<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 25, 1997
OR
[ ]TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ___________
Commission file number: 000-28590
Fine Host Corporation
Delaware 06 - 1156070
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3 Greenwich Office Park
Greenwich, CT 06831
(203) 629 - 4320
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past
90 days. Yes X No
The Registrant had 9,045,444 shares of common stock, $.01 par value, outstanding
as of August 8, 1997.
<PAGE>
TABLE OF CONTENTS
Part I - Financial Information
Page
No.
Item 1 - Financial Statements (unaudited)
* Consolidated Balance Sheets - June 25, 1997
and December 25, 1996 3
* Consolidated Statements of Income - Three and Six Months
Ended June 25, 1997 and June 26, 1996 4
* Consolidated Statement of Stockholders'Equity - Six Months
Ended June 25, 1997 5
* Consolidated Statements of Cash Flows - Six Months Ended
June 25, 1997 and June 26, 1996 6
* Notes to Consolidated Financial Statements 7 - 10
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 11 - 14
Item 3 - Quantitative and Qualitative Disclosure
About Market Risk 15
Part II - Other Information
Item 1 - Legal Proceedings 16
Item 6 - Exhibits and Reports on Form 8-K 17
Signature 18
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
FINE HOST CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
June 25, 1997 December 25, 1996
------------- -----------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 16,110 $ 4,724
Accounts receivable 20,247 14,580
Inventories 5,238 3,260
Prepaid expenses and other current assets 4,886 3,749
---------- ----------
Total current assets 46,481 26,313
Contract rights, net 28,542 22,869
Fixtures and equipment, net 31,002 24,057
Excess of cost over fair value of
net assets acquired, net 43,962 34,362
Other assets 9,842 9,842
-------- --------
Total assets $159,829 $117,443
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 23,567 $ 18,690
Current portion of subordinated debt 2,521 3,045
-------- --------
Total current liabilities 26,088 21,735
Deferred income taxes 13,514 12,360
Long-term debt 7,971 31,562
Subordinated debt 3,386 5,014
------- -------
Total liabilities 50,959 70,671
Stockholders' equity:
Common Stock, $.01 par value,
25,000,000 shares authorized,
8,963,112 and 6,212,016 issued
and outstanding at June 25, 1997
and December 25, 1996, respectively 90 62
Additional paid-in capital 101,715 41,778
Retained earnings 7,221 5,121
Receivables from stockholders for
purchase of Common Stock (156) (189)
-------- --------
Total stockholders' equity 108,870 46,772
-------- --------
Total liabilities and stockholders' equity $159,829 $117,443
======== ========
See accompanying notes to unaudited consolidated
financial statements.
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 25, June 26, June 25, June 26,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales $53,392 $25,803 $102,844 $49,963
Cost of sales 48,176 23,390 92,386 45,020
-------- -------- --------- --------
Gross profit 5,216 2,413 10,458 4,943
General and administrative expenses 2,730 1,241 5,945 2,577
-------- --------- --------- ---------
Income from operations 2,486 1,172 4,513 2,366
Interest expense, net 290 755 828 1,521
--------- ---------- --------- ---------
Income before tax provision 2,196 417 3,685 845
Tax provision 944 167 1,585 336
--------- ---------- -------- ----------
Net income 1,252 250 2,100 509
Accretion to redemption value of warrants - (260) - (1,300)
---------- -------- --------- ----------
Net income (loss) available
to Common Stockholders $ 1,252 $ (10) $ 2,100 $ (791)
======= ========= ========= ==========
Earnings (loss) per share
of Common Stock $ .14 $ -- $ .24 $ (.22)
========= =========== =========== ===========
Average number of shares
of Common Stock outstanding 9,185 3,687 8,590 3,535
======= ======== ========== =========
Earnings (loss) per share of Common
Stock assuming full dilution $ .14 $ -- $ .24 $ (.22)
========= =========== =========== ==========
Average number of shares of Common
Stock outstanding assuming full dilution 9,226 3,713 8,634 3,575
====== ===== ===== =====
</TABLE>
See accompanying notes to unaudited consolidated
financial statements.
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
Receivables
from
Stockholders
for
Additional Purchase of
Common Stock Paid-In Retained Common Stockholders'
Shares Amount Capital Earnings Stock Equity
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 25, 1996 6,212,016 $62 $ 41,778 $5,121 $(189) $ 46,772
Shares issued in connection
with follow-on public offering 2,689,000 27 59,073 59,100
Options exercised 59,900 1 804 805
Stockholder Receivable collected 33 33
Stock issued to non-employee directors 2,196 -- 60 60
Net income 2,100 2,100
--------- --- -------- ------ ------ --------
Balance, June 25, 1997 8,963,112 $90 $101,715 $7,221 $(156) $108,870
========= === ======== ====== ====== ========
See accompanying notes to unaudited consolidated
financial statements.
</TABLE>
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended
June 25, June 26,
1997 1996
------- -------
Cash flows from operating activities:
Net income $2,100 $509
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 4,238 2,041
Deferred income tax provision 1,585 335
Changes in operating assets and liabilities:
Accounts receivable (3,248) (128)
Inventories (474) (189)
Prepaid expenses and other current assets (937) 109
Accounts payable and accrued expenses (2,728) 565
Increase in other assets (52) (3,187)
------- ------
Net cash provided by operating activities 484 55
------- ------
Cash flows from investing activities:
Increase in contract rights (3,292) (3,053)
Purchases of fixtures and equipment (3,683) (1,856)
Sales of fixtures and equipment -- 64
Acquisition of business, net of cash acquired (11,500) (3,215)
Collection of notes receivable -- 396
------- -------
Net cash used in investing activities (18,475) (7,664)
------- ------
Cash flows from financing activities:
Borrowings under long-term debt agreement -- 6,945
Proceeds from issuance of common stock 59,191 30,542
Payment of long-term debt (27,341) (19,768)
Payment of subordinated debt (2,849) (7,661)
Redemption of warrants -- (2,880)
Proceeds from exercise of warrants -- 609
Proceeds from exercise of options 376 -
------ -------
Net cash provided by financing activities 29,377 7,787
------ -------
Net increase in cash 11,386 178
Cash, beginning of period 4,724 634
------- --------
Cash, end of period $16,110 $ 812
======= ========
See accompanying notes to unaudited consolidated
financial statements.
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
(unaudited)
1. Summary of Significant Accounting Policies
Basis of Presentation--The unaudited consolidated financial statements
include the accounts of Fine Host (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 and six months ended June 25, 1997 and June 26, 1996.
The accompanying unaudited consolidated financial statements should be read in
conjunction with the consolidated financial statements of the Company and notes
thereto for the fiscal year ended December 25, 1996 included in the Company's
Annual Report on Form 10-K.
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 period. 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 (debt and 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 $260 and $1,300 for the three and six months ended June 26, 1996.
Accounting Pronouncements - In February 1997, the FASB issued Statement of
Financial Accounting Standards ("SFAS") No. 128, Earnings per share. SFAS No.
128 specifies the computation, presentation and disclosure requirements for
earnings per share (AEPS@). SFAS No. 128 is effective for financial statements
for interim and annual periods ending after December 15, 1997. Earlier
application is not permitted. On a pro forma basis computed in accordance with
SFAS No. 128 and before warrant accretion, basic EPS would have been $.25 and
$.23; and diluted EPS would have been $.24 and $.14, for the six months ended
June 25, 1997 and June 26, 1996, respectively.
2. Acquisitions
On August 6, 1997, the Company acquired 100% of the stock of Statewide
Industrial Catering, Inc. ("Statewide"). Statewide provides contract food
service to 25 school districts in the New York City Metropolitan Area. The
purchase price was $3,200, consisting of cash, assumed debt of Statewide and a
subordinated promissory note.
On January 23, 1997, the Company acquired 100% of the stock of Versatile
Holding Corporation, which owns 100% of the stock of Serv-Rite Corporation
("Serv-Rite"), a contract food services management company that provides food
services to the education and business dining markets in New York and
Pennsylvania. The purchase price was approximately $7,500, consisting of cash
and assumed debt of Serv-Rite.
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
(unaudited)
On December 30, 1996, the Company acquired 100% of the stock of Service
Dynamics Corp. ("Service Dynamics"). Service Dynamics provides contract food
service to the education and business dining markets primarily in New Jersey.
The purchase price was approximately $3,000, consisting of cash paid to the
seller.
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 with respect to the
income statement data for the six months ended June 25, 1997 and June 26, 1996,
as if the acquisitions of Serv-Rite and Service Dynamics had been completed as
of the beginning of such period. No adjustment for acquisition synergies (i.e.
overhead reductions) have been reflected:
Six Months Ended
June 25, June 26,
1997 1996
----------- --------
Summary statement of income data:
Net sales $105,590 $70,870
Income from operations 4,628 1,855
Net income (loss)before warrant accretion 2,169 (3)
Net income per share before warrant
accretion assuming full dilution $ .25 $ -
============ ============
This pro forma information is provided for informational purposes only. It
is based on historical information and does not necessarily reflect the actual
results that would have occurred nor is it necessarily indicative of future
results of operations of the combined enterprise.
3. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consist of the following:
June 25, December 25,
1997 1996
------- ----------
Accounts payable $10,020 $ 8,404
Accrued wages and benefits 3,945 2,640
Accrued rent to clients 3,951 3,187
Accrued other 5,651 4,459
-------- ---------
Total $23,567 $18,690
======= =======
4. Long-Term Debt
Long-term debt consists of the following:
June 25, December 25,
1997 1996
------- ----------
Working Capital Line $7,971 $15,818
Guidance Line - 15,744
------- -------
Total $7,971 $31,562
====== =======
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
(unaudited)
The net proceeds from the follow on public offering (the "Follow-On
Offering"), on February 12, 1997, including the exercise of the over allotment
option granted to the underwriters (see Note 6), were used to repay all of the
long term debt outstanding at the close of the transaction.
On July 30, 1997, the Company entered into the Fourth Amended and Restated
Loan Agreement, a $200 million credit facility with Bank Boston, N.A., as
Administrative Agent (the "Administrative Agent"), U.S. Trust, as Documentation
Agent, and certain banks and other financial institutions party thereto (the
"Bank Agreement"). The Bank Agreement provides for (i) a five year working
capital revolving credit line for general corporate purposes and letters of
credit, in the maximum aggregate amount of $50 million (the "Working Capital
Line") and (ii) a line of credit to provide for future expansion by the Company,
in the maximum amount of $150 million (the "Guidance Line"). The Working Capital
Line provides funds for liquidity, seasonal borrowing needs and other general
corporate purposes. The Guidance Line is available on a revolving basis until
July 30, 2000, to fund the Company's acquisitions and for investments made in
connection with facility agreements. At July 30, 2000, all loans outstanding
under the Guidance Line will convert to term loans, payable quarterly over a
three-year period. Interest on all loans under the Bank Agreement will be based
on, at the Company's option, either a prime rate or a LIBOR rate plus an
incremental rate based on a ratio of debt to EBITDA, not to be less than .75% or
greater than 1.5%. EBITDA represents earnings before interest expense, income
tax expense, depreciation and amortization.
The Company's obligations under the Bank Agreement are 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, accounts 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.
The Bank Agreement contains various financial and other restrictions,
including, but not limited to, restrictions on indebtedness, capital
expenditures, acquisitions and investments. In addition, the Bank Agreement
requires maintenance of (i) certain financial ratios, including ratios of total
debt to EBITDA and EBITDA to interest paid, (ii) minimum net worth and (iii)
minimum EBITDA. The Bank Agreement permits the payment of dividends subject to
compliance with all covenants.
5. Subordinated Debt
In July 1996, as part of the acquisition of Ideal Management Services Inc.
("Ideal"), the Company issued to the stockholders of Ideal two convertible
subordinated promissory notes (the "Ideal Convertible Notes") each with a face
value of $710 at 7 1/4% interest per annum, payable in quarterly installments.
At the option of the note holders, the outstanding principal balance of the
convertible notes was convertible into common stock at a conversion price of $15
per share. On July 30, 1997, the aggregate outstanding principal balances of the
Ideal Convertible Notes of $1,145 was converted into 76,332 shares of common
stock.
<PAGE>
FINE HOST CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
(unaudited)
6. Stockholders' Equity
On February 12, 1997, the Company conducted a Follow-On Offering as
authorized by its Board of Directors, selling 2,689,000 shares of its common
stock at a price of $23.50 per share, generating net proceeds (including the net
proceeds received by the Company upon the exercise of certain stock options held
by senior executives of the Company in connection with the Follow-On Offering)
of approximately $59.1 million, after deducting the underwriting discount and
offering expenses paid by the Company. The net proceeds were used to repay
obligations under the Company's then-existing credit facility and the remainder
of the net proceeds was invested in short term investments in accordance with
the Company's investment policy.
7. Income Taxes
At June 25, 1997 the Company had a tax provision of $1,585, which was
entirely deferred. In addition, the Company had, for Federal income tax
reporting, an estimated net operating loss carry forward of approximately $3,000
that will begin to expire in 2008.
8. Major Client
For the six months ended June 25, 1997, one client represented 9.1% of net
sales and for the six months ended June 26, 1996, another client represented
10.6% of net sales.
9. Subsequent Events
On July 30, 1997, the Company entered into the Fourth Amended and Restated
Loan Agreement (See Note 4).
On July 30, 1997, the outstanding principal balance of the Ideal Convertible
Notes were converted into 76,332 shares of common stock. (See Note 5).
On August 6, 1997, the Company acquired 100% of the outstanding stock of
Statewide. Statewide provides contract food service to school districts in New
York. (See Note 2)
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
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 750 facilities
in 38 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
and school nutrition market ("Education"), which the Company entered in 1994,
serving colleges, universities and public and private schools; and the business
dining market ("Business Dining"), which the Company entered in 1994, serving
corporate cafeterias, office complexes and manufacturing plants.
The matters discussed in this Form 10-Q contain forward looking statements
that involve risks and uncertainties including risks associated with the food
service industry and other risks detailed from time to time in the Company's
filings with the Securities and Exchange Commission.
Results of Operations
The following table sets forth, for the periods indicated, certain
financial data as a percentage of the Company's net sales:
Three Months Ended Six Months Ended
June 25, June 26, June 25, June 26,
1997 1996 1997 1996
-------- ------- ------- ------
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 90.2 90.6 89.8 90.1
------ ------ ------ ----
Gross profit 9.8 9.4 10.2 9.9
General and administrative expenses 5.1 4.9 5.8 5.2
------ ------- ------ ---
Income from operations 4.7 4.5 4.4 4.7
Interest expense, net 0.6 2.9 0.8 3.0
------ ------- ------ ---
Income before tax provision 4.1 1.6 3.6 1.7
Tax provision 1.8 0.6 1.5 0.7
------ ------- ------ ---
Net income before warrant accretion 2.3% 1.0% 2.1% 1.0%
====== ======= ===== ===
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:
Three Months Ended Six Months Ended
June 25, June 26, June 25, June 26,
1997 1996 1997 1996
--------------------------------------------------------
Recreation and Leisure$10,324 19.3% $7,569 29.3% $17,042 16.6% $14,467 29.0%
Convention Centers 13,334 25.0 8,531 33.1 27,150 26.4 20,367 40.8
Education 12,702 23.8 5,051 19.6 26,624 25.9 8,117 16.2
Business Dining 15,712 29.4 4,461 17.3 29,643 28.8 6,822 13.6
Other 1,320 2.5 191 .7 2,385 2.3 190 .4
---------------------------------------------------------
Total $53,392 100.0%$25,803 100.0%$102,844 100.0%$49,963 100.0%
==========================================================
<PAGE>
Three Months Ended June 25, 1997 Compared to Three Months Ended June 26, 1996
Net Sales. The Company's net sales increased over 100% to $53.4 million for
the three months ended June 25, 1997 from $25.8 million for the three months
ended June 26, 1996. Net sales increased in all market areas. Recreation and
Leisure net sales increased 26.7% primarily due to the impact of new contracts
such as the Concord Pavilion in Concord, California and Boise State University
in Boise, Idaho and existing contracts. The 36% increase in Convention Center
net sales is primarily attributable to the new contract at Tulsa Exposition
Center in Tulsa, Oklahoma and increased sales at the Orange County Convention
Center in Orlando, Florida. Net sales in Education and Business Dining more than
doubled, primarily as a result of the impact of acquisitions in 1996 and 1997.
Gross Profit. Gross profit increased to $5.2 million or 9.8% of net sales,
from $2.4 million or 9.4% of net sales for the comparable 1996 period. The
increase in gross profit as a percentage of net sales was attributable to the
contribution from acquisitions, as well as new and existing contracts.
General and Administrative Expenses. General and administrative expenses
increased to $2.7 million (or 5.1% of net sales) for the three months ended June
25, 1997 from $1.2 million (or 4.9% of net sales) for the three months ended
June 26, 1996. The increase was attributable primarily to the Company's
continued investment in training programs, regional and accounting management
and additional sales personnel to support its current and future growth plans.
Operating Income. Operating income increased more than 100% to $2.5 million
for the three months ended June 25, 1997 from $1.2 million for the three months
ended June 26, 1996, primarily as a result of the factors discussed above.
Interest Expense. Interest expense decreased to $290,000 for the three
months ended June 25, 1997, due to decreased debt levels resulting from the
repayment of certain obligations under the Company's credit facility with the
net proceeds from the initial and follow-on public offerings.
Six Months Ended June 25, 1997 Compared to Six Months Ended June 26, 1996
Net Sales. The Company's net sales increased more than 100% to $102.8
million for the six months ended June 25, 1997 from $50.0 million for the six
months ended June 26, 1996. Net sales increased in all market areas. The 17.8%
increase in Recreation and Leisure is primarily a result of new contracts at
Concord Pavilion in Concord, California, Boise State University in Boise, Idaho
and Coral Sky Amphitheater in West Palm Beach, Florida and increased sales at
Pro Player Park, in Miami, Florida, and South Commons Facilities in Columbus,
Georgia. Net sales from convention centers increased 33.3% mainly due to the new
contract at Tulsa Exposition Center in Tulsa, Oklahoma and higher sales at
Orange County Convention Center in Orlando, Florida and Portland Exposition
Center in Portland, Oregon. Net sales in Education and Corporate Dining
increased resulting from the impact of the 1996 and 1997 acquisitions.
Gross Profit. Gross profit as a percentage of net sales increased to 10.2%
for the six months ended June 25, 1997 from 9.9% achieved for the comparable
1996 period. The increase was primarily from purchasing efficiencies realized
from an expanded base of business.
General and Administrative Expenses. General and administrative expenses
increased to $5.9 million (or 5.8% of net sales) for the six months ended June
25, 1997 from $2.6 million (or 5.2% of net sales) for the six months ended June
26, 1996. The increase was attributable primarily to the continued investment in
accounting, sales personnel and training to support the Company's growing base
of business.
Operating Income. Operating income increased 90.7% to $4.5 million for the
six months ended June 25, 1997 from $2.4 million for the six months ended June
25, 1996, primarily as a result of the factors discussed above.
Interest Expense. Interest expense decreased to approximately $830,000 for
the six months ended June 25, 1997, due primarily to decreased debt resulting
from the repayment of certain obligations under the Company's credit facility
with the net proceeds from the initial and follow-on public offerings.
<PAGE>
Liquidity and Capital Resources
The Company has funded its capital requirements from a combination of
operating cash flow, debt and equity financing. Cash flow from operating
activities was a source of funds of approximately $484,000 and $55,000 for the
six months ended June 25, 1997 and June 26, 1996. The increase in the source of
funds from operations resulted primarily from the increase in unit operating
cash flow partially offset by the increase in net working capital requirements
as a result of the expansion into the Education market.
EBITDA was $9.1 million or 8.8% of net sales, compared to $4.5 million or
9.0% of net sales for the six months ended June 25, 1997 and June 26, 1996,
respectively. The decrease in EBITDA as a percentage of net sales was
attributable to an increase in general and administrative expenses. As discussed
above, EBITDA represents earnings before interest expense, income tax expense,
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 as a measure
of the Company's profitability or liquidity.
Cash flows used in investing activities were approximately $18.5 million and
$7.7 million for the six months ended June 25, 1997 and June 26, 1996,
respectively. The increase in use of funds was primarily a result of investments
in acquired companies and purchases of fixtures and equipment.
On December 30, 1996, the Company acquired Service Dynamics for a purchase
price of approximately $3.0 million. On January 22, 1997 the Company acquired
Serv-Rite for a purchase price of approximately $7.5 million. The Company is
eliminating certain redundant operations through closings of offices and
termination of excess personnel relating to these acquisitions.
On August 6, 1997, the Company acquired 100% of the stock of Statewide
Industrial Catering, Inc. ("Statewide"). Statewide provides contract food
service to 25 school districts in New York City Metropolitan Area.. The purchase
price was $3,200, consisting of cash, assumed debt of Statewide and a
subordinated promissory note.
At June 25, 1997 and December 25, 1996 the Company's current assets exceeded
its current liabilities, resulting in a working capital surplus of $20.1 million
and $4.6 million, respectively. The surplus resulted primarily from an increase
in trade receivables related to the new acquisitions in the Education and
Business Dining markets, which generally invest in shorter term assets (i.e.,
accounts receivable), as compared to the Company's Recreation and Leisure
business, which invests in longer term assets (i.e., fixtures and equipment).
The Working Capital Line provides funds for liquidity, seasonal borrowing needs
and other general corporate purposes.
On February 12, 1997, the Company completed the follow-on public offering,
resulting in net proceeds to the Company of approximately $59.1 million after
deducting underwriting discounts and certain expenses. The proceeds of the
follow on offering were used to repay obligations under the Company's then
existing credit agreement and for general working capital purposes.
On July 30, 1997, the Company entered into the Fourth Amended and Restated
Loan Agreement, a $200 million credit facility with Bank Boston, N.A., as
Administrative Agent (the "Administrative Agent"), U.S. Trust, as Documentation
Agent, and certain banks and other financial institutions party thereto (the
"Bank Agreement"). The Bank Agreement provides for (i) a five year working
capital revolving credit line for general corporate purposes and letters of
credit, in the maximum aggregate amount of $50 million (the "Working Capital
Line") and (ii) a line of credit to provide for future expansion by the Company,
in the maximum amount of $150 million (the "Guidance Line"). The Working Capital
Line provides funds for liquidity, seasonal borrowing needs and other general
corporate purposes. The Guidance Line is available on a revolving basis until
July 30, 2000, to fund the Company's acquisitions and for investments made in
connection with facility agreements. At July 30, 2000, all loans outstanding
under the Guidance Line will convert to term loans, payable quarterly over a
three-year period. Interest on all loans under the Bank Agreement will be based
on, at the Company's option, either a prime rate or a LIBOR rate plus an
incremental rate based on a ratio of debt to EBITDA, not to be less than .75% or
greater than 1.5%.
In accordance with the Company's investment policy, $10.6 million was
invested in commercial paper or treasury notes with maturities no greater than
90 days at June 25, 1997.
The Company believes that the invested proceeds of its Follow-On Offering,
internally generated funds and amounts available under the Bank Agreement are
sufficient to satisfy the Company's presently anticipated capital requirements
for at least the next twelve months.
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
<PAGE>
Part II. Other Information
Item 1. Legal Proceedings
Reference is made to the discussion of legal proceedings found in the
Company's Form 10-K for the fiscal year ended December 25, 1996. There have been
no material changes in the status of the proceedings referenced therein.
The Company is involved in certain legal proceedings incidental to the
normal conduct of its business. The Company does not believe that any
liabilities relating to such 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.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
A) Exhibits:
*3.1 Restated Certificate of Incorporation
*3.2 By-Laws
*4 Specimen of Registrant's Common Stock Certificate
10.1 1994 Amended and Restated Stock Option Plan.
10.2 1997 Long-Term Incentive Compensation Plan
10.3 1998 Annual Incentive Compensation Plan
10.4 First Amendment to the Third Amended and Restated Loan Agreement,
dated as of May 9, 1997
11 Computations of Per Share Earnings
27 Financial Data Schedule
* Filed as exhibits to the Company's Registration Statement on Form S-1,
declared effective by the Securities and Exchange Commission on June 19, 1996,
and hereby incorporated by reference.
B) Reports on Form 8-K - None
Omitted from this Part II are items which are inapplicable or to which the
answer is negative for the period presented.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Fine Host Corporation
By: /s/ Nelson A. Barber
Nelson A. Barber
Senior Vice President and Treasurer
(Duly Authorized Officer and Principal Accounting Officer)
Date: August 8, 1997
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
*3.1 Restated Certificate of Incorporation
*3.2 By-Laws
*4 Specimen of Registrant's Common Stock Certificate
10.1 1994 Amended and Restated Stock Option Plan
10.2 1997 Long-Term Incentive Compensation Plan
10.3 1998 Annual Incentive Compensation Plan
10.4 First Amendment to the Third Amended and Restated
Loan Agreement,dated as of May 9, 1997
11 Computations of Per Share Earnings
27 Financial Data Schedule
* Filed as exhibits to the Company's Registration Statement on Form S-1,
declared effective by the Securities and Exchange Commission on June 19, 1996,
and hereby incorporated by reference.
Exhibit 10.1
FINE HOST CORPORATION
STOCK OPTION PLAN
(Amended and Restated as of March 17, 1997)
ARTICLE I.
Purpose
This Stock Option Plan (the "Plan") is intended as an incentive and to
encourage stock ownership by officers and certain other key employees of Fine
Host Corporation (the "Company") in order to increase their proprietary interest
in the Company's success and to encourage them to remain in the employ of the
Company.
The term "Company," when used in the Plan with reference to eligibility
and employment, shall include the Company and its subsidiaries. The word
"subsidiary," when used in the Plan, shall mean any subsidiary of the Company
within the meaning of Section 424(f) of the Internal Revenue Code of 1986, as
amended (the "Code").
It is intended that certain options granted under this Plan will
qualify as "incentive stock options" under Section 422 of the Code.
ARTICLE II.
Administration
The Plan shall be administered by the full Board of Directors of the
Company (the "Board") or a Stock Option Committee (the "Stock Option Committee")
(the Board and the Stock Option Committee hereinafter referred to as the
"Committee") appointed by the Board which shall consist of not less than two
members. Each member of the Stock Option Committee must be a "Non-Employee
Director" within the meaning of the rules promulgated under Section 16(b).
Subject to the provisions of the Plan, the Committee shall have sole authority,
in its absolute discretion: (a) to determine which of the eligible employees of
the Company shall be granted options; (b) to authorize the granting of both
incentive stock options and nonqualified options; (c) to determine the times
when options shall be granted and the number of shares to be optioned; (d) to
determine the option price of the shares subject to each option, which price
shall be not less than the minimum specified in ARTICLE V; (e) to determine the
time or times when each option becomes exercisable, the duration of the exercise
period and any other restrictions on the exercise of options issued hereunder;
(f) to prescribe the form or forms of the option agreements under the Plan
(which forms shall be consistent with the terms of the Plan but need not be
identical); (g) to adopt, amend and rescind such rules and regulations as, in
its opinion, may be advisable in the administration of the Plan; and (h) to
construe and interpret the Plan, the rules and regulations and the option
agreements under the Plan and to make all other determinations deemed necessary
or advisable for the administration of the Plan. All decisions, determinations
and interpretations of the Committee shall be final and binding on all
optionees.
ARTICLE III.
Stock
The stock to be optioned under the Plan shall be shares of authorized
but unissued Common Stock of the Company, par value $.01 per share, or
previously issued shares of Common Stock reacquired by the Company (the
"Stock"). Under the Plan, the total number of shares of Stock which may be
purchased pursuant to options granted hereunder shall not exceed, in the
aggregate, 1,569,000 shares, except as such number of shares shall be adjusted
in accordance with the provisions of ARTICLE X hereof.
The number of shares of Stock available for grant of options under the
Plan shall be decreased by the sum of the number of shares with respect to which
options have been issued and are then outstanding and the number of shares
issued upon exercise of options. In the event that any outstanding option under
the Plan for any reason expires, is terminated or is canceled prior to the end
of the period during which options may be granted, the shares of Stock called
for by the unexercised portion of such option may again be subject to an option
under the Plan.
2
ARTICLE IV.
Eligibility of Participants
Subject to ARTICLE VII in the case of incentive stock options, officers
and other key employees of the Company (excluding any person who is a member of
the Committee) shall be eligible to receive options under the Plan. In addition,
options which are not incentive stock options may be granted to consultants or
other key persons (excluding any person who is a member of the Committee) who
the Committee determines shall receive options under the Plan. No person may
receive options for more than 250,000 shares of Stock in any one year.
3
ARTICLE V.
Option Exercise Price
Subject to ARTICLE VII in the case of incentive stock options, (i) in
the case of each option granted under the Plan which is not an incentive stock
option, the option exercise price shall be not less than 85% of the "Fair Market
Value" of the Stock at the time the option was granted and (ii) in the case of
each option granted under the Plan which is an incentive stock option, the
option exercise price shall not be less than the Fair Market Value of stock at
the time the option is granted. For purposes of the Plan, the Fair Market Value
on a given date means (i) if the Stock is listed on a national securities
exchange, the closing sale price reported as having occurred on the primary
exchange with which the Stock is listed and traded on the date prior to such
date, or, if there is no such sale on that date, then on the last preceding date
on which such a sale was reported; (ii) if the Stock is not listed on any
national securities exchange but is quoted in the National Market System of the
National Association of Securities Dealers Automated Quotation System on a last
sale basis, the average between the high bid price and low ask price reported on
the date prior to such date, or, if there is no such sale on that date, then on
the last preceding date on which a sale was reported; or (iii) if the Stock is
not listed on a national securities exchange nor quoted in the National Market
System of the National Association of Securities Dealers Automated Quotation
System on a last sale basis, the amount determined by the Committee to be the
fair market value based upon a good faith attempt to value the Stock accurately
and computed in accordance with applicable regulations of the Internal Revenue
Service; or (iv) notwithstanding clauses (i) - (iii) above, with respect to
Options granted as of the consummation of the Company's initial public offering
of Stock through an effective registration statement (the "IPO"), the price at
which Stock is sold to the public in the IPO.
ARTICLE VI.
Exercise and Terms of Options
Subject to this ARTICLE VI, the Committee shall determine the dates
after which options may be exercised, in whole or in part. If an option is
exercisable in installments, installments or portions thereof which are
exercisable and not exercised shall remain exercisable.
4
Any other provision of the Plan to the contrary notwithstanding, but
subject to ARTICLE VII in the case of incentive stock options, no option shall
be exercised after the date ten years from the date of grant of such option (the
"Termination Date").
If prior to the Termination Date, an optionee shall cease to be
employed by the Company by reason of a disability, as defined in Section
22(e)(3) of the Code, the option shall remain exercisable until the earlier of
the Termination Date or one year after the date of cessation of employment to
the extent the option was exercisable at the time of cessation of employment.
In the event of the death of an optionee prior to the Termination Date
and while employed by the Company, or while entitled to exercise an option
pursuant to the preceding paragraph or the final sentence of the subsequent
paragraph, the option shall remain exercisable until the earlier of the
Termination Date or one year after the date of death, by the person or persons
to whom the optionee's rights under the option pass by will or the applicable
laws of descent and distribution, to the extent that the optionee was entitled
to exercise it on the date of death.
If an optionee voluntarily terminates employment with the Company for
reasons other than death, disability or retirement on or after the normal
retirement age set forth in the Company's policies (a "Voluntary Termination"),
or if an optionee's employment with the Company is terminated for Cause, as
hereinafter defined, unless otherwise provided by the Committee, all options
previously granted to such optionee which have not been exercised prior to such
termination shall lapse and be canceled. If the Company terminates an optionee's
employment without Cause, as hereinafter defined, unless otherwise provided by
the Committee, all options previously granted to such optionee which were
exercisable immediately prior to such termination shall continue to be
exercisable for a period not extending beyond three months after the date of
such termination.
For purposes of the Plan, the Company shall have "Cause" to terminate
an optionee's employment if the Company has cause to terminate the optionee's
employment under any existing employment agreement between the optionee and the
5
Company or, in the absence of an employment agreement between the optionee and
the Company, upon (A) the determination by the Committee that the optionee has
ceased to perform his duties to the Company (other than as a result of his
incapacity due to physical or mental illness or injury), which failure amounts
to an intentional and extended neglect of his duties to the Company, (B) the
Committee's determination that the optionee has engaged or is about to engage in
conduct materially injurious to the Company, or (C) the optionee having been
convicted of a felony.
For purposes of the Plan, in the case of an optionee who is not an
employee of the Company, references to employment herein shall be deemed to
refer to such person's relationship to the Company.
Notwithstanding anything in the Plan or any option agreement to the
contrary, if at the time any option is exercised, in whole or in part, the
Company or an affiliate has not yet completed its first firm commitment public
offering of securities, it shall be a condition precedent to such exercise that
any optionee execute a written shareholders' agreement in such form as may be
designated by the Committee.
Notwithstanding the foregoing provisions of this ARTICLE VI or the
terms of any option agreement, the Committee may in its sole discretion
accelerate the exercisability of any option granted hereunder. Any such
acceleration shall not affect the terms and conditions of any such option other
than with respect to exercisability.
ARTICLE VII.
Special Provisions Applicable
to Incentive Stock Options Only
To the extent the aggregate fair market value (determined as of the
time the option is granted) of the Stock with respect to which any options
granted hereunder which are intended to be incentive stock options may be
exercisable for the first time by the optionee in any calendar year (under this
Plan or any other stock option plan of the Company or any parent or subsidiary
thereof) exceeds $100,000, such options shall not be considered incentive stock
options.
6
No incentive stock option may be granted to an individual who, at the
time the option is granted, owns directly, or indirectly within the meaning of
Section 424(d) of the Code, stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the Company or of any parent or
subsidiary thereof, unless such option (i) has an option price of at least 110
percent of the fair market value of the Stock on the date of the grant of such
option; and (ii) cannot be exercised more than five years after the date it is
granted.
Each optionee who receives an incentive stock option must agree to
notify the Company in writing immediately after the optionee makes a
disqualifying disposition of any Stock acquired pursuant to the exercise of an
incentive stock option. A disqualifying disposition is any disposition
(including any sale) of such Stock before the later of (a) two years after the
date the optionee was granted the incentive stock option or (b) one year after
the date the optionee acquired Stock by exercising the incentive stock option.
ARTICLE VIII.
Payment for Shares
Payment for shares of Stock purchased under an option granted hereunder
shall be made in full upon exercise of the option, by certified or bank
cashier's check payable to the order of the Company or by any other means
acceptable to the Company. The Stock purchased shall thereupon be promptly
delivered; provided, however, that the Company may, in its discretion, require
that an optionee pay to the Company, at the time of exercise, such amount as the
Company deems necessary to satisfy its obligation to withhold Federal, state or
local income or other taxes incurred by reason of the exercise or the transfer
of shares thereupon.
ARTICLE IX.
Non-Transferability of Option Rights
7
No option shall be transferable except by will or the laws of descent
and distribution. During the lifetime of the optionee, the option shall be
exercisable only by him. The Committee may, however, in its sole discretion,
allow for transfer of options which are not incentive stock options to other
persons or entities, subject to such conditions or limitations as it may
establish.
ARTICLE X.
Adjustment for Recapitalization, Merger, etc.
The aggregate number of shares of Stock which may be purchased pursuant
to options granted hereunder, the number of shares of Stock covered by each
outstanding option and the price per share thereof in each such option shall be
appropriately adjusted for any increase or decrease in the number of outstanding
shares of stock resulting from a stock split or other subdivision or
consolidation of shares of Stock or for other capital adjustments or payments of
stock dividends or distributions or other increases or decreases in the
outstanding shares of Stock without receipt of consideration by the Company. Any
adjustment shall be conclusively determined by the Committee.
In the event of any change in the outstanding shares of Stock by reason
of any recapitalization, merger, consolidation, spin-off, combination or
exchange of shares or other corporate change, or any distributions to common
shareholders other than cash dividends, the Committee shall make such
substitution or adjustment, if any, as it deems to be equitable, as to the
number or kind of shares of Stock or other securities issued or reserved for
issuance pursuant to the Plan, and the number or kind of shares of Stock or
other securities covered by outstanding options, and the option price thereof.
In instances where another corporation or other business entity is being
acquired by the Company, and the Company has assumed outstanding employee option
grants and/or the obligation to make future or potential grants under a prior
existing plan of the acquired entity, similar adjustments are permitted at the
discretion of the Committee. The Committee shall notify optionees of any
intended sale of all or substantially all of the Company's assets within a
reasonable time prior to such sale.
8
The foregoing adjustments and the manner of application of the
foregoing provisions shall be determined by the Committee in its sole
discretion. Any such adjustment may provide for the elimination of any
fractional share which might otherwise become subject to an option.
ARTICLE XI.
Effect of Change in Control
(a) Except to the extent reflected in a particular option agreement in
the event of a "Change in Control," notwithstanding any vesting schedule with
respect to any options, such option shall become immediately exercisable with
respect to 100 percent of the shares subject to such option.
(b) For purposes of the Plan, Change in Control shall, unless the Board
otherwise directs by resolution adopted prior thereto or, in the case of a
particular award, the particular option agreement states otherwise, be deemed to
occur if (i) any "person" (as that term is used in Sections 13 and 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) other than
a Permitted Holder (as defined below) is or becomes the beneficial owner (as
that term is used in Section 13(d) of the Exchange Act), directly or indirectly,
of 30% or more of either the outstanding shares of Common Stock or the combined
voting power of the Company's then outstanding voting securities entitled to
vote generally, (ii) the Company is merged, consolidated or reorganized into or
with another corporation or another legal entity and, as a result of such
merger, consolidation or reorganization, less than 50% of the combined voting
power of the then-outstanding securities of such corporation or entity
immediately after such transaction is held in the aggregate by the holders of
the combined voting power of the securities of the Company entitled to generally
in the election of directors of the Company immediately prior to such
transaction, (iii) during any period of two consecutive years beginning on the
date of the consummation of the IPO, individuals who constitute the Board at the
beginning of such period cease for any reason to constitute at least a majority
thereof, unless the election or the nomination for election by the Company's
shareholders of each new
9
director was approved by a vote of at least three-quarters of the directors then
still in office who were directors at the beginning of the period or (iv) the
Company undergoes a liquidation or dissolution or a sale of all or substantially
all of the assets of the Company. Neither the IPO nor any merger, consolidation
or corporate reorganization in which the owners of the combined voting power of
the Company's then outstanding voting securities entitled to vote generally
prior to said combination, own 50% or more of the resulting entity's outstanding
voting securities shall, by itself, be considered a Change in Control. As used
herein, "Permitted Holder" means William R. Berkley or any of his affiliates (as
such term is defined in Rule 1-02 of Regulation S-X under the Securities Act).
ARTICLE XII.
No Obligation to Exercise Option
Granting of an option shall impose no obligation on the recipient to
exercise such option.
ARTICLE XIII.
Use of Proceeds
The proceeds received from the sale of Stock pursuant to the Plan shall
be used for general corporate purposes.
ARTICLE XIV.
Rights as a Stockholder
An optionee or a transferee of an option shall have no rights as a
stockholder with respect to any share covered by his option until he shall have
become the holder of record of such share, and he shall not be entitled to any
dividends or distributions or other rights in respect of such share for which
the record date is prior to the date on which he shall have become the holder of
record thereof.
10
Notwithstanding anything herein to the contrary, the Committee, in its
sole discretion, may restrict the transferability of all or any number of shares
issued under the Plan upon the exercise of an option by legending the stock
certificate as it deems appropriate.
ARTICLE XV.
Employment Rights
Nothing in the Plan or in any option granted hereunder shall confer on
any optionee any right to continue in the employ of the Company or any of its
subsidiaries, or to interfere in any way with the right of the Company or any of
its subsidiaries to terminate the optionee's employment at any time.
ARTICLE XVI.
Compliance with the Law
The Company is relieved from any liability for the nonissuance or
non-transfer or any delay in issuance or transfer of any shares of Stock subject
to options under the Plan which results from the inability of the Company to
obtain or in any delay in obtaining from any regulatory body having
jurisdiction, all requisite authority to issue or transfer shares of Stock of
the Company either upon exercise of the options under the Plan or shares of
Stock issued as a result of such exercise if counsel for the Company deems such
authority necessary for lawful issuance or transfer of any such shares,
appropriate legends may be placed on the stock certificates evidencing shares
issued upon exercise of options to reflect such transfer restrictions.
Each option granted under the Plan is subject to the requirement that
if at any time the Committee determines, in its discretion, that the listing,
registration or qualification of shares of Stock issuable upon exercise of
options is required by any securities exchange or under any state or Federal
law, or that the consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with, the grant of
11
options or the issuance of shares of Stock, no shares of Stock shall be issued,
in whole or in part, unless such listing, registration, qualification, consent
or approval has been effected or obtained free of any conditions or with such
conditions as are acceptable to the Committee.
ARTICLE XVII.
Cancellation of Options
The Committee, in its discretion, may, with the consent of any
optionee, cancel any outstanding option hereunder.
ARTICLE XVIII.
Effective Date and Expiration Date of Plan
The Plan, as amended and restated, is effective as of March 17, 1997,
the date of adoption of the Plan by the Company's Board of Directors, subject to
approval by the stockholders of the Company in a manner which complies with both
Section 162(m) and Section 422(b)(1) of the Code and the Treasury Regulations
thereunder. The expiration date of the Plan, after which no option may be
granted hereunder, shall be November 1, 2004.
ARTICLE XIX.
Amendment or Discontinuance of Plan
The Board may, without the consent of the Company's stockholders or
optionees under the Plan, at any time terminate the Plan entirely and at any
time or from time to time amend or modify the Plan, provided that no such action
shall adversely affect options theretofore granted hereunder without the
optionee's consent, and provided further that no such action by the Board,
without approval of the stockholders, may (a) increase the total number of
shares of Stock which may be purchased pursuant to options granted under the
Plan, except as contemplated in ARTICLE X, or (b) expand the class of employees
eligible to receive options under the Plan.
12
ARTICLE XX.
Miscellaneous
(a) Options shall be evidenced by option agreements (which need not be
identical) in such forms as the Committee may from time to time approve. Such
agreements shall conform to the terms and conditions of the Plan and may provide
that the grant of any option under the Plan and Stock acquired pursuant to the
Plan shall also be subject to such other conditions (whether or not applicable
to the option or Stock received by any other optionee) as the Committee
determines appropriate, including, without limitation, provisions to assist the
optionee in financing the purchase of Stock through the exercise of options,
provisions for the forfeiture of, or restrictions on, resale or other
disposition of shares under the Plan, provisions giving the Company the right to
repurchase shares acquired under the Plan in the event the participant elects to
dispose of such shares, and provisions to comply with Federal and state
securities laws and Federal and state income tax withholding requirements.
(b) If the Committee shall find that any person to whom any amount is
payable under the Plan is unable to care for his affairs because of illness or
accident, or is a minor, or has died, then any payment due to such person or his
estate (unless a prior claim therefor has been made by a duly appointed legal
representative) may, if the Committee so directs the Company, be paid to his
spouse, child, relative, an institution maintaining or having custody of such
person, or any other person deemed by the Committee to be a proper recipient on
behalf of such person otherwise entitled to payment. Any such payment shall be a
complete discharge of the liability of the Committee and the Company therefor.
(c) No member of the Committee shall be personally liable by reason of
any contract or other instrument executed by such member or on his behalf in his
capacity as a member of the Committee nor for any mistake of judgment made in
good faith, and the Company shall indemnify and hold harmless each member of the
Committee and each other employee, officer or director of the Company to whom
any duty or power relating to the administration or interpretation of the Plan
may be allocated or delegated, against any cost or expense (including counsel
fees) or liability (including any sum paid in settlement of a claim)
13
arising out of any act or omission to act in connection with the Plan unless
arising out of such person's own fraud or bad faith; provided, however, that
approval of the Company's Board of Directors shall be required for the payment
of any amount in settlement of a claim against any such person. The foregoing
right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company's
Certificate of Incorporation or By-Laws, as a matter of law, or otherwise, or
any power that the Company may have to indemnify them or hold them harmless.
(d) The Plan shall be governed by and construed in accordance with the
internal laws of the State of Connecticut without reference to the principles of
conflicts of law thereof.
(e) No provision of the Plan shall require the Company, for the purpose
of satisfying any obligations under the Plan, to purchase assets or place any
assets in a trust or other entity to which contributions are made or otherwise
to segregate any assets, nor shall the Company maintain separate bank accounts,
books, records or other evidence of the existence of a segregated or separately
maintained or administered fund for such purposes. Optionees shall have no
rights under the Plan other than as unsecured general creditors of the Company,
except that insofar as they may have become entitled to payment of additional
compensation by performance of services, they shall have the same rights as
other employees under general law.
(f) Each member of the Committee and each member of the Company's Board
of Directors shall be fully justified in relaying, acting or failing to act, and
shall not be liable for having so relied, acted or failed to act in good faith,
upon any report made by the independent public accountant of the Company and
upon any other information furnished in connection with the Plan by any person
or persons other than such member.
(g) Except as otherwise specifically provided in the relevant plan
document, no payment under the Plan shall be taken into account in determining
any benefits under any pension, retirement, profit-sharing, group insurance or
other benefit plan of the Company.
(h) The expenses of administering the Plan shall be borne by the
Company.
14
(i) Masculine pronouns and other words of masculine gender shall refer
to both men and women.
(j) The shares of Stock reserved for issuance under the Plan may also
be used to satisfy obligations of the Company to deliver shares of Stock
pursuant to the Company's Long Term Incentive Compensation Plan.
* * *
As adopted by the Board of Directors of Fine Host Corporation as of November 1,
1994 and as Amended and Restated as of June 18, 1996 and as further Amended and
Restated as of March 17, 1997
15
Exhibit 10.2
FINE HOST CORPORATION
LONG-TERM INCENTIVE COMPENSATION PLAN
ARTICLE I
PURPOSE
The purpose of the Long-Term Incentive Compensation Plan (the "Plan") is to
promote the interests of Fine Host Corporation (the "Company") and its
stockholders by (i) helping the Company to attract and retain outstanding
management, (ii) stimulating management's efforts on behalf of the Company by
giving participants a direct interest in the performance of the Company and
(iii) suitably rewarding participants' contributions to the success of the
Company.
The Company intends that certain performance-based compensation payable under
the Plan will qualify for deduction under Section 162(m) of the Internal Revenue
Code of 1986, as amended.
ARTICLE II
DEFINITIONS
2.1 Award Certificate: A written instrument evidencing the award of
Units to a Participant.
2.2 Base Year EPS: Earnings Per Share for the Fiscal Year immediately
preceding the date of an award of Units.
2.3 Beneficiary: The person or persons designated by a Participant, in
accordance with Section 9.1, to receive any amount payable under the Plan upon
the Participant's death.
2.4 Board: The Board of Directors of the Company.
2.5 Change in Control: Change in Control shall, unless the Board otherwise
directs by resolution adopted prior thereto or, in the case of a particular
award, the particular Award Certificate states otherwise, be deemed to occur if:
(i) any "person" (as that term is used in Sections 13 and 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")), other
than a Permitted Holder (as defined below), is or becomes the beneficial owner
(as that term is used in Section 13(d) of the Exchange Act), directly or
indirectly, of 30% or more of either the outstanding Common Shares or the
combined voting power of the Company's then outstanding voting securities
entitled to vote generally,
(ii) the Company is merged, consolidated or reorganized into or with
another corporation or other legal entity, and as a result of such merger,
consolidation or reorganization, less than 50% of the combined voting power of
the then outstanding securities of such corporation or entity immediately after
such transaction is held in the aggregate by the holders of the combined voting
power of the outstanding securities of the Company entitled to vote generally in
the election of the Board immediately prior to such transaction,
(iii) during any period of two consecutive years beginning on the
Effective Date, individuals who constitute the Board at the beginning of such
period cease for any reason to constitute at least a majority thereof, unless
the election or the nomination for election by the Company's stockholders of
each new director was approved by a vote of at least three-quarters of the
directors then still in office who were directors at the beginning of the
period, or
(iv) the Company undergoes a liquidation or dissolution or a sale
of all or substantially all of the assets of the Company.
No merger, consolidation or corporate reorganization in which the
owners of the combined voting power of the Company's then outstanding voting
securities entitled to vote generally prior to said combination own 50% or more
of the resulting entity's outstanding securities shall, by itself, be considered
a Change in Control. As used herein, "Permitted Holder" means William R. Berkley
or any of his affiliates (as such term is defined in Rule 1-02 of Regulation S-X
under the Securities Act of 1933).
2.6 Code: The Internal Revenue Code of 1986, as amended from time to
time.
2.7 Committee: The Compensation Committee of the Board, which is comprised
solely of two or more "outside directors" within the meaning of Section 162(m)
of the Code.
2.8 Common Shares: Shares of common stock ($.01 par value) of the
Company.
2.9 Company: Fine Host Corporation and consolidated subsidiaries, a
Delaware corporation, or any successor thereto.
2.10 Cumulative Unit Value: The amount determined in accordance with
Section 7.2.
2.11 Disability: Disability, as defined in a Participant's employment
agreement with the Company, or, absent an agreement, in the Company's group
disability insurance contract.
2.12 Earnings: For any Fiscal Year, the consolidated income of the Company
from continuing operations before income taxes, prepared in accordance with
generally accepted accounting principles, as reported in the Company's audited
consolidated financial statements for that Fiscal Year; adjusted to exclude (a)
in its entirety any item of nonrecurring gain or loss in excess of $2,000,000
and (b) any accruals for this Plan.
2
2.13 Earnings Per Share: For any Fiscal Year, Earnings divided by the
number of Common Shares used to determine the Company's basic earnings per share
for that Fiscal Year, as reported in the Company's audited consolidated
financial statements for the Fiscal Year; provided, however, that for the Fiscal
Year ending December 31,1997, Earnings per Share shall be based on Earnings for
the period March 27 through December 31, 1997 on an annualized basis (i.e.,
multiplied by 133%).
2.14 Effective Date: The effective date of the Plan, which is March 27,
1997.
2.15 Fiscal Year: The 52- or 53-week period beginning on the Thursday after
the last Wednesday in December of one year and ending on the last Wednesday in
December of the next year; provided, however, that the first Fiscal Year shall
commence on the Effective Date and end on December 31, 1997.
2.16 Incremental Unit Value: The amount determined in accordance with
Section 7.1.
2.17 Maximum Cumulative Unit Value: For all Units awarded as of the
beginning of any Fiscal Year, the amount determined by the Committee for
those Units when they are awarded.
2.18 Measuring Price: For each Unit awarded as of the Effective Date,
$19.25; for each Unit awarded thereafter, the closing price of a Common Share as
reported on the NASDAQ National Market System on the last day of the Fiscal Year
preceding the date as of which the Unit is awarded.
2.19 Participant: A key employee of the Company designated by the
Committee to participate in the Plan.
2.20 Plan: The Fine Host Corporation Long-Term Incentive Compensation Plan,
as herein set forth and as it may be amended from time to time.
2.21 Term of the Plan: The period commencing on the Effective Date and
ending five years after the final award of Units, in accordance with Section
5.1, or on such earlier date as the Maximum Cumulative Unit Value of such Units
may be achieved.
2.22 Termination Without Cause: Termination of a Participant's employment
by the Company without "Cause," as defined in the Participant's employment
agreement with the Company, or, absent an agreement defining Cause, termination
of the Participant's employment by the Company for any reason other than (i)
continuing and material failure to fulfill his or her employment obligations or
willful misconduct or gross neglect in the performance of such duties, (ii)
commission of fraud, misappropriation or embezzlement in the performance of such
duties, or (iii) conviction of a felony, which, as determined in good faith by
the Board, constitutes a crime involving moral turpitude and may result in
material harm to the Company.
3
2.23 Unit: A unit of participation in the Plan awarded to a
Participant in accordance with Article V.
2.24 Valuation Date: The last day of any Fiscal Year.
ARTICLE III
ADMINISTRATION
3.1 The Plan shall be administered by the Committee. A majority of the
Committee shall constitute a quorum. Committee decisions and determinations
shall be made by a majority of its members present at a meeting at which a
quorum is present, and they shall be final. The actions of the Committee with
respect to the Plan shall be binding on all affected Participants. Any decision
or determination reduced to writing and signed by all of the members of the
Committee shall be fully effective as if it had been made by a vote at a meeting
duly called and held. The Committee shall keep minutes of its meetings and shall
make such rules and regulations for the conduct of its business as it shall deem
advisable.
3.2 The Committee shall have full authority, subject to the provisions of
the Plan (i) to select Participants and determine the extent and terms of their
participation; (ii) to adopt, amend and rescind such rules and regulations as,
in its opinion, may be advisable in the administration of the Plan, (iii) to
construe and interpret the Plan, the rules and regulations adopted thereunder
and any notice or Award Certificate given to a Participant; and (iv) to make all
other determinations that it deems necessary or advisable in the administration
of the Plan. The Committee may request advice or assistance or employ such
persons as it deems necessary for the proper administration of the Plan and may
rely on such advice or assistance; provided, however, that in making any
determinations with respect to the administration of the Plan, the Committee
shall at all times be obligated to act in good faith and in conformity with the
terms of the Plan.
3.3 In the event of any stock split, stock dividend, reclassification,
recapitalization or other change that affects the character or amount of
outstanding Common Shares and Earnings Per Share, the Committee shall make such
adjustments in the number of Units (whether authorized or outstanding and
unexercised), the Measuring Price or both as shall, in the sole judgment of the
Committee, be equitable and appropriate in order to make the value of such
Units, as nearly as may be practicable, equivalent to the value of Units
outstanding and unexercised immediately prior to such change. In no event,
however, shall any such adjustment give any Participant any additional benefits.
3.4 The Committee shall be precluded from increasing compensation payable
under the Plan to a Participant, including acceleration of payment and increase
of any amount payable, unless specifically provided for by the Plan.
4
ARTICLE IV
PARTICIPATION
4.1 Only key employees of the Company who, in the Committee's judgment,
will have a significant impact on the success of the business shall be eligible
to participate in the Plan. The Committee, in its sole discretion, shall select
the Participants.
4.2 In selecting Participants and in determining the number of Units to be
awarded to each Participant for any Fiscal Year, the Committee shall take into
account such factors as the individual's position, experience, knowledge,
responsibilities, advancement potential and past and anticipated contribution to
Company performance.
ARTICLE V
AWARD OF UNITS
5.1 Subject to adjustment as provided in Section 3.3, a maximum of 300,000
Units may be awarded under the Plan. A Participant who has been awarded Units
may be awarded additional Units from time to time and new Participants may be
awarded Units, both in the discretion of the Committee; provided, however, that
no Units shall be awarded after 2006.
5.2 Units shall be awarded solely by the Committee and shall be evidenced
by an Award Certificate, as provided in Article X.
5.3 Subject to adjustment as provided in Section 3.3, the maximum number of
Units awarded to any one individual shall not exceed 75,000 during the Term of
the Plan.
ARTICLE VI
TERM AND VESTING OF UNITS
6.1 Each Unit shall have a term of five years from the date of award,
subject to earlier termination (i) upon exercise by a Participant, (ii) as
provided in Article XI or (iii) upon achievement before five years of the Unit's
Maximum Cumulative Unit Value. Notwithstanding the foregoing, the term of Units
awarded as of the Effective Date shall terminate on the last day of the Fiscal
Year ending in 2001, subject to earlier termination as aforesaid. Units shall be
deemed to be awarded as of the Effective Date or the first day of any subsequent
Fiscal Year through 2006, as the case may be.
5
6.2 Units shall become vested as follows, except that Units awarded as of
the Effective Date shall become vested as if their date of award was the first
day of Fiscal Year 1997:
Vested Fiscal Years
Percentage of from
Units Awarded Date of Award
40% 2
60% 3
80% 4
100% 5
6.3 Notwithstanding Section 6.2, each Unit shall immediately become fully
vested in the event of (i) attainment of its Maximum Cumulative Unit Value, (ii)
a Participant's Termination Without Cause (before or after a Change in Control)
or (iii) termination of a Participant's employment with the Company by reason of
retirement on or after attainment of age 65, death or Disability.
ARTICLE VII
DETERMINATION OF VALUE OF A UNIT
7.1 For any Fiscal Year, the Incremental Unit Value of a Unit shall be
equal to the product of (i) the Measuring Price, multiplied by (ii) .85 of the
percentage by which Earnings Per Share for the Fiscal Year exceeds Base Year
EPS. In the event Base Year EPS exceeds Earnings Per Share for any Fiscal Year,
the Incremental Unit Value for the Fiscal Year shall be zero. The Committee
shall notify each Participant of the Incremental Unit Value of his or her Units
for each Fiscal Year as soon as practicable after the Valuation Date for the
Fiscal Year.
7.2 The Incremental Unit Value of each Unit for any Fiscal Year shall be
cumulated with the Incremental Unit Value of the Unit for all prior Fiscal Years
from the date of the Unit's award. The cumulative amount thus determined shall
be the then Cumulative Unit Value of such Unit.
ARTICLE VIII
PAYMENT OF UNITS
8.1 A Unit may be exercised, to the extent that it is vested, at any time
prior to becoming fully vested; provided, however, that upon exercise any
partially vested Unit shall be canceled and its nonvested portion forfeited.
Except as provided in Article XI, a Unit that is fully vested, in accordance
with Article VI, shall thereupon be exercised.
6
8.2 In order to exercise a partially or fully vested outstanding Unit, a
Participant (i) shall give written notice of exercise, as provided in Section
8.3, specifying the number of Units being exercised, and (ii) shall deliver his
or her Award Certificate to the Secretary of the Company, who shall endorse
thereon a notation of such exercise and return the same to the Participant. The
date of exercise of a Unit shall be the date on which the Company receives the
required documentation. Upon exercise of a Unit, the Participant shall be
entitled to receive the Cumulative Unit Value of the Vested Units being
exercised, determined as of the concurrent or immediately preceding Valuation
date, but not in excess of the Maximum Cumulative Unit Value.
8.3 Notice of exercise of a partially or fully vested Unit shall be in
writing addressed to the Secretary of the Company. Payment of the amount due
under the Plan shall be made not later than five days following the date of
exercise or the date of such other event as shall entitle the Participant to
payment; provided, however, that, before any payment may be made, the Committee
must certify in writing that all performance criteria under the Plan have been
met. Not less than 50 percent of any amount due shall be paid in cash, and the
balance shall be paid in cash or Common Shares or both, as determined by the
Committee in its discretion; provided, however, that upon a Participant's
Termination Without Cause following a Change in Control, payment shall be made
solely in cash.
ARTICLE IX
LIMITS ON TRANSFERABILITY OF UNITS
9.1 Each Participant shall file with the Committee a written designation of
one or more persons as the Beneficiary who shall be entitled to receive any
amount or any Common Shares payable under the Plan upon his or her death. A
Participant may, from time to time, revoke or change his or her Beneficiary
designation without the consent of any previously designated Beneficiary by
filing a new designation with the Committee. The last such designation received
by the Committee shall be controlling; provided, however, that no designation,
or change or revocation thereof, shall be effective unless received by the
Committee prior to the Participant's death, and in no event shall it be
effective as of a date prior to such receipt. If at the date of a Participant's
death, there is no designation of a Beneficiary in effect for the Participant,
or if no Beneficiary survives to receive any amount payable under the Plan by
reason of the Participant's death, the Participant's estate shall be treated as
the Beneficiary for purposes of the Plan.
9.2 A Unit may be exercised only by the Participant to whom it was awarded,
except in the event of the Participant's death, when a Unit may be exercised by
his or her Beneficiary. Except as provided in Section 9.1, a Participant may not
transfer, assign, alienate or hypothecate any benefits under the Plan.
7
ARTICLE X
AWARD CERTIFICATE
Promptly following the making of an award, the Company shall deliver to the
recipient an Award Certificate, specifying the terms and conditions of the Unit.
This writing shall be in such form and contain such provisions not inconsistent
with the Plan as the Committee shall prescribe.
ARTICLE XI
TERMINATION OF UNITS
11.1 An outstanding Unit awarded to a Participant shall be canceled and all
rights with respect thereto shall expire upon the earlier to occur of (i) its
exercise as provided in Section 8.1 or (ii) termination of the Participant's
employment with the Company; provided, however, that if such termination occurs
by reason of retirement on or after attainment of age 65, death, Disability or
Termination Without Cause, or for any other reason specifically approved in
advance by the Committee, the term of such Unit shall continue for a period of
14 months from the date of termination (the "Extended Term"). For purposes of
this Section 11.1, the Cumulative Unit Value of such Unit shall be determined as
of the Valuation Date concurrent with or immediately preceding the end of the
Extended Term or any earlier exercise date, whichever is applicable. A Unit
whose term is continued for an Extended Term shall be deemed to be automatically
exercised as of the last Valuation Date within the Extended Term, unless sooner
exercised by the Participant or his or her legal representative.
11.2 Nothing contained in Section 11.1 shall be deemed to extend the term
of any Unit beyond the end of the Term of the Plan.
ARTICLE XII
TERMINATION AND AMENDMENT OF THE PLAN
The Company reserves the right to amend or terminate the Plan at any time,
by action of the Committee, but no such amendment or termination shall adversely
affect the rights of any Participant with respect to outstanding Units held by
the Participant without his or her written consent. No amendment will be
effective prior to approval by the Company's stockholders to the extent such
approval is required by Section 162(m) of the Code or otherwise required by law.
8
ARTICLE XIII
GENERAL PROVISIONS
13.1 Nothing in the Plan, nor the award of any Unit, shall confer a right
to continue in the employment of the Company or affect any right of the Company
to terminate a Participant's employment.
13.2 The Plan shall be governed by and construed in accordance with the
laws of the State of Connecticut without reference to principles of conflict of
laws.
13.3 The Company shall be authorized to withhold from any award or payment
it makes under the Plan to a Participant the amount of withholding taxes due
with respect to such award or payment and to take such other action as may be
necessary in the opinion of the Company to satisfy all obligations for the
payment of such taxes.
13.4 Nothing in the Plan shall prevent the Board from adopting other or
additional compensation arrangements, subject to stockholder approval as may be
necessary, and such arrangements may be either generally applicable or
applicable only in specific cases.
13.5 Participants shall not be required to make any payment or provide any
consideration for awards under the Plan other than the rendering of services.
9
Exhibit 10.3
FINE HOST CORPORATION
ANNUAL INCENTIVE COMPENSATION PLAN
ARTICLE I
PURPOSE
The purpose of the Annual Incentive Compensation Plan (the "Plan") is to provide
incentive compensation to executives of Fine Host Corporation (the "Company") in
recognition of their significant contributions to the growth, profitability and
success of the Company from year to year.
The Company intends that certain performance-based compensation payable under
the Plan will qualify for deduction under Section 162(m) of the Internal Revenue
Code of 1986, as amended. Subject to approval by the Company's stockholders, the
Plan will be effective January 1, 1998.
ARTICLE II
DEFINITIONS
2.1 Annual Incentive Pool: For any Fiscal Year, the amount equal to the
percentage of Earnings determined by the Board at the beginning of the Fiscal
Year, subject to the condition that Earnings meet the Corporate Threshold for
the Fiscal Year.
2.2 Board: The Board of Directors of the Company.
2.3 Code: The Internal Revenue Code of 1986, as amended from time to
time.
2.4 Committee: The Compensation Committee of the Board, which is comprised
solely of two or more "outside directors" within the meaning of Section 162(m)
of the Code.
2.5 Company: Fine Host Corporation, a Delaware corporation, and its
consolidated subsidiaries, or any successors thereto.
2.6 Corporate Threshold: For any Fiscal Year, 80 percent of budgeted
Earnings, which is the minimum amount of Earnings that the Company must achieve
in order to establish an Annual Incentive Pool for that Fiscal Year.
2.7 Disability: Disability, as defined in a Participant's employment
agreement with the Company, or, absent an agreement, in the Company's group
disability insurance contract.
2.8 Earnings: For any Fiscal Year, net income of the Company, on a
consolidated basis, determined in accordance with generally accepted accounting
principles, as reported in the Company's audited consolidated financial
statements for that Fiscal Year.
2.9 Fiscal Year: The 52- or 53-week period beginning on the Thursday
after the last Wednesday in December of one year and ending on the last
Wednesday in December of the next year.
2.10 Incentive Allocation: For any Fiscal Year, a Participant's formulated
share of the Annual Incentive Pool, determined by the Committee in accordance
with Sections 6.3 and 6.4.
2.11 Incentive Award: For any Fiscal Year, the amount of compensation
payable under the Plan to a Participant, determined by the Committee in
accordance with Section 6.5.
2.12 Participant: For any Fiscal Year, an executive of the Company
designated by the Committee to participate in the Plan.
2.13 Performance Goals: For any Fiscal Year, the performance measures
applicable to a Participant, established by the Committee in accordance with
Article V.
2.14 Plan: The Fine Host Corporation Annual Incentive Compensation Plan, as
herein set forth and as it may be amended from time to time.
2.15 Target Allocation: For any Fiscal Year, a Participant's share of the
Annual Incentive Pool for achievement of his or her Performance Goals for the
Fiscal Year, determined by the Committee in accordance with Section 6.1.
2.16 Termination Without Cause: Termination of a Participant's employment by
the Company without "Cause," as defined in the Participant's employment
agreement with the Company, or, absent an agreement defining "Cause,"
termination of the Participant's employment by the Company for any reason other
than (i) continuing and material failure to fulfill his or her employment
obligations or willful misconduct or gross neglect in the performance of such
duties, (ii) commission of fraud, misappropriation or embezzlement in the
performance of such duties, or (iii) conviction of a felony, which, as
determined in good faith by the Board, constitutes a crime involving moral
turpitude and may result in material harm to the Company.
ARTICLE III
ADMINISTRATION
3.1 The Plan shall be administered by the Committee. For any Fiscal Year,
the Committee shall (i) designate the executives of the Company who shall
participate in the Plan, (ii) establish Performance Goals for each Participant
2
and certify the extent of their achievement and (iii) determine each
Participant's Target Allocation, Incentive Allocation and Incentive Award.
3.2 Subject to the provisions of the Plan, the Committee shall have full
power and authority to (i) interpret the Plan, (ii) adopt rules and regulations
relating to the conduct of its business and to the Plan and (iii) make all
determinations necessary or advisable for the administration of the Plan.
Determinations of the Committee in the administration of the Plan shall be
conclusive and binding on the Participants and all other parties concerned.
ARTICLE IV
PARTICIPATION
4.1 Only executives of the Company who, in the Committee's judgment, have
contributed, or have the capacity to contribute, in a substantial measure to the
successful performance of the Company for a given Fiscal Year, shall be eligible
to participate in the Plan for that Fiscal Year.
4.2 In selecting Participants for any Fiscal Year, the Committee shall take
into account such factors as the individual's position, experience, knowledge,
responsibilities, advancement potential and past and anticipated contribution to
Company performance.
ARTICLE V
PERFORMANCE GOALS
5.1 Not later than 90 days after the beginning of any Fiscal Year, the
Committee shall establish Performance Goals for each Participant for that Fiscal
Year.
5.2 Performance Goals established by the Committee for any Fiscal Year may
differ among Participants. The Performance Goals of individual Participants
shall be based on one or more of the following categories, as may be applicable:
(i) Earnings, (ii) the contribution of business unit earnings to Earnings and
(iii) individual job performance, taking into account pre-set goals and
objectives; provided, however, that the Performance Goals established with
respect to any amount payable under the Plan that is intended to qualify as
performance-based compensation under Section 162(m) of the Code shall not
include category (iii).
5.3 In establishing Performance Goals, the Committee shall determine, from
among the categories specified in Section 5.2, the categories to be used in
measuring each Participant's performance and the percentage allocation for each
of the categories, the sum of which allocations shall equal 100 percent.
The Committee shall also determine for each Participant for the same Fiscal
Year a threshold level of performance below which no Incentive Award will be
payable and a maximum incentive opportunity.
3
ARTICLE VI
TARGET ALLOCATION, INCENTIVE ALLOCATION AND INCENTIVE AWARD
6.1 Not later than 90 days after the beginning of each Fiscal Year, the
Committee shall determine each Participant's Target Allocation for the Fiscal
Year as a percentage of his or her salary for the Fiscal Year, assuming that the
Performance Goals for the Participant are fully met.
6.2 When the Committee has determined the Target Allocation and range of
incentive opportunity for a Participant for any Fiscal Year and the performance
categories to be used in establishing his or her Performance Goals for that
Fiscal Year, it shall communicate this information to the Participant.
6.3 As soon as practicable following verification by the Company's
independent public accountants of Earnings for any Fiscal Year and receipt of
information regarding the actual performance of Participants against their
respective Performance Goals for the Fiscal Year, the Committee shall certify
(i) the amount, if any, by which Earnings for the Fiscal Year exceeded the
Corporate Threshold for the Fiscal Year and (ii) the extent to which each
Participant achieved his or her Performance Goals for the Fiscal Year.
6.4 Based on the information certified in accordance with Section 6.3, the
Committee shall determine each Participant's Incentive Allocation for the Fiscal
Year by multiplying his or her Target Allocation for the Fiscal Year by the
percentage representing the extent of achievement of his or her Performance
Goals for the Fiscal Year.
6.5 The amount of a Participant's Incentive Allocation as finally determined
by the Committee shall constitute his or her Incentive Award for the Fiscal
Year; provided, however, that no Incentive Award for any Participant for any
Fiscal Year shall exceed 6 percent of Earnings for that Fiscal Year.
6.6 The Committee shall not be obligated to apply the entire Annual
Incentive Pool for any Fiscal Year to Participants' Incentive Awards. Any amount
not so applied shall remain part of the general assets of the Company and shall
not be carried over to the Annual Incentive Pool for any subsequent Fiscal Year.
ARTICLE VII
PAYMENT OF INCENTIVE AWARDS
7.1 Except as provided in Section 7.2, a Participant's Incentive Award for
any Fiscal Year shall be paid in a cash lump sum as soon as practicable
following the Committee's determination of the amount in accordance with Article
VI.
4
7.2 From time to time, the Committee, in its discretion (under uniform rules
applicable to all Participants), may offer Participants the opportunity to defer
receipt of all or a portion of the Incentive Award for any Fiscal Year. Any
election to defer shall be made prior to the beginning of the Fiscal Year except
for the first Fiscal Year that the Plan is in effect. Deferrals shall be in
increments of 10 percent of the Participant's Target Allocation for the Fiscal
Year.
Deferred amounts are not forfeitable and will be paid after termination
of employment with the Company. They constitute unfunded general obligations of
the Company.
Deferred amounts shall be credited with an interest equivalent amount
until the time of final payment at a rate determined by the Committee from time
to time. The sum of the amount deferred for any Fiscal Year plus all interest
equivalents shall be paid in a single sum or in up to 15 installments, as
specified by the Participant when making the deferral election.
7.3 Each Participant shall designate, in a manner prescribed by the
Committee, a beneficiary to receive payments due under the Plan in the event of
his or her death. If a Participant dies prior to the date of payment of his or
her Incentive Award for any Fiscal Year or to receipt of all amounts, if any,
that were deferred, and if no properly designated beneficiary survives the
Participant, the Incentive Award or any other amount due shall be paid to his or
her estate or personal representative.
ARTICLE VIII
TERMINATION OF EMPLOYMENT
8.1 If a Participant's employment with the Company terminates by reason of
retirement on or after attainment of age 65, death, Disability or Termination
Without Cause, or for any other reason specifically approved in advance by the
Committee, the Committee shall determine the Participant's Incentive Award as if
he or she were employed for the entire Fiscal Year, and the Participant shall be
entitled to receive the Incentive Award prorated to the date of his or her
termination of employment.
8.2 If a Participant's employment with the Company terminates for any reason
other than as provided in Section 8.1, he or she forfeits any right to receive
an Incentive Award for the Fiscal Year in which the termination occurs.
ARTICLE IX
TERMINATION AND AMENDMENT OF THE PLAN
9.1 The Company reserves the right, by action of the Committee, to terminate
the Plan at any time. Subject to such earlier termination, the Plan shall have a
term of five years from its effective date.
5
9.2 The Plan may be amended at any time, and from time to time, by a written
document adopted by the Committee. No amendment shall be effective prior to
approval by the Company's stockholders to the extent such approval is required
by Section 162(m) of the Code or otherwise required by law.
ARTICLE X
GENERAL PROVISIONS
10.1 Nothing in the Plan shall confer upon any employee a right to continue
in the employment of the Company or affect any right of the Company to terminate
a Participant's employment.
10.2 A Participant may not alienate, assign, pledge, encumber, transfer,
sell or otherwise dispose of any rights or benefits awarded hereunder prior to
the actual receipt thereof; and any attempt to alienate, assign, pledge, sell,
transfer or assign prior to such receipt, or any levy, attachment, execution or
similar process upon any such rights or benefits shall be null and void.
10.3 The Plan shall at all times be entirely unfunded, and no provision
shall at any time be made to segregate assets of the Company for payment of any
amounts hereunder. No Participant, beneficiary or other person shall have any
interest in any particular assets of the Company by reason of the right to
receive incentive compensation under the Plan. Participants and beneficiaries
shall have only the rights of a general unsecured creditor of the Company.
10.4 The Plan shall be governed by and construed in accordance with the laws
of the State of Connecticut without reference to principles of conflict of laws.
10.5 The Company shall be authorized to withhold from any award or payment
it makes under the Plan to a Participant the amount of withholding taxes due
with respect to such award or payment and to take such other action as may be
necessary in the opinion of the Company to satisfy all obligations for the
payment of such taxes.
10.6 Nothing in the Plan shall prevent the Board from adopting other or
additional compensation arrangements, subject to stockholder approval as may be
necessary, and such arrangements may be either generally applicable or
applicable only in specific cases.
10.7 Participants shall not be required to make any payment or provide any
consideration for awards under the Plan other than the rendering of services.
6
FIRST AMENDMENT TO
THIRD AMENDED AND RESTATED LOAN AGREEMENT
This FIRST AMENDMENT TO THIRD AMENDED AND RESTATED LOAN AGREEMENT (this
"First Amendment") is entered into as of this 9th day of May, 1997, by and among
(a) Fine Host Corporation, a Delaware corporation (the "Borrower"), (b) Fine
Host Services Corporation, a Delaware corporation, which is a Subsidiary of the
Borrower ("Fine Host Services"), (c) Fine Host of Vermont, Inc., a Vermont
corporation, which is a Subsidiary of the Borrower ("Fine Host of Vermont"), (d)
Fanfare, Inc., a Massachusetts corporation which is a Subsidiary of the Borrower
("Fanfare"), (e) Global Fanfare, Inc., an Indiana corporation, which is a
Subsidiary of the Borrower ("Global Fanfare"), (f) Fine Host International
Corporation, a Delaware corporation, which is a Subsidiary of the Borrower
("Fine Host International"), (g) Creative Food Management, Inc., an Ohio
corporation (f/k/a VGE Acquisition Corp.), which is a Subsidiary of the Borrower
("CFM"), (h) Northwest Food Service, Inc., an Idaho corporation, which is a
Subsidiary of the Borrower ("Northwest"), (i) Tarrant County Concessions,
L.L.C., a Texas limited liability company, which is a Subsidiary of the Borrower
("Tarrant County"), (j) Sun West Services, Inc., a New Mexico corporation, which
is a Subsidiary of the Borrower ("SWSI"), (k) USTrust, a Massachusetts trust
company, for itself (hereinafter referred to as "UST" when acting for itself)
and as Agent for the Banks (as defined below)(hereinafter referred to as "Agent"
when acting as Agent for the Banks), (l) The Sumitomo Bank, Limited, a Japanese
bank ("Sumitomo"), (m) State Street Bank and Trust Company, a Massachusetts
trust company ("SSB"), (n) Bank of Boston Connecticut, a Connecticut bank
("BBC"), (o) Mellon Bank, N.A., a national banking association ("Mellon") and
(p) The Bank of New York, a New York bank ("BNY")(UST for itself, Sumitomo, SSB,
BBC, Mellon and BNY, together with their successors and assigns, are hereinafter
sometimes referred to collectively as the "Banks" and each singly as a "Bank").
As used herein, the term "Loan Agreement" means that certain Third
Amended and Restated Loan Agreement, dated as of June 25, 1996 by and among
Borrower, certain Subsidiaries of the Borrower, the Banks and the Agent,
pursuant to which, among other things, the Banks have made or agreed to make
certain Loans to the Borrower. All capitalized terms not defined herein but
defined in the Loan Agreement shall have the meanings given to such terms in the
Loan Agreement.
Preliminary Statements:
A. Since the Closing Date of the Loan Agreement, the Borrower has
acquired all of the issued and outstanding shares of capital stock of the
following corporations (said corporations, together with any and all other
corporations which are wholly-owned subsidiaries of said corporations, are
hereinafter sometimes referred to collectively as the "New Subsidiaries" and
each singly as a "New Subsidiary"): (i) Ideal Management Services, Inc., a New
York corporation; (ii) HCS Management Corp., a North Carolina corporation (now
known as PCS Holding Corp.); (iii) Republic Management Corp. of
-1-
<PAGE>
Massachusetts, a Massachusetts corporation; (iv) Service Dynamics Corp., a
New Jersey corporation; and (v) Versatile Holding Corporation, a Delaware
corporation; and
B. In accordance with the provisions of Section 7.4 of the Loan
Agreement, the Designated Banks pre-approved the Borrower's acquisitions of each
of the New Subsidiaries subject to the condition that, among other things, each
of the New Subsidiaries become a Guarantor; and
C. On February 11, 1997, the Borrower completed a second underwritten
public offering of certain shares of its common stock (the "Second Offering"),
and used proceeds therefrom to pay, among other things, the then entire unpaid
principal balances, together with all accrued but unpaid interest and other sums
outstanding under each of the Guidance Loans; and
D. The Borrower and each of the Subsidiaries now request that the Banks
(i) renew the Guidance Line of Credit Commitment to make Guidance Loans to the
Borrower, in the same pro rata amounts as originally available to the Borrower
as of the Closing Date of the Loan Agreement, and subject to all of the same
terms and conditions contained therein; and (ii) extend the date by which the
New Subsidiaries must become Guarantors to June 30, 1997; and
E. As a condition to (i) renewing the Guidance Line of Credit
Commitment and (ii) extending the date by which the New Subsidiaries must become
Guarantors, all as so requested by the Borrower and its Subsidiaries, the Banks
have requested that all of the parties hereto enter into this First Amendment
which, among other things, further amends the Loan Agreement;
NOW, THEREFORE, in consideration of the mutual agreements and covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, all of the parties hereto agree as
follows:
1. Definitions. All capitalized terms not defined herein but
defined in the Loan Agreement shall have the meanings given to such terms in
the Loan Agreement.
2. Renewal of Commitments. Subject to the terms and conditions set
forth herein, the Banks hereby renew the Guidance Line of Credit Commitment to
make Guidance Loans to the Borrower, in the same pro rata amounts as originally
available to the Borrower as of the Closing Date of the Loan Agreement, and
subject to all of the same terms and conditions contained therein and in the
other Loan Documents. Without limiting the generality of Section 7.1 hereof, the
Working Capital Commitment and the Letter of Credit Line shall continue to
remain in full force and effect, in accordance with the terms and conditions set
forth in the Loan Agreement, as amended hereby.
-2-
<PAGE>
3. Amendments To Loan Agreement.
3.1 Amendment to Subsection 1.1. Section 1.1 of the Loan
Agreement is amended by deleting the definition of "Guidance Line
Conversion Dates" contained therein and inserting in lieu thereof, the
following:
"'Guidance Line Conversion Dates' means and includes
any and all of the following dates: (a) December 31, 1998, (b)
April 30, 1999, and (c) any date after February 11, 1997 on
which the aggregate outstanding principal amount of all
Unconverted Guidance Loans is Twenty Million and 00/100
Dollars ($20,000,000.00) or more."
3.2 Amendment to Subsection 5.28. The first sentence of clause
(e) of Subsection 5.28 of the Loan Agreement is hereby amended and
restated in its entirety as follows:
"The total authorized capital stock of Global Fanfare consists
of One Thousand (1,000) shares of common stock, without par
value, of which Five Hundred (500) shares are validly issued
and outstanding, all of which are owned by the Borrower."
3.3 Amendment to Subsection 6.1.4. Subsection 6.1.4 of
the Loan Agreement is hereby amended and restated in its
entirety as follows:
"6.1.4 Minimum Net Worth. Maintain at all times (to
be tested as of the last day of each fiscal quarter of the
Borrower) during the periods set forth below, for each fiscal
quarter of the Borrower, a minimum Net Worth as set forth
below.
Quarters Ending Net Worth
March 26, 1997 $ 96,700,000
June 25, 1997 $ 97,400,000
September 24, 1997 $ 99,950,000
December 31, 1997 $101,500,000
April 1, 1998 $102,400,000
July 1, 1998 $103,300,000
September 30, 1998 $106,550,000
December 30, 1998 $108,300,000
March 31, 1999 $109,400,000."
4. Acquisitions. The Banks hereby extend the date by which the New
Subsidiaries must become Guarantors to June 30, 1997; provided, however, that by
such date, the Agent must receive all of the following agreements, documents,
certificates and -3-
<PAGE>
opinions, all in form and substance satisfactory to the Agent and duly executed
and delivered by all of the parties thereto: (a) an Amendment to Loan Agreement
to add each New Subsidiary as a party thereto; (b) an Unlimited Guaranty from
each New Subsidiary, in favor of the Banks, pursuant to which each New
Subsidiary guarantees all of the Liabilities; (c) a Security Agreement between
each New Subsidiary and the Agent, pursuant to which each New Subsidiary grants
to the Agent for the benefit of the Banks a first priority security interest
(subject to Liens permitted under subsection 7.1 of the Loan Agreement) in all
of the assets of such New Subsidiary, together with any and all UCC financing
statements which the Agent deems necessary and appropriate in order to perfect
its security interests in such assets; (c) an Assignment of Receivables and
Proceeds from each New Subsidiary in favor of the Agent, pursuant to which each
New Subsidiary assigns to the Agent for the benefit of the Banks certain
receivables and proceeds of such New Subsidiary as additional security for all
Liabilities; (d) a Pledge Agreement between the Borrower and the Agent, pursuant
to which, among other things, the Borrower grants, pledges and assigns to the
Agent for the benefit of the Banks a first priority security interest in all of
the issued and outstanding shares of capital stock of each New Subsidiary; (e)
Subordination Agreements from such creditors of each New Subsidiary (including
without limitation, the Borrower), as the Agent deems necessary or appropriate;
(f) a certificate of the Secretary of each of the Borrower, its Subsidiaries and
each New Subsidiary with respect to resolutions of the Board of Directors of the
Borrower, its Subsidiaries and each New Subsidiary authorizing the execution and
delivery of the foregoing documents and identifying the officer(s) authorized to
execute, deliver and take all other actions required under such documents, and
providing specimen signatures of such officers; (g) certificates of
incorporation and by-laws for each New Subsidiary and all amendments and
supplements thereto; (h) certificates of legal existence and corporate good
standing for the Borrower, its Subsidiaries and each New Subsidiary; (i)
certificates of foreign qualification for each New Subsidiary; (j) opinions
addressed to the Banks and the Agent from each of Willkie Farr & Gallagher,
counsel to the Borrower, and Ellen Keats, General Counsel for the Borrower; (k)
such other documents, instruments, opinions and certificates and completion of
such other matters, as the Agent may reasonably deem necessary or appropriate.
In addition, the Borrower shall have paid all fees, costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses)
incurred or paid by the Agent and the Banks in connection with the preparation,
negotiation and interpretation of the documents referred to in this Section 4.
5. Representations and Warranties. The Borrower and each of the
Subsidiaries that is a party hereto acknowledge and confirm that all of the
representations and warranties of the Borrower and the Subsidiaries in all of
the Loan Documents are and remain true, correct and complete as of the date
hereof as if made as of the date hereof (except as the same may expressly relate
to an earlier date, and except as the same may relate or apply to any of the New
Subsidiaries). The Borrower and each of the Subsidiaries that is a party hereto
represent and warrant to the Banks that if, effective as of the date hereof, the
New Subsidiaries were to be parties to the Loan Agreement and the other Loan
Documents to which all of the other Subsidiaries are parties, there would be no
breach by the New Subsidiaries of any of their representations and warranties
contained therein which would
-4-
<PAGE>
have a material and adverse effect on the Borrower and the Subsidiaries
(including the New Subsidiaries), when taken as a whole, and there would be no
events, circumstances or conditions (financial or otherwise) relating to any of
the New Subsidiaries, which would materially and adversely impair the ability of
each of the New Subsidiaries to perform or observe all of their respective
obligations thereunder, in accordance with the terms thereof.
6. No Events of Default. The Borrower and each of the Subsidiaries that
is a party hereto represent and warrant to the Banks that no Event of Default or
default has occurred and is now continuing under any of the Loan Documents, and
there does not now exist any circumstance or set of facts, which with the
passage of time or the giving of notice or both would constitute or result in an
Event of Default or a default under any of the Loan Documents.
7. Conditions Precedent. The obligations of the Banks and the Agent
hereunder are subject to the satisfaction of each of the following conditions
precedent which shall be in form, scope and substance satisfactory to the Agent
and its counsel:
(a) First Amendment. The Agent shall have received this
First Amendment, as executed by duly authorized officers of the
Borrower and each of its Subsidiaries which is a party hereto;
(b) Reaffirmations of Limited Guaranties. The Agent
shall have received Reaffirmations of Limited Guaranties,
executed by duly authorized officers or agents of the Limited
Guarantors in favor of the Banks;
(c) Evidence of Authority of the Borrower and Subsidiaries.
The Agent shall have received certified copies of all corporate action
(in form and substance reasonably satisfactory to the Agent) taken by
the Borrower and the Subsidiaries to authorize the execution, delivery
and performance of this First Amendment;
(d) Opinion Letters. The Agent shall have received
opinion letters from Willkie Farr & Gallagher, counsel to the
Borrower, and Ellen Keats, General Counsel for the Borrower; and
(e) Other. The Borrower and the Subsidiaries shall have
delivered to the Agent such other documents as the Agent or its
counsel may reasonably require.
8. Ratification of Loan Documents.
8.1 Ratification by Borrower. Subject to the amendments expressly set forth
herein, the Borrower hereby ratifies and reaffirms all of the terms and
provisions of the Loan Documents to which it is a party or by which it or its
property is bound, and hereby expressly acknowledges and confirms that the terms
and provisions of each thereof, as amended hereby, shall and do remain in full
force and effect. Without
-5-
<PAGE>
limiting the generality of the foregoing, the Borrower hereby
acknowledges and agrees that each of the Guidance Notes has, at all
times, been and continues to remain in full force and effect,
notwithstanding that on or about February 11, 1997, the Borrower paid
the then entire unpaid principal balance, together with all accrued but
unpaid interest and other sums outstanding under each of the Guidance
Loans from the proceeds from the Second Offering.
8.2 Ratification by Subsidiaries; Reaffirmation of Unlimited
Guaranties. Subject to the amendments expressly set forth herein, each
of the Subsidiaries that is a party hereto hereby ratifies and
reaffirms all of the terms and provisions of the Loan Documents to
which it is a party or by which it or its property is bound, and hereby
expressly acknowledges and confirms that the terms and provisions of
each thereof, as amended hereby, shall and do remain in full force and
effect. Without limiting the generality of the foregoing, each such
Subsidiary hereby expressly (a) ratifies and reaffirms all of the terms
and provisions of its Unlimited Guaranties (as defined and identified
in Section 3.1(c) of the Loan Agreement), (b) acknowledges that the
term "Liabilities," as defined in its Unlimited Guaranties, includes
the Banks' Commitments to make Loans to the Borrower, in the same pro
rata amounts as originally available as of the Closing Date of the Loan
Agreement, all as provided in this First Amendment, and (c)
acknowledges and confirms that the terms and provisions of its
Unlimited Guaranties shall and do remain in full force and effect.
9. Miscellaneous
9.1 No Other Amendments; No Waiver. Except for the amendments
expressly set forth hereinabove, nothing contained herein shall be
construed to modify, amend or otherwise alter any of the terms or
provisions of any of the Loan Documents; nothing contained herein shall
constitute a waiver of or bar to any rights or remedies available to
the Agent or any of the Banks, or a waiver of any Event of Default
under the Loan Documents on any occasion, other than as expressly set
forth hereinabove; and nothing contained herein shall constitute an
agreement by any of the Banks or obligate any of the Banks or the Agent
to take or refrain from taking any action.
9.2 Execution; Counterparts. This First Amendment may be
executed in any number of counterparts, each of which shall be deemed
to be an original as against any party whose signature appears hereon,
and all of which shall together constitute one and the same instrument.
This First Amendment shall become binding when one or more counterparts
hereof, individually or taken together, shall bear the signatures of
all of the parties reflected hereon as the signatories.
9.3 Successors and Assigns. This First Amendment shall be
binding upon and inure to the benefit of the parties hereto, and their
respective representatives, successors and assigns.
-6-
<PAGE>
9.4 Governing Law. This First Amendment and all questions
relating to its validity, interpretation, performance and enforcement
shall be governed by and construed in accordance with the laws of The
Commonwealth of Massachusetts, notwithstanding any conflict-of-law
provisions to the contrary.
IN WITNESS WHEREOF, this First Amendment has been duly executed as an
instrument under seal by the duly authorized representative of each party
hereto, as of the day and year first above written.
USTRUST AS LENDER AND AGENT THE SUMITOMO BANK, LIMITED
By: /s/ Michael D. O'Neill By: /s/ William N. Paty
Title: Senior Vice President Title: Vice President & Manager
By: /s/ James Drum
Title:Vice President, New York Office
STATE STREET BANK AND TRUST BANK OF BOSTON CONNECTICUT
COMPANY
By: /s/ William Zola By: /s/ W. Lincoln Schoff, Jr.
Title: Vice President Title: Director
MELLON BANK, N.A. THE BANK OF NEW YORK
By: /s/ Frank P. Mohazzi By: /s/ Joseph J. Markey
Title: Vice President Title: Vice President
FINE HOST CORPORATION FINE HOST SERVICES CORPORATION
By: /s/ Nelson A. Barber By: /s/ Nelson A. Barber
Title: Treasurer Title: Senior Vice President
-7-
<PAGE>
FINE HOST OF VERMONT, INC. FANFARE, INC.
By: /s/ Nelson A. Barber By: /s/ Nelson A. Barber
Title: Senior Vice President Title: Treasurer
GLOBAL FANFARE, INC. FINE HOST INTERNATIONAL
CORPORATION
By: /s/ Nelson A. Barber By: /s/ Nelson A. Barber
Title: Treasurer Title: Treasurer
CREATIVE FOOD MANAGEMENT, NORTHWEST FOOD SERVICE, INC.
INC.
By: /s/ Nelson A. Barber By: /s/ Nelson A. Barber
Title: Senior Vice President Title: Treasurer
TARRANT COUNTY CONCESSIONS, L.L.C. SUN WEST SERVICES, INC.
By: /s/ Todd M. Avila By: /s/ Nelson A. Barber
Title: Treasurer Title: Treasurer
-8-
<PAGE>
REAFFIRMATION AND CONFIRMATION OF LIMITED GUARANTY
OF
FINE HOST/R&N/A CUP ABOVE JOINT VENTURE
The undersigned Limited Guarantor hereby (a) consents to the terms and
provisions of the foregoing First Amendment, (b) ratifies and reaffirms as of
the date hereof all of the terms and provisions of its Limited Guaranty (as
defined in the Loan Agreement), (c) acknowledges that the term "Liabilities" (as
defined in its Limited Guaranty), includes the Banks' Commitments to make Loans
to the Borrower, in the same pro rata amounts as originally available as of the
Closing Date of the Loan Agreement, all as provided in the foregoing First
Amendment, and (d) acknowledges and confirms that the terms and provisions of
its Limited Guaranty shall and do remain in full force and effect.
Date: As of May 9, 1997 FINE HOST/R&N/A CUP ABOVE JOINT
VENTURE
By: Fine Host Corporation, as Joint Venturer
of aforesaid Joint Venture
By: /s/ Nelson A. Barber
Name: Nelson A. Barber
Title: Senior Vice President
Its duly authorized officer
By: Ronald O. Rogers and Tyrone Nabbie
(d/b/a R&N Management Services), as
Joint Venturers of aforesaid Joint Venture
By: /s/ Tyrone W. Nabbie
Tyrone W. Nabbie
By: /s/ Ronald O. Rogers
Ronald O. Rogers
By: Ellen Korbin (d/b/a A Cup Above), as
Joint Venturer of aforesaid Joint Venture
By: /s/ Ellen L. Korbin
Ellen L. Korbin
-9-
<PAGE>
REAFFIRMATION AND CONFIRMATION OF LIMITED GUARANTY
OF
FINE HOST/S. BROOKS & ASSOCIATES JOINT VENTURE
The undersigned Limited Guarantor hereby (a) consents to the terms and
provisions of the foregoing First Amendment, (b) ratifies and reaffirms as of
the date hereof all of the terms and provisions of its Limited Guaranty (as
defined in the Loan Agreement), (c) acknowledges that the term "Liabilities" (as
defined in its Limited Guaranty), includes the Banks' Commitments to continue to
make Loans to the Borrower, in the same pro rata amounts as originally available
as of the Closing Date of the Loan Agreement, all as provided in the foregoing
First Amendment, and (d) acknowledges and confirms that the terms and provisions
of its Limited Guaranty shall and do remain in full force and effect.
Date: As of May 9, 1997
FINE HOST/S. BROOKS & ASSOCIATES
JOINT VENTURE
By: Fine Host Corporation, as Joint Venturer of
aforesaid Joint Venture
By: /s/ Nelson A. Barber
Name: Nelson A. Barber
Title: Senior Vice President
Its duly authorized officer
By: S. Brooks & Associates, Inc., as Joint Venturer
of aforesaid Joint Venture
By: /s/ Margaret Brooks
Name: Margaret Brooks
-10-
<PAGE>
EXHIBIT 11
FINE HOST CORPORATION
Computation of Per Share Earnings
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 25, June 26, June 25, June 26,
1997 1996 1997 1996
-----------------------------------------
<S> <C> <C> <C> <C>
Income applicable to Common Stock $1,252 250 $2,100 $ 509
Stock warrant accretion - (260) - (1,300)
------ ----- ------ -------
Net income (loss) available to Common
Stockholders $1,252 (10) $2,100 $ (791)
====== ===== ====== =======
Weighted average number of common shares
Outstanding (Basic) 8,901,812 2,306,096 8,266,101 2,177,148
Average convertible Preferred shares
outstanding - 939,197 - 939,197
Assumed conversion of:
Warrants - 391,708 - 387,260
Options 286,522 75,147 330,375 71,823
Subordinated Notes 37,188 -- 37,188 --
---------- -------- --------- ----------
Average number of shares of Common Stock
outstanding assuming full dilution 9,225,522 3,712,148 8,633,664 3,575,428
========= ========= ========= =========
Net income (loss) per share
assuming full dilution$ $.14 $-- $ .24 $ .(22)
========= ===== ======= =======
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains Summary Financial Information
extracted from the Balance Sheet and Income Statement
for the three months ended June 25, 1997 for Fine Host
Corporation, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0001011584
<NAME> FINE HOST CORPORATION
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> DEC-26-1996
<PERIOD-END> JUN-25-1996
<EXCHANGE-RATE> 1.00
<CASH> 16,110
<SECURITIES> 0
<RECEIVABLES> 20,247
<ALLOWANCES> 0
<INVENTORY> 5,238
<CURRENT-ASSETS> 46,481
<PP&E> 50,854
<DEPRECIATION> 19,852
<TOTAL-ASSETS> 159,829
<CURRENT-LIABILITIES> 26,088
<BONDS> 0
0
0
<COMMON> 90
<OTHER-SE> 108,780
<TOTAL-LIABILITY-AND-EQUITY> 159,829
<SALES> 102,844
<TOTAL-REVENUES> 102,844
<CGS> 92,386
<TOTAL-COSTS> 98,331
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 828
<INCOME-PRETAX> 3,685
<INCOME-TAX> 1,585
<INCOME-CONTINUING> 1,585
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,585
<EPS-PRIMARY> .24
<EPS-DILUTED> .24
</TABLE>
