SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14 (a) of the Securities Exchange Act
of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission only (as permitted by Rule
14a-6 (e) (2))
[ x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
HOMELAND HOLDING 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) (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 (set forth the amount on
which the filing fee is calculated and state how it was
determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously.
Identify the previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Homeland Holding Corporation
2601 N.W. Expressway, Suite 1100E
Oklahoma City, OK 73112
________________________
NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, JULY 10, 1997
______________________
To the Stockholders of Homeland Holding Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Homeland Holding Corporation ("Company") will be held at the Hilton Inn
Northwest, 2945 N.W. Expressway, Oklahoma City, Oklahoma, on Thursday,
July 10, 1997, at 9:00 a.m., Oklahoma City, Oklahoma time, to consider the
following matters:
1. the election of seven directors;
2. the approval of the amendment to the Bylaws of Homeland to
classify the Board of Directors;
3. the approval of Coopers & Lybrand L.L.P. as independent
certified public accountants for the current fiscal year;
4. the approval of the Homeland Holding Corporation 1997
Non-Employee Directors Stock Option Plan;
5. the approval of the increase in the number of shares
available for options to be granted under the Homeland
Holding Corporation 1996 Stock Option Plan; and
6. the transaction of any other business as may properly be
brought before the meeting.
Details concerning those matters to come before the meeting are set
forth in the accompanying Proxy Statement for your information.
The Form 10-K of your Company for the fiscal year ended December 28,
1996, and Form 10-Q for the quarter ended March 22, 1997, are enclosed. We
hope you will find them informative.
Pursuant to the Bylaws of the Company, the Board of Directors has fixed
the close of business on May 15, 1997, as the date for determining
stockholders of record entitled to notice of, and to vote at, the Annual
Meeting. Each share of the Company's common stock, $0.01 par value, will
entitle the holder thereof to one vote on all matters which may properly
come before the Annual Meeting.
By Order of the Board of Directors,
Larry W. Kordisch
Secretary
Dated: June 6, 1997
_________________________
PROXY STATEMENT
_________________________
This Proxy Statement is being furnished in connection with the 1997
Annual Meeting of Stockholders ("Annual Meeting") of Homeland Holding
Corporation ("Company") to be held at the Hilton Inn Northwest, 2945 N.W.
Expressway, Oklahoma City, Oklahoma, on Thursday, July 10, 1997, at 9:00 a.m.,
Oklahoma City, Oklahoma time. This Proxy Statement and the accompanying
materials will be mailed on or about June 9, 1997, to stockholders of record
as of the record date.
At the Annual Meeting, the stockholders will consider
five matters: (1) the election of directors of the Company;
(2) a proposal to amend the Bylaws of the Company ("Bylaws")
to classify the Board of Directors of the Company ("Board of
Directors"); (3) a proposal to ratify Coopers & Lybrand,
L.L.P. as the independent auditors to the Company for fiscal
year 1997; (4) a proposal to adopt the Homeland Holding
Corporation 1997 Non-Employee Director Stock Option Plan
("Director Stock Option Plan") and (5) a proposal to amend
the Homeland Holding Corporation 1996 Stock Option Plan
("Employee Stock Option Plan").
The record date for determining stockholders entitled
to notice of, and to vote at, the Annual Meeting has been
established as of the close of business on May 15, 1997. On
that date, the Company had 4,758,025 issued and outstanding
shares of Common Stock, par value $0.01 ("Common Stock"), of
which 2,427,588 shares are held by the Company and Homeland
Stores, Inc. ("Stores"), the wholly-owned subsidiary of the
Company, in the Class 5 Disputed Claim Reserve ("Disputed
Claim Reserve") pursuant to the First Amended Joint Plan of
Reorganization of Homeland Stores, Inc. and Homeland Holding
Corporation, as amended ("Plan of Reorganization").
A complete list of the holders of Common Stock entitled
to notice of, and to vote at, the Annual Meeting will be
available for inspection during normal business hours at the
principal executive offices of the Company for ten days
prior to the Annual Meeting and will be available at the
Annual Meeting.
Holders of record are entitled to one vote for each
share held of record on each matter properly before the
Annual Meeting and the presence of the holders of a majority
of the shares of Common Stock, in person or by proxy, will
be necessary for a quorum.
The affirmative vote of a majority of the shares of
Common Stock represented in person or by proxy at the Annual
Meeting will be required for the election of directors and
for the approval of the other matters to be submitted to the
stockholders at the Annual Meeting. The Company and Stores
will vote the shares of Common Stock in the Disputed Claim
Reserve in the same proportion as the other shares of Common
Stock are voted at the Annual Meeting. Abstentions and
broker non-votes will not be included for purposes of
voting.
This enclosed Proxy is being solicited by the Board of
Directors. Proxies may be solicited by personal interview,
telephone or mail. Banks, brokerage houses and other
custodians, nominees or fiduciaries will be requested to
forward soliciting materials to their principals and to
obtain authorization for the execution of Proxies, and, upon
request, will be reimbursed for their reasonable out-of-
pocket expenses incurred in that process. The Company will
bear the cost of the solicitation of proxies, which is
expected to be nominal.
Any holder of Common Stock returning the Proxy may
revoke the Proxy at any time prior to its exercise by: (a)
giving written notice of revocation to the Company; (b)
voting in person at the Annual Meeting or (c) executing and
delivering to the Company a later dated proxy. Written
revocations and later dated proxies should be sent to the
Company at its principal executive offices:
Homeland Holding Corporation
Oil Center, Suite 1100E
2601 Northwest Expressway
Oklahoma City, OK 73112
Attn: Secretary
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
On May 13, 1996, the Company and Stores filed voluntary
petitions under Chapter 11 of the United States Bankruptcy
Code with the United States Bankruptcy Court of the District
of Delaware ("Bankruptcy Court"). The Plan of
Reorganization was confirmed by the Bankruptcy Court on July
19, 1996, and became effective on August 2, 1996, and
effected a change in control of the Company.
Under the Plan of Reorganization, each holder of a
general unsecured claim against the Company or Stores is
entitled to receive its ratable share of 4,450,000 shares of
Common Stock, based on the amount of such holder's claim
relative to all general unsecured claims. As of May 15,
1997, 2,022,412 of these shares have been distributed to the
holders of general unsecured claims and 2,427,588 of these
shares are held by the Company and Stores in the Disputed
Claim Reserve pursuant to the Plan of Reorganization.
Set forth below is certain information as of May 15,
1997, regarding the beneficial ownership of the Common Stock
by: (a) each person known by the Company to have beneficial
ownership of more than 5% of the Common Stock of the
Company; (b) each director and each Named Executive Officer
(as defined below), individually, and (c) all directors and
officers as a group:
Shares
Beneficially Percent of
Name of Beneficial Owner Owned Class
Credit Suisse First Boston, Inc. (1) 246,460 5.2%
11 Madison Avenue
New York, NY 10010
James A. Demme (2) 135,000 2.8%
Larry W. Kordisch (2) 62,500 1.3%
Steve M. Mason (3) 665 *
Terry M. Marczewski - -
Robert E. (Gene) Burris - -
Edward B. Krekeler, Jr. - -
Laurie M. Shahon - -
John A. Shields - -
William B. Snow - -
David N. Weinstein - -
Officers and directors as a
group (12 persons) 198,165 4.0%
______________________
* Less than 1%
(1) Credit Suisse First Boston, Inc. is the parent
corporation of Credit Suisse First Boston
Corporation, a registered broker-dealer, which
owns these shares of Common Stock of record.
Credit Suisse Group, the ultimate parent
corporation of Credit Suisse First Boston
Corporation, disclaims ownership of these shares
of Common Stock.
(2) Messrs. Demme and Kordisch were awarded stock
options pursuant to the Employee Stock Option Plan
in December 1996 of 135,000 and 62,500 shares,
respectively. Their options were exercisable
immediately upon issuance and will expire December 26, 2006.
(3) Mr. Mason is the beneficial owner of 324 shares of Common
Stock and warrants to purchase 341 shares of Common Stock
issued under the Plan of Reorganization.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Board of Directors consists of seven directors. Under the Bylaws as
currently in effect, each director serves for a term of one year commencing
at the annual meeting of stockholders at which he or she is elected and
ending at the annual meeting of stockholders at which his or her successor
is elected. At the Annual Meeting, the stockholders will consider a proposal
to amend the Bylaws to classify the Board of Directors. See "AMENDMENT TO
THE BYLAWS TO CLASSIFY THE BOARD OF DIRECTORS."
The following is certain information about the current directors,
each of whom has been nominated for re-election as a director at the Annual
Meeting:
Director
Name Age Position Since
Robert E. (Gene) Burris 50 Director 1996
James A. Demme 57 Director 1994
Edward B. Krekeler, Jr. 53 Director 1996
Laurie M. Shahon 45 Director 1996
John A. Shields 54 Director 1993
William B. Snow 65 Director 1996
David N. Weinstein 38 Director 1996
Robert E. (Gene) Burris became a director of the
Company on August 2, 1996. Since 1988, Mr. Burris has
been President of the United Food and Commercial
Workers' Union ("UFCW") Local No. 1000, which
represents approximately 65% of Stores' unionized
employees. Since February 1995, Mr. Burris has been the
Chief Executive Officer and owner of G&E Railroad, a
retail store. Under the modified union agreement which
Stores entered into with the UFCW in connection with
its restructuring under the Plan of Reorganization, the
UFCW is entitled to designate one director of the
Company and Stores. Mr. Burris is the designee of the
UFCW.
James A. Demme was elected Chairman of the Board
in September 1996. He became President, Chief
Executive Officer and a director of the Company as of
November 30, 1994. From 1992 to 1994, Mr. Demme served
as Executive Vice President of Retail Operations of
Scrivner, Inc. He was responsible for the operations
of its 170 retail stores which had a total volume
exceeding $2 billion. From 1991 to 1992, Mr. Demme
served as Senior Vice President of Marketing of
Scrivner, Inc., where he was responsible for
restructuring and refocusing the merchandising
department to retail orientation. From 1988 to 1991,
Mr. Demme was President and Chief Operating Officer of
Shaws Supermarkets, which was the nation's fifteenth
largest retail chain with sales of $1.7 billion.
Edward B. Krekeler, Jr. became a director of the
Company on August 2, 1996. Since 1994, he has been
owner of Krekeler Enterprises, Ltd., a corporate
financial consulting firm. From 1984 to 1994, he
served in various positions as an officer of Washington
Square Capital, Inc., including Vice-President, Special
Investments; Vice-President, Administration; Vice-
President, Private Placements; Portfolio Manager,
Private Placements, and Chief Investment Analyst. He
was Chairman of the Board of Directors of Convenient
Food Marts, Inc. from 1990 to 1994.
Laurie M. Shahon became a director of the Company
on August 2, 1996. Ms. Shahon has been President of
Wilton Capital Group, a private direct investment firm
since January 1994. Ms. Shahon previously served as
Vice Chairman and Chief Operating Officer of Color
Tile, Inc. in 1989. From 1988 to 1993, she served as
Managing Director of '21' International Holdings, Inc.,
a private holding company. From 1980 to 1988, she was
Vice President of Salomon Brothers, Inc., where she was
founder and head of the retailing and consumer products
group. From 1976 to 1980, Ms. Shahon was an Associate
with Morgan Stanley & Co. Incorporated. Ms. Shahon is
a director of Arbor Drugs, Inc., One Price Clothing
Stores, Inc. and Ames Department Stores, Inc.
John A. Shields became a director of the Company
in May 1993. Mr. Shields has been the Chairman and
Chief Executive Officer of Delray Farms Fresh Markets,
a retail perishables specialty chain, since January
1994. From 1983 to 1993, he served as President, Chief
Executive Officer, Chief Operating Officer and a member
of the Board of Directors of First National
Supermarkets. Mr. Shields is a director of D.I.Y. Home
Warehouse, Inc., Delray Farms, Inc., Wild Oats Markets,
Inc. and Shore Bank, Inc.
William B. Snow became a director of the Company
on August 2, 1996. Mr. Snow has served as Vice Chairman
of Movie Gallery, Inc., the second largest video
specialty retailer in the United States, since 1994.
From 1985 to 1994, he was Executive Vice President and
a director of Consolidated Stores Corporation. From
1980 to 1985, Mr. Snow was Chairman, President and
Chief Executive Officer of Amerimark, Inc., a
diversified supermarket retailer and institutional food
service distributor. From 1974 to 1980, he was
President of Continental Foodservice, Inc. From 1966
to 1974, Mr. Snow was Senior Vice President of
Hartmarx, Inc. Mr. Snow is a director of Movie
Gallery, Inc. and Action Industries, Inc.
David N. Weinstein became a director of the
Company on August 2, 1996. He is the Managing Director
of the High Yield Capital Markets group at BancBoston
Securities, Inc. From 1993 to March 1996, he served as
Managing Director and High Yield Capital Market
Specialist of Chase Securities, Inc. From 1990 to
1993, Mr. Weinstein was head of the Capital Markets
group in the High Yield Department of Lehman Brothers
and later was a director in the High Yield/Private
Financing Group of Smith Barney Shearson. Mr.
Weinstein is also a director of Ithaca Industries, Inc.
No family relationships exist among the directors and
the officers of the Company.
The election of each nominated director requires a
majority of the votes cast at the Annual Meeting. If a
stockholder wishes to withhold authority to vote for any
nominee, such stockholder can do so by following the
directions set forth on the enclosed Proxy or on the ballot
to be distributed at the Annual Meeting, if such stockholder
wishes to vote in person. The persons named in the enclosed
Proxy will vote the shares of Common Stock covered by such
Proxy for the election of the nominees set forth above,
unless instructed to the contrary.
Directors who are not employees of the Company are paid
an annual retainer of $15,000, a meeting fee of $1,000 for
each meeting of the Board of Directors and each committee
thereof which they attend personally and a meeting fee of
$250 for each meeting of the Board of Directors and each
committee thereof in which they participate by telephone.
Since the effective date of the Plan of Reorganization
on August 2, 1996, the Board of Directors has had four
meetings. Each director has attended at least 75% of the
meetings of the Board of Directors.
The Company has three standing committees, an Audit
Committee (consisting of Messrs. Krekeler (Chairman) and
Burris and Ms. Shahon) which is responsible for recommending
the independent auditor to the Company and reviewing the
audit conducted by the independent auditor; a Compensation
and Benefits Committee (consisting of Messrs. Snow
(Chairman) and Shields and Ms. Shahon) which is responsible
for reviewing executive compensation and benefits and making
recommendations with respect thereto; and an Executive
Committee (consisting of Messrs. Shields (Chairman),
Krekeler and Snow) which is responsible for the strategic
direction and guidance for the growth and development of the
Company. From their establishment in August 1996 through
December 1996, the Audit Committee and Compensation and
Benefits Committee have each met once.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS
VOTE FOR THE RE-ELECTION OF THE DIRECTORS.
PROPOSAL TWO
AMENDMENT TO THE BYLAWS TO CLASSIFY THE BOARD OF DIRECTORS
Because the proposed amendment to the Bylaws to
classify the Board of Directors may have an impact upon the
rights of stockholders and may be characterized as an anti-
takeover measure which, if adopted, may tend to insulate
management and make the accomplishment of certain
transactions involving a potential change of control of the
Company more difficult, each stockholder should carefully
study the description of the amendment contained herein and
the text of the amendment as set forth in Exhibit A
("Amendment") to this Proxy Statement.
The description of the Amendment set forth below is
qualified in its entirety by reference to the Amendment as
set forth in Exhibit A.
(a) REASONS FOR THE AMENDMENT
The Board of Directors has unanimously approved a
proposed amendment to the Bylaws which will provide for
the classification of the directors, the filing of
vacant directorships and the removal of directors only
for cause.
In the view of the Board of Directors, the
Amendment is in the best interests of the Company and
its stockholders generally. The proposed
classification would help lend continuity and stability
to the management of the Company. Assuming adoption of
the Amendment, at least two-thirds of the directors
will generally have prior experience as directors. The
Board of Directors believes that such classification
will facilitate long-range strategic planning and
policy. The Company has not historically had problems
with the continuity or the stability of its Board of
Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
APPROVAL OF THE PROPOSED AMENDMENT.
(b) THE AMENDMENT
The Amendment provides that the Board of Directors
will be divided into three classes, each class to be
substantially equal in number. If the Amendment is
adopted, two directors will be elected for a term
expiring at the 1998 Annual Meeting of Stockholders;
two directors will be elected for a term expiring at
the 1999 Annual Meeting of Stockholders; and three
directors will be elected for a term expiring at the
2000 Annual Meeting of Stockholders. Starting with the
1998 Annual Meeting of Stockholders, one class will be
elected each year for a three-year term.
The Amendment also provides that, in the event of
any vacancy in the Board of Directors, for any reason,
including any increase in the number of directors, such
vacancy may be filled by a majority of the remaining
directors and the new director so elected shall serve
until the next election of the class for which such
director is chosen and until his or her successor is
elected and qualified.
Finally, the Amendment also provides that
directors may be removed only for cause. The Bylaws
currently provide for removal of directors by the
Stockholders with or without cause.
(c) ELECTION OF CLASSIFIED BOARD OF DIRECTORS
At the Annual Meeting, seven directors,
constituting the entire Board of Directors of the
Company, are to be elected. If the Amendment is
adopted, the seven directors will be elected for the
terms set forth below. If the Amendment is not adopted,
the directors will hold office until the next Annual
Meeting of Stockholders or until their successors are
duly elected and qualified.
Expiration At
Nominees Term the Annual Meeting
Robert E. (Gene) Burris 1 year 1998
David N. Weinstein 1 year 1998
Laurie M. Shahon 2 years 1999
John A. Shields 2 years 1999
James A. Demme 3 years 2000
William B. Snow 3 years 2000
Edward B. Krekeler, Jr. 3 years 2000
PROPOSAL THREE
RATIFICATION OF AUDITORS
At the Annual Meeting, the Stockholders will be asked
to ratify the selection of Coopers & Lybrand L.L.P. ("C&L")
as independent certified public accountants and tax advisors
of the Company for the current fiscal year.
C&L, independent certified public accountants, have
audited the financial statements of the Company for the
fiscal year ended December 28, 1996. Services provided by
C&L included the audit of the financial statements, reviews
of unaudited quarterly financial information and assistance
in the preparation of federal and state income tax returns.
A representative of C&L is expected to attend this
meeting. He will be afforded the opportunity to make a
statement, if he desires, and will be available to respond
to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS
VOTE FOR RATIFICATION OF C&L AS THE INDEPENDENT AUDITORS.
PROPOSAL FOUR
APPROVAL OF DIRECTOR STOCK OPTION PLAN
At the Annual Meeting, stockholders will also be asked
to consider and approve the Director Stock Option Plan. The
approval of the Director Stock Option Plan requires a
majority of the votes cast at the Annual Meeting. The Board
of Directors recommends that the stockholders approve the
Director Stock Option Plan. The Director Stock Option Plan,
if approved, will be implemented effective as of July 15,
1997.
The purpose of the Director Stock Option Plan is to
attract and to retain individuals of outstanding competence
as members of the Board of Directors and to encourage
ownership among the Board of Directors.
The summary contained in this section is not intended
to be complete and reference should be made to the Director
Stock Option Plan, set forth in Exhibit B of the Proxy
Statement, for a full description of the terms and
provisions.
The maximum number of options that may be granted to
purchase shares of the Company's Common Stock is 90,000.
The Director Stock Option Plan will be administered by
the Board of Directors or a committee to be elected by the
Board of Directors. The Board of Directors or the committee
will have the powers to interpret and carry out the
provisions of the Director Stock Option Plan. Any member of
the Board of Directors may be eligible to participate in the
Director Stock Option Plan.
The Board of Directors or the Committee shall determine
the medium and time of payment of the exercise price of each
option granted. Unless the Board of Directors or the
Committee otherwise determines, each option shall become
exercisable ratably over a two-year period or immediately in
the event of a "change of control," as defined in the
Director Stock Option Plan.
The option price of each option will not be permitted
to be less than the fair market value as determined in
accordance with the Director Stock Option Plan. Any option
granted under the Director Stock Option Plan shall expire
and terminate on the earlier of: (a) ten (10) years from the
date the option is granted; (b) termination of the
optionee's directorship for cause; and (c) forty-five (45)
days after termination of service as a director other than
as a result of removal for cause.
Furthermore, the Board of Directors may from time to
time amend, suspend, or discontinue the Director Stock
Option Plan or amend any option granted, provided, however,
no such action of the Board of Directors may, without
approval of the stockholders, alter the provisions of the
Director Stock Option Plan so as to: (a) materially increase
the benefits accruing to participants; (b) materially
increase the number of securities; or (c) materially modify
the requirements as to eligibility for participation and no
amendment may, without the consent of the optionee, affect
any then outstanding options or unexercised portions
thereof.
A person who holds an option under the Director Stock
Option Plan generally would not recognize income as a result
of the grant of the option, but would normally recognize
compensation taxable at ordinary income rates upon the
exercise of the option to the extent that the fair market
value on the date of the exercise of the option exceeds the
option price paid (unless the shares of Common Stock remains
subject to a "substantial risk of forfeiture"). The Company
will be allowed a deduction for federal income tax purposes
in the same amount as the person realizes ordinary income.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE
STOCKHOLDERS VOTE FOR THE APPROVAL OF THE DIRECTOR STOCK
OPTION PLAN.
PROPOSAL FIVE
PROPOSAL TO APPROVE THE AMENDMENT OF THE EMPLOYEE
STOCK OPTION PLAN TO INCREASE THE NUMBER OF SHARES OF THE
COMPANY'S COMMON STOCK FOR WHICH OPTIONS MAY BE GRANTED FROM
263,158 SHARES TO 432,222 SHARES
The Board of Directors has approved the proposed
amendment to the Employee Stock Option Plan, subject to
stockholders approval. In the event that this amendment is
not approved by the Company's stockholders, then only the
amendment automatically becomes null and void. The Board of
Directors approved the amendment to ensure that the Company
will be able to grant additional options to its officers and
certain key employees as part of its overall compensation
program and also to continue to retain such qualified
management. Except for the amendment to increase the number
of shares, all other terms of the Employee Stock Option Plan
remain unchanged. The amendment to the Employee Stock
Option Plan is set forth in Exhibit C.
As of the end of fiscal 1996, the Company has already
granted options to purchase an aggregate of 197,500 shares
of its Common Stock under the Employee Stock Option Plan to
two officers. For more information regarding the Employee
Stock Option Plan and options granted, see "Stock Option
Plan" and "Fiscal Year-End Options" sections, respectively.
The proposed amendment to the Employee Stock Option
Plan is subject to the approval of a majority of the
outstanding shares of Common Stock entitled to vote and
present at the meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS
VOTE FOR THE PROPOSED AMENDMENT TO THE EMPLOYEE STOCK OPTION
PLAN.
EXECUTIVE OFFICERS
The officers of the Company shall be elected by the
Board of Directors at their annual meeting or at any regular
or special meeting of the Board of Directors and shall be
elected to hold office until the next succeeding annual
meeting.
BIOGRAPHICAL INFORMATION
Set forth below is certain information concerning each
current executive officer of the Company or Stores:
Years with the
Company and/or
Age Position Safeway
James A. Demme 57 Chairman of the Board, 2
President, Chief Executive
Officer and Director
Larry W. Kordisch 49 Executive Vice President - 2
Finance, Chief Financial
Officer and Secretary
Steven M. Mason * 42 Vice President - Marketing 26
Terry M. Marczewski 42 Vice President and Controller 2
Prentess E. Alletag, Jr.* 50 Vice President - Human 29
Resources
Francis T. Wong 37 Treasurer and Assistant 8
Secretary
* Messrs. Mason and Alletag only serve as officers for Stores.
James A. Demme was elected Chairman of the Board
in September 1996. He became President, Chief
Executive Officer and a director of the Company as of
November 30, 1994. From 1992 to 1994, Mr. Demme served
as Executive Vice President of Retail Operations of
Scrivner, Inc. He was responsible for the operations
of its 170 retail stores which had a total volume
exceeding $2 billion. From 1991 to 1992, Mr. Demme
served as Senior Vice President of Marketing of
Scrivner, Inc., where he was responsible for
restructuring and refocusing the merchandising
department to retail orientation. From 1988 to 1991,
Mr. Demme was President and Chief Operating Officer of
Shaws Supermarkets, which was the nation's fifteenth
largest retail chain with sales of $1.7 billion.
Larry W. Kordisch joined the Company in February
1995 and became Executive Vice President - Finance,
Treasurer, Chief Financial Officer and Secretary as of
May 1995. Prior to joining Stores, Mr. Kordisch served
as Executive Vice President - Finance and
Administration, Chief Financial Officer and member of
the Board of Directors of Scrivner, Inc. and was
responsible for the Finance, Accounting, Risk
Management, Legal and Administrative functions. Mr.
Kordisch is a director of Eateries, Inc.
Steven M. Mason joined Safeway, Inc. ("Safeway")
in 1970 and the Oklahoma Division of Safeway in 1986.
At the time of the Company's organization, he was
serving as Special Projects Coordinator for the
Oklahoma Division. In November 1987, he joined Stores
and, in October 1988, he was appointed to the position
of Vice President - Retail Operations. In October
1993, Mr. Mason was appointed to the position of Vice
President - Marketing.
Terry M. Marczewski joined the Company in April
1995 and became the Chief Accounting Officer, Assistant
Treasurer and Assistant Secretary as of May 1995. From
July 1994 to April 1995, he was the controller at
Fleming Companies, Inc.- Scrivner Group. From 1990 to
July 1994, Mr. Marczewski was the Vice President and
Controller at Scrivner, Inc., the nation's third
largest grocery wholesaler, prior to its acquisition by
Fleming Companies, Inc. In December 1996, Mr.
Marczewski was appointed to the position of Vice
President and Controller.
Prentess E. Alletag, Jr. joined the Oklahoma
Division of Safeway in October 1969, where, at the
time of the Company's organization, he served as Human
Resources and Public Affairs Manager. In November
1987, Mr. Alletag joined Stores as Vice President -
Human Resources.
Francis T. Wong joined the Company in July 1989.
In December 1996, Mr. Wong was appointed to the
position of Treasurer and Assistant Secretary. Prior
to this appointment, Mr. Wong served as Director of
Finance, Assistant Secretary and Assistant Treasurer of
the Company.
COMPENSATION
The following table provides certain summary
information concerning compensation paid or accrued by the
Company to, or on behalf of, the Company's Chief Executive
Officer and each of the four other most highly compensated
executive officers of the Company (hereinafter referred to
as the "Named Executive Officers") for the fiscal years
ended December 28, 1996, December 30, 1995, and December 31,
1994:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation
Name and Long-Term
Principal Compensation All Other
Position Year Salary Bonus Option Awards Compensation (3)
<S> <C> <C> <C> <C> <C>
James A. Demme (1)(2) 1996 $200,000 $200,000 135,000 $ 4,675
Chairman, President 1995 200,000 100,000 - 4,396
and Chief Executive 1994 11,538 - - -
Officer
Larry W. Kordisch (2)(4) 1996 $150,000 $150,000 62,500 $ 1,539
Executive Vice 1995 126,923 100,000 - 3,907
Pres. Finance,
Chief Financial Officer
and Secretary
Steven M. Mason (2) 1996 $130,500 $130,500 - $ 2,620
Vice President - 1995 130,500 19,575 - 6,414
Marketing 1994 130,500 110,925 - 8,963
Terry M. Marczewski (2)(5) 1996 $ 90,000 $ 45,000 - $ 86
Vice President - 1995 69,326 20,000 - 43
Controller
Alfred F. Fideline, Sr. (2)(6) 1996 $ 80,000 $ 40,000 - $ 270
Former Vice President - 1995 $ 80,000 $ 12,000 - 247
Retail Operations 1994 $ 78,462 $ 53,074 - 370
</TABLE>
(1) Mr. Demme joined the Company as President, Chief
Executive Officer and a director as of November 30,
1994.
(2) Personal benefits provided to the Named Executive
Officer under various Company programs do not exceed
10% of total annual salary and bonus reported for the
Named Executive Officer.
(3) The Company provides reimbursement for medical benefit
insurance premiums for certain of the Named Executive
Officers. These persons obtain individual private
medical benefit insurance policies with benefits
substantially equivalent to the medical benefits
currently provided under the Company's group plan. The
Company also provides for life insurance premiums for
executive officers, including certain Named Executive
Officers and one other executive officer, who obtain
private term life insurance policies with benefits of
$500,000 per person. Amounts paid during 1996 are as
follows: James A. Demme, $3,325; Larry W. Kordisch,
$1,191; and Steven M. Mason, $2,445.
(4) Mr. Kordisch joined the Company in February 1995 and
was appointed Executive Vice President-Finance, Chief
Financial Officer, Treasurer and Secretary of the
Company as of May 5, 1995.
(5) Mr. Marczewski joined the Company in April 1995 and was
appointed the Chief Accounting Officer and Controller
of the Company as of May 5, 1995.
(6) Mr. Fideline was Vice President - Retail Operations
until his resignation in January 1997.
STOCK OPTION PLAN
In December 1996, the Board of Directors of the
Company, pursuant to the Plan of Reorganization, adopted the
Employee Stock Option Plan. The Employee Stock Option Plan,
to be administered by the Board of Directors, or a committee
of the Board of Directors provides for the granting of
options to purchase up to an aggregate of up to 263,158
shares of Common Stock. Options granted under the Employee
Stock Option Plan shall be "non-qualified options." The
option price of each option must not be less than the fair
market value as determined by the Board of Directors or the
committee. Unless the Board of Directors or the committee
otherwise determines, options shall become exercisable
ratably over a five-year period or immediately in the event
of a "change of control" as defined in the Employee Stock
Option Plan. Each option must be evidenced by a written
agreement and must expire and terminate on the earliest of:
(a) ten (10) years from the date the option is granted; (b)
termination for cause and (c) forty-five (45) days after
termination for other than cause. See Proposal Five for an
amendment to the Employee Stock Option Plan.
FISCAL YEAR-END OPTIONS
The following table sets forth certain information with
respect to grants of options to the following Named
Executive Officers during the 1996 fiscal year:
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Potential Realized Value at
Assumed Rates of Stock
Appreciation for
Individual Grants Option Terms
____________________________________________________________ _______________________
Number of
Securities % of Total
Underlying Options Granted
Options to Employees Exercise Expiration
Name Granted in Fiscal Year Price Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
James A. Demme 135,000 (1) 60.3% $8.00 Dec. 26, 2006 $679,206 $1,721,242
Larry W. Kordisch 62,500 (1) 39.7% $8.00 Dec. 26, 2006 $314,447 $ 796,871
</TABLE>
(1) The options are exercisable immediately upon issuance.
None of these options have been exercised.
RETIREMENT PLAN
The Company maintains a retirement plan in which all
non-union employees, including members of management,
participate. Under the plan, employees who retire at or
after age 65 and after completing five years of vesting
service (defined as calendar years in which employees
complete at least 1,000 hours of service) will be entitled
to retirement benefits equal to 1.50% of career average
annual compensation (including basic, overtime and incentive
compensation) plus .50% of career average annual
compensation in excess of the social security covered
compensation, such sum multiplied by years of benefit
service (not to exceed 35 years). Service with Safeway
prior to the organization of the Company is credited for
vesting purposes under the plan. Retirement benefits will
also be payable upon early retirement beginning at age 55,
at rates actuarially reduced from those payable at normal
retirement. Benefits are paid in annuity form over the life
of the employee or the joint lives of the employee and his
or her spouse or other beneficiary.
Under the retirement plan, estimated annual benefits
payable to the named executive officers of the Company upon
retirement at age 65, assuming no changes in covered
compensation or the social security wage base, would be as
follows: James A. Demme, $28,503; Larry W. Kordisch,
$47,417; Steven M. Mason, $85,134; and Terry M. Marczewski,
$67,591.
MANAGEMENT INCENTIVE PLAN
Stores maintains a Management Incentive Plan to provide
incentive bonuses for members of its management and key
employees. Bonuses are determined according to a formula
based on both corporate, store and individual performance
and accomplishments or other achievements and are paid only
if minimum performance and/or accomplishment targets are
reached. Minimum bonuses range from 0 to 50% of salary for
officers (as set forth in the plan), including the Chief
Executive Officer. Maximum bonus payments range from 100%
to 200% of salary for officers and up to 200% of salary for
the Chief Executive Officer. Performance levels must
significantly exceed target levels before the maximum
bonuses will be paid. Incentive bonuses paid to managers
and supervisors vary according to their reporting and
responsibility levels. The plan is administered by the
Compensation and Benefits Committee. Incentive bonuses
earned for certain Named Executive Officers under the plan
for performance during fiscal year 1996 are included in the
Compensation section.
EMPLOYMENT CONTRACTS WITH NAMED EXECUTIVE OFFICERS
In November 1994, the Company entered into an
employment agreement with James A. Demme, the Company's
President and Chief Executive Officer, for an indefinite
term. The agreement provides a base annual salary of not
less than $200,000 subject to increase from time to time at
the discretion of the Board of Directors. The agreement
entitles Mr. Demme to participate in the Company's
Management Incentive Plan with a maximum annual bonus equal
to 100% of base salary. The agreement also provides for
awards under a long term incentive compensation plan which
is to be established by the Company and authorizes
reimbursement for certain business-related expenses. The
agreement was amended in April 1996, to provide that, if the
agreement is terminated by the Company for other than cause
or disability prior to December 31, 1997, or is terminated
by Mr. Demme following a change of control or a trigger
event (as defined), Mr. Demme is entitled to receive: (a)
payment, which would not be subject to any offset as a
result of his receiving compensation from other employment,
equal to two years' salary, plus a pro rata amount of the
incentive compensation for the portion of the incentive year
that precedes the date of termination, and (b) continuation
of welfare benefit arrangements for a period of two years
after the date of termination.
On September 26, 1995, the Company entered an
employment agreement with Larry W. Kordisch, the Company's
Executive Vice President-Finance and Chief Financial
Officer. The agreement provides for a base annual salary of
not less than $150,000, subject to increase from time to
time at the discretion of the Board of Directors. Mr.
Kordisch is also entitled to participate in the Management
Incentive Plan based upon the attainment of performance
objectives as the Board of Directors shall determine from
time to time. The agreement was amended in April 1996, to
provide that, if the agreement is terminated by the Company
for other than cause or disability prior to December 31,
1997, or is terminated by Mr. Kordisch following a change of
control or a trigger event (as defined), Mr. Kordisch is
entitled to receive: (a) payment, which would not be subject
to any offset as a result of his receiving compensation from
other employment, equal to two years' salary, plus a pro
rata amount of the incentive compensation for the portion of
the incentive year that precedes the date of termination,
and (b) continuation of welfare benefit arrangements for a
period of two years after the date of termination.
On September 26, 1995, the Company entered into an
employment agreement with Terry M. Marczewski, the Company's
Controller and Chief Accounting Officer. The agreement,
which is for an indefinite term, provides for a base annual
salary of $90,000, subject to increase from time to time at
the discretion of the Board of Directors. Mr. Marczewski is
also entitled to participate in the Management Incentive
Plan based upon the attainment of performance objectives as
the Board shall determine from time to time. The agreement
was amended in April 1996, to provide that, in the event his
employment is terminated prior to December 31, 1997, for any
reason other than cause or disability, the Company will pay
Mr. Marczewski his annual salary for a period of one year
after the termination date or until December 31, 1997,
whichever is longer, plus a pro rata amount of the incentive
compensation for the portion of the incentive year that
precedes the date of termination.
In April 1996, the Company entered into employment
agreements with Steve Mason, the Company's Vice President of
Marketing. The agreement, which is for an indefinite term,
provides a base annual salary of $130,500 for Mr. Mason,
subject to increase from time to time at the discretion of
the Board of Directors. In the event his employment is
terminated prior to December 31, 1997, for any reason other
than cause or disability, the Company will pay Mr. Mason his
annual salary for a period of one year after the termination
date or until December 31, 1997, whichever is longer, plus a
pro rata amount of the incentive compensation for the
portion of the incentive year that precedes the date of
termination.
On January 8, 1997, the Company entered into a
settlement agreement (the "Settlement Agreement") with
Alfred F. Fideline, Sr., the Company's former Vice President
- - Retail Operations, in connection with his termination of
employment with the Company. Pursuant to the terms of the
Settlement Agreement, the Company agreed to provide Mr.
Fideline with the following: (a) medical and dental benefits
through December 31, 1997; (b) payment of his base salary
through January 2, 1998; and (c) conveyance of the Company
car.
COMPENSATION COMMITTEE REPORT
The Compensation and Benefits Committee (the
"Committee") of the Company is composed entirely of non-
employee directors. The Committee reviews and approves all
compensation arrangements for executive officers and, in
that regard, has developed compensation policies for the
executives which seek to enhance the profitability of the
Company and to assure the ability of the Company to attract
and retain executive employees with competitive
compensation. Actions by the Committee are reported to the
Board of Directors and, in appropriate cases, ratified by
the Board of Directors prior to implementation.
The compensation program of the Company seeks
specifically to motivate the executives of the Company to
achieve objectives which benefit the Company within their
respective areas of responsibility, with particular emphasis
on continued growth in revenues, expense control, operating
efficiency, and the
ultimate realization of profits for the Company.
Base salary levels for the Company's executive
officers, including the Chief Executive Officer, are set so
that the overall cash compensation package for executive
officers, including bonus opportunity, compares reasonably
to companies with which the Company competes for executive
talent. In determining
salaries, the Committee also takes into account a number of
factors, which primarily include individual experience and
performance, the officer's level of responsibility, the cost
of living and historical salary levels. The measures of
individual performance considered include, to the extent
applicable to an individual executive officer, a number of
quantitative and qualitative factors such as the Company's
financial performance, the individual's achievement of
particular nonfinancial goals within his or her
responsibility, and other contributions made by the officer
to the Company's success.
In addition to base salary, certain executives,
including the Chief Executive Officer, may earn an incentive
of up to 200% of such executive's base pay. The compensation
policies of the Company are general and subjective both as
to salary and as to the other components of the compensation
program. The Company's compensation program also includes
benefits typically offered to executives of similar
businesses to promote management stability, consisting of a
retirement plan, stock option plan and employment
agreements.
Mr. Demme's salary for 1996 was based on his employment
agreement that was entered into in November 1994. The terms
of the employment agreement are set forth in the "Employment
Contracts with Named Executive Officers" section.
Mr. Demme's annual bonus for 1996 was $200,000. This
amount was based on Mr. Demme achieving the criteria
established by the Committee in the 1996 Management
Incentive Plan. This included orchestrating the Company's
successful restructuring while at the same time exceeding
established financial objectives. In 1996, the Committee
also awarded Mr. Demme options to purchase up to 135,000
shares of the Common Stock under the Employee Stock Option
Plan. Additional information on the terms of the option is
set forth in the "Stock Option Plan" section.
No member of the Compensation and Benefits Committee is
a current or former officer or employee of the Company.
William B. Snow, Chairman
Laurie M. Shahon
John A. Shields
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Ms. Shahon and Messrs. Snow and Shields serve on the
Company's Compensation and Benefits Committee of the Board
of Directors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Prior to the consummation of the Plan of
Reorganization, the Company's largest stockholders were
Clayton & Dubilier Private Equity Fund III Limited
Partnership ("C&D Fund III") which owned approximately 35.9%
of the Old Common Stock, and Clayton Dubilier Private Equity
Fund IV Limited Partnership ("C&D Fund IV") which owned
approximately 40.4% of the Old Common Stock. After
consummation of the Restructuring, C&D Fund III and C&D Fund
IV owned less than 5% of the outstanding Common Stock. The
Company believes that C&D Fund III and C&D Fund IV sold all
of their Common Stock prior to year-end 1996.
C&D Fund III and C&D Fund IV are private investment
funds managed by Clayton, Dubilier & Rice, Inc. ("CD&R").
Amounts contributed to C&D Fund III and C&D Fund IV by the
limited partners thereof are invested at the discretion of
the general partner in the equity of corporations organized
for the purpose of carrying out leveraged acquisitions
involving the participation of management, or, in the case
of C&D Fund IV, in corporations where the infusion of
capital coupled with the provision of managerial assistance
by CD&R can be expected to generate returns on investments
comparable to returns historically achieved in leveraged buy-
out transactions. The general partner of C&D Fund III is
Clayton & Dubilier Associates III Limited Partnership, a
Connecticut limited partnership ("Associates III"). The
general partner of C&D Fund IV is Clayton & Dubilier
Associates IV Limited Partnership, a Connecticut limited
partnership ("Associates IV"). B. Charles Ames, a principal
of CD&R, a holder of an economic interest in Associates III
and a general partner of Associates IV, also served as
Chairman of the Board of the Company until the Effective
Date. Andrall E. Pearson, a principal of CD&R and a former
director of the Company, is a general partner of Associates
IV. Michael G. Babiarz, a former director of the Company,
is a professional employee of CD&R. Hubbard C. Howe, a
principal of CD&R and a former director of the Company, is a
general partner of Associates IV.
Through 1995, CD&R received an annual fee for
management and financial consulting services provided to the
Company and reimbursement of certain expenses. The
consulting fees paid to CD&R were $125,000 in 1995, $150,000
in 1994 and $200,000 in 1993. CD&R agreed to forgo the
consulting fee after October 1995, in view of the Company's
financial position and in order to facilitate the proposed
Restructuring. To further assist the Company, CD&R paid
Donaldson, Lufkin and Jenrette, an investment banking firm,
approximately $250,000 in 1995 and $500,000 plus expenses in
1996 for consulting services relating to the Restructuring.
CD&R, C&D Fund III and the Company entered into an
Indemnification Agreement on August 14, 1990, pursuant to
which the Company agreed to indemnify CD&R, C&D Fund III,
Associates III and their respective directors, officers,
partners, employees, agents and controlling persons against
certain liabilities arising under the federal securities
laws and certain other claims and liabilities.
CD&R, C&D Fund III, C&D Fund IV and the Company entered
into a separate Indemnification Agreement, dated as of March
4, 1992, pursuant to which the Company agreed, subject to
any applicable restrictions in the Indenture relating to the
Old Notes, the Prior Credit Agreement, the Subordinated Note
Indenture, the 1987 Registration and Participation
Agreement, and the 1990 Registration and Participation
Agreement, to indemnify CD&R, C&D Fund III, C&D Fund IV,
Associates III, Associates IV and their respective
directors, officers, partners, employees, agents and
controlling persons against certain liabilities arising
under the federal securities laws and certain other claims
and liabilities.
Mr. Gene Burris, a director of the Company, is
President of UFCW Local No. 1000, which represents
approximately 65% of the Company's unionized employees.
Pursuant to the Modified Union Agreements, the UFCW has the
right to designate one member of the Board of Directors of
Company and Stores. Mr. Burris is the designee of the UFCW.
The Plan of Reorganization also permitted the informal
committee which represented the secured noteholders of
Stores prior to the consummation of the restructuring to
designate four persons as directors. That committee
designated Edward B. Krekeler, Jr., Laurie M. Shahon,
William B. Snow and David N. Weinstein.
PERFORMANCE GRAPH
The Company's Common Stock commenced trading on NASDAQ
National Market System on April 14, 1997, under the symbol
"HMLD." As of the date of this Proxy Statement, the Company
does not have sufficient data to provide a performance
graph.
SECTION 16 (A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 (a) of the Securities Exchange Act requires
directors, executive officers and persons who are the
beneficial owners of more than 10% of any class of any
equity security of the Company to file reports with the
Securities and Exchange Commission ( "SEC"). Each of the
directors and executive officers of the Company were
required to file a form with the SEC no later than the date
on which the Registration Statement on Form 10 with respect
to the Common Stock became effective (December 6, 1996).
The directors and executive officers filed their respective
Forms in December 1996 (after December 6, 1996) and January
1997. Accordingly, such forms were filed untimely. This
was the sole occasion on which the directors and the
executive officers made untimely filings in 1996.
STOCKHOLDERS' PROPOSALS
The Board of Directors will consider proposals of the
stockholders intended to be presented for action at the 1998
Annual Meeting of Stockholders. For a shareholder proposal
to be considered by the Board of Directors, it must be
received by the Secretary of the Company at the principal
executive officers of the Company no later than March 16,
1998.
OTHER MATTERS
Management of the Company does not know of any other
matters to be brought before the meeting. If any other
matter properly comes before the Annual Meeting, it is
intended that the holders of Proxies will act in respect
thereof in accordance with their best judgment.
A COPY OF ITS REPORT ON FORM 10-K FOR THE 1996 FISCAL
YEAR ENDED DECEMBER 28, 1996, IS BEING MAILED IN THIS PROXY
STATEMENT TO EACH OF THE STOCKHOLDERS OF RECORD ON MAY 15,
1997, AND EACH BENEFICIAL STOCKHOLDER ON THAT DATE. IF YOU
HAVE NOT RECEIVED YOUR COPY, HOMELAND WILL PROVIDE A COPY
WITHOUT CHARGE (A REASONABLE FEE WILL BE CHARGED FOR
EXHIBITS), UPON RECEIPT OF A WRITTEN REQUEST THEREFOR MAILED
TO THE COMPANY'S OFFICES, ATTENTION: SECRETARY.
EXHIBIT A
HOMELAND HOLDING CORPORATION
AMENDMENT TO THE BYLAWS TO CLASSIFY THE BOARD
OF DIRECTORS
Number and Term of Office. The number of directors
constituting the entire Board of Directors shall be twelve,
which number may be modified from time to time by resolution
of the Board of Directors, provided, however, that the
number of directors shall not be reduced so as to shorten
the term of any director at the time in office; and provided
further, that in no event shall the number of directors be
less than one. Each director (whenever elected) shall hold
office until his successor has been duly elected and
qualified, or until his earlier death, resignation or
removal.
Election of Directors. The Board of Directors shall be
divided into three classes, as nearly equal in numbers as
the then total number of directors constituting the entire
Board permits with the term of office of one class expiring
each year. At the annual meeting of stockholders in 1997,
directors of the first class shall be elected to hold office
for a term expiring at the next succeeding annual meeting,
directors of the second class shall be elected to hold
office for a term expiring at the second succeeding annual
meeting and directors of the third class shall be elected to
hold office for a term expiring at the third succeeding
annual meeting. Any vacancies in the Board of Directors for
any reason, and any directorships resulting from any
increase in the number of directors, may be filled by the
Board of Directors, acting by a majority of the directors
then in office, although less than a quorum, and any
director so chosen shall hold office until the next election
of the class for which such directors shall have been chosen
and until their successors shall be elected and qualified.
No decrease in the number of directors shall shorten the
term of any incumbent director. At each annual meeting of
stockholders, the successors to the class of directors whose
term shall then expire shall be elected to hold officer for
a term expiring at the third succeeding annual meeting. If
the annual meeting for the election of directors is not held
on the date designated therefor, the directors shall cause
the meeting to be held as soon thereafter as convenient At
each meeting of the stockholders for the election of
directors, provided a quorum is present, the directors shall
be elected by a plurality of the votes validly cast in such
election.
Removal of Directors. Any director may be removed at any
time, but only for cause and only by the affirmative vote of
the holders of a majority of the outstanding shares of stock
of the Corporation entitled to vote for the election of such
director, cast at a special meeting of stockholders called
for the purpose.
EXHIBIT B
HOMELAND HOLDING CORPORATION
THE 1997 NON-EMPLOYEE DIRECTORS OPTION PLAN
1. Purpose. This Homeland Holding Corporation
1997 Non-Employee Directors Stock Option Plan (the
"Director Stock Option Plan" or "Plan") is intended to
attract and retain individuals of outstanding
competence as members of the Board of Directors and to
encourage stock ownership among the Board of Directors
of Homeland Holding Corporation ("Holding") and its
subsidiaries in order to increase their proprietary
interest in the success of Holding. The term
"Homeland" means Holding and its subsidiaries.
2. Administration. The Plan shall be administered
by the Board of Directors of Holding ("Board") or, if
the Board decides that the Plan should be so
administered, by a committee ("Committee") of at least
two (2) members of the Board appointed by the Board.
Upon the appointment of a Committee, the Board of
Directors shall cease to administer the Plan and the
Committee shall administer the Plan.
The Board or, if there is a Committee, the
Committee shall determine the persons who may
participate in the Plan and, subject to the provisions
of the Plan, the extent, the terms and the conditions
of their participation.
The interpretation and the construction by the
Board or, if there is a Committee, the Committee of any
provision of the Plan or any option granted under the
Plan and any determination by the Board or, if there is
a Committee, the Committee pursuant to any provision of
the Plan or any such option shall be final and
conclusive. No member of the Board or the Committee,
if any, shall be liable for any action or any
determination taken or made in good faith and the
members of the Board and the Committee, if any, shall
be entitled to indemnification and advancement of
expenses as provided in the Bylaws of Holding.
3. Stock. The capital stock subject to options
under the Plan shall be authorized but unissued shares
of Common Stock, par value $0.01 per share ("Common
Stock"), of Holding, subject to adjustment in
accordance with the Plan. Subject to adjustment in
accordance with the Plan, the total number of shares of
Common Stock on which options may be granted under the
Plan may not exceed, in the aggregate, 90,000 shares.
If any option outstanding under the Plan expires or
terminates for any reason prior to the end of the
period during which options may be granted under the
Plan, the shares of Common Stock covered by the
unexercised portion of such option may again be subject
to an option under the Plan.
4. Terms and Conditions of Stock Options. All
of the options granted under the Plan shall comply
with, and be subject to the following provisions:
4.1. Eligibility. The individuals who are
eligible to receive options under the Plan are
directors of Homeland.
4.2. Option Price. The option price for each
option shall be not less than the fair market
value as determined in accordance with Section 5.
4.3. Term of Option. Any option granted under the
Plan shall expire and terminate on, and shall not
be exercisable after, the earliest of (a) ten (10)
years from the date the option is granted; (b)
termination of the optionee's directorship for
cause; and (c) forty-five (45) days after
termination of service as a director other than as
a result of removal for cause.
4.4. Medium and Time of Payment. The Board or, if
there is a Committee, the Committee shall
determine the medium and the time of payment of
the exercise price of each option granted under
the Plan. Unless the Board or the Committee
otherwise determines, the exercise price shall be
paid in cash at the time at which the option is
exercised.
If so determined by the Board or the Committee,
the exercise price may (a) be paid in cash; (b) be
paid by transferring to Holding shares of Common
Stock equal in value (as determined by the Board
or, if there is a Committee, the Committee) to the
exercise price; or (c) be paid in cash in an
amount equal to the par value of the shares of
Common Stock with a binding obligation to pay the
balance of the exercise price on terms and subject
to conditions determined by the Board or, if there
is a Committee, by the Committee. The Board or,
if there is a Committee, may at the time that it
grants an option, in its sole discretion, grant an
optionee the right to convert an unexercised
option to a cash payment equal to the difference
between the exercise price and the fair market
value of the shares of Common Stock covered
thereby on the date of conversion (as determined
in accordance with Section 5).
4.5. Written Agreement. Each option shall be
evidenced by a written agreement, which shall
state, inter alia, the total number of shares of
Common Stock covered thereby.
4.6. Date of Exercise. The date on which options
are exercisable shall be determined by the Board
or, if there is a Committee, by the Committee.
Unless the Board or the Committee otherwise
determines, each option shall become exercisable
at a rate equal to 50% of the number of shares
covered thereby on the first anniversary and the
remaining 50% of the number of shares covered
thereby on the second anniversary. After becoming
exercisable, an option may be exercised at any
time and from time to time in whole or in part
until expiration or termination of the option.
If there is a change in control of Holding,
all options granted under this Plan shall be
immediately exercisable and each optionee shall
have the right to exercise the optionee's option
at any time prior to the expiration of the option.
The term "change of control" means (a) the
earliest date a new shareholder or related group
of new shareholders acquires beneficial ownership
of 30% or more of the then issued and outstanding
Common Stock, (b) the date on which Holding ceases
to own all of the issued and outstanding capital
stock of Homeland Stores, Inc. or (c) the date on
which Holding or Homeland Stores, Inc. disposes of
50% or more of its assets.
4.7. Adjustments. The Board or, if there is a
Committee, the Committee may adjust the number and
kind of shares covered by each outstanding option
and the price per share thereof for each
outstanding option as the Board or the Committee,
as the case may be, determines, in its sole
discretion and good faith, is equitably required
to prevent dilution or enlargement of the rights
of optionees that would otherwise result from (a)
any stock dividend, stock split, combination of
shares, recapitalization or other change in the
capital structure of Homeland; (b) any merger,
consolidation, separation, reorganization or
partial or complete liquidation; or (c) any other
corporate transaction or event having an effect
similar to any of the foregoing events.
The Board or, if there is a Committee, the
Committee may adjust the number or kind of shares
on which options may be granted to persons
participating under the Plan as the Board or, if
there is a Committee, the Committee, as the case
may be, determines, in its sole discretion and in
good faith, is appropriate to reflect any stock
dividend, stock split, combination of shares,
recapitalization or other change in the capital
structure of Homeland.
No fractional shares shall be issued upon any
exercise of an option following an adjustment and
the aggregate price paid shall be appropriately
reduced on account of any fractional share not
issued.
4.8. Assignability. No option is assignable or
transferable except by will or by the laws of
descent and distribution. During the lifetime of
an optionee, an option is exercisable only by the
optionee.
4.9. Optionee's Agreement. If, at the time of the
exercise of any option, it is necessary,
appropriate or advisable, in order to comply with
any applicable laws or regulations relating to the
sale of securities, that an optionee exercising an
option agree that the optionee will purchase the
shares of Common Stock covered by the option for
investment and not with any present intention to
resell those shares or make other agreements, the
optionee will execute and deliver to Holding an
agreement in form and substance requested by
Holding.
4.10. Rights as a Shareholder. An optionee has
no rights as a shareholder with respect to shares
covered by an option until the date of the
issuance of the shares of Common Stock to the
optionee and only after such shares are fully
paid.
4.11. Other Provisions. The written
agreements required under the Plan may contain
such other terms and conditions as the Board or,
if there is a Committee, the Committee deems
appropriate or advisable.
5. Fair Market Value. Fair market value shall
be determined by the Board or, if there is a
Committee, the Committee as provided in this
Section 5.
The term "fair market value" shall mean (a),
if the shares are listed on a national securities
exchange, the closing price on the date on which
the fair market value is to be determined or, if
none of the shares were traded on that date, on
the immediately preceding date on which shares
were traded; (b), if the shares are quoted on an
inter-dealer quotation system, the closing "asked"
price on the date on which fair market value is to
be determined or, if such closing "asked" price is
not available, the last sales price on such date
or, if no shares were traded on such date, on the
immediately preceding date on which shares were
traded; or (c), if the shares are not listed on a
national securities exchange or quoted on an
inter-dealer quotation system, the value
determined by the Board or the Committee, as the
case may be, taking into account such factors
reflecting value as they deem appropriate.
6. Term of Plan. No stock option shall be
granted pursuant to the Plan after July 15, 2007.
7. Amendments. The Board may from time to
time amend, suspend, or discontinue the Plan or
amend any option granted thereunder; provided,
however, no such action of the Board may, without
approval of the shareholders, alter the provisions
of the Plan so as to (a) materially increase the
benefits accruing to participants under the Plan;
(b) materially increase the number of securities
which may be issued under the Plan; or (c)
materially modify the requirements as to
eligibility for participation in the Plan and no
amendment may, without the consent of the
optionee, affect any then outstanding options or
unexercised portions thereof.
8. No Obligation to Exercise Option. The
granting of an option does not impose any
obligation upon the optionee to exercise the
option.
EXHIBIT C
HOMELAND HOLDING CORPORATION
AMENDMENT TO THE EMPLOYEE STOCK OPTION PLAN
Section 3 of the Homeland Holding Corporation 1996 Stock
Option Plan would be amended to read as follows:
The capital stock subject to options under the Plan
shall be authorized but unissued shares of Common
Stock, par value $0.01 per share ("Common Stock"), of
Holding, subject to adjustment in accordance with the
Plan. Subject to adjustment in accordance with the
Plan, the total number of shares of Common Stock on
which options may be granted under the Plan may not
exceed, in the aggregate, 432,222 shares. If any
option outstanding under the Plan expires or terminates
for any reason prior to the end of the period during
which options may be granted under the Plan, the shares
of Common Stock covered by the unexercised portion of
such option may again be subject to an option under the
Plan.
PROXY /VOTING INSTRUCTION CARD
HOMELAND HOLDING CORPORATION
OKLAHOMA CITY, OKLAHOMA
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON THE 10TH DAY OF
JULY, 1997.
The undersigned hereby appoints James A. Demme and
Larry W. Kordisch, and each of them, each with the power to
appoint his substitute, attorneys with the powers the
undersigned would possess if personally present to vote all
of the Common Stock of Homeland Holding Corporation
("Company") held of record by the undersigned on May 15,
1997, at the Annual Meeting of the Stockholders to be held
on the 10th day of July 1997, at the Hilton Inn Northwest,
2945 N.W. Expressway, Oklahoma City, Oklahoma, at 9:00 a.m.,
Oklahoma City, Oklahoma time, and at any adjournments
thereof, upon the matters set forth below and described in
the notice and proxy statement for said meeting, copies of
which have been received by the undersigned; and, in their
discretion, upon all other matters which may come before the
meeting. Without otherwise limiting the general
authorization hereby given, said attorneys are instructed to
vote as follows on the matters set forth below:
(1) Election of Directors
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
INSTRUCTION--TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S
NAME IN THE LIST BELOW.
Robert E. (Gene) Burris, James A. Demme, Edward B.
Krekeler, Jr., Laurie M. Shahon, John A. Shields,
William B. Snow and David N. Weinstein
(2) Proposal to approve the amendments to the Bylaws of the
Company to classify the Board of Directors.
Terms expiring in 1998: Robert E. (Gene) Burris
and David N. Weinstein
Terms expiring in 1999: Laurie M. Shahon and
John A. Shields
Terms expiring in 2000: James A. Demme, William B. Snow
and Edward B. Krekeler, Jr.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(3) Proposal to ratify the engagement of the accounting
firm of Coopers & Lybrand L.L.P. as auditors
and tax advisors for the current fiscal year.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(4) Proposal to approve the Homeland Holding Corporation
1997 Non-Employee Directors Stock Option
Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(5) Proposal to approve the increase in the number of
shares that may be granted under the Homeland
Holding Corporation 1996 Stock Option Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(6) In their discretion, upon such other matters as may
properly come before the meeting.
AUTHORIZED [ ] NOT AUTHORIZED [ ]
The shares represented by this proxy will be voted in
accordance with the specifications
made by the undersigned herein. IF NO SPECIFICATION IS
MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3, 4 AND 5.
Please mark, sign, date and return this Proxy in the
enclosed envelope as soon as possible, even though you plan
to attend this meeting.
To help our preparations for the meeting, please check
here if you plan to attend. [ ]
SIGN HERE EXACTLY AS NAME(S) APPEAR(S) ABOVE ON THIS PROXY
_______________________________________ Date: ______
_______________________________________ Date: ______
When shares are held by joint tenants, both should
sign. When signing in a fiduciary capacity, such as executor,
administrator, trustee, attorney, guardian, etc., please so
indicate. If a corporation, please sign in full corporate
name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized
person.
If your address has changed, please note new address:
Address:______________________________________
Zip Code ______________
Supplemental Information
Pursuant to Instruction 5 to Item 10 of Regulation S-K, the
Company advises the Commission that the additional options under the
Employee Stock Option Plan, the options under the Director Stock Option
Plan and the shares of Common Stock covered thereby are exempt from
registration under Section 4(2) of the Securities Act of 1933, as
amended. While the persons to whom options will be granted have not
been determined, such options will only be granted to a limited number
of participants, consisting of executive officers, directors and key
management, all of whom would be accredited investors. No general
advertising will be used in connection with the options and the options
will not transferable during the lifetime of the optionees. All of the
optionees will be required to execute and to deliver stock option
agreements which contain standard private offering representations
and warranties and transfer restrictions. The Company is presently
evaluating filing a registration statement with respect to such
options and such shares of Common Stock.
