying notes to financial statements.

F-35
<PAGE>
SUN WEST SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
(IN THOUSANDS)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business--Sun West Services, Inc. (the "Company") was incorporated in the
State of New Mexico on August 28, 1981 to engage in providing contract food
service management. The Company currently operates approximately 70 food service
operations in the southwestern United States.

Significant Accounting Policies--A summary of significant accounting
policies follows:

a. Cash and cash equivalents for the purposes of the balance sheet and
statement of cash flows include cash on hand, cash in banks and money market
accounts.

b. Inventories are stated at the lower of cost determined on a first-in,
first-out (FIFO) basis, or market and include food, beverages and food
preparation supplies.

c. Concentrations of Credit Risk--Accounts receivable are due from a
limited number of customers that are both public and private entities. These
customers are all located in the southwestern United States. The Company had
an allowance for doubtful accounts of $19 at December 31, 1995.

d. Property and equipment are recorded at cost and are depreciated using
the straight line method based over the estimated useful lives of the
related assets, which is primarily 5 years. Expenditures for maintenance and
repairs are charged to expense as incurred.

e. Contract Rights--Certain directly attributable costs incurred by the
Company in obtaining contracts with clients are recorded as contract rights
on the Company's balance sheet. Such costs are being amortized over the
contract life. Accumulated amortization was $22 and $58 at December 31, 1994
and 1995, respectively. These costs are periodically reviewed for
recoverability.

f. Income Taxes--Deferred income tax assets and liabilities are
recognized for the effects of temporary differences between the financial
statement carrying amounts and the income tax basis of assets and
liabilities using enacted tax rates in effect in the years in which the
differences are expected to reverse. For income tax purposes, the Company
utilizes a fiscal year of June 30.

g. Financial Instruments--The carrying values of cash and cash
equivalents, accounts receivable, accounts payable and accrued expenses
approximate fair values due to the short-term maturities of these
instruments. Variable rate long-term debt instruments are estimated to
approximate fair values.

h. Sales revenues from food and beverage concession and catering
contract food services are recognized as the services are provided. The
Company generally enters into one of two types of contracts, profit and loss
contracts or profit sharing contracts:

1) Profit and Loss Contracts ("P&L")--Under P&Ls, the Company
receives all the revenues and bears all the expenses of the operation.
While the Company often benefits from greater upside potential with a P&L
contract, it is responsible for the costs of running the food service
operation and consequently bears greater risk than with a profit sharing
contract. For the year ended December 31, 1995, approximately 49% of the
Company's net sales were associated with P&L contracts.

F-36
<PAGE>
SUN WEST SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES--(CONTINUED)
2) Profit Sharing Contracts--Under profit sharing contracts, the
Company receives a per meal charge plus a fixed monthly fee as an
administrative fee. In addition, the Company is reimbursed for all
on-site expenses incurred in the course of providing food and beverage
services such as food and supply costs and employee wages. Under this
type of contract, the Company does not bear responsibility for losses
incurred, if any, other than for certain guaranteed returns under some of
these contracts (see Note 6). For the year ended December 31, 1995,
approximately 51% of the Company's net sales were associated with profit
sharing contracts.

Net sales is comprised of the following for the years ended December 31:

<TABLE>
<CAPTION>
1993 1994 1995
------- ------- -------
<S> <C> <C> <C>
Profit and loss contract revenues............. $ 5,152 $ 7,051 $ 8,106
Profit sharing contract revenues:
Per meal and fixed fees..................... 805 927 808
Reimbursed food and supply costs............ 3,922 4,997 4,984
Reimbursed employee wages and benefits...... 2,817 3,266 3,145
------- ------- -------
Total................................... $12,696 $16,241 $17,043
------- ------- -------
------- ------- -------
</TABLE>

i. Use of Estimates--The preparation of financial statements in
conformity with generally accepted accounting principles necessarily
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

j. New Accounting Pronouncements--In March 1995, the Financial
Accounting Standards Board issued Statement of Financial Accounting
Standards ("SFAS") No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of. SFAS No. 121 is required
to be adopted in the first quarter of 1996. The Company has not completed
the process of evaluating the impact that will result from adopting this
Statement. However, management does not believe the adoption will have a
significant impact on the Company's financial position and results of
operations.

2. PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31:

<TABLE>
<CAPTION>
1994 1995
---- ----
<S> <C> <C>
Leasehold improvements....................................... $ 76 $ 76
Furniture, fixtures and equipment............................ 280 368
---- ----
356 444
Less: accumulated depreciation and amortization.............. 131 241
---- ----
Property and equipment, net.................................. $225 $203
---- ----
---- ----
</TABLE>

F-37
<PAGE>
SUN WEST SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS)

2. PROPERTY AND EQUIPMENT--(CONTINUED)
Assets acquired under capital leases totaled $19 and $22 during the years
ended December 31, 1994 and 1995, respectively.

3. REVOLVING LINE OF CREDIT

The Company has an $850 revolving bank line of credit. The outstanding
balance of the line at December 31, 1994 and 1995 was $676 and $708,
respectively. Outstanding amounts bear interest at prime (8.5% at December 31,
1995) plus 2%, are collateralized by substantially all assets of the Company,
and are guaranteed by the Company's stockholders. The line of credit expires in
September 1996 and requires the Company to maintain certain covenants, which the
Company was not in compliance with at December 31, 1995.

On March 25, 1996, in connection with the sale of all the outstanding stock
of the Company as described in Note 9, the line of credit was repaid.

4. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS

Long-term debt and capital lease obligations at December 31 consists of the
following:

1994 1995
---- ----
Note payable to bank, interest at prime (8.5% at December 31,
1995) plus 2%, payable in monthly installments of $2.2 plus
interest, due February 1997, collateralized by all equipment,
guaranteed by the Company's stockholders....................... $56 $29
Obligations under capital leases for a copy machine, a
telephone system and various automobiles at interest rates
ranging from 6.35% to 19.264%, maturing from December 1996
through May 2000............................................. 16 26
Note payable to finance company, interest at 8.173%, payable in
monthly installments of $0.5 including interest, due March
1998, collateralized by an automobile........................ 16 11
Note payable to finance company, interest at 9.75%, payable in
monthly installments of $0.3 including interest, due November
1999, collateralized by an automobile.......................... 11 10
Note payable to finance company, interest at 6.9%, payable in
monthly installments of $0.5 including interest, due August
1995, collateralized by an automobile........................ 4 --
---- ----
103 76
Less: current portion.......................................... 41 48
---- ----
Total.................................................... $62 $28
---- ----
---- ----

F-38
<PAGE>
SUN WEST SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS)

4. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS--(CONTINUED)
Maturities at December 31, 1995 are as follows:

1996................................................................. $48
1997................................................................. 16
1998................................................................. 8
1999................................................................. 3
---
Total.......................................................... $75
---
---

Interest paid on the Company's line of credit and other debt was $84, $89
and $116 for the years ended December 31, 1993, 1994 and 1995, respectively.

5. INCOME TAXES

The income tax provision (benefit) for the years ended December 31 is
comprised of the following:

1993 1994 1995
---- ---- ----
Current:
Federal............................................. $25 $33 $--
State............................................... 9 11 --
---- ---- ----
Total current................................... 34 44 --
---- ---- ----
Deferred:
Federal............................................. 8 12 (44)
State............................................... 2 4 (14)
---- ---- ----
Total deferred.................................. 10 16 (58)
---- ---- ----
Total......................................... $44 $60 $(58)
---- ---- ----
---- ---- ----

A reconciliation of the difference between the income tax provision
(benefit) and income taxes at the statutory United States Federal income tax
rate for the years ended December 31 is as follows:

1993 1994 1995
---- ---- ----
[S] [C] [C] [C]
Income tax provision (benefit) at statutory United
States Federal income tax rate....................... $ 41 $ 59 $(73)
Increase (decrease) attributed to graduated tax
rates.................................................. (10) (14) 17
Increase (decrease) attributed to state taxes, net..... 7 10 (9)
Other.................................................. 6 5 7
---- ---- ----
Income tax provision (benefit)......................... $ 44 $ 60 $(58)
---- ---- ----
---- ---- ----

Income taxes paid were $19, $21 and $24 for the years ended December 31,
1993, 1994 and 1995, respectively.

F-39
<PAGE>
SUN WEST SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS)

5. INCOME TAXES--(CONTINUED)
Deferred income taxes are provided to reflect temporary differences in the
basis of net assets for income tax and financial reporting purposes. The
tax-effected temporary differences and net operating loss carryforwards which
comprise deferred taxes at December 31 are as follows:

<TABLE>
<CAPTION>
1994 1995
---------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS LIABILITIES TOTAL ASSETS LIABILITIES TOTAL
------ ----------- ----- ------ ----------- -----
Allowance for doubtful accounts...................... $ 16 $-- $16 $ 6 $-- $ 6
Non-deductible contract guarantee accrual............ -- -- -- 19 -- 19
Accrued employee vacation............................ 22 22 20 20
Net operating loss................................... -- -- -- 38 -- 38
------ ----- ------ -----
Total current...................................... 38 -- 38 83 -- 83
------ ----- ------ -----
Accelerated tax depreciation......................... -- (20) (20) -- (13) (13)
------ ----- ----- ------ ----- -----
Total non-current.................................. -- (20) (20) -- (13) (13)
------ ----- ----- ------ ----- -----
Total.......................................... $ 38 $ (20) $18 $ 83 $ (13) $ 70
------ ----- ----- ------ ----- -----
------ ----- ----- ------ ----- -----
</TABLE>

The Company believes that realization of the net deferred tax asset is more
likely than not, and therefore no valuation allowance is necessary.

6. COMMITMENTS AND CONTINGENCIES

The Company leases certain equipment and automobiles under operating leases
expiring on various dates through 1997. The following is a schedule, by year, of
future minimum noncancelable operating lease payments due as of December 31,
1995:

1996................................................................. $12
1997................................................................. --
---
Total............................................................ $12
---
---

Rent expense for the above leases was $1, $7 and $17 for the years ended
December 31, 1993, 1994 and 1995, respectively.

The Company rents land and building space for its corporate office on a
month-to-month basis for $6 per month from an Arizona limited liability
corporation whose owners are both directors and stockholders of the Company.
Rent expense for this facility for the years ended December 31, 1993, 1994 and
1995 was $0, $40 and $76, respectively.

The Company has contracts with customers under which the Company guarantees
that the customer will earn a specified minimum return. Payments by the Company
under such guarantees were approximately $0, $0 and $153 for the years ended
December 31, 1993, 1994 and 1995, respectively. Management estimates that it is
probable that the Company will incur losses aggregating approximately $65
related to three such guarantees, all of which expire by December 31, 1996,
during the year ending December 31, 1996; therefore, such amount has also been
accrued as of December 31, 1995.

Five former employees of the Company have filed charges of employment
discrimination with the Equal Employment Opportunity Commission pertaining to
their termination of employment. While the

F-40
<PAGE>
SUN WEST SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS)

6. COMMITMENTS AND CONTINGENCIES--(CONTINUED)
Company is unable to predict the outcome of these uncertainties, it is
management's opinion that the ultimate outcome will not have a material adverse
effect on the financial position, results of operations or cash flows of the
Company.

7. RELATED PARTY TRANSACTIONS

Legal fees of approximately $4, $9 and $20 were paid to a related party who
is both a director and stockholder of the Company for the years ended December
31, 1993, 1994 and 1995, respectively.

As discussed in Note 6, the Company leases its corporate office space from a
related party.

8. REDEEMABLE CLASS B COMMON STOCK

The Company's redeemable Class B Common Stock was sold to a relative of an
officer and stockholder of the Company in 1992 for $375 with the provision that
one-half of such shares would be redeemed ratably over a five-year period at an
aggregate price of $188 plus interest at 9.5%, with a balloon payment after five
years for the remaining shares in 1996.

9. SUBSEQUENT EVENTS

Effective January 1, 1996, the Company adopted a defined contribution 401(k)
and profit sharing plan covering all employees who have 1,000 hours of service.
Employees may elect to contribute up to 15% of their annual gross compensation.
The Company shall contribute 10% of the amount contributed by employees, on the
first 5% of the employee's contribution.

On February 5, 1996, the Company signed a letter of intent, subject to
certain closing conditions, with Fine Host Corporation whereby Fine Host
Corporation was to purchase all of the Company's outstanding Class A and Class B
Common Stock for $5,238, subject to certain adjustments set forth in the stock
purchase agreement.

On March 25, 1996, the transaction described in the preceding paragraph was
consummated.

F-41
<PAGE>
SUN WEST SERVICES, INC.
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 25,
1995 1996
------------ ---------
<S> <C> <C>
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents.......................................... $ 343 $ 114
Accounts receivable, net........................................... 2,285 1,948
Inventories........................................................ 229 343
Prepaid expenses and other current assets.......................... 69 34
Deferred income taxes.............................................. 83 79
------------ ---------
Total current assets........................................... 3,009 2,518
Property and equipment, net.......................................... 203 213
Contract rights, net................................................. 22 21
------------ ---------
Total assets................................................... $3,234 $ 2,752
------------ ---------
------------ ---------

LIABILITIES AND CAPITAL DEFICIENCY
Current liabilities:
Accounts payable................................................... $1,893 $ 1,782
Accrued expenses................................................... 366 596
Line of credit..................................................... 708 140
Current portion of long-term debt and capital lease obligations.... 48 42
------------ ---------
Total current liabilities...................................... 3,015 2,560
------------ ---------
Long-term debt and capital lease obligations, net of current
portion.............................................................. 28 21
Deferred income taxes................................................ 13 9
------------ ---------
Total liabilities.............................................. 3,056 2,590
------------ ---------
Commitments and contingencies (Note 4)
Redeemable Class B Common Stock, $.01 par value, 200,000 shares
authorized; 6,327 and 6,092 issued and outstanding at December 31,
1995 and March 25, 1996, respectively................................ 253 243
------------ ---------
Capital deficiency:
Class A Common Stock, $.01 par value, 1,000,000 shares authorized;
25,000 shares issued and outstanding,............................ -- --
Additional paid-in capital......................................... 75 75
Deficit............................................................ (150) (156)
------------ ---------
Total capital deficiency....................................... (75) (81)
------------ ---------
Total liabilities and capital deficiency................... $3,234 2,752
------------ ---------
------------ ---------
</TABLE>

See accompanying notes to unaudited financial statements.

F-42
<PAGE>
SUN WEST SERVICES, INC.
STATEMENTS OF OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------
MARCH 31, MARCH 25,
1995 1996
--------- ---------
<S> <C> <C>
(UNAUDITED)
Net sales........................................................... $ 4,620 $ 4,041
Cost of sales....................................................... 4,373 3,637
--------- ---------
Gross profit........................................................ 247 404
General and administrative expenses................................. 389 393
--------- ---------
Income (loss) from operations....................................... (142) 11
Interest expense.................................................... 23 17
--------- ---------
Loss before tax benefit............................................. (165) (6)
Tax benefit......................................................... 53 --
--------- ---------
Net loss............................................................ $ (112) $ (6)
--------- ---------
--------- ---------
</TABLE>

See accompanying notes to unaudited financial statements.

F-43
<PAGE>
SUN WEST SERVICES, INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------
MARCH 31, MARCH 25,
1995 1996
--------- ---------
<S> <C> <C>
(UNAUDITED)
Cash flows from operating activities:
Net loss.............................................................. $(112) $ (6)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization....................................... 49 37
Deferred income tax provision....................................... (53)
Changes in operating assets and liabilities:
Accounts receivable................................................. (189) 337
Inventories......................................................... 15 (114)
Prepaid expenses and other current assets........................... 81 35
Accounts payable.................................................... 97 (111)
Accrued expenses and other current liabilities...................... (26) 230
--------- ---------
Net cash (used in) provided by operating activities............... (138) 408
--------- ---------
Cash flows from investing activities:
Increase in contract rights........................................... -- (7)
Purchases of property and equipment................................... (28) (42)
Proceeds from sale of property and equipment.......................... -- 3
--------- ---------
Net cash used in investing activities............................. (28) (46)
--------- ---------
Cash flows from financing activities:
Net borrowings (repayments) on line of credit......................... 147 (568)
Payments of long-term debt and capital lease obligations.............. (15) (13)
Redemption of Class B Common Stock.................................... (8) (10)
--------- ---------
Net cash provided by (used in) financing activities............... 124 (591)
--------- ---------
Decrease in cash and cash equivalents................................... (42) (229)
Cash and cash equivalents, beginning of period.......................... 168 343
--------- ---------
Cash and cash equivalents, end of period................................ $ 126 $ 114
--------- ---------
--------- ---------
</TABLE>

See accompanying notes to unaudited financial statements.

F-44
<PAGE>
SUN WEST SERVICES, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND MARCH 25, 1996
(IN THOUSANDS, EXCEPT SHARE DATA)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted. The financial statements include all adjustments of a
normal recurring nature which, in the opinion of management, are necessary for a
fair presentation of the results of operations for the three months ended March
31, 1995 and March 25, 1996. The accompanying unaudited financial statements
should be read in conjunction with the financial statements and notes thereto
included elsewhere in this prospectus for the fiscal year ended December 31,
1995.

2. SALE OF SUN WEST SERVICES, INC.

On March 25, 1996, Fine Host Corporation ("Fine Host") acquired 100% of the
outstanding Class A and Class B Common Stock of Sun West Services, Inc. The
selling price was approximately $5,200 consisting of cash, five-year
subordinated notes to the sellers with interest at 7% and 25,900 shares of Fine
Host Common Stock.

3. INCOME TAXES

A reconciliation of the difference between the income tax benefit and income
taxes at the statutory United States Federal income tax rate is as follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------
MARCH 31, 1995 MARCH 25, 1996
-------------- --------------
<S> <C> <C>
Income tax benefit at statutory United States Federal income
tax rate..................................................... (56) $ (3)
Decrease attributed to graduated tax rates..................... 13 1
Increase attributed to state taxes, net........................ (9) --
Other.......................................................... (1) 2
----- -----
Income tax benefit............................................. $(53) $ --
----- -----
----- -----
</TABLE>

Income taxes paid were $4 for the three months ended March 25, 1996.

F-45
<PAGE>
SUN WEST SERVICES, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND MARCH 25, 1996
(IN THOUSANDS, EXCEPT SHARE DATA)

3. INCOME TAXES--(CONTINUED)
Deferred income taxes are provided to reflect temporary differences in the
basis of net assets for income tax and financial reporting purposes. The
tax-effected temporary differences and net operating loss carryforwards which
comprise deferred taxes at March 25, 1996 are as follows:

<TABLE>
<CAPTION>
ASSETS LIABILITIES TOTAL
------ ----------- -----
<S> <C> <C> <C>
Allowance for doubtful accounts...................................... $ 6 $-- $ 6
Non-deductible contract guarantee accrual............................ 23 -- 23
Accrued employee vacation............................................ 32 32
Net operating loss................................................... 18 -- 18
------ -----
Total current...................................................... 79 -- 79
------ -----
Accelerated tax depreciation......................................... -- (9) (9)
------ ----- -----
Total non-current.................................................. -- (9) (9)
------ ----- -----
Total.......................................................... $ 79 $ (9) $70
------ ----- -----
------ ----- -----
</TABLE>

The Company believes that realization of the net deferred tax asset is more
likely than not, and therefore no valuation allowance is necessary.

4. COMMITMENTS AND CONTINGENCIES

The Company leases certain equipment and automobiles under operating leases
expiring on various dates through 1998. The following is a schedule, by year, of
future minimum noncancelable operating lease payments due as of March 25, 1996:

1997.................................................................. $ 6
1998.................................................................. 1
---
Total............................................................. $ 7
---
---

Rent expense for the above leases was $4 for the three months ended March
25, 1996.

The Company has contracts with customers under which the Company guarantees
that the customer will earn a specified minimum return. Payments by the Company
under such guarantees were approximately $29 and $21 for the three months ended
March 31, 1995 and March 25, 1996, respectively. Management estimates that it is
probable that the Company will incur losses aggregating approximately $76
related to three such guarantees, all of which expire by December 31, 1996,
during the remainder of the year ending December 31, 1996; therefore, such
amount has also been accrued as of March 25, 1996.

Four former employees of the Company have filed charges of employment
discrimination with the Equal Employment Opportunity Commission pertaining to
their termination of employment. One of the claimants has exercised her right to
litigate and has filed a complaint in district court in Arizona. While the
Company is unable to predict the outcome of these uncertainties, it is
management's opinion that the ultimate outcome will not have a material adverse
effect on the financial position, results of operations or cash flows of the
Company.

F-46
<PAGE>
INDEPENDENT AUDITORS' REPORT

To the Board of Directors
Creative Food Management, Inc.
Toledo, Ohio

We have audited the accompanying consolidated balance sheet of Creative Food
Management, Inc. (the "Company") as of December 31, 1993, and the related
consolidated statements of operations and of cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, such consolidated financial statements presents fairly, in
all material respects, the financial position of the Company as of December 31,
1993 and the results of its operations and its cash flows for the year then
ended, in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP
July 29, 1994

F-47
<PAGE>
CREATIVE FOOD MANAGEMENT, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31,
1993
------------
<S> <C>
ASSETS
Current assets:
Cash......................................................................... $ 176
Accounts receivable.......................................................... 718
Inventories.................................................................. 500
Prepaid expenses and other current assets.................................... 22
------------
Total current assets..................................................... 1,416
Fixtures and equipment, net.................................................... 3,562
Assets held for sale........................................................... 327
Deferred costs................................................................. 224
Other assets................................................................... 673
------------
Total assets............................................................. $ 6,202
------------
------------

LIABILITIES AND STOCKHOLDERS' CAPITAL DEFICIENCY
Current liabilities:
Accounts payable............................................................. $ 3,298
Accrued expenses and other current liabilities............................... 1,385
Current portion of long-term debt............................................ 182
Note payable................................................................. 1,807
------------
Total current liabilities................................................ 6,672
Long-term debt................................................................. 421
Commitments
Stockholders' capital deficiency:
Common stock, no par value, 100 shares authorized, 80 shares issued and
outstanding.................................................................... 300
Deficit...................................................................... (1,191)
------------
Total stockholders' capital deficiency................................... (891)
------------
Total liabilities and stockholders' capital deficiency............... $ 6,202
------------
------------
</TABLE>

See accompanying notes to consolidated financial statements.

F-48
<PAGE>
CREATIVE FOOD MANAGEMENT, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
1993
------------
<S> <C>
Net sales...................................................................... $ 21,468
Cost of sales.................................................................. 20,374
------------
Gross profit................................................................... 1,094
General and administrative expenses............................................ 1,731
------------
Loss from operations........................................................... (637)
Interest expense............................................................... 217
------------
Net loss....................................................................... $ (854)
------------
------------
</TABLE>

See accompanying notes to consolidated financial statements.

F-49
<PAGE>
CREATIVE FOOD MANAGEMENT, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
1993
------------
<S> <C>
Cash flows from operating activities:
Net loss..................................................................... $ (854)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization.............................................. 561
Changes in operating assets and liabilities:
Accounts receivable........................................................ 958
Inventories................................................................ 128
Prepaid expenses and other current assets.................................. (64)
Accounts payable........................................................... (74)
Accrued expenses and other current liabilities............................. (199)
------------
Net cash provided by operating activities.................................... 456
Cash flows from investing activities:
Purchase of property and equipment........................................... (1,304)
Cash proceeds from sale of business units.................................... 1,730
------------
Net cash provided by investing activities.................................... 426
Cash flows from financing activities:
Borrowings under notes payable............................................... 1,756
Repayment of notes payable................................................... (2,715)
------------
Net cash used in financing activities........................................ (959)
------------
Decrease in cash............................................................... (77)
Cash, beginning of year........................................................ 253
------------
Cash, end of year.............................................................. $ 176
------------
------------
</TABLE>

See accompanying notes to consolidated financial statements.

F-50
<PAGE>
CREATIVE FOOD MANAGEMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)

1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Business--Creative Food Management, Inc. (formerly VGE Acquisition Corp.)
(the Company) was formed on July 13, 1992 for the purpose of acquiring the
businesses of Canteen Service Co. of Toledo (Canteen), Satellite Refreshment
Services, Inc. (Satellite), Fresh Express Commissary (Fresh), and Creative Food
Management, Inc. (Creative) from V/Gladieux Enterprises, Inc. This transaction
was completed on August 23, 1992 through the acquisition of the assets and
liabilities of Canteen, Satellite and Fresh, and the purchase of the stock of
Creative, and was accounted for using the purchase method of accounting.

Also on August 23, 1992, the Company sold substantially all of the operating
assets and the rights under existing contracts of the corrections division of
Creative, which provided food services for various correctional facilities
across the United States, for $3,042.

Effective March 5, 1993, the Company sold all of the operating equipment and
contract rights of Fresh, a wholesaler of vended food products, for $230.

Effective June 18, 1993, the Company sold all of the assets of Satellite
Vending, a division of Satellite, which operated vending machines at various
industrial locations, for $1,400.

Effective June 18, 1993 and December 10, 1993, the Company sold portions of
the assets of Canteen, an operator of vending machines, for a total of $561.

The results of operations of Creative, Fresh, Satellite and Canteen were
accrued in the opening balance sheet of the Company and therefore are excluded
from results of operations for the year ended December 31, 1993.

The Company and its subsidiary continue to operate various types of food
service businesses, principally vending, cafeterias and concessions. Operations
serve industrial locations in Ohio and Michigan, and universities and sports
complexes throughout the eastern United States.

Basis of Presentation--The accompanying consolidated financial statements
have been prepared on a going concern basis, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business.
As shown in the consolidated balance sheet, the Company has a deficit of $1,191,
and the Company's current liabilities exceed its current assets by $5,256. In
addition, the Company is in violation of certain restrictive covenants of its
loan agreement (see Note 6).

The Company's continuation as a going concern is dependent upon its ability
to generate sufficient cash flow to meet its obligations on a timely basis, to
comply with the terms and covenants of its financing agreement, to obtain
additional financing or refinancing as may be required and ultimately to achieve
profitable operations. Management has disposed of several business segments
determined to be unprofitable. These sales have generated cash to reduce debt
associated with the original acquisition of the businesses. On July 29, 1994,
the Company signed a stock purchase agreement, subject to certain closing
conditions, with Fine Host Corporation ("Fine Host") (see Note 10) whereby Fine
Host will purchase all of the Company's outstanding stock.

Principles of Consolidation -- The accompanying consolidated financial
statements include the accounts of Creative Food Management, Inc. and its
wholly-owned subsidiary. All material intercompany balances and transactions
have been eliminated.

F-51
<PAGE>
CREATIVE FOOD MANAGEMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS)

1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Inventories -- Inventories are stated at the lower of cost, first-in,
first-out method, or market.

Property and Equipment -- Property and equipment recorded at cost.
Depreciation is computed on the straight-line method based on the estimated
useful lives of the related assets, which range from 7-10 years. Expenditures
for maintenance and repairs are charged to expense as incurred.

Deferred Costs -- Deferred costs represent organizational costs and
financing fees which are being amortized over five years and the life of the
related line of credit, respectively.

Self-Insurance Programs -- The Company is self-insured for health care
claims for eligible employees. Self-insured claims are accrued based upon the
aggregate of the liability for reported claims subject to certain stop-loss
provisions on a per claim basis and an estimated liability for claims incurred
but not reported.

Income Taxes -- The Company calculates its provision for income taxes in
accordance with Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes." Certain items, such as depreciation and various accruals, are
recognized for tax purposes in years other than the years in which they are
reported in the financial statements. Deferred income taxes are reflected in the
financial statements for those temporary differences.

Pledges and Commitments -- The Company pledges financial support and commits
to capital improvements at certain universities where it provides food service.
The pledges are expensed and the improvements are capitalized.

2. ASSETS HELD FOR SALE

Assets held for sale consist of property and equipment which was sold in
April 1994 in connection with the sale of an insignificant portion of the
Company's business.

3. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

Leasehold improvements............................................ $ 564
Furniture and equipment........................................... 2,379
Construction in progress.......................................... 1,001
------
3,944
Less accumulated depreciation..................................... 382
------
Net property and equipment........................................ $3,562
------
------

The Company invests in fixtures and equipment at various locations. Upon
termination of a contract, the client is generally required to purchase the
assets from the Company at an amount equal to their undepreciated value.

F-52
<PAGE>
CREATIVE FOOD MANAGEMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS)

4. DEFERRED COSTS AND OTHER ASSETS

Deferred costs consist of the following:

Organization costs.................................................. $240
Financing costs..................................................... 50
----
290
Less accumulated amortization....................................... 66
----
Total............................................................. $224
----
----
Other assets consist of the following:

Contracts, net accumulated amortization of $202..................... $556
Non-compete agreements, net of accumulated amortization of $78...... 42
Other............................................................... 75
----
Total............................................................. $673
----
----

In connection with the acquisition of the business in 1992, the Company
acquired the rights to the contract agreements held by the former owner to
provide food services at various locations. The value assigned to those
agreements was based on the estimated cash flows to be generated under the
contracts, and is being amortized over five years.

In addition, the Company paid $250 to the former owner for a three year
non-compete agreement, which is being amortized over the life of the agreement.
A portion of the non-compete agreement was allocated to the business segments
sold, and were written off in connection with those sales.

5. LONG-TERM DEBT

Long-term debt consists of the following:

Note issued to the seller, subordinated to the line of credit,
bearing interest at 1% over the prime rate of the First National
Bank of Chicago (7% at December 31, 1993). Monthly payments of
principal and interest through September 1997..................... $ 460
Installments notes secured by related equipment; payable monthly
through 1995. The net book value of the equipment is approximately
equal to the amount of the debt..................................... 143
-----
603
Less current portion................................................ 182
-----
Total long-term debt.............................................. $ 421
-----
-----

Annual maturities of long-term debt are as follows:

1994................................................................ $ 182
1995................................................................ $ 162
1996................................................................ $ 154
1997................................................................ $ 105

F-53
<PAGE>
CREATIVE FOOD MANAGEMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS)

6. NOTE PAYABLE

The Company has a line of credit agreement with a bank which expires August
1994 that provides for borrowings of up to $2,500 based on qualified accounts
receivable and property and equipment. Interest is payable monthly based on the
outstanding balance at 2% over the bank's prime rate (8% at December 31, 1993).
Borrowings under this agreement were $1,807 at December 31, 1993. The line of
credit is secured by accounts receivable, inventory and property and equipment
of the Company. The line of credit is also personally guaranteed by the
Company's shareholders and the outstanding stock of the Company has been pledged
as additional collateral for the note.

The credit agreement requires, among other things, minimum working capital
and current ratios, minimum tangible net worth and other restrictive covenants.
At December 31, 1993, the Company was in violation of these debt covenants which
is an event of default that could accelerate the repayment of the note. As of
July 29, 1994, the bank has not demanded repayment of the note and is
negotiating the refinancing of the note payable with the purchaser noted in Note
9.

7. INCOME TAXES

Deferred income taxes consist of the following:

Deferred asset:
Vacation accrual................................................. $ 51
Severance agreement.............................................. 34
Accrued pledged.................................................. 32
Bad debt allowance............................................... 21
Inventory reserve................................................ 21
Other............................................................ 72
Net operating loss (expires beginning 2007)...................... 291
-----
522
Valuation allowance.............................................. (405)
-----
117

Deferred liability:
Book basis of property in excess of tax basis.................... (117)
-----
Net deferred taxes................................................. $ 0
-----
-----

During 1993, the valuation allowance increased approximately $290.

8. COMMITMENTS

The Company leases certain equipment, automobiles, office space and other
facilities under various operating leases expiring on various dates through
1997. The rental payments on these leases are based on a minimum rental with
certain leases providing for additional rentals based upon a percentage of sales
or income as specified in the lease agreements.

F-54
<PAGE>
CREATIVE FOOD MANAGEMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS)

8. COMMITMENTS--(CONTINUED)
The following is a schedule, by year, of non-cancelable operating lease
payments due as of December 31, 1993:

1994.............................................................. $102
1995.............................................................. 44
1996.............................................................. 19
1997.............................................................. 4
----
Total............................................................. $169
----
----

Rental expense was $200 for the year ended December 31, 1993.

The Company pledges financial support and commits to providing capital
improvements at certain universities where it provides food service. As of
December 31, 1993, accrued expenses includes $93 for pledges made prior to
August 2, 1992 to certain universities. There are no outstanding commitments for
capital improvements as of December 31, 1993.

In connection with the acquisition of the Company, the Company is obligated
under an employment agreement of a former employee to pay $4 per month through
January 1996, which is included in accrued expenses as of December 31, 1993.

9. RETIREMENT PLAN

The Company has a defined contribution plan (401k plan) covering
substantially all employees of the Canteen division. Employees may elect to
contribute a percentage of compensation during the plan year. Employer
contributions are based upon a specified percentage of the Company's profits.
There were no employer contributions during 1993.

10. SUBSEQUENT EVENTS

On July 29, 1994, the Company signed a stock purchase agreement, subject to
certain closing conditions with Fine Host whereby Fine Host will purchase all of
the Company's outstanding stock for $4,500, subject to certain adjustments as
defined in the stock purchase agreement.

F-55
<PAGE>
CREATIVE FOOD MANAGEMENT, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, 1993 JULY 1, 1994
----------------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash.......................................................... $ 176 $ 519
Accounts receivable........................................... 718 315
Notes receivable.............................................. -- 41
Inventories................................................... 500 563
Prepaid expenses and other current assets..................... 22 21
------- ------------
Total current assets...................................... 1,416 1,459
Fixtures and equipment, net..................................... 3,562 2,888
Notes receivable................................................ -- 123
Assets held for sale............................................ 327 117
Deferred costs.................................................. 224 234
Other assets.................................................... 673 277
------- ------------
Total assets.............................................. $ 6,202 $ 5,098
------- ------------
------- ------------

LIABILITIES AND STOCKHOLDERS'
CAPITAL DEFICIENCY

Current liabilities:
Accounts payable.............................................. $ 3,298 $ 3,260
Accrued expenses and other current liabilities................ 1,385 1,616
Current portion of long-term debt............................. 182 437
Note payable.................................................. 1,807 1,094
------- ------------
Total current liabilities................................. 6,672 6,407

Long-term debt.................................................. 421 312

Commitments

Stockholders' capital deficiency:
Common stock, no par value, 100 shares authorized, 80 shares
issued and outstanding.......................................... 300 300
Deficit....................................................... (1,191) (1,921)
------- ------------
Total stockholders' capital deficiency.................... (891) (1,621)
------- ------------
Total liabilities and stockholders' capital
deficiency...................................................... $ 6,202 $ 5,098
------- ------------
------- ------------
</TABLE>

See accompanying notes to unaudited consolidated financial statements.

F-56
<PAGE>
CREATIVE FOOD MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------------------------
JULY 2, 1993 JULY 1, 1994
------------ ------------
(UNAUDITED)
<S> <C> <C>
Net sales............................................................ $ 11,555 $ 10,424
Cost of sales........................................................ 11,385 9,943
------------ ------------
Gross profit......................................................... 170 481
General and administrative expenses.................................. 1,541 1,107
Loss from operations................................................. (1,371) (626)
Interest expense..................................................... 161 104
------------ ------------
Net loss............................................................. $ (1,532) $ (730)
------------ ------------
------------ ------------
</TABLE>

See accompanying notes to unaudited consolidated financial statements.

F-57
<PAGE>
CREATIVE FOOD MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------------------------
JULY 2, 1993 JULY 1, 1994
------------ ------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net loss........................................................... $ (1,532) $ (730)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization.................................... 262 172
Changes in operating assets and liabilities:
Accounts receivable.............................................. 493 402
Notes receivable................................................. (164)
Inventories...................................................... 69 (63)
Prepaid expenses and other current assets........................ (42) 386
Accounts payable................................................. (47) (37)
Accrued expenses and other current liabilities................... 204 178
------------ ------
Net cash provided by (used in) operating activities................ (593) 144

Cash flows from investing activities:
Property and equipment............................................. (648) --
Cash proceeds from sale of business units.......................... 1,730 768
------------ ------
Net cash provided by investing activities.......................... 1,082 768

Cash flows from financing activities:
Borrowings under long term debt.................................... 852 145
Repayment of notes payable......................................... (1,395) (714)
------------ ------
Net cash used in financing activities.............................. (543) (569)
------------ ------
Increase (decrease) in cash.......................................... (54) 343
Cash, beginning of year.............................................. 253 176
------------ ------
Cash, end of year.................................................... $ 199 $ 519
------------ ------
------------ ------
</TABLE>

See accompanying notes to unaudited consolidated financial statements.

F-58
<PAGE>
CREATIVE FOOD MANAGEMENT, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JULY 2, 1993 AND JULY 1, 1994
(IN THOUSANDS)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted. The financial statements include all adjustments of a
normal recurring nature which, in the opinion of management, are necessary for a
fair presentation of the results of operations for the six months ended July 2,
1993 and July 1, 1994. The accompanying unaudited financial statements should be
read in conjunction with the financial statements and notes thereto included
elsewhere in this prospectus for the fiscal year ended December 31, 1993.

Effective June 18, 1993, December 10, 1993 and April 18, 1994, the Company
sold portions of the assets of Canteen, an operator of vending machines, for a
total of $959.

2. SALE OF CREATIVE FOOD MANAGEMENT, INC.

On July 29, 1994, the Company signed a stock purchase agreement, subject to
certain closing conditions, with Fine Host whereby Fine Host will purchase all
of the Company's outstanding stock for $4,500, subject to certain adjustments as
defined in the stock purchase agreement.

3. ASSETS HELD FOR SALE

Assets held for sale ($327 and $117) consists of property and equipment
which was sold (April 1994 and September 1994, respectively), in connection with
the sale of an insignificant portion of the Company's business.

4. NOTES RECEIVABLE

In February 1994, in connection with the sale of a segment of the business,
the Company received a five year, $100 non-interest bearing note receivable.
Payments are due in five equal installments. The balance due as of July 1, 1994
is $100, $80, of which is classified as long term.

In 1993 the Company received a note receivable in connection with the sale
of a segment of the business. The note is non-interest bearing from April 1,
1993, through March 1, 1994, at which time interest is charged at prime plus 2%
adjusted quarterly. Monthly principal and interest payments of $2 are required
with any remaining balance due September 1, 1997. The sales agreement provides
for a reduction in the value of the note in the event of certain occurrences. In
May 1994, the parties agreed to reduce the value of the note by $25, which has
been reflected in the balance as of July 1, 1994. The balance due as of July 1,
1994 is $64, of which $43 is classified as long term.

5. NOTE PAYABLE

F-59
<PAGE>
CREATIVE FOOD MANAGEMENT, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED FINANCIAL STATEMENTS--(CONTINUED)
FOR THE SIX MONTHS ENDED JULY 2, 1993 AND JULY 1, 1994
(IN THOUSANDS)

5. NOTE PAYABLE--(CONTINUED)
Borrowings under this agreement were $1,094 at July 1, 1994. The line of credit
is secured by accounts receivable, inventory and property and equipment of the
Company. The line of credit is also personally guaranteed by the Company's
shareholders and the outstanding stock of the Company has been pledged as
additional collateral for the note.

The credit agreement requires, among other things, minimum working capital
and current ratios, minimum tangible net worth and other restrictive covenants.
At July 1, 1994, the Company was in violation of these debt covenants which is
an event of default that could accelerate the repayment of the note. As of July
29, 1994, the bank has not demanded repayment of the note and is negotiating the
refinancing of the note payable with the purchaser noted in Note 2.

6. COMMITMENTS

The following is a schedule, by year, of non-cancelable operating lease
payments due as of July 1, 1994:

1994......................... 51
1995......................... 44
1996......................... 19
1997......................... 3
----
Total.................... $117
----
----

Rental expense was $100 for the six months ended July 1, 1997.

The Company pledges financial support and commits to providing capital
improvements at certain universities where it provides food service. As of July
1, 1994, accrued expenses includes $93 for pledges made prior to August 2, 1992
to certain universities. There are no outstanding commitments for capital
improvements as of July 1, 1994.

F-60
<PAGE>

-----------------------

SELECTED FINE HOST

EDUCATION & CORPORATE

DINING CLIENTS

[FORD LOGO]
[CHRYSLER LOGO]

[T R I N O V A L O G O]

[ORE IDA LOGO]
[GM LOGO] R O
I R W
C L
E S
N O R T H W E S T E R N

[A S U LOGO]
ARIZONA STATE
UNIVERSITY

[XAVIER UNIVERSITY
[OF LOUISIANA LOGO]

[UNIVERSITY OF MINNESOTA LOGO]

UNIVERSITY OF MINNESOTA

The above Logos are trademarks and service marks of the
respective companies and universities.

FINE HOST
CORPORATION

<PAGE>

- ------------------------------------------ ---------------------------------
- ------------------------------------------ ---------------------------------

No dealer, salesman or other person is
authorized to give any information or to
make any representation in connection with
this offering not contained in this
Prospectus, and any information or
representation not contained herein must not
be relied upon as having been authorized by 4,030,000 Shares
the Company or the Underwriters. This
Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy
any securities other than the shares of [LOGO]
Common Stock to which it relates, or an
offer to, or solicitation of, any person in
any jurisdiction where such offer or
solicitation would be unlawful. Neither the
delivery of this Prospectus nor any sale
made hereunder shall, under any circum-
stances, create an implication that there
has been no change in the affairs of the
Company or that information contained herein
is correct as of any time subsequent to the
date hereof. FINE HOST CORPORATION

---------------------
TABLE OF CONTENTS
---------------------
Page
----
Prospectus Summary.................... 3 COMMON STOCK
Risk Factors.......................... 6
Use of Proceeds....................... 10
Dividend Policy....................... 10
Capitalization........................ 11
Dilution.............................. 12
Selected Consolidated Financial
Data.................................. 13
Unaudited Pro Forma Consolidated ----------------
Financial Data...................... 15
Management's Discussion and Analysis of PROSPECTUS
Financial Condition and Results of
Operations............................ 21 ----------------
Business.............................. 29
Management............................ 40
Certain Transactions.................. 45
Principal and Selling Stockholders.... 48
Description of Capital Stock.......... 50
Shares Eligible for Future Sale....... 54
Underwriting.......................... 56 MONTGOMERY SECURITIES
Legal Matters......................... 57
Experts............................... 57 OPPENHEIMER & CO., INC.
Additional Information................ 58
Index to Financial Statements......... F-1

----------------------

Until July 14, 1996 (25 days after the
date of this Prospectus), all dealers
effecting transactions in the Common Stock,
whether or not participating in this
distribution, may be required to deliver a
Prospectus. This is in addition to the June 19, 1996
obligation of dealers to deliver a
Prospectus when acting as underwriters and
with respect to their unsold allotments or
subscriptions.

- ------------------------------------------ ---------------------------------
- ------------------------------------------ ---------------------------------