SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box
|_| Preliminary Proxy Statement
|X| Definitive Proxy Statement
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Calton, Inc.
------------------------------------------------
(Name of Registrant as Specified in its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
Check the appropriate box
|X| No fee required
|_| Fee computed on table below per Exchange Act Rules 14(a)(6)(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
- --------------------------------------------------------------------------------
<PAGE>
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>
CALTON, INC.
125 Half Mile Road
Red Bank, New Jersey 07701
------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 17, 2000
-----------------------------------
TO THE SHAREHOLDERS OF CALTON, INC.
The Annual Meeting of the Shareholders of CALTON, INC. (the "Company") will
be held on Monday, April 17, 2000 at the Hyatt Regency Orlando International
Airport Hotel, 9300 Airport Boulevard, Orlando, Florida at 11:00 a.m., local
time, for the following purposes:
1. To elect one director.
2. To consider and vote upon a proposal to adopt the Company's 2000 Equity
Incentive Plan.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Holders of Common Stock of record at the close of business on March 14,
2000, are entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
MARY H. MAGEE
Secretary
Red Bank, New Jersey
March 23, 2000
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. IF YOU ARE UNABLE TO DO
SO, PLEASE MARK, SIGN AND DATE THE ACCOMPANYING PROXY AND MAIL IT AT ONCE IN THE
ENCLOSED ENVELOPE. PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION WILL BE
APPRECIATED.
<PAGE>
CALTON, INC.
--------------------
PROXY STATEMENT
--------------------
General Information
This Proxy Statement is furnished to the holders of Calton, Inc. (the
"Company" or "Calton") Common Stock, $.01 par value ("Common Stock"), in
connection with the solicitation of proxies for use at the annual meeting of
shareholders to be held on April 17, 2000, and at any adjournment thereof (the
"meeting" or "annual meeting"), pursuant to the accompanying Notice of Annual
Meeting of Shareholders. Holders of Common Stock are referred to herein
collectively as the "shareholders." Forms of proxies for use at the meeting are
also enclosed. The Company anticipates mailing this Proxy Statement to its
shareholders on or about March 23, 2000. The executive offices of the Company
are located at 125 Half Mile Road, Red Bank, New Jersey 07701-6749.
Shareholders may revoke the authority granted by their execution of proxies
at any time before the effective exercise of proxies by filing written notice of
such revocation with the secretary of the meeting. Presence at the meeting does
not of itself revoke the proxy; however, a vote cast at the meeting by written
ballot will revoke the proxy. All shares represented by executed and unrevoked
proxies will be voted in accordance with the specifications therein. Proxies
submitted without specification will be voted FOR the election of the nominee
for director named herein and FOR the proposal to adopt the 2000 Equity
Incentive Plan. Management is not aware at the date hereof of any matters to be
presented at the meeting other than the election of a director and the proposal
to adopt the 2000 Equity Incentive Plan. If any other matter is properly
presented, the persons named in the proxy will vote thereon according to their
best judgment.
Proxies for use at the meeting are being solicited by the Board of
Directors of the Company. The cost of preparing, assembling and mailing the
proxy material is to be borne by the Company. It is not anticipated that any
compensation will be paid for soliciting proxies, and the Company does not
intend to employ specially engaged personnel of the Company or other paid
solicitors in the solicitation of proxies. It is contemplated that proxies will
be solicited principally through the mail, but directors, officers and employees
of the Company may, without additional compensation, solicit proxies personally
or by telephone, facsimile transmission or letter.
Voting Securities
The voting securities entitled to vote at the meeting consist of shares of
Common Stock, with each share entitling its owner to one vote on an equal basis.
On March 14, 2000, the number of outstanding shares of Common Stock was
21,649,820. Only shareholders of record on the books of the Company at the close
of business on March 14, 2000 will be entitled to vote at the meeting. The
<PAGE>
holders of a majority of the outstanding shares of Common Stock, present in
person or by proxy, will constitute a quorum at the meeting. The affirmative
vote of a plurality of the shares of Common Stock present in person or
represented by proxy and entitled to vote, is required for the election of
directors. The proxy card provides space for a shareholder to withhold votes for
any nominee for the Board of Directors. The proposal to adopt the 2000 Equity
Incentive Plan must be approved by a majority of the votes cast at the meeting
on such proposal.
All votes will be tabulated by the inspector of election appointed at the
meeting who will separately tabulate affirmative votes, negative votes,
authority withheld for any nominee for director, abstentions and broker
non-votes. Authority withheld will be counted toward the tabulation of the votes
cast on the election of directors and will have the same effect as a negative
vote. Under New Jersey law, any proxy submitted and containing an abstention or
broker non-vote will not be counted as a vote cast on any matter to which it
relates and, accordingly, will have no effect on the outcome of the vote.
Abstentions and broker non-votes will be counted for purposes of determining
whether a quorum is present at the annual meeting.
Principal Shareholders
The following table sets forth information with respect to each person who,
as of March 14, 2000, is known by the Company to be the beneficial owner (as
defined in Rule 13d-3 ("Rule 13d-3") of the Securities Exchange Act of 1934) of
more than five percent (5%) of the Company's Common Stock. Except as set forth
in the footnotes to the table, the shareholders have sole voting and investment
power over such shares:
Amount and Percent
Nature of of
Name of Beneficial Owner Beneficial Ownership Class
- ------------------------ -------------------- -----
Anthony J. Caldarone.................... 6,738,781(1) 30.2%
Joyce P. Caldarone...................... 6,738,781(2) 30.2%
- --------------------
(1) Includes an aggregate of 2,281,209 shares held by Joyce P. Caldarone, Mr.
Caldarone's wife, as to which shares he disclaims any beneficial interest,
and 700,000 shares subject to currently exercisable stock options.
(2) Includes an aggregate of 4,457,512 shares beneficially owned by Anthony J.
Caldarone, Mrs. Caldarone's husband, as to which shares she disclaims any
beneficial interest.
Security Ownership of Management
The following table sets forth information, as of March 14, 2000, with
respect to the beneficial ownership (as defined in Rule 13d-3) of the Company's
Common Stock by each director and nominee for director, each of the Named
Officers (as defined in the section captioned "Executive Compensation") who is
currently an officer of the Company and by all directors and executive officers
as a group. Except as set forth in the footnotes to the table, the shareholders
have sole voting and investment power over such shares.
2
<PAGE>
Amount and Percent
Nature of of
Name of Beneficial Owner Beneficial Ownership Class
- ------------------------ -------------------- -----
Anthony J. Caldarone............................. 6,738,781 (1) 30.2%
J. Ernest Brophy................................. 73,834 (2) (3)
Mark N. Fessel................................... 71,170 (2) (3)
Frank Cavell Smith, Jr........................... 40,000 (2) (3)
Kenneth D. Hill.................................. 92,918 (4) (3)
Robert E. Naughton............................... 19,428 (5) (3)
David J. Coppola................................. 70,000 (6) (3)
All Directors and Executive Officers as
a Group (6 persons)(1)(2)(4)(5) and (6)....... 7,132,346 31.6%
- ---------------
(1) Includes an aggregate of 2,281,209 shares held by Joyce P. Caldarone, Mr.
Caldarone's wife, as to which shares he disclaims any beneficial interest,
and 700,000 shares subject to currently exercisable stock options.
(2) Includes 40,000 shares subject to currently exercisable stock options.
(3) Shares beneficially owned do not exceed 1% of the Company's outstanding
Common Stock.
(4) Includes 40,000 shares held by Mr. Hill's spouse, as to which shares he
disclaims any beneficial interest, and 10,000 shares subject to currently
exercisable stock options.
(5) Includes 5,000 shares held by Mr. Naughton's spouse, as to which shares he
disclaims any beneficial interest, and 10,000 shares subject to currently
exercisable stock options.
(6) Includes 50,000 shares subject to currently exercisable stock options.
ELECTION OF DIRECTORS
The Company's by-laws provide that the Board of Directors shall consist of
not fewer than three nor more than fifteen members. The Board of Directors is
divided into four classes, with each class to hold office for a term of four
years and the term of office of one class to expire each year. The Board of
Directors has fixed the number of directors at six, one of whom is to be elected
at the 2000 annual meeting, two whose terms expire at the annual meeting in
2001, two whose terms expire at the annual meeting in 2002 and one whose term
expires at the annual meeting in 2003.
Frank Cavell Smith, Jr. is the incumbent director whose term expires at the
2000 annual meeting. Mr. Smith has been nominated to stand for reelection at the
meeting to hold office until the 2004 annual meeting. It is the intention of the
persons named in the accompanying proxy to vote, unless otherwise instructed, in
favor of the election of Mr. Smith as director. If Mr. Smith should be unable to
serve, the proxies will be voted for the election of a substitute nominee, if
any, designated by the Board of Directors. The Company is not aware of any
reason why Mr. Smith, if elected, would be unable to serve as a director.
3
<PAGE>
Set forth below is certain biographical information with respect to the
nominees for election to the Board and the directors whose terms of office will
continue after the 2000 annual meeting.
Nominee for Election for a Four-Year Term Expiring at the 2004 Annual Meeting.
Frank Cavell Smith, Jr. Mr. Smith, age 53, has served as a Director of
Calton since May 1993. Since 1990, Mr. Smith has been associated with the MEG
Companies as a Senior Consultant responsible for corporate real estate
consulting activities. From 1977 to 1990, Mr. Smith served as a Real Estate
Consultant and Real Estate Development Manager for The Spaulding Co., Inc. Mr.
Smith also is an adjunct faculty member at Boston University and a member of the
Board of Trustees of Shelter, Inc.
Director Continuing in Office until 2003 Annual Meeting.
Mark N. Fessel. Mr. Fessel, age 42, has served as a Director of Calton
since May 1993. Since 1985, Mr. Fessel has owned and operated a real estate
company and has acted as principal in numerous commercial and residential real
estate developments throughout the northeast. In 1984, Mr. Fessel served as the
Vice President of Acquisitions of the Meredith Organization, a nationally
recognized real estate developer.
Directors Continuing in Office until 2002 Annual Meeting.
Kenneth D. Hill. Mr. Hill, age 58, has served as a Director of Calton since
April 1999. He is currently Chief Executive Officer of the Company's wholly
owned subsidiary, eCalton.com, Inc. Since 1975, he has founded and managed
computer related companies, including NASTEC Corporation, a developer of
computer-aided software engineering development tools, from 1982 until its
acquisition in 1987, and Multiple Technologies Corporation, a consulting and
application development company, from 1975 to 1982. From January 1994 through
February 1996, he was employed as a consultant by KDH Enterprises, Inc. From
March 1997 through April 1998, Mr. Hill served as President and Chief Executive
Officer of DataTell Solutions, Inc., a regional systems integration company that
filed for federal bankruptcy protection in May 1998. He served as President and
Chief Executive Officer of National AmeriServe, Inc., an internet business
solutions provider, from May 1998 through October 1998, when it merged with iAW,
Inc., the predecessor of eCalton.com, Inc.
J. Ernest Brophy. Mr. Brophy, age 74, a self-employed attorney and
Certified Public Accountant specializing in tax consultation to clients engaged
in the construction business, was reappointed as a Director of Calton in
November 1995, having served in such capacity from March 1983 through November
1985 and from April 1986 through May 1993. From 1992 through March 1996, Mr.
Brophy served as Chief Financial Officer and a director of Hurdy-Gurdy
International, Inc., a company that marketed sorbet products.
Directors Continuing in Office until 2001 Annual Meeting.
Anthony J. Caldarone. Mr. Caldarone, age 62, was reappointed as Chairman,
President, Chief Executive Officer and a Director of Calton in November 1995,
having previously served in such capacities from the inception of the
4
<PAGE>
Company in 1981 through May 1993. From June 1993 through October 1995, Mr.
Caldarone served as a Director of the Company.
Robert E. Naughton. Mr. Naughton, age 62, has served as a Director of
Calton since April 1999. He has served as President and CEO of SIG, Inc. since
its founding in 1990. SIG, Inc. is an information technology consulting firm
specializing in network design and management, technology transition, business
profit improvement, project management, e-business and staff augmentation. Prior
to 1990, Mr. Naughton held management positions with AGS Information Services,
Compuware and SPR Corporation. He has 24 years of experience in the information
technology industry, including sales, marketing, recruiting and P&L management.
Meetings of the Board of Directors; Committees
During the fiscal year ended November 30, 1999, the Board of Directors held
six(6) meetings. During fiscal 1999, each member of the Company's current Board
of Directors attended at least 75% of the meetings of the Board of Directors and
all of the meetings of the committees on which he served. See the section
captioned "Directors' Compensation" for a discussion of fees paid by the Company
to its directors for their services.
During fiscal 1999, the Board of Directors had two standing committees: the
Audit Committee and the Compensation Committee.
The Audit Committee currently consists of Mr. Brophy and Mr. Smith. The
functions performed by the Audit Committee are, among other things, to recommend
to the Board of Directors the auditors to be engaged as the Company's
independent public accountants, to review the proposed plan and scope for the
annual audit and the results of such audit when completed, to review the
services rendered by the auditors and the fees charged for such services, to
determine the effect, if any, on the independent public accountants'
independence of the performance of any non-audit services and to review the
plan, scope and results of the Company's internal audit operations. During
fiscal 1999, the Audit Committee held one (1) meeting.
Messrs. Fessel and Smith are members of the Compensation Committee. The
Compensation Committee reviews and approves compensation for executive employees
of the Company on a periodic basis, subject to approval of the Board, and
administers the Company's Incentive Compensation Plan, the 1996 Equity Incentive
Plan (the "1996 Option Plan") and the Amended and Restated 1993 Non-Qualified
Stock Option Plan (the "1993 Option Plan" and collectively with the 1996 Option
Plan, the "Option Plans"). The Compensation Committee will also administer the
2000 Equity Incentive Plan if the proposal to adopt the plan is approved at the
meeting. During fiscal 1999, the Compensation Committee held one (1) meeting and
acted by unanimous written consent on one (1) occasion.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation for services in all capacities to the Company and its
subsidiaries for the fiscal years ended November 30, 1999, 1998 and 1997, of the
Chief Executive Officer of the Company in fiscal 1999 and the other executive
officer of the Company who earned salary and bonuses in fiscal 1999 in excess of
$100,000 (collectively, the "Named Officers"):
<TABLE>
<CAPTION>
Long Term
Annual Compensation Awards Compensation
----------------------------------- ------------
Awards
------------
Securities All Other
Name and Underlying Compensation
Principal Position Year Salary($) Bonus($)(1) Options ($)(2)
------------------ ---- --------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Anthony J. Caldarone 1999 $275,000 -- 200,000(3) $15,672 (4)
Chairman, Chief 1998 275,000 350,000 600,000 $17,855
Executive Officer 1997 250,000 52,000 -- $16,726
& President
David J. Coppola 1999 85,000 25,000 40,000(3) 688
Vice President & 1998 -- -- -- --
Treasurer(5) 1997 -- -- -- --
</TABLE>
- ---------------
(1) Represents amounts accrued in fiscal 1999, 1998 and 1997 and paid in the
subsequent fiscal year to the Named Officers pursuant to the Company's
Incentive Compensation Plan (the "Incentive Plan"). The Incentive Plan
provides for an incentive compensation pool equal to ten percent (10%) of
the Company's annual pre-tax income, subject to certain adjustments to
pre-tax income that may be made by the Compensation Committee to remove the
effect of events or transactions not in the ordinary course of the
Company's operations. After making certain adjustments in accordance with
the terms of the Incentive Plan, the Committee established a pool of
$50,000 for awards under the Incentive Plan for fiscal 1999. Officers and
key operations and senior corporate management employees (the "Eligible
Employees") of the Company and its subsidiaries are eligible for
participation in the Incentive Plan. In addition, a portion of the
incentive compensation pool established under the Incentive Plan may be
used for bonuses to full time employees who do not otherwise have an
opportunity to obtain a specified level of commissions or bonuses. The
Eligible Employees are determined each fiscal year by the Compensation
Committee based on the recommendations of the President and Chief Executive
Officer of the Company. An Eligible Employee may not receive a distribution
from the incentive compensation pool for any fiscal year that exceeds the
lesser of twenty percent (20%) of the available incentive compensation pool
or one hundred percent (100%) of the Eligible Employee's base salary for
such fiscal year, unless otherwise provided in the Eligible Employee's
employment agreement with the Company. The Compensation Committee
ultimately determines the percentage, if any, of the incentive compensation
pool for a fiscal year to be awarded to an Eligible Employee.
(2) Includes cost of premiums paid by the Company under a program which
provides officers of the Company with additional life insurance
(supplementing the coverage available under the Company's group life
6
<PAGE>
insurance plan) as follows: Mr. Caldarone - $8,472 and Mr. Coppola - $688.
(3) Represents shares underlying options granted in January 2000 for services
rendered in fiscal 1999.
(4) Includes a $7,200 automobile allowance paid to Mr. Caldarone in fiscal
1999.
(5) Mr. Coppola was not an executive officer of the Company in fiscal 1998 or
1997.
Directors' Compensation
Members of the Board of Directors who are not full time employees of Calton
were each entitled in fiscal 1999 to annual compensation of $20,000 for service
as a director. Calton paid or accrued a total of $80,500 in director fees to
members of the Board of Directors during fiscal year 1999 ($23,050 of which was
paid in the form of Common Stock pursuant to elections permitted under the 1996
Option Plan). Directors are reimbursed for travel expenses incurred in
connection with attendance at Board and committee meetings. Directors who are
not full time employees are paid a participation fee of $1,000 for each
committee meeting attended. In addition, under the terms of the 1996 Option
Plan, each non-employee director is awarded options to purchase 10,000 shares of
the Company's Common Stock each time such director is elected or re-elected to
the Board of Directors and each time that an annual meeting of shareholders is
held during the term of such director. In order to receive the award, an
incumbent non-employee director must have attended 75% of all Board meetings and
75% of all meetings of Board committees of which the director is a member during
the prior 12 months. Options to purchase an aggregate of 50,000 shares of Common
Stock at an exercise price of $1.09 per share (the fair market value of the
Common Stock on the date of grant) were granted to non-employee directors
pursuant to the 1996 Option Plan in fiscal 1999.
Employment Agreement with Chief Executive Officer
Effective November 21, 1995, the Company entered into an Employment
Agreement (the "Employment Agreement") with Anthony J. Caldarone, Chairman,
President and Chief Executive Officer of the Company. The term of the Employment
Agreement will end on November 30, 2001. Pursuant to the Employment Agreement,
Mr. Caldarone will receive a minimum annual salary of $250,000 ("Base
Compensation") which may be increased by the Board or a committee thereof. In
January 1998, the Compensation Committee fixed Mr. Caldarone's annual salary at
$275,000. Mr. Caldarone is entitled to participate in any bonus compensation or
benefit plan or arrangement provided by the Company to its employees or senior
level executives, including the Company's Incentive Plan. Under the Employment
Agreement, Mr. Caldarone may be awarded up to thirty percent (30%) of the
Incentive Plan's designated incentive compensation for any fiscal year and,
subject to such limitation, is entitled to not less than one-half of the average
percentage that all awards to other Eligible Participants are of the respective
Eligible Participants' base salary for the relevant fiscal year. Mr. Caldarone
is entitled to be reimbursed by the Company for certain automobile expenses and
was granted options to purchase 500,000 shares of Common Stock under the 1996
Option Plan pursuant to the Employment Agreement.
7
<PAGE>
If the Employment Agreement is terminated by reason of Mr. Caldarone's
death, the Company is obliged to reimburse Mr. Caldarone's designated
beneficiaries the cost of COBRA benefits, other than long-term disability
coverage, for a period of 18 months following the date of death. If the
Employment Agreement is terminated by reason of Mr. Caldarone's disability, Mr.
Caldarone will be entitled to receive a lump sum cash payment equal to one
year's Base Compensation (the "Severance Compensation") from the Company as well
as the cost of COBRA benefits, other than long-term disability, for him and his
family for a period of 18 months following the date of termination, and continue
to participate in any group life insurance or supplemental life insurance
program of the Company then in effect for a period of 18 months following the
date of termination (collectively, the "Severance Benefits"). The Company may
terminate the Employment Agreement for just cause in the event Mr. Caldarone is
convicted of a felony in connection with his duties as an officer of the
Company, if the commission of such felony resulted in a personal financial
benefit to Mr. Caldarone. Upon termination for just cause by the Company, Mr.
Caldarone is not entitled to receive any Severance Compensation or Severance
Benefits. If the Company terminates the Employment Agreement without just cause,
Mr. Caldarone is entitled to the Severance Compensation and Severance Benefits.
If the Company terminates the Employment Agreement by issuing a notice of
non-extension, Mr. Caldarone is entitled to receive a lump sum cash payment
equal to one year's Base Compensation as well as the Severance Benefits. Mr.
Caldarone may terminate the Employment Agreement for just cause and receive
Severance Compensation and Severance Benefits, if (i) the Board fails to
re-elect him as each of Chairman, President and Chief Executive Officer of the
Company, (ii) the Board significantly reduces the nature and scope of his
authorities, powers, duties and functions, (iii) the Company breaches any
material covenant of the Employment Agreement or (iv) the Company consents to
Mr. Caldarone's retirement. If Mr. Caldarone terminates the Employment Agreement
without just cause or by issuing a notice of non-extension, he is not entitled
to the Severance Compensation or Severance Benefits. After the date of
termination of Mr. Caldarone's employment for any of the reasons specified
herein and in the Employment Agreement, Mr. Caldarone will not receive any
further salary payments under the Employment Agreement.
For the term of the Employment Agreement and for a period of twelve (12)
months following termination of Mr. Caldarone's employment, other than for just
cause by the Company or without just cause by Mr. Caldarone, Mr. Caldarone is
restricted from competing with the Company in the homebuilding business in
certain regions if the Company is actively engaged in the homebuilding business.
8
<PAGE>
Option Grants
Shown below is further information with respect to grants of stock options
in fiscal 1999 to the Named Officers by the Company which are reflected in the
Summary Compensation Table set forth under the caption "Executive Compensation."
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------------------
Potential Realizable Value
Number of Percent of at Assumed Annual Rates of
Securities Total Options Stock Price Appreciation
Underlying Granted to Exercise or for Option Term
Options Employees in Base Price Expiration ---------------------------
Name Granted (#)(1) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
---- -------------- ------------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Anthony J. Caldarone........ 200,000(2) 8.5% $2.78 1/27/05 $153,622 $339,438
David J. Coppola............ 40,000(3) 1.7 2.53 1/27/10 48,597 161,282
</TABLE>
- ---------------
(1) Represents shares of Common Stock underlying options granted in January
2000 for services rendered in fiscal 1999.
(2) These options are exercisable cumulatively in five equal annual
installments commencing on the first anniversary of the date of grant.
(3) These options are exercisable cumulatively in three equal annual
installments commencing on the first anniversary of the date of grant.
Option Exercises and Fiscal Year-End Values
Shown below is information with respect to options exercised by the Named
Officers during fiscal 1999 and the value of unexercised options to purchase the
Company's Common Stock held by the Named Officers at November 30, 1999.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money
Shares Options Held At FY-End (#) Options At FY-End ($)(1)
Acquired on Value ---------------------------- ----------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Anthony J. Caldarone -- -- 500,000 600,000 $640,625 $243,000
David J. Coppola... 20,000 $20,550 45,000 25,000 100,050 35,000
</TABLE>
- ---------------
(1) Represents market value of shares covered by in-the-money options on
November 30, 1999. The closing price of the Common Stock on such date was
$1.625. Options are in-the-money if the market value of shares covered
thereby is greater than the option exercise price.
9
<PAGE>
Corporate Performance
Set forth below is a performance graph which compares the percentage change in
the cumulative total shareholder return on the Common Stock of the Company for
the period from December 1, 1994 to November 30, 1999, with the cumulative total
return over the same period on the American Stock Exchange Market Value Index
and peer group indices(1) over the same period (assuming the investment of $100
in the Company's Common Stock, the American Stock Exchange Market Value Index
and the peer group indices on December 1, 1994 and that all dividends were
reinvested).
[GRAPHIC]
In the printed version of the document, a line graph appears which depicts
the following plot points:
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
--------------------------------------------------------------------------
COMPANY/INDEX/MARKET 11/30/94 11/30/95 11/30/96 11/30/97 11/30/98 11/30/99
- -------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Calton Inc. 100.00 46.67 33.33 46.67 113.33 180.00
Former Peer Group 100.00 167.34 177.27 210.77 218.12 164.80
AMEX Market Index 100.00 125.65 135.54 154.83 152.96 191.10
New Peer Group 100.00 157.76 182.99 204.79 98.24 136.94
</TABLE>
(1) Due to the change in the Company's business which occurred as a result of
the sale of the Company's homebuilding operations in December 1998 and its
strategic plan to acquire or combine with one or more operating businesses, the
Company does not believe it reasonably can identify a peer group of companies
engaged in a similar line of business as of November 30, 1999. The current peer
group (the "Current Peer Group") selected by the Company is comprised of
companies having market capitalizations similar to the Company as of November
30, 1999. The companies in the Current Peer Group are: Collins Industries, Inc.,
Delphos Citizens Bancorp, Eufaula Banccorp, Inc., Marine Petroleum Trust, MFRI,
Inc., Mobile America Corp FL, Nanophase Technologies C, Neorx Corp., Oryx
Technology Corp., Penn Octane Corp., Urologix, Inc., Valley Forge Scientific and
Xicor, Inc. The peer group selected for the Company's 1999 Proxy Statement (the
"Former Peer Group") included Hovnanian Enterprises, Inc., Toll Brothers, Inc.,
Oriole Homes Corp., Washington Homes, Inc., FPA Corp. (now known as Orleans
Homebuilders, Inc.) and Sundance Homes, Inc. (which sold its business in 1999
and thus is not included in the Former Peer Group index reflected in the above
graph).
10
<PAGE>
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors (the "Compensation
Committee" or the "Committee") has furnished the following report on executive
compensation.
The Compensation Committee is currently comprised of independent,
non-employee directors. It is charged with the responsibility of reviewing and
approving the compensation of the Company's officers and administration of the
Company's Incentive Plan, the Option Plans and severance policy for the
Company's senior executives.
The Committee has determined that the Company's policies for compensation,
including base compensation, incentive compensation and benefits, should be
guided by the marketplace. In recent years, the Committee has determined that
the blend of base salary and incentive compensation offered to the Company's
executive officers should emphasize performance based incentive compensation
over base salary compensation. To accomplish the Committee's compensation
objectives for the Company and to attract, motivate and retain key executives
for the management and long term success of the Company, the Company has
developed compensation programs which provide executive officers a base salary
and the opportunity to earn additional compensation based on the profits and
overall success of the Company. Compensation programs include salary and
incentive plans.
The Company's executive compensation programs have three principal
components: base salary, incentive compensation awards and stock option grants.
Factors considered when determining the base salary for an officer of the
Company include the position of the officer, the amount of responsibility
associated with such position, past performance of such responsibilities,
dedication to the pursuit of achieving individual and Company goals and the
overall results of the Company. The Committee believes that the base salaries of
the Company's executive officers are generally below or similar to the amounts
paid to comparable officers at other companies of the same or similar size and
in the businesses currently and previously conducted by the Company, and,
therefore, incentive compensation in the form of awards under the Incentive Plan
and stock option grants are key components of the total compensation paid or
awarded to officers of the Company. The type and amount of incentive
compensation is a function of the performance of both Company and individual
participants in the particular plan. For example, the Company's Incentive Plan
is a cash based plan directly linked to the Company's financial performance
while the Option Plans provide a method whereby the officers can share in the
long-term growth and success of the Company. The Committee believes these
components collectively provide an appropriate relationship between an
executive's compensation and the Company's financial performance.
The Compensation Committee reviews the performance of the Chief Executive
Officer and other officers of the Company annually. The Compensation Committee
makes recommendations to the Board with respect to salaries and determines
awards to be made under the Incentive Plan. The Compensation Committee also
determines recipients of, and the number of shares to be covered by, options
granted under the Option Plans to all employees, including officers. Incentive
compensation and stock option grants for executive officers are determined by
evaluating the performance of the individuals reviewed, their contributions to
the performance of the Company, their responsibilities, experience and
potential, their period of service at current salary and compensation
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practices for comparable positions at other companies. Financial results,
nonfinancial measures and the Chief Executive Officer's evaluation of other
executive officers are considered.
In November 1995, the Board of Directors appointed Anthony J. Caldarone as
Chairman, President and Chief Executive Officer of the Company. Mr. Caldarone
had previously served in such capacity from the inception of the Company in 1981
through May 1993. In connection with the appointment of Mr. Caldarone as
Chairman, President and Chief Executive Officer, the Board approved an
employment agreement between the Company and Mr. Caldarone which provides for a
minimum base salary of $250,000 per year and pursuant to which, options to
purchase 500,000 shares of Calton Common Stock at a price of $.34375 per share
(110% of the trading price of the Common Stock on the date of grant) were
granted to Mr. Caldarone under the 1996 Option Plan. In approving the employment
agreement and the compensation payable thereunder, the Board considered the
compensation paid to chief executive officers of similarly situated companies,
as well as Mr. Caldarone's qualifications and prior experience in serving in
such capacity. See "Employment Agreement with Chief Executive Officer" for a
more detailed description of the terms of the employment agreement between the
Company and Mr. Caldarone. In January 2000, the Committee reviewed Mr.
Caldarone's compensation, considering the fact that Mr. Caldarone had received
only one increase in salary (which increased his annual base salary to $275,000)
since his return to the Company in 1995. Based upon this information, and the
Committee's desire to provide a further incentive to Mr. Caldarone to further
develop and execute the Company's strategic plan to enhance shareholder value,
the Committee granted Mr. Caldarone options to purchase 200,000 shares of Common
Stock at an exercise price of $2.78 per share (110% of the fair market value on
the date of the grant). Mr. Caldarone was not awarded any of the incentive
compensation awarded to participants in the Incentive Plan. The total amount of
incentive compensation awarded under the Incentive Plan for fiscal 1999 was
$50,000.
In 1993, the Internal Revenue Code of 1986, as amended (the "Code"), was
amended to add Section 162(m). Section 162(m) places a limit of $1,000,000 on
the amount of compensation that may be deducted by the Company in any year with
respect to certain of the Company's highest paid executives. Certain performance
based compensation that has been approved by shareholders is not subject to the
deduction limit. The Company believes that compensation paid to its officers
under all of its compensation plans, except the Incentive Plan, options to
acquire 815,000 shares of Common Stock under the 1993 Option Plan and options to
acquire 1,800,000 shares of Common Stock granted pursuant to certain employment
agreements entered into in connection with the Company's acquisition of iAW,
Inc., will qualify as performance based compensation, and will therefore be
exempt from the $1,000,000 deduction limit. See "Certain Relationships and
Related Party Transactions."
COMPENSATION COMMITTEE:
Mark N. Fessel
Frank Cavell Smith, Jr.
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Certain Relationships and Related Party Transactions
In July 1999, the Company acquired substantially all of the assets of iAW,
Inc. ("iAW"), an Internet business solutions provider. The purchase price of the
acquisition was $250,000. Kenneth D. Hill, a director of the Company, was a
director, Chief Executive Officer and a principal shareholder of iAW. In
addition, Mr. Hill's son, Robert Hill, was an officer and shareholder of iAW. In
connection with the acquisition, Kenneth Hill entered into an employment
agreement with the Company's wholly owned subsidiary, eCalton.com, Inc.
("eCalton"), that entitles him to a base salary of $75,000 per annum for the
first six months of the term of the agreement and $120,000 per annum for the
following 12 months of the three year term. Robert Hill entered into an
employment agreement with eCalton that entitles him to a salary of $75,000 per
annum for the first six months of the term of the agreement and $80,000 per
annum for the following 12 months of the three year term. Each of the employment
agreements provides that prior to the 18 month anniversary of the agreement,
eCalton and the employee will negotiate in good faith, based upon market rates,
base salary for the remaining term of the agreement. Pursuant to the employment
agreements, each of Kenneth Hill and Robert Hill was also granted options to
acquire 600,000 shares of the Company's Common Stock at an exercise price of
$1.63 per share. The options have a term of 10 years.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's executive 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 (the
"SEC"). Officers, directors and greater than ten percent shareholders are
required by SEC 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 executive officers, directors and
greater than ten percent shareholders complied with all filing requirements
applicable to them with respect to events or transactions during fiscal 1999,
except that the Forms 3 required to be filed by each of Kenneth D. Hill and
Robert E. Naughton in April 1999 following their election as directors, a Form 4
required to be file by Kenneth Hill in August 1999 to report a grant of options
and a Form 3 required to be filed by Maria Caldarone in March 2000 following her
appointment as an officer of the Company, were filed late.
PROPOSAL TO ADOPT THE CALTON, INC. 2000 EQUITY INCENTIVE PLAN
Introduction
The Board of Directors has approved and adopted, subject to approval and
ratification by the shareholders, the 2000 Equity Incentive Plan (the "Equity
Incentive Plan" or the "Plan"). The Board of Directors believes that the Equity
Incentive Plan can be an effective means of attracting, motivating and retaining
key employees and directors. In addition, the Board believes that the Equity
Incentive Plan will provide a method whereby key employees and directors can
share in the long-term growth in the Company.
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The aggregate number of shares reserved for issuance under the Equity
Incentive Plan is 4,000,000 shares.
Summary of Provisions of the 2000 Equity Incentive Plan
General
The Equity Incentive Plan will be administered by the Compensation
Committee which will be authorized to grant (i) "incentive stock options" within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended,
(ii) nonqualified stock options, (iii) stock appreciation rights ("SARs"), (iv)
restricted stock grants, (v) deferred stock awards and (vi) other stock based
awards to employees of the Company and its subsidiaries. The Compensation
Committee will determine (i) the recipients of awards under the Plan ("Awards"),
(ii) the times at which Awards will be made, (iii) the size and type or types of
Awards to be made to each recipient and (iv) will set forth in each such Award
the terms, conditions and limitations applicable to the Award granted. The
Compensation Committee will have full and exclusive power to interpret the Plan,
to adopt rules, regulations and guidelines relating to the Plan, to grant
waivers of Plan restrictions and to make all of the determinations necessary for
its administration.
The aggregate number of shares of Common Stock reserved for issuance
pursuant to Awards granted under the Plan is 4,000,000 shares. The maximum
number of shares of Common Stock which may be issued to the Chief Executive
Officer ("CEO") of the Company pursuant to all Awards granted the CEO under the
Plan may not exceed thirty-five percent (35%) of the number of shares of the
Company's Common Stock reserved for issuance under the Plan. The maximum number
of shares of the Company's Common Stock awarded to any other participant
eligible to receive Awards pursuant to all Awards granted to such participant
under the Plan may not exceed twenty percent (20%) of the number of shares of
the Company's Common Stock reserved for issuance under the Plan. The Equity
Incentive Plan will terminate on January 27, 2010 unless earlier terminated by
the Board of Directors.
Those eligible to receive Awards under the Plan (each, a "Participant" and
collectively, the "Participants") will be persons in the employ of the Company
or any of its subsidiaries designated by the Committee ("Employees") and other
persons or entities who, in the opinion of the Committee, are in a position to
make a significant contribution to the success of the Company or its
subsidiaries, including, without limitation, consultants and agents of and
advisors to the Company or any subsidiary. A "subsidiary" for purposes of the
Plan will be a present or future corporation of which the Company owns or
controls, or will own or control, more than 50% of the total combined voting
power of all classes of stock or other equity interests.
Awards Under the Equity Incentive Plan
Stock Options. The Compensation Committee may grant either incentive stock
options or non-qualified stock options under the Equity Incentive Plan. Only
employees of the Company may be granted incentive stock options. The exercise
price of each option shall be equal to the "fair market value" (as defined
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below) of the Common Stock on the date the option is granted to the Participant;
provided, however, that (i) in the Compensation Committee's discretion, the
exercise price of a nonqualified option may be less than the fair market value
of the Common Stock on the date of grant; (ii) with respect to a Participant who
owns more than 10% of the total combined voting power of all classes of stock of
the Company, the exercise price of an incentive stock option granted to such
Participant shall not be less than 110% of the fair market value of the Common
Stock on the date the option is granted; and (iii) with respect to any option
repriced by the Compensation Committee, the exercise price shall be equal to the
fair market value of the Common Stock on the date such option is repriced unless
otherwise determined by the Compensation Committee. For purposes of the exercise
price of an option, "fair market value" shall mean the average of the high and
low sales prices of the Common Stock as reported on the American Stock Exchange.
The term of each option granted to a participant pursuant to the Plan will be
determined by the Compensation Committee; provided, however, that in no case
shall an option be exercisable more than ten years (five years in the case of an
incentive stock option granted to a ten-percent stockholder) from the date of
the grant.
Stock Appreciation Rights. An SAR is an Award entitling the recipient to
receive payment, in cash and/or shares of Common Stock, determined in whole or
in part by reference to appreciation in the value of a share of Common Stock. An
SAR entitles the recipient to receive in cash and/or shares of Common Stock,
with respect to each SAR exercised, the excess of the fair market value of a
share of Common Stock on the date of exercise over the fair market value of a
share of Common Stock on the date the SAR was granted.
The Compensation Committee may grant SARs either alone or in combination
with an underlying stock option. The term of an SAR and the time or times at
which an SAR shall be exercisable shall be set by the Compensation Committee;
provided, that an SAR granted in tandem with an option will be exercisable only
at such times and to the extent that the related option is exercisable. An SAR
granted in tandem with an incentive stock option may be exercised only when the
market price of the shares of Common Stock subject to the incentive stock option
exceeds the exercise price of the incentive stock option, and the SAR may be for
no more than 100% of the difference between the exercise price of the underlying
incentive stock option and the fair market value of the Common Stock subject to
the underlying incentive stock option at the time the SAR is exercised. At the
option of the Compensation Committee, upon exercise, an SAR may be settled in
cash, Common Stock or a combination of both.
Restricted Stock Grants. The Compensation Committee may grant shares of
Common Stock under a restricted stock grant which sets forth the applicable
restrictions, conditions and forfeiture provisions which shall be determined by
the Compensation Committee and which can include restrictions on transfer,
continuous service with the Company or any of its subsidiaries, achievement of
business objectives, and individual, subsidiary and Company performance. Shares
of Common Stock may be granted pursuant to a restricted stock grant for no
consideration or for any consideration as determined by the Compensation
Committee. Subject to such restrictions, conditions and forfeiture provisions as
may be established by the Compensation Committee, any Participant receiving an
Award of Restricted Stock will have all the rights of a stockholder of the
Company with respect to the shares of Restricted Stock, including the right to
vote the shares and the right to receive any dividends thereon.
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Deferred Stock Awards. The Compensation Committee may grant shares of
Common Stock under a deferred stock award, with the delivery of such shares of
Common Stock to take place at such time or times and on such conditions as the
Compensation Committee may specify. At the time any deferred stock award is
granted, the Committee may provide that the Participant will receive an
instrument evidencing the Participant's right to future delivery of Deferred
Stock.
Formula Awards. Each time an individual who is not an employee of the
Company or a subsidiary of the Company is elected or reelected as a director of
the Company, the director will receive non-qualified stock options to acquire
10,000 shares of the Company's Common Stock. Each such option (a "Formula
Option") shall (i) have a per share exercise price equal to the fair market
value of the Common Stock on the date of such grant, (ii) have a term of five
years and (iii) become exercisable on the first anniversary of the date of
grant. In order for a non-employee director to receive a Formula Option, such
director must have attended 75% of all Board meetings and 75% of all meetings of
the Board committee(s) of which the director was a member held during the prior
12 months while such director was a member of the Board and committee(s). No
award of Formula Options will be made to a director who is receiving a
comparable award under the 1996 Option Plan.
Directors' Fees. Directors of the Company may elect to receive all or a
portion of their annual retainer fee and meetings fees in the form of the
Company's Common Stock. Shares of Common Stock having an aggregate fair market
value equal to the aggregate amount of Board fees being paid in stock will be
issued to a director who elects to receive fees in the form of stock no later
than 15 business days following the date of payment of the Board fees by the
Company.
Federal Income Tax Consequences
Stock Options. The grant of an incentive stock option or a nonqualified
stock option does not result in income for the grantee or in a deduction for the
Company.
The exercise of a nonqualified stock option results in ordinary income for
the grantee and a business deduction for the Company measured by the difference
between the option's exercise price and the fair market value of the shares of
Common Stock received at the time of exercise. If the Company is required to
withhold income taxes in connection with the exercise of a nonqualified stock
option, the Compensation Committee may, in its discretion, permit such
withholding obligation to be satisfied by the delivery of shares of Common Stock
held by the grantee or to be delivered to the grantee upon exercise of the
option.
The exercise of a qualified incentive stock option does not result in
income for the grantee or in a business deduction for the Company; provided,
that the employee does not dispose of the shares of Common Stock acquired upon
exercise within two years after the date of grant of the option and one year
after the transfer of the shares of Common Stock upon exercise, and provided
further that, the employee is employed by the Company or a subsidiary of the
Company from the date of grant until three months before the date of exercise.
If these requirements are met, the employee's basis in the shares of Common
Stock would be the exercise price. Any gain related to the subsequent
disposition of shares of Common Stock will be taxed to the employee as a
long-term capital gain and the Company will not be entitled to any deduction.
The excess of the fair market value of the Common Stock on the date of exercise
16
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over the exercise price is an item of tax preference for the employee,
potentially subject to the alternative minimum tax.
If an employee should dispose of the shares of Common Stock acquired
pursuant to the exercise of an incentive stock option prior to the expiration of
either of the designated holding periods, the employee recognizes ordinary
income and the Company is entitled to a business deduction in an amount equal to
the lesser of the fair market value of the shares of Common Stock on the date of
exercise minus the option exercise price or the amount realized on disposition
of the shares of Common Stock minus the option exercise price. Any gain in
excess of the ordinary income recognized by the employee is taxable as long-term
or short-term capital gain, depending on the holding period. If an option,
intended to be an incentive stock option, does not satisfy all of the
requirements of an incentive stock option pursuant to Section 422 of the Code
when granted, the employee recognizes ordinary income upon exercise of the
option and the Company is entitled to a business deduction in an amount equal to
the fair market value of the shares of Common Stock on the exercise date minus
the option exercise price. Income tax withholding would be required. In the
event an option intended to be an incentive stock option does not qualify as
such when granted or when exercised, the Board of Directors believes that any
related deduction should not be subject to the annual $1 million per capita
limitation on employee renumeration for the Named Officers of the Company
imposed by Section 162(m) of the Code. The Board of Directors believes that the
income recognized by an employee or other participant upon the exercise of an
option granted under the Equity Incentive Plan should be qualified
performance-based compensation and, therefore, an exception to the limitations
imposed on the Company by Section 162(m) of the Code with respect to the
deductibility of a Named Officer's compensation during a particular calendar
year.
SARS. The grant of an SAR does not result in income for the grantee or in a
business deduction for the Company for federal income tax purposes. Upon the
exercise of an SAR, the grantee recognizes ordinary income and the Company is
entitled to a business deduction measured by the fair market value of the shares
of Common Stock plus any cash received. Income tax withholding would be required
for employees of the Company and its subsidiaries. The Board of Directors
believes that any income related to the exercise of SARs should be exempt from
the $1 million limit of Section 162(m) of the Code pursuant to the
performance-based compensation exception.
Restricted Stock Grants and Deferred Stock Award. If the shares of Common
Stock issued pursuant to a restricted stock grant or deferred stock award are
subject to restrictions resulting in a "substantial risk of forfeiture" pursuant
to the meaning of such term under Section 83 of the Code, the restricted stock
grant or deferred stock award does not result in income for the grantee or in a
business deduction for the Company for federal income tax purposes. If there are
no such restrictions, conditions, limitations or forfeiture provisions, the
grantee recognizes ordinary income and the Company is entitled to a business
deduction upon receipt of the shares of Common Stock. Dividends paid to the
grantee while the stock remained subject to any restrictions would be treated as
compensation for federal income tax purposes. At the time the restrictions
lapse, the grantee receives ordinary income and the Company is entitled to a
business deduction, subject to the $1 million deduction limitation under Section
162(m), measured by the fair market value of the shares of Common Stock at the
time of lapse. Income tax withholding would be required for employees of the
Company and its subsidiaries.
17
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Other Stock Based Awards. Any employee of the Company or any of its
subsidiaries who receives shares of Common Stock as bonus compensation or in
lieu of the employee's cash compensation shall recognize ordinary income, and
the Company shall be entitled to a business deduction, subject to the $1 million
deduction limitation under Section 162(m), measured by the fair market value of
the shares of Common Stock issued to the employee.
Other Information
If there is a stock split, stock dividend or other relevant change
affecting the Company's Common Stock, appropriate adjustments will be made in
the number of shares of Common Stock or in the type of securities to be issued
pursuant to any award granted before such event. In the event of a merger,
consolidation, combination or other similar transaction involving the Company in
which the Company is not the surviving entity, either all outstanding stock
options and SARs shall become exercisable immediately and all restricted stock
grants and deferred stock awards shall immediately become free of all
restrictions and conditions, or the Compensation Committee may arrange to have
the surviving entity grant replacement awards for all outstanding awards. Upon
termination of service prior to age 65 for any reason other than death or
disability, stock options and SARs which are exercisable as of the date of such
termination may be exercised within three months of the date of termination, and
any restricted stock grants and deferred stock awards which are still subject to
any restriction shall be forfeited to the Company. Upon death or disability or
voluntary or involuntary termination of service after age 65, all stock options
and SARs become immediately exercisable and may be exercised for a period of six
months (in the case of death or disability) or three months (in the case of
termination for reasons other than death or disability) after the date of
termination, and all restricted stock grants and deferred stock awards shall
become immediately free of all restrictions and conditions. The Compensation
Committee has the discretionary authority to alter or establish the terms and
conditions of an award in connection with termination of service. The Board of
Directors may amend, suspend or terminate the Equity Incentive Plan, subject to
shareholder approval if required by any applicable federal or state security
laws, tax laws or corporate statute.
New Plan Benefits
At this time, no awards have been granted under the Equity Incentive Plan,
and it is not possible to state the terms or benefits of any individual awards
which may be issued under the Equity Incentive Plan, or which would have been
issued if the Equity Incentive Plan had been in effect during fiscal 1999, or
the name or positions of, or respective amounts of the allotment to, any persons
who may participate.
Vote Required
Approval and adoption by the Company's shareholders of the Equity Incentive
Plan requires the affirmative vote of a majority of the votes cast at the Annual
Meeting by the holders of shares of Common Stock present in person or
represented by proxy.
The Board of Directors recommends a vote "FOR" the approval and adoption of
the 2000 Equity Incentive Plan.
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ANNUAL REPORT
The annual report to shareholders for the fiscal year ended November 30,
1999 accompanies this Proxy Statement. PricewaterhouseCoopers, L.L.P.
("PricewaterhouseCoopers") has audited the financial statements of the Company
for the three fiscal years ended November 30, 1999, which financial statements
are contained in the annual report to shareholders. Such annual report,
including the audited financial statements contained therein, is not
incorporated in this Proxy Statement and is not deemed to be a part of the proxy
soliciting material.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Selection of the independent public accountants for the Company is made by
the Board of Directors. On December 17, 1999, the Company's Board of Directors
approved the engagement of PricewaterhouseCoopers to serve as the Company's
independent public accountants for fiscal 1999. PricewaterhouseCoopers has
served as the Company's auditors since 1988. The Board of Directors has not yet
met to select the Company's independent public accountants for the current
fiscal year.
As previously stated under the caption "Election of Directors," the
Company's Board of Directors has an Audit Committee consisting of outside
directors, and the present members of the committee are Mr. Brophy and Mr.
Smith.
A representative of PricewaterhouseCoopers will be present at the meeting
and will have an opportunity to make a statement if the representative desires
to do so. Said representative will also be available to respond to appropriate
questions from shareholders of the Company.
SHAREHOLDER PROPOSALS
Shareholder proposals for presentation at the Company's next annual meeting
must be received by the Company at its principal executive offices for inclusion
in its proxy statement and form of proxy relating to that meeting no later than
November 23, 2000. The Company's by-laws contain certain procedures which must
be followed in connection with shareholder proposals.
THE MANAGEMENT OF THE COMPANY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
NOMINEES TO THE BOARD OF DIRECTORS.
THE COMPANY SUBMITS TO THE SECURITIES AND EXCHANGE COMMISSION AN ANNUAL
REPORT ON FORM 10-K. COPIES OF THE REPORT WILL BE FURNISHED WITHOUT CHARGE UPON
WRITTEN REQUEST RECEIVED FROM ANY HOLDER OF RECORD OR BENEFICIAL OWNER OF SHARES
OF COMMON STOCK OF THE COMPANY. REQUESTS SHOULD BE DIRECTED TO SHAREHOLDER
RELATIONS, CALTON, INC., 125 HALF MILE ROAD, SUITE 206, RED BANK, NEW JERSEY
07701.
ALL SHAREHOLDERS ARE URGED TO MARK, SIGN, DATE AND SEND IN THEIR PROXIES IN
THE ENCLOSED ENVELOPE WITHOUT DELAY TO FIRST CITY TRANSFER COMPANY, P.O. BOX
170, ISELIN, NEW JERSEY 08830. PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION
WILL BE APPRECIATED.
MARY H. MAGEE
Secretary
March 23, 2000
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CALTON, INC.
Proxy for Annual Meeting of Shareholders to be held on April 17, 2000
THIS PROXY IS BEING SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF CALTON, INC.
P KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints Anthony J. Caldarone and David J. Coppola and
R each of them, the true and lawful attorneys, agents and proxies of the
undersigned, with full power of substitution, to vote with respect to
O all the shares of Common Stock of CALTON, INC., standing in the name
of the undersigned at the close of business on March 14, 2000, at the
X annual meeting of shareholders to be held at the Hyatt Regency Orlando
International Airport Hotel, Orlando, Florida and at any and all
Y adjournments thereof, with all powers that the undersigned would
possess if personally present and especially (but without limiting the
general authorization and power hereby given) to vote as indicated on
the reverse side hereof. Said proxies are authorized to vote in their
discretion upon any other matters which may come before the meeting.
The shares represented by this Proxy will be voted in the manner
directed, and if no instructions to the contrary are indicated, will
be voted FOR the election of Frank Cavell Smith, Jr. as Director and
FOR the proposal to adopt the 2000 Equity Incentive Plan.
See Reverse Side
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<PAGE>
(This proxy is continued from reverse side)
<TABLE>
<CAPTION>
|X| Please mark your
votes as in this example.
(2) Approval of 2000
WITHHOLD Equity Incentive
FOR AUTHORITY Plan FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C> <C>
(1) Election of Frank Cavell Smith, Jr., |_| |_| |_| |_| |_|
as Director.
PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD
PROMPTLY USING THE
ENCLOSED ENVELOPE.
</TABLE>
Signature(s) of Shareholder(s)_________________________________________________
(Joint owners must EACH sign. Please sign EXACTLY as your name(s) appear(s) on
this card. When signing as attorney, trustee, executor, administrator, guardian
or corporate officer, please give your FULL title.)
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