<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
<TABLE>
<S> <C>
Filed by the registrant /X/
Filed by a party other than the
registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/ / Confidential, For Use of the
Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
FINE HOST CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE>
[LOGO]
3 GREENWICH OFFICE PARK
GREENWICH, CONNECTICUT 06831
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------------
TO OUR STOCKHOLDERS:
Please take notice that the 1997 Annual Meeting of Stockholders of Fine Host
Corporation, a Delaware corporation (the "Company"), will be held on Friday, May
23, 1997 at 10:00 A.M. at Greenwich Harbor Inn, 500 Steamboat Road, Greenwich,
Connecticut. At the meeting, stockholders will act on the following matters:
1. Election of two directors, each for a term of three years;
2. Approval of amendments to the Company's Amended & Restated 1994 Stock
Option Plan;
3. Approval of the 1997 Long-Term Incentive Compensation Plan;
4. Approval of the 1998 Annual Incentive Compensation Plan;
5. Ratification of the appointment of Deloitte & Touche LLP as the
Company's independent auditors for the 1997 fiscal year; and
6. Any other matters that may properly come before the meeting or any
postponements or adjournments thereof.
The Board of Directors has fixed the close of business on April 10, 1997 as
the record date for the purpose of determining stockholders entitled to notice
of, and to vote at, the meeting.
YOU ARE REQUESTED, WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE MEETING, TO
MARK, DATE, SIGN AND RETURN PROMPTLY THE ACCOMPANYING PROXY IN THE ENCLOSED
ENVELOPE TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors
ELLEN KEATS
SECRETARY
Greenwich, Connecticut
April 23, 1997
<PAGE>
ANNUAL MEETING OF STOCKHOLDERS
OF
FINE HOST CORPORATION
------------------------
PROXY STATEMENT
------------------------
The proxy accompanying this proxy statement is solicited by the Board of
Directors of Fine Host Corporation, a Delaware corporation (the "Company"), for
use at the 1997 Annual Meeting of Stockholders to be held on Friday, May 23,
1997 at 10:00 A.M. at Greenwich Harbor Inn, 500 Steamboat Road, Greenwich,
Connecticut 06830, and at any postponements or adjournments thereof.
All proxies in the accompanying form which are properly executed and duly
returned will be voted in accordance with the instructions specified therein. If
no instructions are given, the shares represented by the proxies will be voted
in accordance with the recommendations of the Board of Directors as indicated in
this proxy statement and in the discretion of the proxy holders on any other
matters that may properly come before the meeting. A proxy may be revoked at any
time prior to its exercise by written notice to the Company, by submission of
another proxy bearing a later date or by voting in person at the meeting. Such
revocation will not affect a vote on any matters taken prior thereto. The mere
presence at the meeting of the person appointing a proxy will not revoke the
appointment.
The approximate date of mailing of this proxy statement and the accompanying
proxy to stockholders is April 23, 1997. The Company's principal executive
offices are located at 3 Greenwich Office Park, Greenwich, Connecticut 06831.
VOTING SECURITIES--RECORD DATE
Only holders of the Company's Common Stock, $.01 par value per share (the
"Common Stock"), of record at the close of business on April 10, 1997 (the
"Record Date") will be entitled to notice of and to vote at the meeting or at
any postponements or adjournments thereof. On that date, 8,955,766 shares of
Common Stock were issued and outstanding.
Each share of Common Stock entitles the holder thereof to one vote with
respect to each proposal properly brought before the meeting for consideration
by stockholders. The holders of a majority of the outstanding shares of Common
Stock entitled to vote must be present at the meeting in person or by proxy to
constitute a quorum.
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with regard to the
beneficial ownership of the Common Stock as of April 15, 1997 by (i) each person
known by the Company to own beneficially more than 5% of the outstanding shares
of Common Stock, (ii) each director of the Company and the Chief Executive
Officer and the four other most highly compensated executive officers (the
"Executive Officer Group") and (iii) all directors and executive officers of the
Company as a group. Except as otherwise noted, the named beneficial owner has
sole voting and investment power.
<TABLE>
<CAPTION>
NAME AND ADDRESS
OF BENEFICIAL OWNER(1) SHARES PERCENTAGE
- ------------------------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
Putnam Investments, Inc.(2).......................................................... 1,135,302 12.7%
One Post Office Square
Boston, Massachusetts 02109
William R. Berkley................................................................... 831,250 9.3%
165 Mason Street
Greenwich, Connecticut 06830
The LGT Asset Group(3)............................................................... 487,700 5.4%
166 Avenue of the Americas
New York, New York 10036
Massachusetts Financial Services
Company(4)........................................................................... 450,500 5.0%
500 Boylston Street
Boston, Massachusetts 02116
Richard E. Kerley.................................................................... 70,166(5) *
Randy B. Spector..................................................................... 56,500(6) *
Randall K. Ziegler................................................................... 60,833(7) *
Robert F. Barney..................................................................... 5,666(8) *
Nelson A. Barber..................................................................... 750(9) *
Ronald E. Blaylock................................................................... 1,250 *
Catherine B. James................................................................... 34,750 *
Jack H. Nusbaum...................................................................... 6,250 *
Joshua A. Polan...................................................................... 39,250 *
Neal F. Finnegan..................................................................... 0 --
J. Michael Chu....................................................................... 0 --
All directors and executive officers as a group (13 persons)......................... 275,415 10) 3.1%
</TABLE>
- ------------------------
* Less than 1%.
(1) Under the rules of the Securities and Exchange Commission, shares are
deemed to be "beneficially owned" by a person if such person directly or
indirectly has or shares (i) the power to vote or dispose of such shares,
whether or not such person has any pecuniary interest in such shares, or
(ii) the right to acquire the power to vote or dispose of such shares
within 60 days, including any right to acquire through the exercise of any
option, warrant or right.
(2) Putnam Investments, Inc. ("Putnam"), a wholly-owned subsidiary of Marsh &
McLennan Companies, Inc. ("MMC"), wholly owns two registered investment
advisers: Putnam Investment Management, Inc. ("PIM"), which is the
investment adviser to the Putnam family of mutual funds, and The Putnam
Advisory Company, Inc. ("PAC"), which is the investment adviser to Putnam's
institutional clients. Both subsidiaries have dispository power over the
shares as investment managers, but each of the mutual funds' trustees have
voting power over the shares held by each fund, and PAC has shared voting
power over the shares held by the institutional clients. In the Putnam
family of funds is The
2
<PAGE>
Putnam OTC & Emerging Growth Fund (the "Fund"), which holds 722,900 of the
total shares owned by Putnam. The business address for each of Putnam, PIM,
PAC and the Fund is One Post Office Square, Boston Massachusetts 02109. The
business address for MMC is 1166 Avenue of the Americas, New York, New York
10036. Information regarding Putnam has been obtained by the Company from a
Schedule 13G filed by Putnam with the Securities and Exchange Commission on
or about March 7, 1997, reporting beneficial ownership of Common Stock as
of February 28, 1997.
(3) The LGT Asset Group is comprised of Chancellor LGT Asset Management, Inc.,
Chancellor LGT Trust Company and LGT Asset Management, Inc. The business
address of LGT Asset Management, Inc. is 50 California Street, San
Francisco, California 94111. The business address of the other members of
the LGT Asset Group is 1166 Avenue of the Americas, New York, New York
10036. Information regarding the LGT Asset Group has been obtained by the
Company from a Schedule 13G filed by the LGT Asset Group with the
Securities and Exchange Commission on or about February 7, 1997, reporting
beneficial ownership of Common Stock as of December 31, 1996.
(4) Information regarding Massachusetts Financial Services Company ("MFS") has
been obtained by the Company from a Schedule 13G filed by MFS with the
Securities and Exchange Commission on or about February 11, 1997, reporting
beneficial ownership of Common Stock as of December 31, 1996.
(5) Includes 166 shares of Common Stock issuable upon exercise of stock
options.
(6) Includes 500 shares of Common Stock issuable upon exercise of stock
options.
(7) Includes 5,833 shares of Common Stock issuable upon exercise of stock
options.
(8) Includes 4,666 shares of Common Stock issuable upon exercise of stock
options.
(9) Consists of 750 shares of Common Stock issuable upon exercise of stock
options.
(10) Includes 11,915 shares of Common Stock issuable upon exercise of stock
options beneficially owned by directors and executive officers of the
Company and excludes shares owned by William R. Berkley, who resigned as a
director of the Company as of April 10, 1997.
3
<PAGE>
PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into three classes. At the
1997 Annual Meeting of Stockholders, two directors, constituting Class I of the
Board of Directors, are to be nominated for election, to serve until the 2000
Annual Meeting of Stockholders and until their respective successors are duly
elected and qualified. Joshua A. Polan has chosen not to stand for election.
Unless a proxy shall specify that it is not to be voted for the directors, it is
intended that the shares of Common Stock represented by each duly executed and
returned proxy will be voted FOR the election as directors of the persons named
below.
If any nominee is not a candidate for election at the meeting, an event
which the Board of Directors does not anticipate, the proxies will be voted for
a substitute nominee and for the others named below.
The Company's By-Laws provide that directors be elected by a plurality of
the votes cast at the meeting by the holders of the outstanding shares of Common
Stock entitled to notice of, and to vote in, the election.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES.
DIRECTORS STANDING FOR ELECTION-CLASS I
JACK H. NUSBAUM Director since June 1996
Mr. Nusbaum, 56, is the Chairman of the New York law firm of Willkie Farr &
Gallagher, where he has been a partner for more than the past twenty-five years.
He is also a director of Pioneer Companies, Inc. ("PCI"), a publicly traded
company engaged in the manufacture and marketing of chlorine and caustic soda
and related products, W.R. Berkley Corporation, a property and casualty
insurance holding company, Strategic Distribution, Inc. ("Strategic
Distribution"), a publicly traded industrial service and distribution business,
Prime Hospitality Corp., a national hotel company, and The Topps Company, Inc.,
a baseball card and collectibles company. Mr. Nusbaum is also a trustee of Prep
for Prep, the Joseph Collins Foundation and the Robert Steel Foundation.
RANDY B. SPECTOR Director since March 1997
Mr. Spector, 45, has been Chief Administrative Officer of the Company since
March 1997. He continues to serve as Executive Vice President of the Company, a
position he has held since 1993. From 1990 to 1993, Mr. Spector was Senior Vice
President--Law and Corporate Affairs of the Company. From 1987 to 1990, Mr.
Spector served as Vice President and General Counsel of the Company. Before
joining the Company in 1987, Mr. Spector spent five years as Vice President and
General Counsel of Dellwood Foods, Inc., a processor and distributor of milk and
dairy products in the New York City metropolitan area.
DIRECTORS CONTINUING IN OFFICE
CLASS II-TERM EXPIRES AT THE 1998 ANNUAL MEETING
RONALD E. BLAYLOCK Director since June 1996
Mr. Blaylock, 37, has been President and Chief Executive Officer of Blaylock
& Partners, L.P., an investment banking firm, since he founded the firm in
September 1993. Prior to September 1993, Mr. Blaylock was a founding partner and
Executive Vice President of Utendahl Capital Partners, a minority-owned broker
dealer, where he specialized in taxable fixed-income securities, from 1991 to
1993. Prior to such time, Mr. Blaylock was a First Vice President at PaineWebber
Incorporated from 1988 to 1991 and a Vice President at Citibank Capital Markets
from 1982 to 1988. Mr. Blaylock is a director of Georgetown University, where he
was a member of an NCAA Final Four basketball team, and also serves as a
director of Harbourton Mortgage Corp. and Covenant House.
4
<PAGE>
NEAL F. FINNEGAN Director since April 1997
Mr. Finnegan, 59, has been President and Chief Executive Officer of UST
Corp. since 1993. Mr. Finnegan is also Chairman, President and Chief Executive
Officer of USTrust. Prior to joining UST Corp., Mr. Finnegan was Executive Vice
President in charge of Private Banking at Bankers Trust Company in New York
City. From 1986 to 1988, Mr. Finnegan was President and Chief Operating Officer
of Bowery Savings Bank in New York City. From 1982 to 1986, Mr. Finnegan was
Vice Chairman of Shawmut Corporation in Boston, Massachusetts. Mr. Finnegan
serves as Vice Chairman of the Board of Trustees of Northeastern University.
CATHERINE B. JAMES Director since 1994
Ms. James, 44, has served as Chief Financial Officer of Strategic
Distribution since February 1996, as Executive Vice President of Strategic
Distribution since January 1989 and as Secretary and Treasurer of Strategic
Distribution since December 1989. She has served as a member of the Board of
Directors of Strategic Distribution since 1990. She was Chief Financial Officer
of Strategic Distribution from January 1989 until September 1993. Ms. James has
been a Managing Director of Interlaken Capital, Inc., a private investment and
consulting firm, since January 1990. From 1982 through 1988, she was employed by
Morgan Stanley & Co. Incorporated, serving as a Managing Director in the
corporate finance area during the last two years of her tenure.
DIRECTORS CONTINUING IN OFFICE
CLASS III-TERM EXPIRES AT THE 1999 ANNUAL MEETING
J. MICHAEL CHU Director since April 1997
Mr. Chu, 38, has been the Managing General Partner of Catterton-Simon
Partners ("Catterton") since 1989. Catterton is a private equity investment firm
focusing on the consumer, food and beverage industries. Mr. Chu is a member of
the Board of Trustees of Bates College.
RICHARD E. KERLEY Director since 1994
Mr. Kerley, 55, has been the President and Chief Executive Officer of the
Company since 1991. In April 1997, Mr. Kerley became Chairman of the Board. He
previously served as Chief Financial Officer of the Company from 1990 to 1991.
Mr. Kerley has 21 years of experience in the food services industry. Prior to
joining the Company in 1990, Mr. Kerley held a series of senior management
positions at Ogden Corporation, a contract food service provider, including head
of business development, logistic support and accounting.
RANDALL K. ZIEGLER Director since 1994
Mr. Ziegler, 54, has been Group President--Convention, Leisure and
International of the Company since March 1997. He previously served as Executive
Vice President--Recreation and Leisure of the Company from 1995 to 1997. Prior
to that time he served as President of the Company's Food Services Division from
1990 to 1995. From 1985 to 1990, Mr. Ziegler served as Vice President--Sales of
the Company. Prior to joining the Company in 1985, he held a number of senior
management positions at Service America Corporation, a contract food service
provider, including head of new business development.
5
<PAGE>
DIRECTORS' COMPENSATION; ATTENDANCE
DIRECTOR'S COMPENSATION. Members of the Board of Directors who are not
officers or employees of the Company receive $2,500 per meeting and participate
in the 1996 Non-Employee Director Stock Plan (the "Directors Plan"). Pursuant to
the Directors Plan, each Non-Employee Director will, on the date of each Annual
Meeting of Stockholders, be automatically granted, without further action by the
Board of Directors, a number of shares of Common Stock equal to $15,000 divided
by the Fair Market Value (as defined in the Directors Plan) of one share of
Common Stock on the date of grant.
Common Stock granted under the Directors Plan will be restricted and
nontransferable until the first Annual Meeting immediately following the date of
the grant unless otherwise provided by the Board of Directors. In the event that
a Non-Employee Director ceases to be a member of the Board of Directors, other
than because of his or her death or Disability (as defined in the Directors
Plan), all shares of Common Stock granted to him or her pursuant to the
Directors Plan whose restrictions have not lapsed shall be forfeited back to the
Company. Upon a Non-Employee Director's death or Disability all restrictions on
shares of Common Stock granted to him pursuant to the Directors Plan shall lapse
and all such shares shall become freely transferable. In the event of a Change
in Control (as defined in the Directors Plan), all restrictions with respect to
shares of Common Stock previously granted pursuant to the Directors Plan will
immediately lapse and all such shares will become immediately transferable.
The Company reimburses its Board members for all reasonable expenses
incurred in connection with their attendance at directors' meetings.
MEETINGS AND ATTENDANCE. During the Company's past fiscal year, the Board
of Directors held three meetings and acted by unanimous written consent on four
occasions. Each member of the Board attended at least 75% of the meetings of the
Board and Board Committees on which he or she served, except for Mr. Ziegler who
missed one meeting of the Board of Directors as the result of work-related
travel.
COMMITTEES OF THE BOARD
The Board of Directors has standing Executive, Compensation and Audit
Committees.
EXECUTIVE COMMITTEE. The Executive Committee of the Board of Directors
possesses all of the powers of the Board except with respect to certain
significant transactions, and certain other powers specifically reserved by
Delaware law to the Board. In fiscal 1996, the Executive Committee held two
meetings. It is presently contemplated that following the Annual Meeting, the
Executive Committee will be composed of Messrs. Kerley and Spector.
COMPENSATION COMMITTEE. As of the end of the 1996 fiscal year, the
Compensation Committee of the Board of Directors was composed of Messrs.
Berkley, Bursky and Polan. The Compensation Committee provides recommendations
concerning salaries and incentive compensation for employees of, and consultants
to, the Company and administers the 1994 Stock Option Plan and the 401(k) Plan.
In fiscal 1996, the Compensation Committee acted by unanimous written consent on
one occasion. It is presently contemplated that following the Annual Meeting,
the Compensation Committee will be composed of Messrs. Blaylock and Finnegan.
AUDIT COMMITTEE. The Audit Committee, currently composed of Messrs.
Blaylock, Nusbaum and Polan, reviews the results and scope of the annual audit
of the Company's financial statements conducted by the Company's independent
accountants, the scope of other services provided by the Company's independent
accountants, and proposed changes in the Company's financial and accounting
standards and principles. The Audit Committee also reviews the Company's
policies and procedures with respect to its internal accounting, auditing and
financial controls and makes recommendations to the Board of Directors on the
engagement of the independent accountants, as well as other matters which may
come before the Audit Committee or at the direction of the Board of Directors.
The audit committee met one time during fiscal 1996. It is presently
contemplated that following the Annual Meeting, the Audit Committee will be
composed of Messrs. Blaylock, Nusbaum and Finnegan.
The Board of Directors does not maintain a standing nominating committee,
the customary functions of such committee being performed by the entire Board of
Directors.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information regarding the compensation of the
Company's Chief Executive Officer and the Executive Officer Group during the
fiscal years ended December 27, 1995 and December 25, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM
NAME AND ---------------------------------------- COMPENSATION AWARDS
PRINCIPAL FISCAL OTHER ANNUAL SECURITIES UNDERLYING ALL OTHER
POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) OPTIONS/SARS(#) COMPENSATION ($)(2)
- ----------------------------- ----------- --------- --------- ------------------ --------------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Richard E. Kerley............ 1996 $ 225,000 $ 256,500 -- 54,000 $ 44,811
President and Chief 1995 185,000 125,000 -- -- 1,440
Executive Officer
Randy B. Spector............. 1996 175,000 128,250 -- 22,000 39,732
Executive Vice 1995 155,000 62,500 -- 510
President and Chief
Administrative Officer
Randall K. Ziegler........... 1996 193,500 71,750 -- 15,000 28,602
Group President 1995 180,000 52,500 -- -- 1,440
Robert F. Barney(3).......... 1996 160,000 71,750 $ 50,362(4) 14,500 4,300
Group President 1995 60,000 17,500 -- -- --
Nelson A. Barber............. 1996 132,000 102,750 -- 14,500 2,396
Senior Vice 1995 115,000 52,500 -- -- --
President and Chief
Financial Officer
</TABLE>
- ------------------------
(1) Other annual compensation in the form of perquisites and other personal
benefits has been omitted for certain executive officers where the aggregate
amount of such perquisites and other personal benefits was less than
$50,000.
(2) Represents premiums paid by the Company for excess group life insurance (Mr.
Kerley $2,250; Mr. Spector $870; Mr. Ziegler $1,440; Mr. Barney $2,250; Mr.
Barber $437) and contributions by the Company to the Company's 401(k)
savings plan on account of each executive officer for the fiscal year ended
December 25, 1996 (Mr. Kerley $3,614; Mr. Spector $3,614; Mr. Ziegler
$3,614; Mr. Barney $2,050; Mr. Barber $1,959). Also represents forgiveness
of interest on promissory notes for the fiscal year ended December 25, 1996,
payable by certain executive officers (Mr. Kerley $38,947; Mr. Ziegler
$23,548; Mr. Spector $35,248).
(3) Mr. Barney became an executive officer of the Company in July 1995.
(4) $47,062 of the total $50,362 of Other Annual Compensation reflects payments
to Mr. Barney for moving expenses.
7
<PAGE>
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding options granted to the
Chief Executive Officer and the Executive Officer Group during the fiscal year
ended December 25, 1996.
<TABLE>
<CAPTION>
POTENTIAL REALIZED VALUE
AT ASSUMED
ANNUAL RATES OF STOCK
PRICE
APPRECIATION FOR OPTION
TERM (1)
------------------------
<S> <C> <C> <C> <C> <C> <C>
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS GRANTED TO EXERCISE
UNDERLYING EMPLOYEES IN FISCAL PRICE EXPIRATION
NAME OPTIONS GRANTED YEAR ($/SHARE) DATE(2) 5% 10%
- --------------------------- ------------------- --------------------- ------------- ----------- ---------- ------------
Richard E. Kerley.......... 54,000 14.2% $ 12.00 6/19/06 $ 407,521 $ 1,032,742
Randy B. Spector........... 22,000 5.8 12.00 6/19/06 166,027 420,747
Randall K. Ziegler......... 15,000 3.9 12.00 6/19/06 113,200 286,873
Robert F. Barney........... 14,500 3.8 12.00 6/19/06 109,427 277,310
Nelson A. Barber........... 14,500 3.8 12.00 6/19/06 109,427 277,310
</TABLE>
- ------------------------
(1) These columns illustrate the hypothetical appreciation in the value of the
stock options under the assumption that the Common Stock, which had a value
per share of $12.00 on the date of grant of the option, appreciates at the
rate of 5% or 10%, respectively, compounded annually for ten years, the term
of the options.
(2) The options are exercisable in 20% increments annually commencing on June
19, 1997 and on each anniversary thereof.
Additionally, on January 7, 1997 the Compensation Committee granted stock
options to purchase 15,000, 7,500, 5,000, 5,000 and 2,500 shares, having an
exercise price of $20.75, to each of Messrs. Kerley, Spector, Barber, Barney and
Ziegler, respectively.
AGGREGATE FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning the number and value
of unexercised stock options held at December 25, 1996 by each member of the
Executive Officer Group. No stock options were exercised by members of the
Executive Officer Group during the fiscal year ended December 25, 1996.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR IN-THE-MONEY OPTIONS AT
END(#) FISCAL YEAR END ($) (1)
-------------------------- --------------------------
<S> <C> <C> <C> <C>
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------- ----------- ------------- ----------- -------------
Richard E. Kerley......................................... 15,166 61,584 $ 181,157 $ 434,839
Randy B. Spector.......................................... 10,500 27,250 125,422 202,961
Randall K. Ziegler........................................ 5,833 17,917 69,675 130,468
Robert F. Barney.......................................... 4,666 16,834 52,422 118,659
Nelson A. Barber.......................................... 10,500 19,750 125,422 155,148
</TABLE>
- ------------------------
(1) The amounts set forth in this column were calculated using the difference in
the fiscal year-end closing price of the Common Stock, $18.375 per share,
and the exercise price per share.
8
<PAGE>
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation policies are formulated by the
Compensation Committee. The Company maintains an overall philosophy that the
compensation of its executive officers should be competitive with similarly
situated executive officers of its competitors with incentives tied to
increasing stockholder value. Compensation paid to the Company's executive
officers during 1996 was composed of salary, bonus and stock options awarded
under the Company's 1994 Stock Option Plan. The amounts and levels of
compensation paid to the Company's executive officers during 1996 were
determined by the Compensation Committee to be competitive with the Company's
competitors. This determination was a subjective determination made by the
Compensation Committee based on its understanding of the business of the Company
and the general levels of compensation in the industry and was not based on any
quantifiable survey or measurable statistics.
After the Company's initial public offering in June 1996 and its experience
during the last six months of 1996 as a public company, the Compensation
Committee decided to hire compensation consultants to help establish and
structure the Company's compensation plans and programs to fit within its
overall policy in a less subjective manner. Upon the recommendation of the
Company's compensation consultants, beginning in fiscal 1997, the Company's
compensation program will consist of:
1. salary;
2. subjective annual bonus, to be replaced in 1998 with a formula-based
objective annual incentive compensation plan, which directly ties annual
bonus compensation to an increase in stockholder value on an annual basis;
3. a formula-based objective long-term incentive compensation plan,
which directly ties compensation to an increase in stockholder value in the
long term; and
4. options granted under the Company's 1994 Stock Option Plan, which
options will not commence vesting until the third anniversary of the date of
grant to further align the interest of the senior executives with the
Company's shareholders.
In line with the Company's policies, Mr. Kerley's base salary for 1996
($225,000) was set by the Compensation Committee on the basis of its knowledge
of salaries of chief executive officers of companies with which the Company
competes, to be in line with such chief executive officer pay. Mr. Kerley's
bonus for 1996, $256,500, was awarded in recognition of his significant
contributions to the growth, profitability and success of the Company during the
year, in which the Company also completed successfully its initial public
offering (the "Initial Public Offering").
The remainder of Mr. Kerley's compensation for 1996 was performance-based,
in the form of an option to purchase 54,000 shares of Common Stock, with a value
per share of $12.00 on the date of grant of option. The option, which is
exercisable in 20% increments annually commencing on June 19, 1997, was designed
to focus Mr. Kerley on the long-term performance of the Company by enabling him
to share in any increase in value of the Common Stock.
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally
limits to $1 million the deductibility by the Company for compensation paid in
any one year to any executive officer named in the Summary Compensation Table.
There is an exception for "performance-based" compensation which would allow the
Company to deduct for compensation paid in excess of this $1 million limit,
provided such compensation meets quantifiable goals and certain other
requirements. The Company's 1997 Long Term Incentive Compensation Plan, 1998
Annual Incentive Compensation Plan and 1994 Stock Option Plan are structured to
provide for performance-based compensation which is fully deductible subject to
the anticipated replacement of the members of the Compensation Committee with
Messrs. Blaylock and
9
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Finnegan at the Annual Meeting. While no executive officer of the Company
currently receives compensation in excess of $1 million, it is the Compensation
Committee's general policy to take such actions to ensure that all compensation
is fully deductible. However, the Compensation Committee also believes that from
time to time it may be necessary to base compensation on nonquantifiable
performance goals which are in the best interests of stockholders. Compensation
based on such nonquantifiable performance goals will not be eligible for the
performance based exception and thus may not be deductible.
Members of the Compensation Committee
WILLIAM R. BERKLEY
ANDREW M. BURSKY
JOSHUA A. POLAN
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
For the 1996 fiscal year, the Compensation Committee was composed of William
R. Berkley, Andrew M. Bursky and Joshua A. Polan. Mr. Berkley was Chairman of
the Board of the Company until April 10, 1997, when he resigned from the Board
of Directors. Mr. Bursky, who also resigned from the Board of Directors on April
10, 1997, served as an executive officer of the Company from 1985 to 1990.
Messrs. Berkley, Bursky and Polan received compensation for their service as
directors as set forth above under "Directors' Annual Compensation." Mr. Berkley
is Chairman of the Board and a member of the Compensation Committee of PCI and a
director of Strategic Distribution. Mr. Bursky, an executive officer of
Strategic Distribution, served on the Compensation Committee of the Company
until he resigned on April 10, 1997. See "Certain Relationships and Related
Transactions" for a description of certain transactions between the Company and
certain other entities, of which Messrs. Berkley, Bursky and Polan are officers,
directors or partners.
EMPLOYMENT AGREEMENT WITH ROBERT F. BARNEY
Mr. Barney serves the Company pursuant to an employment agreement dated as
of June 30, 1995, as amended on July 1, 1996 and March 17, 1997 (the "Employment
Agreement"). Pursuant to the terms of the Employment Agreement, Mr. Barney is
employed as Group President, Education and Business Dining and President of the
Company's wholly owned subsidiary, Northwest Food Service, Inc. In 1996, Mr.
Barney received a base salary of $160,000 per annum and participated in such
other compensation plans as are available to comparably situated executives of
the Company. The Employment Agreement expires on June 30, 1999.
10
<PAGE>
PERFORMANCE MEASUREMENT COMPARISON
The following graph sets forth as of December 25, 1996, the cumulative total
stockholder return on the Company's Common Stock compared with the cumulative
total return of the Nasdaq National Market Index and a peer group common stock
index comprised of those public companies whose business activities fall within
the same Standard Industrial Classification Code as the Company. The total
return assumes a $100 investment on June 19, 1996 (the date of the Initial
Public Offering of the Company's Common Stock) and reinvestment of dividends in
each index.
COMPARISON OF CUMULATIVE TOTAL RETURN OF THE
COMPANY'S COMMON STOCK, PEER GROUP COMMON
STOCK INDEX AND NASDAQ NATIONAL MARKET INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FINE HOST CORPORATION INDUSTRY INDEX BROAD MARKET
<S> <C> <C> <C>
6/19/1996 100.00 100.00 100.00
6/26/1996 96.92 100.00 100.00
9/25/1996 117.75 98.49 102.76
12/25/1996 153.17 95.03 107.59
</TABLE>
11
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ADVISORY AGREEMENT WITH INTERLAKEN CAPITAL
The Company has paid Interlaken Capital, Inc. ("Interlaken Capital"), a
private investment and consulting firm affiliated with Interlaken Investment
Partners, L.P. ("Interlaken Partners"), an advisory fee of $150,000 during each
of fiscal 1994, 1995 and 1996, for certain administrative services provided by
Interlaken Capital to the Company. The Company pays Interlaken Capital this
annual advisory fee pursuant to an advisory services agreement which terminates
on December 31, 1999. Mr. Berkley, formerly a director of the Company, is the
sole owner and President of Interlaken Capital, and each of Mr. Bursky, Ms.
James and Mr. Polan is a managing director of Interlaken Capital. Messrs.
Berkley and Bursky are also directors of Interlaken Capital. Each of Mr.
Berkley, Mr. Bursky, Ms. James and Mr. Polan are limited partners of Interlaken
Management Partners, L.P., the general partner of Interlaken Partners.
EMPLOYEE NOTES AND REGISTRATION
In 1987 and 1991, Messrs. Kerley, Spector and Ziegler, executive officers of
the Company, purchased Common Stock from the Company in exchange for promissory
notes payable to the Company in the original principal amounts of $86,545,
$77,412 and $34,618 and having outstanding principal amounts, as of April 15,
1997, of $81,995 and $74,208, with respect to Messrs. Kerley and Spector. On
February 12, 1997, Mr. Ziegler repaid the outstanding balance of $32,796 on his
promissory note. In addition, in 1985, Douglas M. Stabler, a former officer of
the Company, and Mr. Ziegler purchased Common Stock with funds borrowed from
Interlaken Capital Partners Limited Partnership ("ICPLP"), of which Messrs.
Berkley and Bursky are general partners, evidenced by notes each in the original
principal amount of $16,779 and having an outstanding principal amount of
$16,779, with respect to Mr. Stabler as of April 15, 1997. On February 12, 1997,
Mr. Ziegler repaid the outstanding balance of $16,779 on his promissory note.
Upon the closing of the Initial Public Offering on June 25, 1996, pursuant to
the terms of the employee notes to the Company and ICPLP, interest on the notes
(aggregating $38,947 for Mr. Kerley, $35,248 for Mr. Spector, $23,548 for Mr.
Ziegler and $7,970 for Mr. Stabler) was forgiven and interest thereafter ceased
to accrue. In addition, the employee notes were amended to extend their maturity
for three years. On February 24, 1997, the Company filed a shelf registration
statement under the Securities Act of 1933 (the "Securities Act") covering the
sale of shares of Common Stock held by certain individuals, including Messrs.
Kerley, Ziegler and Spector, which would entitle them to sell such shares within
the volume limitations of Rule 144 under the Securities Act. These shares are
subject to 90-day lock-up agreements with the underwriters in the Company's
follow-on public offering restricting the sale or other disposition of the
shares prior to May 7, 1997 without consent. The Company believes the
arrangements discussed in this paragraph assist it in retaining qualified
management personnel.
BANK OF AMERICA AND ING ARRANGEMENTS
In April 1993, the Company entered into a subordinated loan agreement with
Continental Bank, N.A. (now known as Bank of America Illinois ("BAI")) pursuant
to which the Company sold $8.5 million of its variable rate subordinated notes
and issued warrants to acquire 733,467 shares of non-voting common stock at an
exercise price of $4.93 per share and warrants to acquire 133,763 shares of
non-voting common stock at an exercise price of $.01 per share. On April 21,
1995, the rate of interest was reset at 12.79% for the remainder of the term of
the notes. BAI agreed in April 1995 to reduce the number of shares of Common
Stock represented by certain of the warrants. In addition, the terms of certain
of the warrants provided for a reduction in the number of shares issuable upon
exercise thereof in the event the Company satisfied certain financial
conditions.
On March 22, 1996, in connection with the transfer by BAI of the $6.5
million variable rate subordinated notes to ING Capital Corp. ("ING"), BAI
transferred to ING one-half of its warrants to acquire shares of non-voting
common stock at an exercise price of $4.93 per share and one-half of its
warrants to acquire shares of non-voting common stock at an exercise price of
$.01 per share. All warrants held by BAI and ING were repurchased by the Company
upon the closing of the Initial Public Offering.
12
<PAGE>
FANFARE FINANCING
In connection with the financing of the acquisition of Fanfare in 1993, the
Company issued to The Berkley Family Limited Partnership (the "Partnership")
15,650 shares of Series A Convertible Preferred Stock, a warrant to acquire
21,294 shares of Common Stock at an exercise price of $4.93 per share and a
warrant to acquire 81,613 shares of Common Stock at an exercise price of $0.01
per share. In addition, the Company issued to GRD Corporation ("GRD") 86,942
shares of Series A Convertible Preferred Stock, a warrant to acquire 118,307
shares of Common Stock at an exercise price of $4.93 per share and a warrant to
acquire 453,432 shares of Common Stock at an exercise price of $0.01 per share
(collectively, the "Fanfare Financing"). The consideration for the issuance and
sale of such securities to the Partnership consisted of the reduction of
$539,925 in principal amount of a promissory note made by the Company and
payable to the Partnership, and the consideration for the issuance and sale of
such securities to GRD was $2,999,499. In connection with the Fanfare Financing,
the Company granted the Partnership and GRD certain registration rights relating
to the shares of Common Stock owned by them. Upon the closing of the Initial
Public Offering, the shares of Series A Convertible Preferred Stock held by the
Partnership and GRD were converted into 109,550 and 608,594 shares of Common
Stock, respectively. All shares issuable upon exercise of the warrants issued to
the Partnership and GRD were sold in the Initial Public Offering, except for
warrants to acquire 133,756 shares, which were canceled pursuant to their terms.
INTERLAKEN PARTNERS INVESTMENT
In April 1995, Interlaken Partners purchased 31,579 shares of Series A
Convertible Preferred Stock from the Company for a price of $47.50 per share.
Upon the closing of the Initial Public Offering, the shares of Series A
Convertible Preferred Stock held by Interlaken Partners were converted into
221,053 shares of Common Stock and sold. In connection with the April 1995
financing, the Company granted Interlaken Partners certain registration rights
relating to the shares acquired by it.
USTRUST CREDIT FACILITY
USTrust is Agent for and one of the banks which provide the Company with its
existing credit facility, which provides for (i) a working capital revolving
credit line for general obligations and letters of credit, in the maximum
aggregate amount of $20.0 million and (ii) a line of credit to provide for
future expansion by the Company, in the maximum amount of $55.0 million, for
which USTrust receives customary fees. Mr. Finnegan, a director of the Company,
is President and Chief Executive Officer of UST Corp., a bank holding company
which is the parent company of USTrust. In addition, Mr. Finnegan is also
Chairman, President and Chief Executive Officer of USTrust.
OTHER
The Company has retained the law firm of Willkie Farr & Gallagher as its
counsel with respect to certain matters and anticipates it will continue to do
so in the future. Mr. Nusbaum, a director of the Company, is the Chairman of
Willkie Farr & Gallagher.
Fine Host was a participating employer in the Interlaken Capital Retirement
401(k) Savings Plan through March 31, 1997.
The Company believes that all transactions between the Company and its
officers, directors and principal stockholders or affiliates thereof, in light
of the circumstances of the transactions, have been and will in the future be on
terms no less favorable to the Company than could be obtained from unaffiliated
third parties. Such transactions will, in the future, be subject to the approval
of a majority of the disinterested directors of the Company.
------------------------
13
<PAGE>
PROPOSAL 2: AMENDMENTS TO THE COMPANY'S STOCK OPTION PLAN
The Board of Directors has approved and recommended for submission to the
Company's stockholders amendments to the Company's Amended & Restated 1994 Stock
Option Plan (the "Plan") to (i) increase the maximum number of shares of the
Company's Common Stock, $.01 par value per share (the "Common Stock") available
for issuance under the Plan from 569,000 to 1,569,000, and (ii) make such other
modifications as the Board of Directors deemed necessary including such
modifications needed to bring the Plan into conformity with new Rule 16b-3 of
the Securities Exchange Act of 1934 (the "Exchange Act"). The Company is seeking
stockholder approval of the Plan, as amended, in order to comply with the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code") and the requirements of Section 162(m) of the Code in order for
compensation paid under the Plan to be deductible by the Company irrespective of
the $1 million limit in such Section. Stockholder approval is also required by
the rules of the Nasdaq National Market System in order for shares of Common
Stock issued pursuant to the Plan to be listed for trading thereunder.
The Plan originally authorized the issuance of options to purchase up to
569,000 shares. To date, options to purchase 37,666 shares have been exercised,
resulting in remaining shares under the Plan of 531,334 shares. Of such 531,334
shares, options for 497,672 shares have been granted and remain unexercised.
Accordingly, only 33,662 shares remain available for issuance under the Plan.
The Board of Directors believes that additional shares should be authorized to
enable the Company to continue to achieve the objectives of the Plan.
Accordingly, the Board of Directors has approved and recommends for submission
to the Company's stockholders an amendment to the Plan that would increase the
aggregate number of shares of Common Stock which may be issued under the Plan by
1,000,000 shares. If the amendment to the Plan is authorized by the Company's
stockholders, in addition to the options for 497,672 shares which have been
granted and are outstanding, options for an additional 1,033,662 shares will be
available for issuance under the Plan.
A summary of the significant provisions of the Plan, as amended, is set
forth below. The summary of the Plan is qualified in its entirety by express
reference to the text of the Plan as filed with the Securities and Exchange
Commission. Under the Plan, Options may be granted which are qualified as
"incentive stock options" within the meaning of Section 422 of the Code ("ISOs")
and Options which are not so qualified ("NQSOs").
PURPOSE AND ELIGIBILITY
The primary purpose of the Plan is to attract and retain the best available
personnel for positions of substantial responsibilities with the Company and to
provide an additional incentive to such employees and consultants to exert their
maximum efforts toward the success of the Company. All officers and key
employees of the Company are eligible to be granted Options under and
participate in the Plan. In addition, NQSOs may be granted to consultants of the
Company chosen to participate in the Plan.
ADMINISTRATION
The Plan is administered by either the full Board of Directors or a
committee appointed by the Board of Directors from among its members (the entity
administering the Plan is hereafter referred to as the "Committee"). Prior to
the amendment, the Plan provided that it was to be administered by a committee
of at least two directors each of whom was a "disinterested person" with the
meaning of prior Rule 16b-3. The Committee, in its sole discretion, determines
which eligible employees and consultants are to receive grants of Options
pursuant to the Plan ("Participants"). In addition, the Committee determines the
terms of all Options granted thereunder including the exercise price for an
Option, the time or times at which Options will be granted, become exercisable
and forfeitable, and the number of shares covered by an Option. The Committee
interprets the Plan and makes all other determinations deemed advisable for the
administration of the Plan. The Committee may, in its discretion, provide for
the accelerated vesting and exercisability of Options, upon the occurrence of
such events as it deems appropriate.
14
<PAGE>
SHARES SUBJECT TO THE PLAN
Prior to the amendment, the Plan allowed for the grant of an aggregate of
569,000 shares of Common Stock. The amendment to the Plan proposes to increase
the total number of shares of Common Stock which may be issued thereunder by
1,000,000. As a result, the total number of shares of Common Stock which can be
granted under the Plan is 1,569,000 in the aggregate, subject to equitable
adjustment in the event of certain corporate transactions, as set forth below.
TERMS AND CONDITIONS OF OPTIONS
The terms and conditions of Options granted under the Plan will be set out
in option agreements between the Company and Participants which will contain
such provisions as the Committee from time to time deems appropriate. The terms
of each Option granted under the Plan will be determined by the Committee and be
consistent with the terms of the Plan. The exercise price for any Option will be
determined by the Committee, but will not be less than 85% of the fair market
value of the Common Stock on the date of grant, with respect to NQSOs, and not
less than 100% of the fair market value, with respect to ISOs. No Option will be
exercisable after the expiration of ten years from the date of its grant. No
Participant may be granted Options to purchase more than 250,000 shares of
Common Stock in any one calendar year. Prior to the amendment of the Plan, no
Participant could be granted Options to purchase more than 150,000 shares of
Common Stock in any one calendar year.
SPECIAL CONDITIONS APPLICABLE TO ISOS
No ISO can be granted under the Plan after September 31, 2004. ISOs may not
be granted under the Option Plan to a person who owns stock possessing more than
10% of the total combined voting power of all classes of stock of the Company,
any of its subsidiary corporations, or any parent corporation of the Company,
unless the Option has an exercise price of at least 110% of the fair market
value of the Common Stock on the date of grant of such Option and the Option
cannot be exercised more than five years from the date of grant. If the fair
market value of the Common Stock with respect to which ISOs are exercisable for
the first time by any optionee during any calendar year exceeds $100,000, such
ISOs will be treated, to the extent of such excess, as NQSOs.
PAYMENT UPON EXERCISE
Payment in full for the number of shares of Common Stock purchased pursuant
to the exercise of any Option must be made to the Company at the time of such
exercise. Payment for such shares may be made by certified check or bank
cashier's check, or any other means acceptable to the Company.
PAYMENT PURSUANT TO THE LONG-TERM INCENTIVE COMPENSATION PLAN
The Plan has been amended to provide for the payment of amounts owing under
the Company's Long-Term Incentive Compensation Plan which the Company may elect
to pay in the form of Common Stock.
ADJUSTMENT FOR RECAPITALIZATION, MERGER, ETC.
The aggregate number of shares of Common Stock which may be purchased
pursuant to options granted hereunder, the number of shares of Common 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 Common Stock resulting from a stock split or
other subdivision or consolidation of shares of Common Stock or for other
capital adjustments or payments of stock dividends or distributions or other
increases or decreases in the outstanding shares of Common Stock without receipt
of consideration by the Company. Any adjustment shall be conclusively determined
by the Committee.
15
<PAGE>
In the event of any change in the outstanding shares of Common 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 Common 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.
CHANGE IN CONTROL
Except to the extent reflected in any particular Option agreement, in the
event of a Change in Control, as defined in the Plan, all outstanding Options
shall become fully vested and exercisable.
MARKET VALUE
On April 11, 1997, the closing price for the Common Stock on the Nasdaq
National Market System was $23.375.
TRANSFERABILITY OF OPTIONS
No grant of Options, or any right or interest therein, is assignable or
transferable except by will or the laws of descent and distribution and during
the lifetime of an optionee. Options are exercisable only by the optionee or his
legal representative.
TERMINATION OR AMENDMENT
The Board of Directors may terminate or amend the Plan at any time; provided
that, without shareholder approval, no such action will (i) increase the maximum
number of shares for which Options may be granted under the Plan or increase the
total number of shares for which Options may be granted to any optionee in any
calendar year under the Plan, or (ii) expand the class of persons eligible to
become Participants.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief discussion of the Federal income tax consequences
of transactions under the Plan based on the Code, as in effect as of the date of
this summary. This discussion is not intended to be exhaustive and does not
describe the state or local tax consequences.
ISOs. No taxable income is realized by the optionee upon the grant or
exercise of an ISO. If Common Stock is issued to an optionee pursuant to the
exercise of an ISO, and if no disqualifying disposition of such shares is made
by such optionee within two years after the date of grant or within one year
after the transfer of such shares to such optionee, then (1) upon sale of such
shares, any amount realized in excess of the Option price will be taxed to such
optionee as a long-term capital gain and any loss sustained will be a long-term
capital loss, and (2) no deduction will be allowed to the Company for federal
income tax purposes.
If the Common Stock acquired upon the exercise of an ISO is disposed of
prior to the expiration of either holding period described above, generally (1)
the optionee will realize ordinary income in the year of disposition in an
amount equal to the excess (if any) of the fair market value of such shares at
exercise (or, if less, the amount realized on the disposition of such shares)
over the exercise price paid for such
16
<PAGE>
shares, and (2) the Company will be entitled to deduct such amount for federal
income tax purposes if the amount represents an ordinary and necessary business
expense. Any further gain (or loss) realized by the optionee upon the sale of
the Common Stock will be taxed as short-term or long-term capital gain (or
loss), depending on how long the shares have been held, and will not result in
any deduction by the Company.
Subject to certain exceptions for disability or death, if an ISO is
exercised more than three months following termination of employment, the
exercise of the Option will generally be taxed as the exercise of a NQSO.
For purposes of determining whether an optionee is subject to any
alternative minimum tax liability, an optionee who exercises an ISO generally
would be required to increase his or her alternative minimum taxable income, and
compute the tax basis in the stock so acquired, in the same manner as if the
optionee had exercised an NQSO. Each optionee is potentially subject to the
alternative minimum tax. In substance, a taxpayer is required to pay the higher
of his/her alternative minimum tax liability or his/her "regular" income tax
liability. As a result, a taxpayer has to determine his/her potential liability
under the alternative minimum tax.
NQSOs. With respect to NQSOs: (1) no income is realized by the optionee at
the time the Option is granted; (2) generally, at exercise, ordinary income is
realized by the optionee in an amount equal to the excess, if any, of the fair
market value of the shares on such date over the exercise price, and the Company
is generally entitled to a tax deduction in the same amount, subject to
applicable tax withholding requirements; and (3) at sale, appreciation (or
depreciation) after the date of exercise is treated as either short-term or
long-term capital gain (or loss) depending on how long the shares have been
held.
SPECIAL RULES APPLICABLE TO CORPORATE INSIDERS
As a result of the rules under Section 16(b) of the Exchange Act ("Section
16(b)"), and depending upon the particular exemption from the provisions of
Section 16(b) utilized, officers of the Company and persons owning more than 10%
of the outstanding shares of stock of the Company ("Insiders") may not receive
the same tax treatment as set forth above with respect to the grant and/or
exercise of Options. Generally, Insiders will not be subject to taxation until
the expiration of any period during which they are subject to the liability
provisions of Section 16(b) with respect to any particular Option. Insiders
should check with the General Counsel of the Company or their own tax advisers
to ascertain the appropriate tax treatment for any particular Option.
NEW PLAN BENEFITS
The grant of Options under the Plan is entirely within the discretion of the
Committee. The Company cannot forecast the extent of Option grants that will be
made in the future. The table below sets forth the number of Options for each
individual that the Board of Directors intends to recommend to the Compensation
Committee upon its reconstitution at the Annual Meeting. If the Compensation
Committee, upon the Board of Director's recommendation, authorizes the grant of
such options, the Board of Directors intends to approve such grants. Information
with respect to compensation paid and other
17
<PAGE>
benefits, including Options, granted in respect of the 1996 fiscal year to the
Chief Executive Officer and the Executive Officer Group is set forth in the
Summary Compensation Table.
<TABLE>
<CAPTION>
DOLLAR
NAME VALUE(1) NUMBER OF OPTIONS(2)
- ------------------------------------------------------- -------------- --------------------
<S> <C> <C>
Richard E. Kerley...................................... $ 200,000
Randy B. Spector....................................... $ 75,000
Randall K. Ziegler..................................... $ 20,000
Robert F. Barney....................................... $ 25,000
Nelson A. Barber....................................... $ 25,000
Executive Officer Group................................ $ 345,000
</TABLE>
- ------------------------
(1) Because the exercise price for these Options will not be set until the
Compensation Committee actually grants the Options, their dollar value is
undeterminable. It is expected that these Options will have a per share
exercise price equal to the fair market value of one share of Common Stock
on the date of grant.
(2) As recommended by the Board of Directors, Mr. Kerley's options will vest as
follows: 33,333 shares on the third and fourth anniversaries of the date of
grant and 133,334 shares on the fifth anniversary of the date of grant. All
other Options to be granted to the members of the Executive Officer Group
will vest at the rate of one third of the total options each year commencing
on the third anniversary of the date of grant and continuing on the fourth
and fifth anniversaries thereof.
APPROVAL BY THE STOCKHOLDERS
The effectiveness of amendments to the Plan is subject to approval by the
stockholders. Until such approval is obtained, the amendments to the Plan shall
not be effective. If the amendments to the Plan are not approved, the Plan as in
effect prior to the amendments will continue in operation and Options may
continue to be granted thereunder.
REQUIRED VOTE FOR PROPOSED AMENDMENTS
The affirmative vote of holders of a majority of the Company's outstanding
Common Stock represented in person or by proxy and entitled to vote on this
proposal is required for approval of the amendments to the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENTS TO THE PLAN.
------------------------
PROPOSAL 3: APPROVAL OF THE 1997 LONG-TERM INCENTIVE COMPENSATION PLAN
The Board of Directors submits to the stockholders for approval the Fine
Host Corporation 1997 Long-Term Incentive Compensation Plan (the "LTIP"). The
Board of Directors believes that it is in the best interest of the Company and
the stockholders to adopt a plan which provides for incentive compensation to
key executives responsible for the success of the Company and which can help to
attract talented new executives. Compensation payable under the LTIP is based on
long-term corporate performance and is tied to an increase in stockholder value.
The Company is seeking stockholder approval of the LTIP in order to comply with
the requirements of Section 162(m) of the Code in order for compensation paid
under the LTIP to be deductible by the Company irrespective of the $1 million
limit in such Section. The LTIP is designed so that all compensation payable
thereunder will be fully deductible by the Company.
The following summary of the material features of the LTIP is qualified in
its entirety by the terms of the LTIP as filed with the Securities and Exchange
Commission.
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<PAGE>
ELIGIBILITY
Participation in the LTIP will be limited to key employees of the Company
designated by the Compensation Committee of the Board (the "Committee"). There
are approximately 20 employees eligible to participate in the LTIP.
PLAN ADMINISTRATION
The LTIP will be administered by the Committee, which has full power and
authority to determine which key employees of the Company will receive awards
under the LTIP and the extent of such awards, to interpret and construe the
terms of the LTIP, and to make all determinations it deems necessary in the
administration of the LTIP.
AWARD OF UNITS
The LTIP allows for the award of participation units ("Units") to key
employees as determined by the Committee. Subject to stockholder approval, Units
may be awarded as of the effective date of the LTIP, which was March 27, 1997
("Effective Date") and may be awarded thereafter as of the first day of any
fiscal year of the Company through 2006. Units generally vest and become
exercisable over a maximum term of five years from the date of their award. A
maximum of 300,000 Units may be awarded under the LTIP, and no more than 75,000
Units may be awarded to any one participant.
VESTING OF UNITS
Units granted in 1997 will vest at the rate of 40% on the last day of fiscal
year 1998, and thereafter at the rate of 20% on each of the next three
consecutive anniversaries of the initial vesting date. Units granted in
subsequent years will vest over five years at the rate of 40% on the second
anniversary of the date of award and thereafter at the rate of 20% on each of
the next three consecutive anniversaries thereof.
A Unit will become fully vested earlier upon the attainment of the Unit's
Maximum Cumulative Unit Value (as defined below), or upon the termination of a
participant's employment with the Company (i) upon a Termination Without Cause
(as defined in the LTIP), (ii) upon retirement at or after age 65, or (iii) upon
a participant's death or disability.
VALUE OF UNITS
The value of an outstanding Unit at any time depends on the degree of
increase in the Company's Earnings Per Share (as defined below). For purposes of
the LTIP, the Earnings Per Share for any fiscal year is the Company's Earnings
(as defined below) divided by the number of shares of Common Stock 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 fiscal year ending December 31, 1997,
Earnings Per Share will be based on Earnings for the period March 27 through
December 31, 1997 on an annualized basis.
The Company's Earnings for any fiscal year is the consolidated income of the
Company from continuing operations before income taxes, as reported in the
Company's audited consolidated financial statements for the fiscal year,
adjusted to exclude (i) any item of nonrecurring gain or loss in excess of
$2,000,000 and (ii) any accruals for the LTIP. The value of a Unit for any
fiscal year (the "Incremental Unit Value") is determined by a formula as of the
end of the applicable fiscal year, and is equal to the product of (i) the Unit's
Measuring Price (as defined below), and (ii) 85% of the percentage by which the
Earnings Per Share for such fiscal year exceeds the Base Year EPS (as defined
below). The Measuring Price for Units granted as of the Effective Date is
$19.25. The Measuring Price for each Unit awarded thereafter is
19
<PAGE>
the closing price of the Company's common stock as reported on the Nasdaq
National Market System on the last day of the fiscal year preceding award of the
Unit. Base Year EPS for Units awarded in 1997 is $1.41, which is Earnings Per
Share for the fiscal year ended December 25, 1996. For Units awarded in
subsequent fiscal years, Base Year EPS will be equal to Earnings Per Share for
the immediately preceding fiscal year.
Each Unit's Incremental Unit Value for each of the five years from the date
of award is cumulated to obtain the unit's cumulative value ("Cumulative Unit
Value"), which is capped at an amount determined by the Committee at the time
Units are granted (the "Maximum Cumulative Unit Value").
PAYMENT OF UNITS
A Unit may be exercised to the degree vested at any time. A partially vested
Unit may be exercised to the extent vested but, if exercised, the unvested
portion will be forfeited. Upon exercise, a participant will receive the Unit's
Cumulative Unit Value (but not more than the Maximum Cumulative Unit Value) to
the extent vested. Upon the attainment of a Unit's Maximum Cumulative Unit
Value, the Unit will be automatically exercised without any action on the part
of a participant. Upon exercise, not less than 50% of the amount due will be
paid in cash, and the balance, as determined by the Committee in its discretion,
may be paid in cash, in Common Stock, or any combination thereof; provided,
however, that upon exercise of a Unit after a participant's Termination Without
Cause following a Change in Control (as defined in the LTIP), payment will be
made solely in cash.
TERMINATION OF UNITS
A Unit will expire upon the earlier of (i) the Unit's exercise or (ii) the
termination of the participant's employment with the Company; provided, however,
that if such termination occurs by reason of retirement, death, disability, upon
a Termination Without Cause, or for any other reason specifically approved in
advance by the Committee, the term of the Unit will be extended for a period of
14 months from the date of termination (the "Extended Term"). In the event of an
Extended Term, the Cumulative Unit Value will be determined as of the last day
of the fiscal year which ends 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 will be deemed to be
automatically exercised as of the last day of such fiscal year, within the
Extended Term, unless sooner exercised.
TERMINATION AND AMENDMENT
The Committee may amend or terminate the LTIP at any time, provided that no
amendment will be effective prior to approval by the Company's stockholders to
the extent such approval is required to preserve deductibility of all
compensation paid pursuant to the LTIP under Section 162(m) of the Code or
otherwise required by law.
20
<PAGE>
NEW PLAN BENEFITS
Because the award of Units is within the discretion of the Committee, the
Company cannot determine the number and value of Units to be granted in the
future. The following table sets forth the number of Units that the Board of
Directors intends to recommend to the Committee upon its reconstitution at the
Annual Meeting after stockholder approval of the LTIP.
<TABLE>
<CAPTION>
DOLLAR VALUE NUMBER OF
NAME AND POSITION (1) UNITS
- ------------------------------------------------------------------- --------------- -----------
<S> <C> <C>
Richard E. Kerley.................................................. $ 35,000
Randy B. Spector................................................... $ 20,000
Randall K. Ziegler................................................. $ 8,500
Robert F. Barney................................................... $ 8,500
Nelson A. Barber................................................... $ 9,000
Executive Officer Group............................................ $ 81,000
</TABLE>
- ------------------------
(1) The dollar value of Units to be granted in 1997 is not presently
determinable. Because the Base Year EPS for 1997 awards is the Earnings Per
Share for fiscal 1996, the value of the benefits that would have been
allocated to participants in the last fiscal year is zero. Furthermore,
because the Company was not a public company prior to June 1996, the
Measuring Price for 1996 is not determinable. Therefore, the dollar value
that would have been received by these individuals with respect to these
Units for the last fiscal year if the plan had been in effect is not
determinable.
REQUIRED VOTE FOR APPROVAL OF 1997 LONG-TERM INCENTIVE COMPENSATION PLAN
The affirmative vote of holders of a majority of the Company's outstanding
Common Stock represented in person or by proxy and entitled to vote on this
proposal is required for adoption of the 1997 Long-Term Incentive Compensation
Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE LTIP.
------------------------
PROPOSAL 4: APPROVAL OF THE 1998 ANNUAL INCENTIVE COMPENSATION PLAN
The Board of Directors submits to the stockholders for approval the Fine
Host Corporation 1998 Annual Incentive Compensation Plan (the "Annual Plan").
The Board of Directors believes that it is in the best interest of the Company
and the stockholders to adopt a plan which provides for incentive compensation
in the form of an annual bonus to key executives responsible for the success of
the Company and which can help to attract talented new executives. Compensation
payable under the Annual Plan is based on annual corporate performance. The
Company is seeking stockholder approval of the Annual Plan in order to comply
with the requirements of Section 162(m) of the Code in order for certain
compensation paid under the Annual Plan to be deductible by the Company
irrespective of the $1 million limit in such Section. The Annual Plan is
designed so that all compensation payable thereunder will be fully deductible by
the Company. The Annual Plan is intended to be effective as of January 1, 1998,
and is subject to stockholder approval. In the event that the Annual Plan is not
approved by stockholders, the Company's existing annual bonus plan will continue
in effect.
The following summary of the material features of the Annual Plan is
qualified in its entirety by the terms of the Annual Plan as filed with the
Securities and Exchange Commission.
ELIGIBILITY
Participation in the Annual Plan will be limited to key employees of the
Company designated by the Compensation Committee of the Board (the "Committee").
There are approximately 20 employees eligible for participation in the Annual
Plan.
21
<PAGE>
PLAN ADMINISTRATION
The Annual Plan will be administered by the Committee, which has full power
and authority to determine which key employees of the Company will receive
awards under the Annual Plan, to set performance goals and bonus targets as of
the commencement of any fiscal year, to interpret and construe the terms of the
Annual Plan, and to make all determinations it deems necessary in the
administration of the Annual Plan, including the determination with respect to
the achievement of performance goals and the application of such achievement to
the bonus targets.
BONUS FORMULA
The Annual Plan is structured to pay out an annual bonus equal to a
percentage of certain bonus targets, based on the degree of achievement of
predetermined performance goals with respect to specific business criteria. The
Annual Plan has three categories of business criteria upon which performance
goals will be based. The business criteria measures within each category are
assigned weightings based upon their relative degree of importance as determined
by the Committee. The three categories of business criteria to be used as
performance measures in the Annual Plan are (i) the Company's Earnings (as
defined below), (ii) the performance of a particular business unit in relation
to the Company's Earnings and (iii) individual performance, taking into account
individual goals and objectives. Compensation paid under the Annual Plan that is
intended to qualify as performance-based compensation within the meaning of
Section 162(m) of the Code will be based solely on criteria (i) and/or (ii).
Earnings, with respect to any fiscal year, means the Company's net income on a
consolidated basis, determined in accordance with generally accepted accounting
principles as reported in the Company's audited consolidated financial
statements for such fiscal year.
The performance goals with respect to each category of business criteria are
established by the Committee at the commencement of each fiscal year for which
annual bonus awards may be earned. No annual bonus for any fiscal year will be
paid unless the Company's Earnings equal at least 80% of budgeted Earnings for
that year, as set by the committee of the Board of Directors responsible for
setting the Company's budget.
BONUS TARGETS
The annual bonus targets are expressed as a percentage of current salary
with respect to each category of business criteria applied. The Committee
determines the target percentages annually with respect to each individual
participating in the Annual Plan at the commencement of the fiscal year.
BONUS PAYOUTS
At the end of any fiscal year for which bonus amounts can be earned, the
Committee makes a determination with respect to each participant as to the level
of achievement of the performance goals. The percentage of achievement is then
applied to the bonus targets to determine the amount of bonus for each
participant. However, the maximum bonus amount that any individual may receive
for any fiscal year is 6% of Earnings for such year.
The Annual Plan is structured to allow participants to defer receipt of
bonus amounts at such times as the Committee chooses to offer a deferral option.
If participants are allowed to defer receipt of any bonus under the Annual Plan
in any fiscal year, they must choose the amount to be deferred prior to the year
in which such bonus amount may be earned. Deferred amounts are paid out at the
time a participant terminates employment with the Company and may be paid either
in a lump sum or in a series of up to 15 installments, as elected by the
participant. Deferred amounts represent a general unfunded obligation of the
Company and will be credited with interest at a rate determined by the Committee
from time to time.
22
<PAGE>
TERMINATION AND AMENDMENT
The Committee may amend or terminate the Annual Plan at any time, provided
that no amendment will be effective prior to approval by the Company's
stockholders to the extent such approval is required to preserve deductibility
of compensation paid pursuant to the Annual Plan under Section 162(m) of the
Code or otherwise required by law.
NEW PLAN BENEFITS
Because the payment of an annual bonus under the Annual Plan for any fiscal
year is contingent on the achievement of the performance goals as of the end of
the fiscal year, the Company cannot determine the amounts that will be payable
or allocable for fiscal year 1998 or in the future. Furthermore, because the
Committee has not yet chosen the individuals to participate in the Annual Plan
for the 1998 fiscal year nor set the bonus targets for such year, the Company
cannot determine what amounts or benefits would have been received during the
last completed fiscal year if the Annual Plan had been in effect. Consequently,
the Company has not included the tabular disclosure of new plan benefits.
REQUIRED VOTE FOR APPROVAL OF 1998 ANNUAL BONUS PLAN
The affirmative vote of holders of a majority of the Company's outstanding
Common Stock represented in person or by proxy and entitled to vote on this
proposal is required for adoption of the 1998 Annual Bonus Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ANNUAL PLAN.
------------------------
PROPOSAL 5: RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
It is proposed that stockholders ratify the appointment by the Board of
Deloitte & Touche LLP as independent auditors for the Company for the fiscal
year ending December 31, 1997. The Company expects representatives of Deloitte &
Touche LLP to be present at the Annual Meeting and available to respond to
appropriate questions submitted by stockholders. Such representatives will also
be afforded an opportunity at such time to make such statements as they may
desire.
Approval by the stockholders of the appointment of independent auditors is
not required, but the Board of Directors deems it desirable to submit this
matter to stockholders. If holders of a majority of the outstanding shares of
Common Stock present and voting at the meeting do not approve the appointment of
Deloitte & Touche LLP, the selection of independent auditors will be
reconsidered by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT
OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS FOR THE COMPANY.
------------------------
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than ten percent
of a registered class of the Company's equity securities to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and
Exchange Commission. Officers, directors and greater than ten percent
stockholders are required by the Commission's regulation to furnish the Company
with copies of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received, the Company believes that all of its officers, directors and greater
than ten percent beneficial owners complied with all filing requirements
applicable to them with respect to transactions during fiscal 1996.
23
<PAGE>
VOTING PROCEDURES
Pursuant to Securities and Exchange Commission rules, a designated space is
provided on the proxy card to withhold authority to vote for one or more
nominees for director and boxes are provided on the proxy card for stockholders
to mark if they wish to abstain on Proposals 2, 3, 4 or 5. Votes withheld in
connection with the election of one or more of the nominees for director will
not be counted in determining the votes cast and will have no effect on the
vote. Abstentions in connection with Proposals 2, 3 and 4 will be counted as
present and therefore will have the affect of a negative vote. Abstentions are
not counted in determining the votes cast with respect to the ratification of
the selection of independent auditors contained in Proposal 5 and will have no
effect on the vote.
Under the rules of the National Association of Securities Dealers, brokers
who hold shares in street name for customers have the authority to vote on
certain items when they have not received instructions from beneficial owners.
Brokers that do not receive instructions are entitled to vote upon the election
of directors and the selection of independent auditors. Under the General
Corporation Law of the State of Delaware, a broker non-vote will have no effect
on the outcome of the election of directors or upon Proposals 2, 3, 4 or 5.
OTHER MATTERS
MANNER AND EXPENSES OF SOLICITATION
The solicitation of proxies in the accompanying form is made by the Board of
Directors and the cost thereof will be borne by the Company. In addition to the
solicitation of proxies by use of the mails, some of the officers, directors and
other employees of the Company may also solicit proxies personally or by mail,
telephone or telegraph, but they will not receive additional compensation for
such services. Brokerage firms, custodians banks, trustees, nominees or other
fiduciaries holding shares of Common Stock in their names will be requested by
the Company to forward proxy materials to their principals and will be
reimbursed for their reasonable out-of-pocket expenses in such connection.
It is important that proxies be returned promptly. Therefore, whether or not
you plan to attend the meeting in person, you are urged to mark, date, execute,
and return your proxy in the enclosed envelope, to which no postage need be
affixed if mailed in the United States.
DISCRETIONARY AUTHORITY TO VOTE PROXY
As of the date of this proxy statement, the Board of Directors is not aware
of any other matters to be presented for action, but if any other matters
properly come before the meeting, it is intended that the persons voting the
accompanying proxy will vote the shares represented thereby in accordance with
their best judgment.
ANNUAL REPORT
The Annual Report of the Company for 1996, including financial statements,
accompanies this proxy statement.
SUBMISSION OF STOCKHOLDER PROPOSALS
Stockholder proposals in respect of matters to be acted at the Company's
1998 Annual Meeting of Stockholders should be received by the Company on or
before December 19, 1997 in order that they may be considered for inclusion in
the Company's proxy materials.
24
<PAGE>
THE COMPANY WILL PROVIDE WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 25, 1996, INCLUDING
FINANCIAL STATEMENTS AND SCHEDULES THERETO, TO EACH OF THE COMPANY'S
STOCKHOLDERS OF RECORD ON APRIL 10, 1997 AND EACH BENEFICIAL STOCKHOLDER ON THAT
DATE, UPON RECEIPT OF A WRITTEN REQUEST THEREFOR MAILED TO THE COMPANY'S
OFFICES, 3 GREENWICH OFFICE PARK, GREENWICH, CONNECTICUT 06831, ATTENTION:
SECRETARY. REQUESTS FROM BENEFICIAL STOCKHOLDERS MUST SET FORTH A GOOD FAITH
REPRESENTATION AS TO SUCH OWNERSHIP ON THAT DATE.
BY ORDER OF THE BOARD OF DIRECTORS
ELLEN KEATS
SECRETARY
Dated: April 23, 1997
25
<PAGE>
FINE HOST CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
MAY 23, 1997
THE UNDERSIGNED, revoking all previous proxies, hereby appoints RICHARD E.
KERLEY, RANDY B. SPECTOR and NELSON BARBER, or any of them as attorneys, agents
and proxies with power of substitution, and with all powers the undersigned
would possess if personally present, to vote all shares of Common Stock of FINE
HOST CORPORATION (the "Company") which the undersigned is entitled to vote at
the Annual Meeting of Stockholders of the Company to be held on Friday, May 23,
1997 at 10:00 A.M. local time at Greenwich Harbor Inn, 500 Steamboat Road,
Greenwich, Connecticut 06830, and at all adjournments or postponements thereof.
The shares represented by this Proxy will be voted as indicated below upon the
following matters, as more fully described in the Proxy Statement.
The Board of Directors recommends a vote FOR each of the proposals 1 through
5.
(1) Election of Class I members of the Board of Directors
<TABLE>
<CAPTION>
WITHHOLD AUTHORITY
NOMINEE VOTE FOR TO VOTE FOR
- -------------------------------------------------------------------- ----------- --------------------------
<S> <C> <C>
Jack H. Nusbaum..................................................... / / / /
Randy B. Spector.................................................... / / / /
</TABLE>
(2) Approval of amendments to the Company's Amended & Restated 1994 Stock Option
Plan.
FOR / / AGAINST / / ABSTAIN / /
(3) Approval and adoption of the 1997 Long-Term Incentive Compensation Plan.
FOR / / AGAINST / / ABSTAIN / /
(SEE REVERSE SIDE)
<PAGE>
(4) Approval of the 1998 Annual Incentive Compensation Plan.
FOR / / AGAINST / / ABSTAIN / /
(5) Ratification of the appointment of Deloitte & Touche LLP as independent
auditors for the 1997 fiscal year.
FOR / / AGAINST / / ABSTAIN / /
(6) In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS GIVEN. IF NO SUCH INSTRUCTIONS ARE GIVEN, THE SHARES REPRESENTED BY
THIS PROXY WILL BE VOTED FOR ELECTION OF THE NOMINEES FOR DIRECTORS DESIGNATED
BY THE BOARD OF DIRECTORS AND FOR ITEMS 2,3,4 AND 5.
Dated: __________________, 1997
-------------------------------
NAME
-------------------------------
SIGNATURE
NOTE: Please sign exactly as
your name or names appear
hereon. Joint owners should
each sign personally. When
signing as executor,
administrator, corporation,
officer, attorney, agent,
trustee or guardian, etc.,
please add your full title to
your signature.
NOTE: PLEASE MARK, DATE, SIGN AND MAIL THIS PROXY IN THE ENVELOPE ENCLOSED FOR
THIS PURPOSE. NO POSTAGE IS REQUIRED FOR MAILING IN THE UNITED STATES.
<PAGE>
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).
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
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<PAGE>
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
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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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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)
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<PAGE>
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.
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<PAGE>
(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
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<PAGE>
Exhibit 99.2
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,
<PAGE>
(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
<PAGE>
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
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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
<PAGE>
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
<PAGE>
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:
<TABLE>
<CAPTION>
Vested Fiscal Years
Percentage of from
Units Awarded Date of Award
<S> <C>
40% 2
60% 3
80% 4
100% 5
</TABLE>
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
<PAGE>
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
<PAGE>
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.
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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.
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Exhibit 99.3
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.
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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
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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.
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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.
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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.
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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.
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