UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by registrant [x]
Filed by a party other than the registrant [_]
Check the appropriate box:
[_] Preliminary proxy statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive proxy statement
[_] Definitive additional materials
[_] Soliciting material pursuant to 240.14a-12
CALTON, INC.
______________________________________________
(Name of Registrant as Specified in its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I) (1) and 0-11.
1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:(1)
________________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
5) Total fee paid:
________________________________________________________________________________
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
________________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
________________________________________________________________________________
3) Filing Party:
________________________________________________________________________________
4) Date Filed:
________________________________________________________________________________
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
CALTON, INC.
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 9, 2007
-----------------------------------
TO THE SHAREHOLDERS OF CALTON, INC.
The Annual Meeting of the Shareholders of CALTON, INC. (the "Company")
will be held on Wednesday, May 9, 2007 at the Homes by Calton Model Center,
Pointe West Community, 7614 South Village Square, Vero Beach, Florida at 10:00
a.m., local time, for the following purposes:
1. To elect two (2) directors.
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Holders of Common Stock of record at the close of business on March 26,
2007 are entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
/s/ Mary H. Magee
-----------------
MARY H. MAGEE
SECRETARY
Red Bank, New Jersey
March 30, 2007
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. IF YOU ARE UNABLE TO DO
SO, PLEASE MARK, SIGN AND DATE THE ACCOMPANYING PROXY AND MAIL IT AT ONCE IN THE
ENCLOSED ENVELOPE. PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION WILL BE
APPRECIATED.
CALTON, INC.
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PROXY STATEMENT
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GENERAL INFORMATION
This Proxy Statement is furnished to the holders of Calton, Inc. (the
"Company" or "Calton") Common Stock, $.05 par value ("Common Stock"), in
connection with the solicitation of proxies for use at the annual meeting of
shareholders to be held on May 9, 2007, and at any adjournment thereof (the
"meeting" or "annual meeting"), pursuant to the accompanying Notice of Annual
Meeting of Shareholders. Holders of Common Stock are referred to herein
collectively as the "shareholders." Forms of proxies for use at the meeting are
also enclosed. The Company anticipates mailing this Proxy Statement to its
shareholders on or about March 30, 2007. The executive offices of the Company
are located at 2050 40th Avenue, Suite One, Vero Beach, Florida 32960.
Shareholders may revoke the authority granted by their execution of
proxies at any time before the effective exercise of proxies by filing written
notice of such revocation with the secretary of the meeting. Presence at the
meeting does not of itself revoke the proxy; however, a vote cast at the meeting
by written ballot will revoke the proxy. All shares represented by executed and
unrevoked proxies will be voted in accordance with the specifications therein.
Proxies submitted without specification will be voted FOR the election of the
nominees for director named herein. Management is not aware at the date hereof
of any matters to be presented at the meeting other than the election of the
directors. If any other matter is properly presented, the persons named in the
proxy will vote thereon according to their best judgment.
Proxies for use at the meeting are being solicited by the Board of
Directors of the Company. The cost of preparing, assembling and mailing the
proxy material is to be borne by the Company. It is not anticipated that any
compensation will be paid for soliciting proxies, and the Company does not
intend to employ specially engaged personnel of the Company or other paid
solicitors in the solicitation of proxies. It is contemplated that proxies will
be solicited principally through the mail, but directors, officers and employees
of the Company may, without additional compensation, solicit proxies personally
or by telephone, facsimile transmission or letter.
VOTING SECURITIES
The voting securities entitled to vote at the meeting consist of shares
of Common Stock, with each share entitling its owner to one vote on an equal
basis. On March 26, 2007, the number of outstanding shares of Common Stock was
9,629,511. Only shareholders of record on the books of the Company at the close
of business on March 26, 2007 will be entitled to vote at the meeting. The
holders of a majority of the outstanding shares of Common Stock, present in
person or by proxy, will constitute a quorum at the meeting. The affirmative
vote of a plurality
of the shares of Common Stock present in person or represented by proxy and
entitled to vote, is required for the election of directors. The proxy card
provides space for a shareholder to withhold votes for any nominee for the Board
of Directors.
All votes will be tabulated by the inspector of election appointed at
the meeting who will separately tabulate affirmative votes, negative votes,
authority withheld for any nominee for director, abstentions and broker
non-votes. Authority withheld will be counted toward the tabulation of the votes
cast on the election of directors and will have the same effect as a negative
vote. Under New Jersey law, any proxy submitted and containing an abstention or
broker non-vote will not be counted as a vote cast on any matter to which it
relates and, accordingly, will have no effect on the outcome of the vote.
Abstentions and broker non-votes will be counted for purposes of determining
whether a quorum is present at the annual meeting.
PRINCIPAL SHAREHOLDERS
The following table sets forth information with respect to each person
who, as of March 26, 2007, is known by the Company to be the beneficial owner
(as defined in Rule 13d-3 ("Rule 13d-3") of the Securities Exchange Act of 1934)
of more than five percent (5%) of the Company's Common Stock. Except as set
forth in the footnotes to the table, the shareholders have sole voting and
investment power over such shares:
Amount and Percent
Nature of of
Name of Beneficial Owner Beneficial Ownership Class
- ------------------------ -------------------- -----
Anthony J. Caldarone........................ 4,004,752 (1) 41.6%
Joyce P. Caldarone.......................... 4,004,752 (2) 41.6%
Maria F. Caldarone.......................... 1,098,093 (3) 11.3%
John G. Yates............................... 926,775 (4) 9.5%
Laura A. Camisa............................. 562,995 (5) 5.8%
- --------------------
(1) Includes an aggregate of 456,240 shares held by Joyce P. Caldarone, Mr.
Caldarone's wife, as to which shares he disclaims any beneficial
interest.
(2) Includes an aggregate of 3,548,512 shares beneficially owned by Anthony
J. Caldarone, Mrs. Caldarone's husband, as to which shares she disclaims
any beneficial interest.
(3) Includes an aggregate of 85,000 shares subject to stock options which
are exercisable within 60 days of March 26, 2007 ("Currently Exercisable
Stock Options").
(4) Includes an aggregate of 175,000 shares subject to Currently Exercisable
Stock Options.
(5) Includes an aggregate of 80,000 shares subject to Currently Exercisable
Stock Options.
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SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information, as of March 26, 2007, with
respect to the beneficial ownership (as defined in Rule 13d-3) of the Company's
Common Stock by each director and nominee for director, each of the Named
Officers (as defined in the section captioned "Executive Compensation") who is
currently an officer of the Company and by all directors and executive officers
as a group. Except as set forth in the footnotes to the table, the shareholders
have sole voting and investment power over such shares.
Amount and Percent
Nature of of
Name of Beneficial Owner Beneficial Ownership Class
- ------------------------ -------------------- -----
Anthony J. Caldarone............................. 4,004,752 (1) 41.6%
Kenneth D. Hill.................................. 174,630 (2) 1.8%
John G. Yates.................................... 926,775 (3) 9.5%
Maria F. Caldarone............................... 1,098,093 (4) 11.3%
J. Ernest Brophy................................. 69,987 (5) (6)
Mark N. Fessel................................... 181,524 (5) 1.9%
Frank Cavell Smith, Jr. ......................... 145,935 (5) 1.5%
All Directors and Executive Officers as
a Group (7 persons) (1),(2),(3),(4) and (5)... 6,601,696 65.4%
- ---------------
(1) Includes an aggregate of 456,240 shares held by Joyce P. Caldarone, Mr.
Caldarone's wife, as to which shares he disclaims any beneficial
interest.
(2) Includes 8,000 shares held by Mr. Hill's spouse, as to which shares he
disclaims any beneficial interest and 50,000 shares subject to Currently
Exercisable Stock Options.
(3) Includes 175,000 shares subject to Currently Exercisable Stock Options.
(4) Includes 85,000 shares subject to Currently Exercisable Stock Options.
(5) Includes 50,000 shares subject to Currently Exercisable Stock Options.
(6) Shares beneficially owned do not exceed 1% of the Company's outstanding
Common Stock.
ELECTION OF DIRECTORS
GENERAL
The Company's by-laws provide that the Board of Directors shall consist
of not fewer than three nor more than 15 members. The Board of Directors is
divided into four classes, with each class to hold office for a term of four
years and the term of office of one class to expire each year. The Board of
Directors has fixed the number of directors at six, two whose terms expire at
the annual meeting in 2007, one whose term expires at the annual meeting in
2008, one whose term expires at the annual meeting in 2009, and two whose term
expires at the annual meeting in 2010.
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NOMINATION PROCESS
The Board of Directors established a Nominating Committee in 2004. The
current members of the Nominating Committee are J. Ernest Brophy, Mark N.
Fessel, Kenneth D. Hill and Frank Cavell Smith, Jr., each of whom currently
meets the standards for independence as set forth in the rules of the American
Stock Exchange. The Nominating Committee's primary responsibilities and duties
are to:
o identify individuals qualified to become members of the Board;
o select, or recommend to the Board, director nominees to be
presented for shareholder approval at the annual meeting;
o select, or recommend to the Board, director nominees to fill
vacancies on the Board as necessary; and
o review periodically the structure, size, composition and
operation of the Board and each committee of the Board.
The members of the Nominating Committee as a whole believe that, at a
minimum, the Board should be comprised of directors who have expertise that may
be useful to the Company as well as directors who have in the past exhibited the
highest personal and professional ethics. When considering nominees for
director, the Nominating Committee considers several factors, including (i)
relevant business experience; (ii) independence from management; (iii) judgment,
skill, integrity and reputation; (iv) existing commitments and potential
conflicts of interest; (v) financial and accounting background; and (vi) the
size and composition of the existing Board. Because the nominees named below are
sitting directors of the Company who are up for re-election at the annual
meeting, the independent directors also considered the directors' past
performance on the Board. The Board seeks to identify individuals who satisfy
these criteria from among persons known to them.
The Nominating Committee will also consider nominees for director
suggested by shareholders of the Company. The process by which a shareholder of
the Company may suggest a nominee for director of the Company can be found under
"Shareholder Proposals and Nominees for Director." The Nominating Committee will
apply the same criteria described above to any candidate suggested by a
shareholder, as well as evaluate any additional information required to be
submitted therewith. The Company does not pay any fees to third parties to
identify, evaluate or assist in identifying or evaluating potential nominees.
Mark N. Fessel and John G. Yates are the incumbent directors whose terms
expire at the 2007 annual meeting. Each of Mr. Fessel and Mr. Yates has been
unanimously nominated by the Nominating Committee to stand for election at the
meeting to hold office until the 2011 annual meeting. It is the intention of the
persons named in the accompanying proxy to vote, unless otherwise instructed, in
favor of the election of Mr. Fessel and Mr. Yates. If any nominee should be
unable to serve, the proxies will be voted for the election of a substitute
nominee, if any, designated by the Board of Directors. The Company is not aware
of any reason why any nominee, if elected, would be unable to serve as a
director.
4
Set forth below is certain biographical information with respect to the
nominees for election to the Board and the directors whose terms of office will
continue after the 2007 annual meeting.
NOMINEES
NOMINEES FOR ELECTION FOR FOUR-YEAR TERMS EXPIRING AT THE 2011 ANNUAL MEETING.
MARK N. FESSEL. Mr. Fessel, age 50, has served as a Director of Calton
since May 1993. Since 1985, Mr. Fessel has owned and operated a real estate
company and has acted as principal in numerous commercial and residential real
estate developments throughout the northeast. Mr. Fessel is a 1981 graduate of
the New York University School of Law and the New York University Undergraduate
School of Business. Prior to forming his own real estate company in 1985, Mr.
Fessel was an associate at the New York based law firm of Weil, Gotshal &
Manges.
JOHN G. YATES. Mr. Yates, age 64, was appointed a Director of the
Company in October 2002. From September 2002 through January 2005, he served as
President and Chief Operating Officer of the Company. He has also served as
President and Chief Executive Officer of the Company's wholly owned subsidiary,
PrivilegeONE Networks, LLC since May 2001. For eight years prior to joining the
Company, Mr. Yates served as Senior Vice President and General Manager of
American Express, and in that capacity implemented and managed the American
Express Corporate Purchasing Card division. He was also employed for more than
24 years with General Electric in a variety of senior management positions.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2010 ANNUAL MEETING:
KENNETH D. HILL. Mr. Hill, age 65, has served as a Director of Calton
since April 1999. From July 1999 through June, 2001 he served as Chief Executive
Officer of the Company's wholly owned subsidiary, eCalton.com, Inc. Since 1975,
he has founded and managed computer related companies, including NASTEC
Corporation, a developer of computer-aided software engineering development
tools, from 1982 until its acquisition in 1987, and Multiple Technologies
Corporation, a consulting and application development company, from 1975 to
1982. From January 1994 through February 1996, he was employed as a consultant
by KDH Enterprises, Inc. From March 1997 through April 1998, Mr. Hill served as
President and Chief Executive Officer of DataTell Solutions, Inc., a regional
systems integration company. He served as President and Chief Executive Officer
of National AmeriServe, Inc., an internet business solutions provider, from May
1998 through October 1998, when it merged with iAW, Inc., the predecessor of
eCalton.com, Inc.
J. ERNEST BROPHY. Mr. Brophy, age 82, a retired attorney and Certified
Public Accountant who specialized in tax consultation to clients engaged in the
construction business, was reappointed as a Director of Calton in November 1995,
having served in such capacity from March 1983 through November 1985 and from
April 1986 until through May 1993. From 1992 through March 1996, Mr. Brophy
served as Chief Financial Officer and a director of Hurdy-Gurdy International,
Inc., a company that marketed sorbet products.
5
DIRECTOR CONTINUING IN OFFICE UNTIL THE 2009 ANNUAL MEETING:
ANTHONY J. CALDARONE. Mr. Caldarone, age 69, has served as Chairman,
President and Chief Executive Officer of the Company since January 2005 and
served in the same capacity from the inception of the Company in 1981 through
June 1993 and from November 1995 through September 2002. From September 2002
until January 2005, he served as Chairman and Chief Executive Officer of the
Company. He served as a Director of the Company from June 1993 through October
1995.
DIRECTOR CONTINUING IN OFFICE UNTIL THE 2008 ANNUAL MEETING:
FRANK CAVELL SMITH, JR. Mr. Smith, age 62, has served as a Director of
Calton since May 1993. Since 1990, Mr. Smith has been associated with the MEG
Companies as a Senior Consultant responsible for corporate real estate
consulting activities. From 1977 to 1990, Mr. Smith served as a Real Estate
Consultant and Real Estate Development Manager for The Spaulding Co., Inc. Mr.
Smith also is an adjunct faculty member at Boston University and a member of the
Board of Trustees of Shelter, Inc.
CODE OF CONDUCT
The Company has adopted a Code of Conduct that applies to all of its
directors, officers and employees, including its Chief Executive Officer, Chief
Financial Officer and other senior financial officers. The Company's Code of
Conduct is posted on its website, www.caltoninc.com, under Investor Relations.
The Company intends to disclose on its website any amendment to, or waiver of, a
provision of the Code of Conduct that applies to its Chief Executive Officer,
Chief Financial Officer or other senior financial officers.
MEETINGS OF THE BOARD OF DIRECTORS; COMMITTEES
During the fiscal year ended November 30, 2006, the Board of Directors
held four meetings and acted by unanimous written consent on two occasions.
During fiscal 2006, each member of the Company's current Board of Directors
attended at least 75% of the meetings of the Board of Directors and meetings of
the committees on which he served. See the section captioned "Directors'
Compensation" for a discussion of fees paid by the Company to its directors for
their services.
During fiscal 2006, the Board of Directors had three standing
committees: the Audit Committee, the Compensation Committee and the Nominating
Committee.
The Audit Committee currently consists of Mr. Brophy, Mr. Fessel and Mr.
Smith. The duties and functions performed by the Audit Committee are described
under the caption "Audit Committee Report" contained elsewhere in this Proxy
Statement. The Audit Committee held four meetings in fiscal 2006.
Mr. Fessel and Mr. Smith currently serve as members of the Compensation
Committee. The Compensation Committee reviews and approves compensation for
executive employees of the Company on a periodic basis, subject to approval of
the Board, and administers the Company's Incentive Compensation Plan, the 2000
Equity Incentive Plan (the "2000 Plan"), the
6
2006 Equity Incentive Plan (the "2006 Plan") and the Employee Stock Purchase
Plan. The Compensation Committee met twice in fiscal 2006 and acted by unanimous
written consent on one occasion.
The Nominating Committee, which was established by the Board in August
2004, currently consists of Mr. Brophy, Mr. Fessel, Mr. Hill and Mr. Smith. The
duties and functions performed by the Nominating Committee are described under
the caption "Nomination Process." The Nominating Committee Charter is posted on
the Company's website, www.caltoninc.com, under "Investor Relations." The
Nominating Committee met on one occasion in fiscal 2006.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation for services in all capacities to the Company and its
subsidiaries for the fiscal years ended November 30, 2006, 2005, and 2004, of
the Chief Executive Officer of the Company in fiscal 2006 and the other
executive officers of the Company who earned salary and bonuses in fiscal 2006
in excess of $100,000 (collectively, the "Named Officers"):
ANNUAL COMPENSATION AWARDS
--------------------------
ALL OTHER
NAME AND COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)(1) ($)(2)
- ----------------------------- ---- ---------- ------------ ------------
Anthony J. Caldarone 2006 $ 75,001 $ -- $ 10,984
Chairman, President and 2005 100,000 -- 9,913
Chief Executive Officer 2004 100,000 -- 9,468
Maria F. Caldarone 2006 130,641 -- 770
Executive Vice President 2005 127,223 40,000 1,134
2004 125,460 21,000 664
Laura A. Camisa 2006 125,204 -- 750
Former Sr. Vice President, 2005 121,945 35,000 692
Chief Financial Officer 2004 120,335 18,000 647
and Treasurer (3)
- ---------------
(1) Represents amounts accrued in fiscal 2004 and fiscal 2005 and paid in
fiscal 2005 and fiscal 2006, respectively, to the Named Officers
pursuant to the Company's Incentive Compensation Plan (the "Incentive
Plan"). The Incentive Plan provides for an incentive compensation pool
equal to ten percent (10%) of the Company's annual pre-tax income,
subject to certain adjustments to pre-tax income that may be made by the
Compensation Committee to remove the effect of events or transactions
not in the ordinary course of the Company's operations. No awards were
made under the Incentive Plan for fiscal 2006. Officers and key
operations and senior corporate management employees (the "Eligible
Employees") of the Company and its subsidiaries are eligible for
participation in the Incentive Plan. In addition, a portion of the
incentive compensation pool established under the Incentive Plan may be
used for bonuses to full time employees who do not otherwise have an
opportunity to obtain a specified level of commissions or bonuses. The
Eligible Employees are determined each fiscal year by the Compensation
Committee based on the recommendations of the President and Chief
Executive Officer of the Company. The Compensa-tion Committee ultimately
determines the percentage, if any, of the incentive compensation pool
for a fiscal year to be awarded to an Eligible Employee, subject to the
limits contained in the plan.
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(2) Amounts reported include cost of premiums paid by the Company under a
program that provides officers of the Company with additional life
insurance (supplementing the coverage available under the Company's
group life insurance plan).
(3) Ms. Camisa resigned her positions with the Company effective February
28, 2007.
DIRECTORS' COMPENSATION
Members of the Board of Directors who are not full time employees of
Calton were each entitled in fiscal 2006 to annual compensation of $10,000 for
service as a director. Effective May 31, 2003, all such compensation is payable
in the form of Common Stock having an equivalent market value at the time of
issuance. Calton paid or accrued a total of $50,000 in director fees to members
of the Board of Directors during fiscal year 2006.
Each non-employee director is awarded options to purchase 10,000 shares
of the Company's Common Stock each time such director is elected or re-elected
to the Board of Directors and each time that an annual meeting of shareholders
is held during the term of such director. In order to receive the award, an
incumbent non-employee director must have attended 75% of all Board meetings and
75% of all meetings of Board committees of which the director is a member during
the prior 12 months. Options to purchase an aggregate of 50,000 shares of Common
Stock at an exercise price of $0.45 per share (the fair market value of the
Common Stock on the date of grant) were granted to non-employee directors
pursuant to this arrangement in fiscal 2006.
Directors are reimbursed for travel expenses incurred in connection with
attendance at Board and committee meetings.
EMPLOYMENT AGREEMENT WITH CHIEF EXECUTIVE OFFICER
Effective January 1, 2006, the Company entered into an Employment
Agreement (the "Employment Agreement") with Anthony J. Caldarone, Chairman,
President and Chief Executive Officer of the Company. The Employment Agreement
provides for an annual base salary of $100,000 and entitles Mr.Caldarone to
participate in all benefit plans made available to the Company's senior
executives. Effective January 2007, Mr. Caldarone agreed to a reduction of his
salary to $1.00 per year, and the Board of Directors extended the term of the
Employment Agreement until December 31, 2007. The Employment Agreement, which
replaced the employment agreement between the Company and Mr. Caldarone that
expired on December 31, 2005, is terminable at will by either party. Mr.
Caldarone will be prohibited from engaging in the acquisition, development,
construction and marketing of residential real estate in the State of Florida
for a twelve month period following the termination of the Employment Agreement.
8
OPTION GRANTS
No stock options were granted to any of the Named Officers of the
Company in fiscal 2006.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Shown below is information with respect to options exercised by the
Named Officers during fiscal 2006 and the value of unexercised options to
purchase the Company's Common Stock held by the Named Officers at November 30,
2006.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS HELD AT FY-END (#) OPTIONS AT FY-END ($)(1)
SHARES -------------------------- -------------------------
ACQUIRED ON VALUE
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
Anthony J. Caldarone.... -- -- 75,000 -- $ -- --
Maria F. Caldarone...... -- -- 85,000 -- $ 6,050 --
Laura A. Camisa......... -- -- 80,000 -- $ 6,000 --
- ----------
(1) Represents market value of shares covered by in-the-money options on
November 30, 2006. The closing price of the Common Stock on such date
was $0.44. Options are in-the-money if market value of shares covered
thereby is greater than the option exercise price.
9
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table provides information as of November 30, 2006 with
respect to shares of Common Stock that may be issued under the Company's equity
compensation plans:
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES TO BE WEIGHTED-AVERAGE EXERCISE FUTURE ISSUANCE UNDER EQUITY
ISSUED UPON EXERCISE OF PRICE OF OUTSTANDING COMPENSATION PLANS (EXCLUDING
OUTSTANDING OPTIONS, OPTIONS, WARRANTS AND SECURITIES REFLECTED IN
WARRANTS AND RIGHTS RIGHTS COLUMN (A))
PLAN CATEGORY (a) (b) (c)
- ------------------------- -------------------------- ------------------------- -----------------------------
Equity compensation plans 717,000 -0- 1,327,851 (2)
approved by security
holders (1)
Equity compensation plans
not approved by security
holders (3) 152,415 $6.55 -0-
TOTAL 869,415 $1.52 1,327,851
(1) The Company's 2000 and 2006 Plans provide for the issuance of incentive
awards to officers, directors, employees and consultants in the form of
stock options, stock appreciation rights, restricted stock and deferred
stock, and in lieu of cash compensation. The Company's Employee Stock
Purchase Plan permits the purchase of Common Stock by employees at a
discount to market value through periodic payroll deductions.
(2) Represents 0 shares available for issuance under the 2000 Plan, 971,590
shares available for issuance under the 2006 Plan and 356,261 shares
available for issuance under the Employee Stock Purchase Plan. The
number of shares available for issuance under the Employee Stock
Purchase Plan is increased on January 1 of each year by an amount equal
to the lesser of two percent (2%) of the total number of shares of
Common Stock then outstanding or 75,000 shares.
(3) Represents 32,415 shares subject to options issued to an Officer of the
Company with an exercise price of $0.61 per share which expired in
January 2007 and 120,000 shares subject to options granted to a Director
of the Company that have an exercise price of $8.15 per share and expire
in July 2009.
10
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
John G. Yates and Thomas C. Corley have served as unpaid officers of the
Company's wholly-owned subsidiary, PrivilegeONE Networks, LLC ("PrivilegeONE")
since August 31, 2003 and September 30, 2003, respectively. From those same
dates until January 2005 and April 2004, respectively, Mr. Yates and Mr. Corley
also served as unpaid officers of the Company. In consideration of their
agreement to continue to serve in such capacities and pursue business
opportunities on behalf of PrivilegeONE, the Company has agreed that Mr. Yates
and Mr. Corley will be entitled to 25% of the net profit attributable to
business arrangements with parties introduced by either of them to PrivilegeONE.
REPORT OF THE AUDIT COMMITTEE
Notwithstanding anything to the contrary set forth in any of the
Company's previous or future filings under the Securities Act of 1933, as
amended (the "Securities Act"), or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), that might incorporate this Proxy Statement or
future filings with the SEC, in whole or in part, the following report shall not
be deemed to be incorporated by reference into any such filing.
MEMBERSHIP AND ROLE OF AUDIT COMMITTEE
The Audit Committee of the Board (the "Audit Committee") is comprised of
the following directors: J. Ernest Brophy, Mark N. Fessel and Frank Cavell
Smith, Jr. Each member of the Audit Committee qualifies as an independent
director in accordance with the rules and regulations of the American Stock
Exchange. In addition, the Board has determined that J. Ernest Brophy is both
independent and qualifies as a financial expert, as defined by rules and
regulations of the American Stock Exchange. The Audit Committee operates under a
written charter previously adopted by the Board (see discussion below).
The primary function of the Audit Committee is to provide advice with
respect to the Company's financial matters and to assist the Board in fulfilling
its oversight responsibilities regarding finance, accounting, tax and legal
compliance. The Audit Committee's primary duties and responsibilities are to: 1)
serve as an independent and objective body to monitor the financial reporting
process and internal control systems of the Company; 2) oversee the quality and
integrity of the financial statements of the Company; 3) engage a firm of
independent auditors for the Company each year; 4) review and appraise the
qualifications, performance and independence of the Company's independent
auditors; 5) review and appraise the performance of the Company's internal audit
department; 6) provide an open forum for communication among the independent
auditors, senior financial officers, other members of management, the internal
audit department and the Board; and 7) assist in assuring the Company's
compliance with legal and regulatory requirements.
AUDIT COMMITTEE CHARTER
The Audit Committee developed an Audit Committee Charter (the "Charter")
in consultation with the Company's accounting department, the Company's
independent auditors and outside general counsel. The Board adopted the Charter
in fiscal 2001, and the Charter was filed with the SEC on March 16, 2001 as
Appendix "A" to the Company's proxy statement
11
delivered in connection with the 2001 annual meeting of shareholders. The Audit
Committee reviews the Charter on an annual basis and updates the Charter as
necessary. The Charter was updated in January 2005 and the updated Charter was
filed with the SEC on March 30, 2005 as Appendix "A" to the Company's proxy
statement delivered in connection with the 2005 annual meeting of shareholders.
The Audit Committee reviewed the Charter in February 2007 and determined that no
changes were required.
REVIEW OF THE COMPANY'S AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED
NOVEMBER 30, 2006
The Audit Committee has reviewed and discussed the audited financial
statements of the Company for the fiscal year ended November 30, 2006 with the
Company's management. The Audit Committee has discussed with Aidman, Piser &
Company, P.A. ("Aidman, Piser"), the Company's independent auditors, those
matters required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees).
The Audit Committee has also received the written disclosures and the
letter from Aidman, Piser required by Independence Standards Board Standard No.
1 (Independence Discussion with Audit Committees), and the Audit Committee has
discussed the independence of Aidman, Piser with that firm. Aidman, Piser
confirmed, in its professional judgment, that it is not aware of any
relationship between Aidman, Piser and the Company that would reasonably bear on
its independence.
Based on the Audit Committee's review and discussions noted above, the
Audit Committee recommended to the Board that the Company's audited financial
statements be included in the Company's Annual Report on Form 10-KSB for the
fiscal year ended November 30, 2006 for filing with the SEC.
PRINCIPAL ACCOUNTING FEES AND SERVICES
The following table sets forth the aggregate fees billed to the Company
for the years ended November 30, 2006 and November 30, 2005 by Aidman, Piser:
Year Ended November 30,
2006 2005
------- -------
Audit Fees $78,100 $65,200
Audit-Related Fees 3,657 695
Financial Information Systems -- --
Design and Implementation Fees -- --
Tax Fees -- --
All Other Fees -- --
Audit fees represent amounts billed for professional services rendered
for the audit of the Company's annual financial statements and the reviews of
its financial statements included in the Company's Forms 10-QSB for the fiscal
year. Before Aidman, Piser was engaged by
12
the Company to render its audit services, the engagement was approved by the
Audit Committee of the Company's Board of Directors.
Submitted by:
J. Ernest Brophy
Mark N. Fessel
Frank C. Smith, Jr.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and
Exchange Commission (the "SEC"). Officers, directors and greater than ten
percent shareholders are required by SEC regulation to furnish the Company with
copies of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received, the Company believes that all of its executive officers, directors and
greater than ten percent shareholders complied with all filing requirements
applicable to them with respect to events or transactions during fiscal 2006.
ANNUAL REPORT
The annual report to shareholders for the fiscal year ended November 30,
2006 accompanies this Proxy Statement. Aidman, Piser has audited the financial
statements of the Company for the last six fiscal years ended November 30, 2006.
INDEPENDENT AUDITORS
The firm of Aidman, Piser, independent registered public accountants,
was retained as independent auditors to the Company for the year ended November
30, 2006 by the Audit Committee of the Board of Directors. A representative of
Aidman, Piser will be present at the meeting and will have an opportunity to
make a statement if the representative desires to do so. Said representative
will also be available to respond to appropriate questions from shareholders of
the Company.
SHAREHOLDER COMMUNICATIONS WITH DIRECTORS
The Board has adopted a formal process to be followed for those
shareholders who wish to communicate directly with the Board or any individual
director of the Company. A share-holder can contact the Board, or any individual
director, by sending a written communication to: Board of Directors, Calton,
Inc., c/o Corporate Secretary, 43 W. Front Street, Suite 15, Red Bank, New
Jersey 07701. A shareholder's letter should also indicate that he or she is a
Calton, Inc. shareholder. The Secretary of the Company shall either (a)
distribute such communication to the Board, or a member or members thereof, as
appropriate depending upon the facts and
13
circumstances described in the communication received; or (b) determine that the
communica-tion should not be forwarded to the Board because, in his or her
judgment, (i) the communication is primarily commercial in nature and relates to
the Company's ordinary business or relates to a topic that is improper or not
relevant to the Board; or (ii) the Company's management can adequately handle
the shareholder inquiry or request, in which case the inquiry or request will be
forwarded to the appropriate individual. If a shareholder communication is
addressed to one or more members of the Board, but not the entire Board, the
Corporate Secretary shall notify any member of the Board to whom such
communication was not addressed that such communication was received and shall
provide a copy of such communication upon request.
SHAREHOLDER PROPOSALS AND NOMINEES FOR DIRECTOR
A shareholder of the Company who wishes to present a proposal for action
at the Company's 2008 annual meeting of shareholders must submit such proposal
to the Company and such proposal must be received by November 30, 2007. A
shareholder wishing to submit a proposal should write to the Company's Corporate
Secretary and include a detailed description of such proposal.
The Nominating Committee of the Board will also consider nominees for
director suggested by shareholders of the Company applying the same criteria for
nominees described under "Election of Directors--Nomination Process" and
considering the additional information required below. A shareholder who wishes
to suggest a nominee for director should write to the Company's Corporate
Secretary and include the following information: (1) the name and contact
information for the nominee; (2) a statement of the nominee's business
experience and educational background; (3) a detailed description describing any
relationship between the nominee and the proposing shareholder; (4) a statement
by the shareholder explaining why he or she believes that the nominee is
qualified to serve on the Board and how his or her service would benefit the
Company; and (5) a statement that the nominee is willing to be considered and
willing to serve as a director of the Company if nominated and elected. A
shareholder wishing to suggest a nominee for director for possible consideration
at the Company's 2008 annual meeting of shareholders must submit the required
information to the Company and such information must be received by the Company
by February 8, 2008. The Nominating Committee retains complete discretion for
making nominations for election as a member of the Board.
THE MANAGEMENT OF THE COMPANY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
THE NOMINEES TO THE BOARD OF DIRECTORS.
THE COMPANY SUBMITS TO THE SECURITIES AND EXCHANGE COMMISSION AN ANNUAL
REPORT ON FORM 10-KSB. COPIES OF THE REPORT WILL BE FURNISHED WITHOUT CHARGE
UPON WRITTEN REQUEST RECEIVED FROM ANY HOLDER OF RECORD OR BENEFICIAL OWNER OF
SHARES OF COMMON STOCK OF THE COMPANY. REQUESTS SHOULD BE DIRECTED TO
SHAREHOLDER RELATIONS, CALTON, INC., 43 WEST FRONT STREET, SUITE 15, RED BANK,
NEW JERSEY 07701.
14
ALL SHAREHOLDERS ARE URGED TO MARK, SIGN, DATE AND SEND IN THEIR PROXIES
IN THE ENCLOSED ENVELOPE WITHOUT DELAY TO STOCKTRANS, INC., 44 WEST LANCASTER
AVENUE, ARDMORE, PENNSYLVANIA 19003.
PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION WILL BE APPRECIATED.
/s/ Mary H. Magee
-----------------
MARY H. MAGEE
SECRETARY
March 30, 2007
15
CALTON, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 9, 2007
THIS PROXY IS BEING SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF CALTON, INC.
P KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes
and appoints Anthony J. Caldarone and Vicky F. Savage and each of them,
the true and lawful attorneys, agents and proxies of the
R undersigned, with full power of substitution, to vote with respect to
all the shares of Common Stock of CALTON, INC., standing in the name of
the undersigned at the close of business on March 26, 2007, at the
O annual meeting of shareholders to be held at the Homes by Calton Model
Center, Pointe West Community, 7614 South Village Square, Vero Beach,
Florida on May 9, 2007 and at any and all adjournments thereof,
X with all powers that the undersigned would possess if personally present
and especially (but without limiting the general authorization and power
hereby given) to vote as indicated on the reverse side
Y hereof. Said proxies are authorized to vote in their discretion upon any
other matters which may come before the meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE MANNER
DIRECTED, AND IF NO INSTRUCTIONS TO THE CONTRARY ARE INDICATED, WILL BE
VOTED FOR THE ELECTION OF ALL NOMINEES FOR DIRECTOR LISTED ON THE
REVERSE SIDE OF THIS CARD.
COMMON STOCK
(This proxy is continued from reverse side)
Please mark your votes |X|
as in this example.
1. Election of Mark N. Fessel and John G. Yates as Directors.
|_| FOR all nominees (except as provided to the contrary
below)
|_| WITHHOLD AUTHORITY to vote for all nominees
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, WRITE NOMINEE(S) NAME HERE:
- ----------------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Signature(s) of Shareholder(s)__________________________________________________
(Joint owners must EACH sign. Please sign EXACTLY as your name(s) appear(s) on
this card. When signing as attorney, trustee, executor, administrator, guardian
or corporate officer, please give your FULL title.)