PRELIMINARY COPY
HOST AMERICA CORPORATION
Two Broadway
Hamden, CT 06518-2697
(203) 248-4100
----------------------
PROXY STATEMENT
----------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held November 21, 2000
TO THE SHAREHOLDERS OF HOST AMERICA CORPORATION
NOTICE HEREBY IS GIVEN that the Annual Meeting of Shareholders of Host
America Corporation, a Colorado corporation (the "Company") will be held at
310 West Shepard Street, Hamden, Connecticut 06514, on November 21, 2000,
at 10:00 a.m., Eastern Time, and at any and all adjournments thereof, for
the purpose of considering and acting upon the following matters:
1. A proposal to amend the Articles of Incorporation to modify the
lengths of the terms of the directors of the Company;
2. To elect seven directors to such terms as will be required by the
Articles of Incorporation as may be amended by proposal 1, above;
3. Ratification of the Company's 2000 Stock Option Plan and an
amendment increasing the maximum number of shares reserved for
issuance thereunder to 500,000 shares of Common Shares.
4. To ratify the selection of DiSanto Bertoline & Company, P.C. as
independent auditors of the Company for the year ending June 29, 2001.
5. To transact such other business as properly may come before the
meeting or any adjournment thereof.
Only holders of the voting $.001 par value Common Stock and voting Series
A Preferred Stock of the Company of record at the close of business on
October 19, 2000 will be entitled to notice of and to vote at the Meeting
or at any adjournment or adjournments thereof.
All shareholders, whether or not they expect to attend the Annual Meeting
of Shareholders in person, are urged to sign and date the enclosed Proxy
and return it promptly in the enclosed postage-paid envelope which requires
no additional postage if mailed in the United States. The giving of a
proxy will not affect your right to vote in person if you attend the Meeting.
A copy of the Company's Annual Report to Shareholders for the year ended
June 30, 2000 accompanies this Notice of Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS.
GEOFFREY W. RAMSEY
PRESIDENT
Hamden, Connecticut
October 19, 2000
PRELIMINARY COPY
HOST AMERICA CORPORATION
Two Broadway
Hamden, CT 06518-2697
(203) 248-4100
----------------------
PROXY STATEMENT
----------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 21, 2000
GENERAL INFORMATION
-------------------
The enclosed Proxy is solicited by and on behalf of the Board of
Directors of Host America Corporation, a Colorado corporation (the
"Company"), for use at the Company's Annual Meeting of Shareholders to be
held at 310 West Shepard Street, Hamden, Connecticut 06514, on November 21,
2000, at 10:00 a.m., Eastern Time, and at any adjournment thereof. It is
anticipated that this Proxy Statement and the accompanying Proxy will be
mailed to the Company's shareholders on or about October 19, 2000.
Any person signing and returning the enclosed Proxy may revoke it at
any time before it is voted by giving written notice of such revocation to
the Company, or by voting in person at the Meeting. The expense of
soliciting proxies, including the cost of preparing, assembling and mailing
this proxy material to shareholders, will be borne by the Company. It is
anticipated that solicitations of proxies for the Meeting will be made only
by use of the mails; however, the Company may use the services of its
Directors, Officers and employees to solicit proxies personally or by
telephone, without additional salary or compensation to them. Brokerage
houses, custodians, nominees and fiduciaries will be requested to forward
the proxy soliciting materials to the beneficial owners of the Company's
shares held of record by such persons, and the Company will reimburse such
persons for their reasonable out-of-pocket expenses incurred by them in
that connection.
All shares represented by valid proxies will be voted in accordance
therewith at the Meeting.
The Company's Annual Report to Shareholders for the Company's fiscal
year ended June 30, 2000, is being simultaneously mailed to the Company's
shareholders, but does not constitute part of these proxy soliciting materials.
SHARES OUTSTANDING AND VOTING RIGHTS
------------------------------------
All voting rights are vested exclusively in the holders of the
Company's $.001 par value Common Stock and the voting Series A Preferred
Stock, with each share entitled to one vote. Only shareholders of record
at the close of business on October 19, 2000, are entitled to notice of and to
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vote at the Meeting or any adjournment thereof. On October 19, 2000, the
Company had 1,325,122 shares of its $.001 par value Common Stock
outstanding and 700,000 Series A Preferred Stock, each share of which is
entitled to one vote on all matters to be voted upon at the Meeting,
including the election of Directors. Cumulative voting in the election of
Directors is not permitted.
A majority of the Company's outstanding Common Stock and Series A
Preferred Stock represented in person or by proxy shall constitute a quorum
at the Meeting.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------
The following table sets forth the number and percentage of shares of
the Company's $.001 par value Common Stock owned beneficially, as of
October 19, 2000, by any person who is known to the Company to be the
beneficial owner of 5% or more of such Common Stock and Series A Preferred
Stock and, in addition, by each Director of the Company and its
subsidiaries and by all Directors and Officers of the Company and its
subsidiaries as a group. Information as to beneficial ownership is based
upon statements furnished to the Company by such persons.
Beneficial Ownership Beneficial Ownership Beneficial Ownership
-------------------- -------------------- Based on 2,025,122
Voting Common(1)(2) Voting Preferred(2) Voting Shares(3)
------------------ ------------------ ----------------
Name and Address Shares Percent Shares Percent Shares Percent
- ---------------- ------ ------- ------ ------- ------ -------
Geoffrey W. and 80,550 (4) 6.1% 225,000 (3) 32.1% 305,550 15.1%
Debra Ramsey
2 Broadway
Hamden, CT 06518-2697
David J. Murphy 77,600 (5) 5.9% 225,000 (5) 32.1% 302,600 15.0%
2 Broadway
Hamden, CT 06518-2697
Anne L. Ramsey 20,327 (6) 1.5% 0 * 20,327 *
2 Broadway
Hamden, CT 06518-2697
Thomas P. and Irene Eagan 27,750 (7) 2.1% 100,000 (6) 14.3% 127,750 6.3%
11 Woodhouse Avenue
Northford, CT 06472
Patrick J. Healy 13,850 (8) * 0 * 13,850 *
2 Broadway
Hamden, CT 06518-2697
John D'Antona 13,750 (9) * 0 * 13,750 *
2 Broadway
Hamden, CT 06518-2697
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Gilbert Rossomando 99,061 7.5% 0 * 99,061 7.5%
2 Broadway
Hamden, CT 06518-2697
Mark Cerreta 99,061 7.5% 0 * 99,061 7.5%
2 Broadway
Hamden , CT 06518-2697
All Executive Officers
and Directors as a
group (7 persons) 431,949 32.6% 550,000 78.6% 981,949 48.5%
_____________________________
* Less than 1%
(1) Calculated pursuant to Rule 13d-3(d) of the Securities Exchange Act of
1934. Unless otherwise stated below, each such person has sole voting
and investment power with respect to all such shares. Under Rule 13d-
3(d), shares not outstanding which are subject to options, warrants,
rights or conversion privileges exercisable within 60 days are deemed
outstanding for the purpose of calculating the number and percentage
owned by such person, but are not deemed outstanding for the purpose
of calculating the number and percentage owned by each other person
listed.
(2) Calculated on the basis that a total of 1,325,122 shares of Common
Stock are issued and outstanding and 700,000 shares of voting Series
A Preferred are outstanding.
(3) There are 1,325,122 shares of voting Common Stock and 700,000 shares
of voting Series A Preferred for a total of 2,025,122 shares eligible
to vote any matter to come before the meeting.
(4) Mr. Ramsey is the beneficial owner of 20,550 shares of Common Stock,
options to purchase 60,000 shares of Common Stock and 225,000 shares
of Series A Preferred which has full voting rights and converts after
a five (5) year period to 225,000 shares of Common Stock. Additional
shares of Common Stock may be issued earlier if certain performance
goals are achieved.
(5) Mr. Murphy is the beneficial owner of 17,600 shares of Common Stock,
options to purchase 60,000 shares of Common Stock and 225,000 shares
of Series A Preferred which has full voting rights and converts after
a five (5) year period to 225,000 shares of Common Stock. Additional
shares of Common Stock may be issued earlier if certain performance
goals are achieved.
(6) Ms. Ramsey is the beneficial owner of 577 shares of Common Stock and
19,750 options to purchase shares of Common Stock.
(7) Mr. Eagan is the beneficial owner of 8,000 shares of Common Stock and
options to purchase 19,750 shares of Common Stock and of 100,000
shares of Series A Preferred which has full voting rights and converts
after a five (5) year period to 100,000 shares of Common Stock.
Additional shares of Common Stock may be issued earlier if certain
performance goals are achieved.
(8) Mr. Healy is the beneficial owner of options to purchase 100 shares of
Common Stock and 13,750 options to purchase Common Stock.
(9) Mr. D'Antona is the beneficial owner of options to purchase 13,750
shares of Common Stock.
Additional shares of Common Stock may be issued earlier upon the
conversion of the Series A Preferred Stock to Messrs. Ramsey, Murphy and
Eagan if certain performance goals are achieved. To date, these performance
goals have not been met.
There is no arrangement or understanding known to the Company,
including any pledge by any person of securities of the Company, the
operation of which may at a subsequent date result in a change in control
of the Company.
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PROPOSAL 1
PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION
TO MODIFY THE LENGTH OF TERMS FOR THE DIRECTORS OF THE COMPANY
The Board of Directors has voted to authorize an amendment to Article
IV of the Company's Articles of Incorporation and to recommend such
proposed amendment to the Shareholders for adoption. Although this
proposal may have the effect of discouraging a holder of a large block of
the Company's securities from attempting a merger, tender offer, proxy
contest, or other assumption of control with or for the Company or the
removal of incumbent management, the Company is not aware of any proposed
attempt to take over the Company or of any attempt to acquire a large block
of the Common Stock, and the proposed amendment to the Company's Articles
of Incorporation is not in response to any specific effort to do so. The
purpose of Proposal 1 is to enhance continuity and stability in the
composition of the Company's Board of Directors and in the policies
formulated by the Board. If this proposal is adopted by the Shareholders,
Article IV of the Articles of Incorporation will be amended to add
following paragraph:
Classification of Directors. The directors shall be divided into
three classes, designated Class I, Class II and Class III. Each class
shall consist, as nearly as possible, of one-third of the total number
of directors constituting the entire Board of Directors. The term of
the initial Class I directors shall terminate on the date of the 2001
annual meeting of Shareholders; the term of the initial Class II
directors shall terminate on the date of the 2002 annual meeting of
Shareholders; and the term of the initial Class III directors shall
terminate on the date of the 2003 annual meeting of Shareholders. At
each meeting of Shareholder beginning in 2001, successors to the class
of directors whose term expires at that annual meeting shall be
elected for a three-year term. If the number of directors is changed,
any increase or decrease in directorships shall be apportioned among
the classes so as to maintain the number of directors in each class as
nearly equal as possible, and any additional directors of any class
elected to fill a vacancy resulting from an increase in such class
shall hold office until the next election of directors of such class
by the Shareholders, but in no case will a decrease in the number of
directors shorten the term of any incumbent director. Directors shall
hold office until the annual meeting for the year in which their terms
expire and until their successors shall be elected and shall qualify,
subject, however, to prior death, resignation, retirement,
disqualification or removal from office. Any vacancy on the Board of
Directors, howsoever resulting, may be filled by the affirmative vote
of a majority of the remaining directors then in office, even if less
than a quorum. Any director elected to fill a vacancy shall hold
office until the next election of directors of such class by the
Shareholders.
This proposal provides for three classes of directors, each consisting
as nearly as possible of one-third of the Board and for one-third of the
Board to be elected each year. However, members of all three classes would
be elected initially at the Annual Meeting. If this proposal is approved
and the slate of seven directors proposed for election at the Annual
Meeting are elected, they would be elected in three separate classes as
follows: two "Class I Directors" would be elected for a term expiring at
the 2001 Annual Meeting; three "Class II Directors" would be elected for a
term expiring
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at the 2002 Annual Meeting; and two "Class III Directors" would be elected
for a term expiring at the 2003 Annual Meeting. At each annual meeting
after the Meeting, only directors of the class whose term is expiring would
be voted upon, and upon election each such director would serve a three-year
term. Currently, the Company's Articles of Incorporation provide that
the number of directors of the Company shall be fixed by the by-laws, and
the by-laws provide that the number shall never be less than one or more
than eleven. Subject to Colorado law, this proposal expressly delegates to
incumbent directors sole power to fill vacancies whether occurring by an
increase in the number of directors or otherwise. A director elected to
fill a vacancy would hold office for the unexpired portion of the term of
the director who was being replaced. A director elected to fill a newly
created directorship would hold office until the next election for the
class to which that director was elected. If the size of the Board is
increased, the additional directors would be apportioned among the three
classes of directors to keep all such classes as nearly equal as possible.
The Board of Directors believes that the adoption of this proposal is
advantageous to the Company and its Shareholders for a number of reasons.
Providing that directors will serve three-year terms rather than one-year
terms, will enhance continuity and stability in the composition of the
Company's Board of Directors and in the policies formulated by the Board.
Public companies are potentially subject to attempts by various individuals
and entities to acquire significant minority positions in the company with
the intent either of obtaining actual control of the company by electing
their own slate of directors, or of achieving some other goal, such as the
repurchase of their shares by the company at a premium. Public companies
also are potentially subject to inadequately priced or coercive bids for
control through majority share ownership. These prospective acquirers may
be in a position to elect a company's entire board of directors through
proxy contest or otherwise, even though they do not own a majority of the
company's then outstanding shares at the time. If this proposal is
approved, a majority of the Company's directors could not be removed by
such persons until two annual meetings of Shareholders have occurred,
unless such removal was for cause and the requisite vote was obtained. By
providing this additional time to the Board of Directors and eliminating
the possibility of rapid removal of the Board, the directors of the Company
will have the necessary time to most effectively satisfy their
responsibility to the Company's Shareholders to evaluate any proposal and
to assess and develop alternatives without the pressure created by the
threat of imminent removal. The Board believes that this will permit it to
more effectively represent the interests of all Shareholders, including
responding to demands or actions by any Shareholder or group. This
proposal may discourage potential purchasers because its provisions would
operate to delay the purchaser's ability to obtain control of the Board of
Directors, since it will generally take a purchaser two annual meetings of
Shareholders to elect a majority of the Board. The Board has no knowledge
of any present effort to gain control of the Company or to organize a proxy
contest. However, the Board believes that adopting this proposal is
prudent, advantageous and in the best interests of Shareholders because it
will give the Board more time to fulfill its responsibilities to
Shareholders and, it will provide greater assurance of continuity and
stability in the composition and policies of the Board of Directors. The
Board also believes such advantages outweigh any disadvantage relating to
discouraging potential acquirers from attempting to obtain control of the
Company. Approval of this proposal requires an affirmative vote of holders
of a majority of the outstanding shares of the Company's Common Stock
entitled to vote in person or by proxy at the Annual Meeting.
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THE BOARD OF DIRECTORS BELIEVES THAT PROPOSAL 1 IS IN THE BEST
INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS AND RECOMMENDS A VOTE FOR
APPROVAL OF PROPOSAL 1.
It is the intention of the persons named in the accompanying form of
Proxy to vote the shares represented thereby in favor of such ratification
unless otherwise instructed in such Proxy.
PROPOSAL 2
ELECTION OF DIRECTORS
Seven directors will be elected at the Annual Meeting. If the
Shareholders approve Proposal 1, the Board of Directors will be divided
into three classes with staggered terms of office. The initial
classification of the Board will be as follows: the Class I directors,
Patrick J. Healy and John D'Antona, will serve until the date of the 2001
Annual Meeting of Shareholders; the Class II directors, Anne L. Ramsey and
Thomas P. Eagan, will serve until the date of the 2002 Annual Meeting of
Shareholders; and the Class III directors, Geoffrey W. Ramsey, David J.
Murphy and Gilbert Rossomando, will serve until the date of the 2003 Annual
Meeting of Shareholders. At each Annual Meeting after 2000, directors will
be elected to succeed those directors whose terms then expire, and each
person so elected will serve for a three-year term. If Proposal 1 is not
approved, directors elected at the Annual Meeting will serve until the date
of the 2001 Annual Meeting of Shareholders and until their respective
successors are duly elected and shall have qualified.
Directors are elected by a majority of the votes present in person or
represented by proxy and entitled to vote at the Annual Meeting.
Shareholders do not have the right to cumulate their votes in the election
of directors. If, prior to the Annual Meeting, any nominee should become
unavailable for election, an event which currently is not anticipated by
the Board, the proxies will be voted for the election of such substitute
nominee or nominees as the Board of Directors may propose. Each person
nominated for election has agreed to serve if elected and management has no
reason to believe that any nominee will be unable to serve.
Set forth below is biographical information for each person nominated:
PATRICK J. HEALY Ph.D has been a Board Member of the Company since
February of 1998. He is the Senior Vice President for Finance and
Administration for Quinnipiac University and has held this position for the
past 20 years. He received his undergraduate degree in accounting from
Quinnipiac, his MBA from the University of New Haven, a doctorate in
Educational Leadership, Higher Education Administration, from the
University of Connecticut, and completed the higher education program at
the Institute for Educational Management at Harvard University. He has
been on the Board of the Connecticut Chapter of the Leukemia and Lymphoma
Society since 1992, where he served as Treasurer, Vice President, and
Chapter President. He was elected to the National Board of the Leukemia
and Lymphoma Society in 1996, and also currently serves on the Board of The
Children's Corner in Ridgefield, Connecticut.
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JOHN D'ANTONA has served as a Director of the Company from February
1998 to present. Mr. D'Antona has 25 years experience in a variety of food
service marketing and sales positions and currently is the New England
Regional Manager for Mother Parker Tea and Coffee. Mother Parker Tea and
Coffee was established in 1912 and is a Canadian company and is the largest
private label and producer of tea and coffee in North America.
ANNE L. RAMSEY has been the Secretary and a Director of the Company
since March, 1986. Along with her duties as Corporate Secretary, Ms. Ramsey
serves as a District Supervisor and is responsible for one of Host America
facilities in Connecticut and Human Resources Director. Prior to 1986, she
was Vice President of Operations for Comstock Leasing, Inc. in San Mateo,
California from 1984 to 1985. From 1980 to 1984, she was Operations
Manager for Comstock Leasing.
THOMAS P. EAGAN, JR. has been a Director of the Company since
November, 1988. He has been employed as a Regional Sales Director with
Eastern Bag & Paper Co., Inc., Bridgeport, Connecticut since May, 1979.
From February, 1972 to May 1979, Mr. Eagan owned and operated Purifier
Systems, Inc., Hamden, Connecticut, a wholesale paper distributor. From
January 1972 to February, 1973, Mr. Eagan was Regional Manager for Piedmont
Capital Corp., a mutual fund life insurance underwriter located in
Woodbridge, Connecticut. In this capacity, Mr. Eagan supervised Piedmont's
Financial Planners and District Managers in southern Connecticut. Mr.
Eagan studied Business Administration and graduated from Quinnipiac
University, Hamden, Connecticut.
GEOFFREY W. RAMSEY, the Company's co-founder, has been the President,
Treasurer and a Director of the Company since March, 1986. Mr. Ramsey has
more than 30 years experience in the food service industry. Currently, he
is responsible for the day-to-day management of all marketing and sales
activities for the Company. He also is responsible for future growth
planning and evaluating potential acquisition candidates. He has developed
a comprehensive sales program for manual dining operations, vending and
other ancillary services. Prior to 1986, Mr. Ramsey operated a number of
diverse food service operations. These included the University of New
Haven, Southern Connecticut State University, Choate - Rosemary Hall and
others. Mr. Ramsey was Personnel and Training Specialist for ARA Services
and has a B.S. degree from the University of New Haven and a A.A.S. degree
from the Culinary Institute of America.
DAVID J. MURPHY, a co-founder of the Company, has been Executive Vice
President and a Director of the Company since March, 1986. Mr. Murphy has
more than 25 years experience in the industry. Currently, he is
responsible as Chief Financial Officer for all financial and operational
aspects of the Company. From 1984 to 1986 he was the Operations Manager
for Campus Dining at the University of New Haven and served as Adjunct
Professor in the Hotel, Restaurant and Tourism School. From 1983 to 1984
he was involved in operations at Hamilton College, Clinton, New York and
Fairleigh Dickinson University, Madison, New Jersey. Mr. Murphy received
his B.S. degree in International Business from Quinnipiac University,
Hamden, Connecticut, and a certificate in Exporting Marketing from the same
college. He has also completed post graduate courses in business. Mr.
Murphy is a member of the National Restaurant Association and the National
Association of College and University Food Services and is listed in 1986-
1987 Directory of Hospitality Educators.
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GILBERT ROSSOMANDO, has served as a Director of the Company since
July, 2000 and is one of the founders of Lindley Food Services, Inc. Mr.
Rossomando continues to be an officer of Lindley Food Services, Inc. and
handles cost analysis, sales and marketing, contract bidding and employee
policies. Mr. Rossomando has a Bachelors Degree in Business Administration
and Food Service Management from the University of New Haven.
THE BOARD OF DIRECTORS BELIEVES THAT PROPOSAL 2 IS IN THE BEST
INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS AND RECOMMENDS A VOTE FOR
PATRICK J. HEALY AND JOHN D'ANTONA AS CLASS I DIRECTORS; ANNE L. RAMSEY AND
THOMAS P. EAGAN AS CLASS II DIRECTORS; AND GEOFFREY W. RAMSEY, DAVID J.
MURPHY AND GILBERT ROSSOMANDO AS CLASS III DIRECTORS, OR IN THE EVENT THAT
PROPOSAL 1 IS NOT RATIFIED THE BOARD RECOMMENDS A VOTE FOR PATRICK J.
HEALY, JOHN D'ANTONA, ANNE L. RAMSEY, THOMAS P. EAGAN, GEOFFREY W. RAMSEY,
DAVID J. MURPHY AND GILBERT ROSSOMANDO UNTIL THE 2001 ANNUAL MEETING.
It is the intention of the persons named in the accompanying form of Proxy
to vote the shares represented thereby in favor of such directors unless
otherwise instructed in such Proxy.
DIRECTORS AND EXECUTIVE OFFICERS
NAME AGE POSITION
- ---- --- --------
Geoffrey W. Ramsey 50 President, Treasurer and a Director
David J. Murphy 43 Executive Vice President and a Director
Anne L. Ramsey 53 Secretary and a Director
Gilbert Rossomando 42 President of Lindley and a Director
Mark Cerreta 41 Executive Vice President - Lindley
Thomas P. Eagan, Jr. 57 Director
Patrick J. Healy 56 Director
John D'Antona 57 Director
_____________________
All members of the Board of directors hold offices until the election
and qualifications of their successors, or until death, resignation or
removal. Messrs. Patrick J. Healy and John D'Antona are independent
directors. Officers serve at the discretion of the Board of Directors.
-8-
The Company's Board of Directors held four (4) meetings during the
fiscal year ended June 25, 1999, and each Director attended all of the
meetings held. There is no family relationship between any Director or
nominee for Director of the Company and any other Director, nominee or
Executive Officer of the Company except Geoffrey W. Ramsey and Anne L.
Ramsey are brother and sister.
===========================================================================================================
SUMMARY COMPENSATION TABLE
- -----------------------------------------------------------------------------------------------------------
Long Term Compensation
------------------------------
Annual Compensation Awards Payouts
- -----------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other All
Name Annual Restricted LTIP Other
and Compen- Stock Options/ Pay- Compen-
Principal Salary Bonus sation Award(s) SARs outs sation
Position Year (1) ($) ($) ($)(2) ($) (#) ($) ($)
- -----------------------------------------------------------------------------------------------------------
Geoffrey W. Ramsey 2000 $140,000 $ -0- $ -0- 0 25,000 0 $9,200(2)
President and CEO 1999 $105,000 $ -0- $ -0- 0 30,000 0 $8,227(2)
1998 $ 85,000 $ -0- $ -0- 0 5,000 0 $6,500(2)
David J. Murphy 2000 $135,000 $ -0- $ -0- 0 25,000 0 $6,000(2)
Vice President 1999 $100,750 $ -0- $ -0- 0 30,000 0 $6,000(2)
1998 $ 77,750 $ -0- $ -0- 0 5,000 0 $6,000(2)
===========================================================================================================
(1) Periods presented are for the fiscal years ended June 30, 2000, June 25,
1999 and June 28, 1998.
(2) The Company pays Messrs. Ramsey's and Murphy's life insurance policy
and car allowance valued at approximately $6,500 per year. Under Mr.
Ramsey's and Mr. Murphy's employment agreements, they are also
entitled to health and disability insurance.
OPTIONS GRANTED TO DIRECTORS AND EXECUTIVE MANAGEMENT
In September 1997, the Company granted options to purchase 1,000
shares of Common Stock to two Directors, Mr. Thomas P. Eagan, Jr. and Anne
L. Ramsey, respectively. Also in September 1997, the Company issued
options to purchase 5,000 shares of Common Stock to Geoffrey W. Ramsey and
David J. Murphy, Officers and Directors. The stock options are exercisable
over a period of ten (10) years at an exercise price of $5.00 per share.
The options are subject to certain adjustment provisions in the event of
any stock dividends, reverse splits and/or reclassifications of the Common
Stock. In July 1999, the Company granted to its Officers and Directors
options to purchase 90,000 shares of Common Stock to its Directors.
Specifically, the Board of Directors granted Mr. Ramsey 30,000 options, Mr.
Murphy 30,000 options, Ms. Ramsey 10,000 options, Mr. Eagan 10,000 options,
Mr. Healy 5,000 options and Mr. D'Antona 5,000
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options. In May, 2000, the Company granted to its Officers and Directors
options to purchase 85,000 shares of Common Stock. The stock options are
exercisable for a period of ten (10) years at an exercise price of $4.00.
Specifically, the Board granted Mr. Ramsey 25,000 options, Mr. Murphy
25,000 options, Ms. Ramsey 8,750 options, Mr. Eagan 8,750 options, Mr.
D'Antona 8,750 options and Mr. Healy 8,750 options.
STOCK OPTIONS GRANTED TO EXECUTIVE OFFICERS DURING 2000
The following table sets forth certain information regarding grants of
stock options to our Executive Officers who received stock options during
2000. The fair value of the option grant was estimated on the date of the
grant based on the then market price of the Company's Common Stock and
after factors such as length of employment time contracted to the Company.
None of the following options have been exercised.
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS
OPTIONS GRANTED TO EXERCISE GRANT
NAME GRANTED EMPLOYEES PRICE ($) DATE
- ---- ------- --------- --------- ----
Geoffrey W. Ramsey 55,000 42.7% $4.00 5/17/00
David J. Murphy 55,000 42.7% $4.00 5/17/00
Anne L. Ramsey 19,750 14.8% $4.00 5/17/00
DIRECTOR COMPENSATION
Our directors receive $500 for each meeting of the Board attended,
$250 for participation in each meeting of the Board by telephone conference
and $250 for participation, in person or by telephone conference, in each
committee meeting, and they are reimbursed for out-of-pocket expenses in
attending meetings of the Board of Directors or Committees.
EXECUTIVE EMPLOYMENT AGREEMENTS
The Company entered into employment agreements with Messrs. Ramsey and
Murphy, Officers and Directors of the Company, for five years commending
February 19, 1998. Under the terms of the agreements, Messrs. Ramsey and
Murphy receive annual salaries of $140,000 and $130,000, respectively,
which may be increased from time to time by the Company's Compensation
Committee or the Board of Directors, but shall not be decreased without the
consent of the employee. Both individuals receive an expense account, an
automobile expense account, related business expenses and all benefits
afforded other employees. The Company also provides health, disability and
insurance to each of these individuals.
In July 2000, the Company entered into four (4) year employment
agreements with Gilbert Rossomando and Mark Cerreta, the president and vice
president of Lindley Food Services, Inc., our wholly-owned subsidiary,
wherein each receives a base salary of $135,000 a year and benefits
including a car allowance and health and disability insurance. Messrs.
Rossomando and Cerreta are
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also entitled to a certain multi-year profits interest payments on the
Lindley profits pursuant to the agreement wherein the Company acquired the
shares of Lindley from Messrs. Rossomando and Cerreta.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company has four standing committees: the Executive Committee, the
Audit Committee, the Compensation Committee and the Nominating Committee.
EXECUTIVE COMMITTEE
The Executive Committee was formed by the Board to attend to and
report to the Board on day to day operating, financial, regulatory and
other matters. The committee consists of Geoffrey W. Ramsey, David J.
Murphy and Anne L. Ramsey. The duties of the Executive Committee members
are in addition to their duties as members of the Board.
AUDIT COMMITTEE
The Audit Committee was formed in June 1999 pursuant to the Audit
Committee Charter (the "Charter") which is included with this Proxy
Statement. The Audit Committee attends to and reports to the Board with
respect to matters regarding the Company's independent public accountants,
including, without limitation: annual review of the Charter, recommending
to the Board of Directors the firm to be engaged as its independent public
accountants for the next fiscal year; reviewing with the Company's
independent public accountants the scope and results of its audit and any
related management letter; consulting with the independent public
accountants and management with regard to the Company's accounting methods
and adequacy of its internal accounting controls; approving the
professional services rendered by the independent public accountants;
reviewing the independence, management consulting services and fees of the
independent public accountants; inquiring about significant risks or
exposures and methods to minimize such risk; ensuring effective use of
audit resources, and preparing and supervising SEC reporting requirements.
The Audit Committee currently consists of Messrs. Patrick Healy, Thomas P.
Eagan and John D'Antona, all of whom are the independent members of the
Audit Committee. The Audit committee is required meet at least four times
in each fiscal year.
COMPENSATION COMMITTEE
The Compensation Committee was formed by the Board to attend to and
report to the Board with respect to the appropriate compensation of
directors and executive officers of the Company and is responsible for
administering all the Company's employee benefit plans. The Compensation
Committee current consists of Messrs. Geoffrey W. Ramsey, Thomas P. Eagan
and John D'Antona.
NOMINATING COMMITTEE
The Nominating Committee was formed by the Board to attend and report
to the Board with respect to interviewing, evaluating, nominating and
recommending individuals for membership on
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the Company's Board of Directors and committees and nominating specific
individuals to be elected as officers of the Company. The Nominating
Committee currently consists of Messrs. David J. Murphy and Geoffrey W. Ramsey.
RELATED PARTY AND OTHER MATERIAL TRANSACTIONS
We lease approximately 3,000 square feet of office space for the
corporate offices of our wholly-owned subsidiary, Lindley Food Services,
Inc. from Gilbert Rossomando, a Director, and Mark Cerreta, a principal
Shareholder. The rent on the lease is $10,831 per month and extends for
five (5) years. We believe this is a competitive lease rate for similar
real estate in Bridge Port, Connecticut area where the office and
operations center are located. All future transactions with management
must be reviewed and approved by all of the Company's independent directors.
PROPOSAL 3
RATIFICATION OF THE 2000 STOCK OPTION PLAN AND AN AMENDMENT
INCREASING THE MAXIMUM AGGREGATE NUMBER OF SHARES RESERVED
FOR ISSUANCE THEREUNDER TO 500,000 SHARES OF COMMON STOCK.
STOCK OPTION PLAN
In September 2000 our board of directors authorized the 2000 Stock
Option Plan (the "Plan") which provides for the grant of: (1) shares of
Common Stock as a bonus; and (2) options exercisable to purchase Common
Stock which may be granted in the discretion of the Board as either
"qualified incentive stock options" within the meaning of Section 422 of
the United States Internal Revenue Code of 1986 (the "Code"), or
"nonqualified stock options." Incentive stock options are issuable only
to: (i) employees (including officers and directors) of the Company; (ii)
consultants or independent contractors who are employed by the Company and
who provide valuable services to the Company ("Eligible Persons"). There
are currently fifteen (15) Eligible Persons. The purposes of the plan are
to attract and retain the best available personnel, and to provide
additional incentives to Eligible Persons, which will subsequently promote
the success of our business and the interests of Shareholders.
We have reserved 500,000 shares of Common Stock for issuance under the
Plan, which is administered by the Compensation Committee and the Board of
Directors. Under the Plan, the Board of Directors determined which
individuals will receive options or bonus shares, the time period during
which options may be partially or fully exercised, the number of shares of
Common Stock that may be purchased under each option and the option price.
Options granted under the Plan are generally exercisable for a period of
five years from the date of grant at an exercise price not less than the
fair market value of the shares at the date of grant. In the case of
Control Persons, the exercise price for Qualified Options is not less than
110% of the fair market value. Options granted under the Plan generally
vest over a one to three year period from the date of the grant.
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While future issuances are indeterminable, we have not granted any
options to date under the Plan. Shareholder ratification of the Plan is
required to allow options granted under the Plan to be "Qualified Options."
After ratification, the majority of issuances under the Plan will be
"Qualified Options" so that recipients will receive more favorable tax
consequences. Under Proposal 3, the amendment to increase the number of
shares available under this Plan to 500,000 shares of common Stock is to be
ratified by Shareholders.
The Board of Directors has voted to authorize an amendment to Section
1.2(a) of the Stock Option Plan and to recommend such proposed amendment to
the Shareholders for adoption. A copy of the Stock Option Plan, as
proposed to be amended, is attached hereto and incorporated herein by this
reference. If this proposal is adopted by the Shareholders, Section 1.2(a)
of the Stock Option Plan will be amended to read as follows:
(a) DESCRIPTION OF STOCK AND MAXIMUM SHARES ALLOCATED. The shares of
stock subject to the provisions of the Plan and issuable upon the
grant of Stock Awards or upon the exercise of SARs or Options
granted under the Plan are shares of the Company's Common Stock,
$.001 par value per share (the "Stock"), which may be either
unissued or treasury shares. The Company may not issue more than
500,000 shares of Stock pursuant to the Plan, unless the Plan is
amended as provided in SECTION 1.3 or the maximum number of
shares subject to the Plan is adjusted as provided in SECTION 3.1.
Pursuant to Section 1.3(a) of the Stock Option Plan, this amendment
requires an affirmative vote of the holders of a majority of the shares of
the Company's Common Stock present in person or by proxy and voting at the
Annual Meeting. This Proposal 3 shall become effective on the date of such
affirmative vote by the Shareholders.
THE BOARD OF DIRECTORS BELIEVES THAT PROPOSAL 3 IS IN THE BEST
INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS AND RECOMMENDS A VOTE FOR
APPROVAL OF PROPOSAL 3.
It is the intention of the persons named in the accompanying form of
Proxy to vote the shares represented thereby in favor of such ratification
unless otherwise instructed in such Proxy.
PROPOSAL 4
RATIFICATION OF SELECTION OF INDEPENDENT
The Board of Directors of the Company has selected DiSanto Bertoline
& Company, P.C. to serve as independent accountants for the Company for the
fiscal year ending June 29, 2001. Such firm has examined the financial
statements of the Company since the Company's inception. The Board of
Directors considers DiSanto Bertoline & Company, P.C. to be well qualified.
Although it is not required to do so, the Board of Directors is submitting
its selection of the Company's independent accountants for ratification at
the Annual Meeting in order to ascertain the views of
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Shareholders regarding such selection. If the selection is not ratified,
the Board of Directors will reconsider its selection.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS VOTE
FOR RATIFICATION OF THE SELECTION OF DISANTO BERTOLINE & COMPANY, P.C. TO
EXAMINE THE CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY FOR THE FISCAL
YEAR ENDING JUNE 29, 2001.
It is the intention of the persons named in the accompanying form of
Proxy to vote the shares represented thereby in favor of such ratification
unless otherwise instructed in such Proxy.
A representative of DiSanto Bertoline & Company, P.C. will be present
at the Meeting with the opportunity to make a statement if such
representative desires to do so, and will be available to respond to
appropriate questions.
FINANCIAL STATEMENTS AND INFORMATION
The financial statements for the fiscal year ended June 30, 2000 were
included in the Company's form 10-KSB filed with the SEC on September 28, 2000.
SHAREHOLDER PROPOSALS TO BE PRESENTED
AT THE NEXT ANNUAL MEETING
Shareholders interested in presenting a proposal for consideration at
the Company's Annual Meeting of Shareholders in the year 2001 (the "2001
Annual Meeting') may do so by the following the procedures prescribed in
Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). To be eligible for inclusion in the Company's 2001 proxy
statement, shareholder proposals must be received by the Company's
Secretary no later than July 21, 2001. Under the rules of the Securities
and Exchange Commission, Shareholders submitting such proposals are
required to have held shares of the Company's Common Stock amounting to at
least $2,000 in market value or one percent of the Common Stock outstanding
for at least one year prior to the date on which such proposals are
submitted. Further, such Shareholders must continue to own at least that
amount of the Company's Common Stock through the date on which the Annual
Meeting is held.
-14-
TRANSACTIONS OF OTHER BUSINESS
At the date of this Proxy Statement, the only business which the Board
of Directors intends to present or knows that others will present at the
meeting is as set forth above. If any other matter or matters are properly
brought before the meeting, or any adjournment thereof, it is the intention
of the persons named in the accompanying form of proxy to vote the proxy on
such matters in accordance with their best judgement.
By Order of the Board of Directors
Geoffrey W. Ramsey
October 19, 2000
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HOST AMERICA CORPORATION
EXHIBITS TO PROXY STATEMENT
* Audit Committee Charter of Host America Corporation
* 2000 Stock Option Plan
AUDIT COMMITTEE CHARTER
The Audit Committee is a committee of the board of directors. Its
primary function is to assist the board in fulfilling its oversight
responsibilities by reviewing the financial information which will be
provided to the shareholders and others, the systems of internal controls
which management and the board of directors have established, and the audit
process.
In meeting its responsibilities, the Audit Committee is expected to:
1. Provide an open avenue of communication between the independent
accountant and the board of directors and the financial management of
the Company.
2. Review and update the Committee's charter annually.
3. Recommend to the board of directors the independent accountants to be
nominated, approve the compensation of the independent accountant,
review and evaluate the performance of the independent accountant and
approve the discharge of the independent accountant, where
appropriate.
4. Confirm and assure the independence of the independent accountant,
including a review of management consulting services and related fees
provided by the independent accountant, requesting a formal written
statement delineating all relationships between the independent
accountant and the Company, consistent with Independence Standards
Board Standard 1, recommending to the board of directors appropriate
action to ensure the independence of the independent accountant.
5. Inquire of management and the independent accountant about significant
risks or exposures and assess the steps management has taken to
minimize such risk to the Company.
6. Consider, in consultation with the independent accountant, the audit
scope and plan of the independent accountant.
7. Consider with management and the independent accountant the rationale
for employing audit firms other than the principal independent
accountant.
8. Review with management and the independent accountant the coordination
of audit effort to assure completeness of coverage, reduction of
redundant efforts, and the effective use of audit resources.
9. Consider and review with the independent accountant and the financial
management of the Company:
* The adequacy of the Company's internal controls including
computerized information system controls and security.
1
* Any related significant findings and recommendations of the
independent accountant together with management's responses
thereto.
10. Review with management and the independent accountant at the
completion of the annual examination:
* The Company's annual financial statements and related
footnotes.
* The independent accountant's audit of the financial
statements and its report thereon.
* Any significant changes required in the independent
accountant's audit plan.
* Any serious difficulties or disputes with management
encountered during the course of the audit.
* Other matters related to the conduct of the audit which are
to be communicated to the Committee under generally accepted
auditing standards.
11. Consider and review with management:
* Significant findings during the year and management's
responses thereto.
* Any difficulties encountered in the course of the audits,
including any restrictions on the scope of the work or
access to required information.
* Any changes required in the planned scope of the audit plan.
12. Review filings with the SEC and other published documents containing
the Company's financial statements and consider whether the
information contained in these documents is consistent with the
information contained in the financial statements.
13. Review with management and the independent accountant the interim
financial report before it is filed with the SEC or other regulators.
14. Review policies and procedures with respect to officers' expense
accounts and perquisites, including their use of corporate assets, and
consider the results of any review of those areas by the independent
accountant.
15. Review legal and regulatory matters that may have a material impact on
the financial statements, related Company compliance policies, and
programs and reports received from regulators.
2
16. Meet with the independent accountant and management in separate
executive sessions to discuss any matters that the Committee or these
groups believe should be discussed privately with the Audit Committee.
17. Report Committee actions to the board of directors with such
recommendations as the Committee may deem appropriate.
18. Prepare a letter for inclusion in the annual report that describes the
Committee's composition and responsibilities, and how they were
discharged.
19. Prepare a report, as prescribed by SEC Rules, to be included in the
Company's annual proxy or information statement, stating, among other
things:
* whether the Committee has reviewed and discussed the audited
financial statements with management;
* whether the Committee has discussed with the independent
accountant the matters required to be discussed by SAS 61,
as modified or supplemented;
* whether the Committee has received the written disclosures
and the letter from the independent accountant required by
Independence Standards Board Standard No. 1, as may be
modified or supplemented, and
* whether the Committee has discussed with the independent
accountant the independent accountant's independence;
* whether, based upon the review and discussions in
subparagraphs a. through d., above, the Committee
recommended to the board that the audited financial
statements be included in the Company's Annual Report on
Form 10-KSB for the last fiscal year for filing with the
SEC; and
* the name of each member of the Committee below the above
information in the Report.
20. The Audit Committee shall consult with the independent accountant to
ensure that the independent accountant reviews the financial
information included in the Company's Quarterly Reports on Form 10-Q
or 10-QSB prior to the Company's filing such reports with the SEC.
21. The Audit Committee shall have the power to conduct or authorize
investigations into any matters within the Committee's scope of
responsibilities. The Committee shall be empowered to retain
independent counsel, accountants, or others to assist it in the
conduct of any investigation.
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22. The Committee shall meet at least four times per year or more
frequently as circumstances require. The Committee may ask members of
management or others to attend the meeting and provide pertinent
information as necessary.
23. The Committee will perform such other functions as assigned by law,
the Company's charter or bylaws, or the board or directors.
The membership of the Audit Committee shall consist of at least two
members, a majority of which shall be independent members of the board of
directors who shall serve at the pleasure of the board of directors. Audit
Committee members and the Committee chairman shall be designated by the
full board of directors.
The duties and responsibilities of a member of the Audit Committee are
in addition to those duties set out for a member of the board of directors.
4
HOST AMERICA CORPORATION
2000 STOCK OPTION PLAN
ARTICLE I
1.1 PURPOSE OR PLAN; TERM.
(a) ADOPTION. On September 10, 2000 (the "Adoption Date"), the
Board of Directors (the "Board") of Host America Corporation, a Delaware
corporation (the "Company"), adopted this stock option plan to be known as
the 2000 Stock Option Plan (the "plan").
(b) DEFINED TERMS. All initially capitalized terms used hereby
shall have the meaning set forth in ARTICLE IV hereto.
(c) GENERAL PURPOSE. This 2000 Stock Option is intended to
encourage stock ownership by employees, officers, directors of and
consultants to Host America Corporation and its controlled, affiliated
subsidiary corporations (collectively, the "Company"), so that they may
acquire or increase their proprietary interest in the Company, and is
intended to facilitate the Company's efforts to (i) induce qualified
persons to become employees or officers of or consultants to the Company;
(ii) compensate employees, officers, directors and consultants for services
to the Company; and (iii) encourage such persons to remain in the employ of
or associated with the Company and to put forth maximum efforts for the
success of the Company. Such purpose shall be accomplished by providing for
the discretionary granting of options to acquire the Company's Stock
("Options"), the direct granting of the Company's Stock ("Stock Awards"),
and the granting of stock appreciation rights ("SARs"), (Stock Awards and
SARs shall be collectively referred to herein as "Awards").
(d) CHARACTER OF OPTIONS. Options granted under this Plan to
employees of the Company (or Parent or Subsidiary Corporations) that are
intended to qualify as an "incentive stock option" as defined in Code
section 422 ("Incentive Stock Option") will be specified in the applicable
stock option agreement. All other Options granted under this Plan will be
non-qualified options.
(e) RULE 16b-3 PLAN. The Plan is intended to comply with all
applicable conditions of Rule 16b-3 (and all subsequent revisions thereof)
promulgated under the Securities Exchange Act of 1934 (the "Act"). In such
instance, to the extent any provision of the Plan or action by a Committee
or the Board fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Board or such
Committee. In addition, the Board may amend the Plan from time to time as
it deems necessary in order to meet the requirements of any amendments to
Rule 16b-3 without the consent of the shareholders of the Company.
(f) DURATION OF PLAN. The term of the Plan is 10 years,
commencing on the date of adoption of the original Plan by the Board as
specified in SECTION 1.1(a) hereof. No Option or Award shall be granted
under the Plan unless granted within 10 years of the adoption
1
of the Plan by the Board, but Options or Awards outstanding on that date
shall not be terminated or otherwise affected by virtue of the Plan's
expiration.
1.2 STOCK AND MAXIMUM NUMBER OF SHARES SUBJECT TO PLAN.
(a) DESCRIPTION OF STOCK AND MAXIMUM SHARES ALLOCATED. The
shares of stock subject to the provisions of the Plan and issuable upon the
grant of Stock Awards or upon the exercise of SARs or Options granted under
the Plan are shares of the Company's Common Stock, $.001 par value per
share (the "Stock"), which may be either unissued or treasury shares. The
Company may not issue more than 500,000 shares of Stock pursuant to the
Plan, unless the Plan is amended as provided in SECTION 1.3 or the maximum
number of shares subject to the Plan is adjusted as provided in SECTION 3.1.
(b) CALCULATION OF AVAILABLE SHARES. The number of shares of
Stock available under the Plan shall be reduced: (i) by any shares of Stock
issued (including any shares of Stock withheld for tax withholding
requirements) upon exercise of an Option; and, (ii) by any shares of Stock
issued (including any shares of Stock withheld for tax withholding
requirements) upon the grant of a Stock Award or the exercise of an SAR.
(c) RESTORATION OF UNPURCHASED SHARES. If an Option or SAR
expires or terminates for any reason prior to its exercise in full and
before the term of the Plan expires, the shares of Stock subject to, but
not issued under, such Option or SAR shall, without further action or by or
on behalf of the Company, again be available under the Plan.
1.3 APPROVAL; AMENDMENTS.
(a) APPROVAL BY STOCKHOLDERS. The Plan shall be submitted to
the stockholders of the Company for their approval at a regular or special
meeting to be held within 12 months after the adoption of the Plan by the
Board. Stockholder approval shall be evidenced by the affirmative vote of
the holders of a majority of the shares of the Company's Common Stock
present in person or by proxy and voting at the meeting. The date such
stockholder approval has been obtained shall be referred to herein as the
"Effective Date."
(b) COMMENCEMENT OF PLAN. The Plan is effective immediately,
but if the Plan is not approved by the stockholders within 12 months after
its adoption by the Board, the Plan and all Options and Awards made
thereunder will automatically terminate and be forfeited to the same extent
and with the same effect as though the Plan had never been adopted.
(c) AMENDMENTS TO PLAN. The Board may, without action on the
part of the Company's stockholders, terminate or make such amendments to,
changes in and additions to the Plan as it may, from time to time, deem
necessary or appropriate and in the best interests of the Company;
provided, the Board may not, without the consent of the applicable
Optionholder, take any action which disqualifies any Option previously
granted under the Plan for treatment as an Incentive Stock Option or which
adversely affects or impairs the rights of the Optionholder of any
2
Option outstanding under the Plan, and further provided that, except as
provided in ARTICLE III hereof, the Board may not, without the approval of
the Company's stockholders: (i) increase the aggregate number of shares of
Stock subject to the Plan; (ii) reduce the exercise price at which Options
may be granted or the exercise price at which any outstanding Option may be
exercised; (iii) extend the term of the Plan; (iv) change the class of
persons eligible to receive Options or Awards under the Plan; or, (v)
materially increase the benefits accruing to participants under the Plan.
Notwithstanding the foregoing, Options or Awards may be granted under this
Plan to purchase shares of Stock in excess of the number of shares then
available for issuance under the Plan if (A) an amendment to increase the
maximum number of shares issuable under the Plan is adopted by the Board
prior to the initial grant of any such Option or Award and within one year
thereafter such amendment is approved by the Company's stockholders and (B)
each such Option or Award granted does not become exercisable or vested, in
whole or in part, at any time prior to the obtaining of such stockholder
approval.
ARTICLE II
2.1 PARTICIPANTS; ADMINISTRATION.
(a) ELIGIBILITY AND PARTICIPATION. Options and Awards may be
granted only to persons ("Eligible Persons") who at the time of grant are:
(i) employees (including officers and directors) of the Company or Parent
or Subsidiary Corporations; or, (ii) consultants or independent contractors
who provide valuable services to the Company or Parent or Subsidiary
Corporations; provided that Incentive Stock Options may only be granted to
employees of the Company (and its Parent or Subsidiary Corporations). The
Committee shall have full authority to determine which Eligible Persons are
to receive Option grants under the Plan, the number of shares to be covered
by each such grant, whether or not the granted Option is to be an Incentive
Stock Option, the time or times at which each such Option is to become
exercisable, and the maximum term for which the Option is to be
outstanding. The Committee shall also have full authority to determine
which Eligible Persons are to receive Awards and the conditions relating to
such Award.
(b) GENERAL ADMINISTRATION. The Plan shall be administered by
the Compensation Committee which shall make recommendations to the Board of
Directors with respect to the grant of Options and Awards. The Board of
Directors retains complete authority in its discretion, subject to and not
inconsistent with the express provisions of the Plan, to grant Options and
Awards pursuant to the Plan. The Committee shall administer the Plan and
make recommendations to the Board concerning the following: exercise of all
powers and authorities either specifically conferred under the Plan or
necessary or advisable in the administration of the Plan: to determine the
vesting schedule and other restrictions, if any, relating to Options and
Awards; to determine the Option Price; to determine the persons to whom,
and the time or times at which, Options and Awards shall be granted; to
determine the number of shares to be covered by each Option or Award; to
determine Fair Market Value per share; to interpret the Plan; to prescribe,
amend and rescind rules and regulations relating to the Plan; to determine
the terms and provisions of the Option agreements (which need not be
identical) entered into in connection with Options granted under the Plan;
and to make all other determinations deemed necessary or
3
advisable for the administration of the Plan. The Committee may delegate
to one or more of its members or to one or more agents such administrative
duties as it may deem advisable, and the Committee or any person to whom it
has delegated duties as aforesaid may employ one or more persons to render
advice with respect to any responsibility the Committee or such person may
have under the Plan.
(c) Options and Awards granted under the Plan shall be evidenced
by duly adopted resolutions of the Committee included in the minutes of the
meeting at which they are adopted or in a unanimous written consent.
(d) No member of the Committee or the Board shall be liable for
any action taken or determination made in good faith with respect to the
Plan or any Option or Award granted hereunder.
(e) In designating and selecting Eligible Persons for
participation in the Plan, the Committee shall consult with and give
consideration to the recommendations and criticisms submitted by
appropriate managerial and executive officers of the Company. The
Committee also shall take into account the duties and responsibilities of
the Eligible Persons, their past, present and potential contributions to
the success of the Company and such other factors as the Committee shall
deem relevant in connection with accomplishing the purpose of the Plan.
2.2 TERMS AND CONDITIONS OF OPTIONS.
(a) ALLOTMENT OF SHARES. The Committee shall determine the
number of shares of Stock to be optioned from time to time and the number
of shares to be optioned to any Eligible Person (the "Optioned Shares").
The grant of a Option to a person shall neither entitle such person to, nor
disqualify such person from, participation in any other grant of Options or
Awards under this Plan or any other stock option plan of the Company.
(b) EXERCISE PRICE. Upon the grant of any Option, the Committee
shall specify the option price per share. If the Option is intended to
qualify as an Incentive Stock Option under the Code, the option price per
share may not be less than 100 percent of the fair market value per share
of the stock on the date the Option is granted (110 percent if the Option
is granted to a stockholder who at the time the Option is granted owns or
is deemed to own stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the Company or of any
Parent or Subsidiary Corporation). If the Option is not intended to qualify
as an Incentive Stock Option under the Code, the option price per share may
not be less than 85 percent of the fair market value per share of the stock
on the date the Option is granted. The determination of the fair market
value of the Stock shall be made in accordance with the valuation
provisions of SECTION 3.5 hereof.
(c) INDIVIDUAL STOCK OPTION AGREEMENTS. Options granted under
the Plan shall be evidenced by option agreements in such form and content
as the Committee from time to time approves, which agreements shall
substantially comply with and be subject to the terms of the Plan,
including the terms and conditions of this SECTION 2.2. As determined by
the Committee,
4
each option agreement shall state: (i) the total number of shares to which
it pertains; (ii) the exercise price for the shares covered by the Option;
(iii) the time at which the Options vest and become exercisable; and, (iv)
the Option's scheduled expiration date. The option agreements may contain
such other provisions or conditions as the Committee deems necessary or
appropriate to effectuate the sense and purpose of the Plan, including
covenants by the Optionholder not to compete and remedies for the Company
in the event of the breach of any such covenant.
(d) OPTION PERIOD. No Option granted under the Plan that is
intended to be an Incentive Stock Option shall be exercisable for a period
in excess of 10 years from the date of its grant (five years if the Option
is granted to a shareholder who at the time the Option is granted owns or
is deemed to own stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the Company or of any
Subsidiary Corporation), subject to earlier termination in the event of
termination of employment, retirement or death of the Optionholder. An
Option may be exercised in full or in part at any time or from time to time
during the term of the Option or provide for its exercise in stated
installments at stated times during the Option's term.
(e) VESTING; LIMITATIONS. The time at which Options vest with
respect to an Optionholder shall be in the discretion of that
Optionholder's Committee; provided that no Options shall vest prior to the
Effective Date. Notwithstanding the foregoing, to the extent an Option is
intended to qualify as an Incentive Stock Option, the aggregate fair market
value (determined as of the respective date or dates of grant) of the Stock
for which one or more Options granted to any person under this Plan (or any
other option plan of the Company or its Parent or Subsidiary Corporations)
may for the first time become exercisable as Incentive Stock Options during
any one calendar year shall not exceed the sum of $100,000 (referred to
herein as the "$100,000 Limitation"). To the extent that any person holds
two or more Options which become exercisable for the first time in the same
calendar year, the foregoing limitation on the exercisability as an
Incentive Stock Option shall be applied on the basis of the order in which
such Options are granted.
(f) NO FRACTIONAL SHARES. Options shall be exercisable only for
whole shares; no fractional shares will be issuable upon exercise of any
Option granted under the Plan.
(g) METHOD OF EXERCISE. To exercise a Option, an Optionholder
(or in the case of an exercise after an Optionholder's death, such
Optionholder's executor, administrator, heir or legatee, as the case may
be) must take the following action:
(i) execute and deliver to the Company a written notice of
exercise signed in writing by the person exercising the Option specifying
the number of shares of Stock with respect to which the Option is being
exercised;
(ii) pay the aggregate Option Price in one of the alternate
forms as set forth in SECTION 2.2(h) below; and,
5
(iii) furnish appropriate documentation that the person or
persons exercising the Option (if other than the Optionholder) has the
right to exercise such Option.
(iv) as soon as practical after the Exercise Date, the
Company will mail or deliver to or on behalf of the Optionholder (or any
other person or persons exercising this Option under the Plan) a
certificate or certificates representing the Stock acquired upon exercise
of the Option.
(h) PAYMENT PRICE. The aggregate Option Price shall be payable
in one of the alternative forms specified below:
(i) Full payment in cash or check made payable to the
Company's order;
(ii) At the Company's option, full payment in shares of
Stock held for the requisite period necessary to avoid a charge to the
Company's reported earnings and valued at fair market value on the Exercise
Date (as determined in accordance with SECTION 3.5 hereof); or,
(iii) If a cashless exercise Plan has been implemented by
the Board, full payment through a sale and remittance procedure pursuant to
which the Optionholder (A) shall provide irrevocable written instructions
to a designated brokerage firm to effect the immediate sale of the Optioned
Shares to be purchased and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the Optioned Shares to be purchased and (B)
shall concurrently provide written directives to the Company to deliver the
certificates for the Optioned Shares to be purchased directly to such
brokerage firm in order to complete the sale transaction.
(i) RIGHTS OF A STOCKHOLDER. An Optionholder shall not have any
of the rights of a stockholder with respect to Optioned Shares until such
individual shall have exercised the Option and paid the Option Price for
the Optioned Shares. No adjustment will be made for dividends or other
rights for which the record date is prior to the date such stock
certificate is issued.
(j) REPURCHASE RIGHT. The Committee may, in its sole discretion,
set forth other terms and conditions upon which the Company (or its assigns)
shall have the right to repurchase shares of Stock acquired by an
Optionholder pursuant to a Option. Any repurchase right of the Company
shall be exercisable by the Company (or its assignees) upon such terms and
conditions as the Committee may specify in a stock repurchase agreement in
such form and content as the Committee may approve evidencing such right.
The Committee may also in its discretion establish as a term and condition
of one or more Options granted under the Plan that the Company shall have
a right of first refusal with respect to any proposed sale or other
disposition by the Optionholder of any shares of Stock issued upon the
exercise of such Options. Any such right of first refusal shall be
exercisable by the Company (or its assigns) in accordance with the terms
and conditions set forth in a stock repurchase agreement.
6
(k) TERMINATION OF SERVICE. If any Optionholder ceases to be in
Service to the Company for a reason other than permanent disability or
death, such Optionholder must, within 90 days after the date of termination
of such Service, but in no event after the Option's stated expiration date,
exercise some or all of the Options that the Optionholder was entitled to
exercise on the date the Optionholder's Service terminated; provided, that
if the Optionholder is discharged for Cause or commits acts detrimental to
the Company's interests after the Service of the Optionholder has been
terminated, then the Option will thereafter be void for all purposes.
"cause" shall mean a termination of Service based upon a finding by the
applicable Committee that the Optionholder: (i) has committed a felony
involving dishonesty, fraud, theft or embezzlement; (ii) after written
notice from the Company, has repeatedly failed or refused, in a material
respect, to follow reasonable policies or directives established by the
Company; (iii) after written notice from the Company, has willfully and
persistently failed to attend to material duties or obligations; (iv) has
performed an act or failed to act, which, if he were prosecuted and
convicted, would constitute a theft of money or property of the Company;
or, (v) has misrepresented or concealed a material fact for purposes of
securing employment with the Company. If any Optionholder ceases to be in
Service to the Company by reason of permanent disability within the meaning
of section 22(e)(3) of the Code (as determined by the applicable
Committee), the Optionholder will have 12 months after the date of
termination of Service, but in no event after the stated expiration date of
the Optionholder's Options, to exercise Options that the Optionholders was
entitled to exercise on the date the Optionholder's Service terminated as
a result of the disability.
(l) DEATH OF OPTIONHOLDER. If an Optionholder dies while in the
Company's Service, any Options that the Optionholder was entitled to
exercise on the date of death will be exercisable within the six-month
period following the date of issuance of letters testamentary or letters of
administration of a deceased Optionholder, in the case of the
Optionholder's death during his employment by the Company, but not later
than one year after the Optionholder's death or until the stated expiration
date of the Optionholder's Option, whichever occurs first, by the person or
persons ("successors") to whom the Optionholder's rights pass under a will
or by the laws of descent and distribution. As soon as practicable after
receipt by the Company of such notice and of payment in full of the Option
Price, a certificate or certificates representing the Optioned Shares shall
be registered in the name or names specified by the successors in the
written notice of exercise and mall be delivered to the successors.
(m) OTHER PLAN PROVISIONS STILL APPLICABLE. If a Option is
exercised upon the termination of Service or death of an Optionholder under
this SECTION 2.2, the other provisions of the Plan will continue to apply
to such exercise, including the requirement that the Optionholder or its
successor may be required to enter into a Stock Repurchase Agreement.
(n) DEFINITION OF "SERVICE". For purposes of this Plan, unless
it is evidenced otherwise in the option agreement with the Optionholder,
the Optionholder is deemed to be in "Service" to the Company so long as
such individual renders continuous services on a periodic basis to the
Company (or to any Parent or Subsidiary Corporation) in the capacity of an
employee, director, or an independent consultant or advisor. In the
discretion of the applicable Committee, an Optionholder will be considered
to be rendering continuous services to the Company even if
7
the type of services change, e.g., from employee to independent consultant.
The Optionholder will be considered to be an employee for so long as such
individual remains in the employ of the Company or one or more of its
Parent or Subsidiary Corporations.
2.3 TERMS AND CONDITIONS OF STOCK AWARDS.
(a) ELIGIBILITY. All Eligible Persons shall be eligible to
receive Stock Awards. The Committee shall determine the number of shares of
Stock to be awarded from time to time to any Eligible Person. Except as
provided otherwise in this Plan, the grant of a Stock Award to a person (a
"Grantee") shall neither entitle such person to, nor disqualify such person
from participation in, any other grant of options or awards by the Company,
whether under this Plan or under any other stock option or award plan of
the Company.
(b) AWARD FOR SERVICES RENDERED. Stock Awards shall be granted
in recognition of an Eligible Person's services to the Company. The grantee
of any such Stock Award shall not be required to pay any consideration to
the Company upon receipt of such Stock Award, except as may be required to
satisfy any applicable corporate law, employment tax and/or income tax
withholding requirements.
(c) CONDITIONS TO AWARD. All Stock Awards shall be subject to
such terms, conditions, restrictions, or limitations as the Committee deems
appropriate, including, by way of illustration but not by way of
limitation, restrictions on transferability, requirements of continued
employment, individual performance or the financial performance of the
Company, or payment by the recipient of any applicable employment or
withholding taxes. Such Committee may modify or accelerate the termination
of the restrictions applicable to any Stock Award under the circumstances
as it deems appropriate.
(d) AWARD AGREEMENTS. The Committee may require as a condition
to a Stock Award that the recipient of such Stock Award enter into an award
agreement in such form and content as that Committee from time to time approves.
2.4 TERMS AND CONDITIONS OF SARS.
(a) ELIGIBILITY. All Eligible Persons shall be eligible to
receive SARs. The Committee shall determine the SARs to be awarded from
time to time to any Eligible Person. The grant of a SAR to a person shall
neither entitle such person to, nor disqualify such person from
participation in, any other grant of options or awards by the Company,
whether under this Plan or under any other stock option or award plan of
the Company.
(b) AWARD OF SARS. Concurrently with or subsequent to the grant
of any Option to purchase one or more shares of Stock, the Committee may
award to the Optionholder with respect to each share of Stock, underlying
the Option, a related SAR permitting the Optionholder to be paid any
appreciation on that Stock in lieu of exercising the Option. In addition,
a Committee may award to any Eligible Person a SAR permitting the Eligible
Person to
8
be paid the appreciation on a designated number of shares of the Stock,
whether or not such Shares are actually issued.
(c) CONDITIONS TO SAR. All SARs shall be subject to such terms,
conditions, restrictions or limitations as the Committee deems appropriate,
including, by way of illustration but not by way of limitation,
restrictions on transferability, requirements of continued employment,
individual performance, financial performance of the Company, or payment by
the recipient of any applicable employment or withholding taxes. The
Committee may modify or accelerate the termination of the restrictions
applicable to any SAR under the circumstances as it deems appropriate.
(d) SAR AGREEMENTS. The Committee may require as a condition to
the grant of a SAR that the recipient of such SAR enter into a SAR
agreement in such form and content as that Committee from time to time approves.
(e) EXERCISE. An Eligible Person who has been granted a SAR may
exercise such SAR subject to the conditions specified in the SAR agreement
by the Committee.
(f) AMOUNT OF PAYMENT. The amount of payment to which the
grantee of a SAR shall be entitled upon the exercise of each SAR shall be
equal to the amount, if any, by which the fair market value of the
specified shares of Stock on the exercise date exceeds the fair market
value of the specified shares of Stock on the date the Option related to
the SAR was granted or became effective, or, if the SAR is not related to
any Option, on the date the SAR was granted or became effective.
(g) FORM OF PAYMENT. The SAR may be paid in either cash or
Stock, as determined in the discretion of the Committee and set forth in
the SAR agreement. If the payment is in Stock, the number of shares to be
paid to the participant shall be determined by dividing the amount of the
payment determined pursuant to SECTION 2.4(f) by the fair market value of
a share of Stock on the exercise date of such SAR. As soon as practical
after exercise, the Company shall deliver to the SAR grantee a certificate
or certificates for such shares of Stock.
(h) TERMINATION OF EMPLOYMENT; DEATH. SECTIONS 2.2(k) AND (1),
applicable to Options, shall apply equally to SARs.
ARTICLE III
3.1 CAPITAL ADJUSTMENTS. The aggregate number of shares of Stock
subject to the Plan, the number of shares of Stock covered by outstanding
Options and Awards, and the price per share stated in all outstanding
Options and Awards shall be proportionately adjusted for any increase or
decrease in the number of outstanding shares of Stock of the Company
resulting from a subdivision or consolidation of shares or any other
capital adjustment or the payment of a stock dividend or any other increase
or decrease in the number of such shares effected without the Company's
receipt of consideration therefor in money, services or property.
9
3.2 MERGERS, ETC. If the Company is the surviving corporation in any
merger or consolidation (not including a Corporate Transaction), any Option
or Award granted under the Plan shall pertain to and apply to the
securities to which a holder of the number of shares of Stock subject to
the Option or Award would have been entitled prior to the merger or
consolidation. Except as provided in SECTION 3.3 hereof, a dissolution or
liquidation of the Company shall cause every Option or Award outstanding
hereunder to terminate.
3.3 CORPORATE TRANSACTION. In the event of stockholder approval of a
Corporate Transaction, the Committee shall have the discretion and
authority, exercisable at any time, to provide for the automatic
acceleration of one or more of the outstanding Options or Awards granted by
it under the Plan. Upon the consummation of the Corporate Transaction, all
Options shall, to the extent not previously exercised, terminate and cease
to be outstanding.
3.4 CHANGE IN CONTROL.
(a) In the event of a Change in Control, the Committee shall
have the discretion and authority, exercisable at any time, whether before
or after the Change in Control, to provide for the automatic acceleration
of one or more outstanding Options or Awards granted by it under the Plan
upon the occurrence of such Change in Control. The Committee may also
impose limitations upon the automatic acceleration of such Options or
Awards to the extent it deems appropriate. Any Options or Awards
accelerated upon a Change in Control will remain fully exercisable until
the expiration or sooner termination of the Option term.
(b) INCENTIVE STOCK OPTION LIMITS. The exercisability of any
Options which are intended to qualify as Incentive Stock Options and which
are accelerated by the Committee in connection with a pending Corporation
Transaction or Change in Control shall, except as otherwise provided in the
discretion of the Committee and the Optionholder, remain subject to the
$100,000 Limitation and vest as quickly as possible without violating the
$100,000 Limitation.
3.5 CALCULATION OF FAIR MARKET VALUE OF STOCK. The fair market value
of a share of Stock on any relevant date shall be determined in accordance
with the following provisions:
(a) If the Stock is not at the time listed or admitted to
trading on any stock exchange but is traded in the over-the-counter market,
the fair market value shall be the mean between the highest bid and lowest
asked prices (or, if such information is available, the closing selling
price) per share of Stock on the date in question in the over-the-counter
market, as such prices are reported by the National Association of
Securities Dealers through its NASDAQ system or any successor system. If
there are no reported bid and asked prices (or closing selling price) for
the Stock on the date in question, then the mean between the highest bid
price and lowest asked price (or the closing selling price) on the last
preceding date for which such quotations exist shall be determinative of
fair market value.
(b) If the Stock is at the time listed or admitted to trading on
any stock exchange, then the fair market value shall be the closing selling
price per share of Stock on the
10
date in question on the stock exchange determined by the Board to be the
primary market for the Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no reported
sale of Stock on such exchange on the date in question, then the fair
market value shall be the closing selling price on the exchange on the last
preceding date for which such quotation exists.
(c) If the Stock at the time is neither listed nor admitted to
trading on any stock exchange nor traded in the over-the-counter market,
then the fair market value shall be determined by the Board after taking
into account such factors as the Board shall deem appropriate, including
one or more independent professional appraisals.
3.6 USE OF PROCEEDS. The proceeds received by the Company from the
sale of Stock pursuant to the exercise of Options or Awards hereunder, if
any, shall be used for general corporate purposes.
3.7 CANCELLATION OF OPTIONS. The Committee shall have the authority
to effect, at any time and from time to time, with the consent of the
affected Optionholders, the cancellation of any or all outstanding Options
granted under the Plan by that Committee and to grant in substitution
therefore new Options under the Plan covering the same or different numbers
of shares of Stock as long as such new Options have an exercise price per
share of Stock no less than the minimum exercise price as set forth in
SECTION 2.2(b) hereof on the new grant date.
3.8 REGULATORY APPROVALS. The implementation of the Plan, granting
of any Option or Award hereunder, and the issuance of Stock upon the
exercise of any such Option or Award shall be subject to the procurement by
the Company of all approvals and permits required by regulatory authorities
having jurisdiction over the Plan, the Options or Awards granted under it
and the Stock issued pursuant to it.
3.9 INDEMNIFICATION. In addition to such other rights of
indemnification as they may have, the members of the Committee shall be
indemnified and held harmless by the Company, to the extent permitted under
applicable law, for, from and against all costs and expenses reasonably
incurred by them in connection with any action, legal proceeding to which
any member thereof may be a party by reason of any action taken, failure to
act under or in connection with the Plan or any rights granted thereunder
and against all amounts paid by them in settlement thereof or paid by them
in satisfaction of a judgment of any such action, suit or proceeding,
except a judgment based upon a finding of bad faith.
3.10 PLAN NOT EXCLUSIVE. This Plan is not intended to be the
exclusive means by which the Company may issue options or warrants to
acquire its Stock, stock awards or any other type of award. To the extent
permitted by applicable law, any such other option, warrants or awards may
he issued by the Company other than pursuant to this Plan without
shareholder approval.
3.11 COMPANY RIGHTS. The grants of Options shall in no way affect the
right of the Company to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.
11
3.12 ASSIGNMENT. The right to acquire Stock or other assets under the
Plan may not be assigned, encumbered or otherwise transferred by any
Optionholder except as specifically provided herein. No Option or Award
granted under the Plan or any of the rights and privileges conferred
thereby shall be assignable or transferable by an Optionholder or grantee
other than by will or the laws of descent and distribution, and such Option
or Award shall be exercisable during the Optionholder's or grantee's
lifetime only by the Optionholder or grantee. Notwithstanding the
foregoing, any Options or Awards granted pursuant to the Plan may be
assigned, encumbered or otherwise transferred by the Optionholder or
grantee if specifically allowed by the Committee upon the grant of such
Option or Award. The provisions of the Plan shall inure to the benefit of,
and be binding upon, the Company and its successors or assigns, and the
Optionholders. the legal representatives of their respective estates, their
respective heirs or legatees and their permitted assignees.
3.13 SECURITIES REGISTRATION.
(a) LEGEND ON CERTIFICATES. All certificates representing
shares of Stock issued under the Plan shall be endorsed with a legend
reading as follows:
The shares of Common Stock evidenced by this certificate have been issued
to the registered owner in reliance upon written representations that these
shares have been purchased solely for investment. These shares may not he
sold, transferred or assigned unless in the opinion of the Company and its
legal counsel such sale, transfer or assignment will not be in violation of
the Securities Act of 1933, as amended, and the rules and regulations
thereunder.
(b) PRIVATE OFFERING FOR INVESTMENT ONLY. The Options and
Awards are and shall be made available only to a limited number of present
and future executives, directors, employees and/or consultants who have
knowledge of the Company's financial condition, management and its affairs.
The Plan is not intended to provide additional capital for the Company, but
to encourage ownership of Stock among the Company's employees. By the act
of accepting an Option or Award, each grantee agrees: (i) that, any shares
of Stock acquired will be solely for investment not with any intention to
resell or redistribute those shares; and, (ii) such intention will be
confirmed by an appropriate certificate at the time the Stock is acquired
if requested by the Company. The neglect or failure to execute such a
certificate, however, shall not limit or negate the foregoing agreement.
(c) REGISTRATION STATEMENT. If a Registration Statement
covering the shares of Stock issuable under the Plan as filed under the
Securities Exchange Act of 1933, as amended, and as declared effective by
the Securities Exchange Commission, the provisions of SECTIONS 3.13(a) AND
(b) shall terminate during the period of time that such Registration
Statement, as periodically amended, remains effective.
12
3.14 TAX WITHHOLDING.
(a) GENERAL. The Company's obligation to deliver Stock under the
Plan shall be subject to the satisfaction of all applicable federal, state
and local income tax withholding requirements.
(b) SHARES TO PAY FOR WITHHOLDING. The Board may, in its
discretion and in accordance with the provisions of this SECTION 3.14(b)
and such supplemental roles as it may from time to time adopt (including
the applicable safe-harbor provisions of SEC Rule 16b-3), provide any or
all Optionholders or Grantees with the right to use shares of Stock in
satisfaction of all or part of the federal, state and local income tax
liabilities incurred by such Optionholders or Grantees in connection with
the receipt of Stock ("Taxes"). Such right may be provided to any such
Optionholder or Grantee in either or both of the following formats:
(i) STOCK WITHHOLDING. An Optionholder or Grantee may be
provided with the election, which may be subject to approval by the
Committee, to have the Company withhold, from the Stock otherwise issuable,
a portion of those shares of Stock with an aggregate fair market value
equal to the percentage of the applicable Taxes (not to exceed 100 percent)
designated by the Optionholder or Grantee.
(ii) STOCK DELIVERY. The Board may, in its discretion,
provide the Optionholder or Grantee with the election to deliver to the
Company, at the time the Option is exercised or Stock is awarded, one or
more shares of Stock previously acquired by such individual (other than
pursuant to the transaction triggering the Taxes) with an aggregate fair
market value equal to the percentage of applicable taxes incurred in
connection with such Option exercise or Stock Award (not to exceed 100
percent) designated by the Optionholder or Grantee.
3.15 GOVERNING LAW. The Plan shall be governed by and all questions
hereunder shall he determined in accordance with the laws of the State of
Colorado.
ARTICLE IV
DEFINITIONS
The following capitalized terms used in this Plan shall have the meaning
described below:
"AFFILIATES" shall mean all "executive officers" (as that term is defined
in Rule 16a-1(f) promulgated under the Act) and directors of the Company
and all persons who own ten percent or more of the Company's issued and
outstanding Stock.
"AWARD" shall mean a Stock Award or SAR under the Plan.
"BOARD" shall mean the Board of Directors of the Company.
"CHANGE IN CONTROL" shall mean and include the following transactions or
situations:
13
(a) A sale, transfer, or other disposition by the Company
through a single transaction or a series of transactions of securities of
the Company representing 30 percent or more of the combined voting power of
the Company's then outstanding securities to any "Unrelated Person" or
"Unrelated Persons" acting in concert with one another. For purposes of
this Section, the term "Person" shall mean and include any individual,
partnership, joint venture, association, trust corporation, or other entity
(including a "group" as referred to in Section 13(d)(3) of the Act). For
purposes of this Section, the term "Unrelated Person" shall mean and
include any Person other than the Company, a wholly-owned subsidiary of the
Company, or an employee benefit plan of the Company.
(b) A sale, transfer, or other disposition through a single
transaction or a series of transactions of all or substantially all of the
assets of the Company to an Unrelated Person or Unrelated Persons acting in
concert with one another.
(c) A change in the ownership of the Company through a single
transaction or a series of transactions such that any Unrelated Person or
Unrelated Persons acting in concert with one another become the "Beneficial
Owner," directly or indirectly, of securities of the Company representing
at least 30 percent of the combined, voting power of the Company's then
outstanding securities. For purposes of this Section, the term "Beneficial
Owner" shall have the same meaning as given to that term in Rule 13d-3
promulgated under the Act, provided that any pledgee of voting securities
is not deemed to be the Beneficial Owner thereof prior to its acquisition
of voting rights with respect to such securities.
(d) Any consolidation or merger of the Company with or into an
Unrelated Person, unless immediately after the consolidation or merger the
holders of the common stock of the Company immediately prior to the
consolidation or merger are the Beneficial Owners of securities of the
surviving corporation representing at least 50 percent of the combined
voting power of the surviving corporation's then outstanding securities.
(e) During any period of two years, individuals who, at the
beginning of such period, constituted the Board of Directors of the Company
cease, for any reason, to constitute at least a majority thereof, unless
the election or nomination for election of each new director was approved
by the vote of at least two-thirds of the directors then still in office
who were directors at the beginning of such period.
(f) A change in control of the Company of a nature that would be
required to be reported in response to Item 6(e) of Schedule l4A of
Regulation 14A promulgated under the Act, or any successor regulation of
similar import, regardless of whether the Company is subject to such
reporting requirement.
Notwithstanding any provision hereof to the contrary, the filing of a
proceeding for the reorganization of the Company under Chapter 11 of the
General Bankruptcy Code or any successor or other statute of similar import
shall not be deemed to be a Change of Control for purposes of this Plan.
14
"CODE" shall mean the internal Revenue Code of 1986, as amended.
"COMMITTEE" shall mean the Compensation Committee appointed by the Board,
if one has been appointed. If no Committee has been appointed, the term
"committee" shall mean the Board.
"COMPANY" shall mean Host America Corporation, a Delaware corporation.
"CORPORATE TRANSACTION" shall mean: (a) a merger or consolidation in which
the Company is not the surviving entity, except for a transaction the
principal purposes of which is to change the state in which the Company is
incorporated; (b) the sale, transfer of or other disposition of all or
substantially all of the assets of the Company and complete liquidation or
dissolution of the Company; or, (c) any reverse merger in which the Company
is the surviving entity hut in which the securities possessing more than 50
percent of the total combined voting power of the Company's outstanding
securities are transferred to a person or persons different from those who
held such securities immediately prior to such merger.
"EFFECTIVE DATE" shall mean the date that the Plan has been approved by the
Stockholders as required by SECTION 1 3(a) hereof.
"ELIGIBLE PERSONS" shall mean, with respect to the Plan, those persons who,
at the time that the Option or Award is granted, are (i) employees
(including officers and directors) of the Company or Parent or Subsidiary
Corporations, or (ii) consultants or independent contractors who provide
valuable services to The Company or Parent or Subsidiary Corporations.
"EXERCISE DATE" shall be the date on which written notice of the exercise
of an Option is delivered to the Company in accordance with the
requirements of the Plan.
"GRANTEE" shall mean an Eligible Person that has received an Award.
"INCENTIVE STOCK OPTION" shall mean a Option that is intended to qualify as
an "Incentive stock option" under Code section 422.
"NON-AFFILIATES" shall mean all persons who are not Affiliates.
"NON-EMPLOYEE DIRECTOR" shall have the same meaning as ascribed under Rule
16b-3(b)(3)(i) of the Securities Exchange Act of 1934, as amended.
"$100,000 LIMITATION" shall mean the limitation in which the aggregate fair
market value (determined as of the respective date or dates of grant) of
the Stock for which one or more Options granted to any person under this
Plan (or any other option plan of the Company or any Parent or Subsidiary
Corporation) may for the first time be exercisable as Incentive Stock
Options during any one calendar year shall not exceed the sum of $100,000.
"OPTIONHOLDER" shall mean an Eligible Person or Eligible Director to whom
Options have been granted.
15
"OPTIONED SHARES" shall be those shares of Stock to be optioned from time
to time to any Eligible Person or Directors.
"OPTION PRICE" shall mean the option price per share as specified by the
Committee or by the terms of the Plan.
"OPTIONS" shall mean options granted under the Plan to acquire Stock.
"PARENT" OR "PARENT CORPORATION" shall mean any corporation as defined in
Section 424(e) of the Code, with respect to the Corporation.
"PLAN" shall mean The 2000 Stock Option Plan for the Company.
"SAR" shall mean stock appreciation rights granted pursuant to SECTION 2.4
hereof.
"SERVICE" shall have the meaning set forth in SECTION 2.2(n) hereof.
"STOCK" shall mean shares of the Company's Common Stock, $.001 par value
per share, which may be unissued or treasury shares, as the Board may from
time to time determine.
"STOCK AWARDS" shall mean Stock directly granted under the Plan.
"SUBSIDIARY CORPORATION" shall mean any corporation in the unbroken chain
of corporations starting with the employer corporation, where, at each link
of the chain, the corporation and the link above owns at least 50 percent
of the combined voting power of all classes of stock in the corporation below.
EXECUTED as of the 10th day of September, 2000.
HOST AMERICA CORPORATION
By:________________________
Name: Geoffrey W. Ramsey
Its: President
16
PROXY PROXY
- ----- -----
- -------------------------------------------------------------------------
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDER
SOLICITED BY THE BOARD OF DIRECTORS
- -------------------------------------------------------------------------
The undersigned hereby constitutes and appoints Geoffrey W. Ramsey and
David J. Murphy, and each of them, the true and lawful attorneys and
proxies of the undersigned, with full power of substitution and
appointment, for and in the name, place and stead of the undersigned, to
act for and vote all of the undersigned's shares of the $.001 par value
Common Stock of Host America Corporation, a Colorado corporation at the
Annual Meeting of Shareholders to be held at 310 West Shepard Street,
Hamden, Connecticut at 10:00 a.m. Eastern Time, on November 21, 2000, and
any and all adjournments thereof, for the following purposes:
THE SHARES REPRESENTED HEREBY SHALL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS MADE, SUCH SHARES SHALL BE VOTED IN FAVOR OF ALL PROPOSALS
CONTAINED IN THE PROXY STATEMENT.
A vote FOR the following proposals is recommended by the Board of
Directors:
1. To authorize the Company's Board of Directors to amend the
Articles of Incorporation to modify the lengths of the terms of
the directors of the Company;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. To elect seven directors as proposed in the Proxy Statement to
such terms as will be required by the Articles of Incorporation
as may be amended by Proposal 1, above;
Patrick J. Healy [ ] FOR [ ] AGAINST [ ] ABSTAIN
John D'Antona [ ] FOR [ ] AGAINST [ ] ABSTAIN
Anne L. Ramsey [ ] FOR [ ] AGAINST [ ] ABSTAIN
Thomas P. Eagan [ ] FOR [ ] AGAINST [ ] ABSTAIN
Geoffrey W. Ramsey [ ] FOR [ ] AGAINST [ ] ABSTAIN
David J. Murphy [ ] FOR [ ] AGAINST [ ] ABSTAIN
Gilbert Rossomando [ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Ratification of the Company's Stock Option Plan and an amendment
increasing the maximum number of shares reserved for issuance
thereunder to 500,000 shares of Common Stock
[ ] FOR [ ] AGAINST [ ] ABSTAIN
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
4. To ratify the selection of DiSanto Bertoline & Company, P.C. as
independent auditors of the Company for the year ending June 29, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW. [ ]
_________________________________
_________________________________
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_________________________________
Even if you are planning to attend the meeting in person, you are
urged to sign and mail the Proxy in the return envelope so that your stock
may be represented at the meeting.
Do you plan to attend the Annual Meeting: [ ] YES [ ] NO
Sign exactly as your name(s) appears on your stock certificate. If
shares of stock stand on record in the names of two or more persons or in
the name of husband and wife, whether as joint tenants or otherwise, both
or all of such persons should sign the above Proxy. If shares of stock are
held of record by a corporation, the Proxy should be executed by the
president or Vice President and the Secretary or Assistant Secretary, and
the corporate seal should be affixed thereto. Executors or administrators
or other fiduciaries who execute the above Proxy for a deceased shareholder
should give their title. Please date the Proxy.
Signature(s) ____________________________ Date: ____________________
____________________________ Date: ____________________