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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
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: [_]
[X] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Fresh America Corp.
(Name of Registrant as Specified in its Charter)
_________________________________
(Name of Person 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) and 0-11.
(1) Title of each class of securities to which the transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of the transaction:
Total proposed maximum aggregate value of the 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 No.:
(3) Filing Party:
(4) Date Filed:
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[Fresh America Logo]
Fresh America Corp.
1049 Avenue H East
Arlington, Texas 76011
November 5, 2001
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of Fresh
America Corp. to be held at 10:00 a.m., Central Time, on December 6, 2001, at
our corporate offices located at 1049 Avenue H East, Arlington, Texas 76011. At
this meeting you will be asked to:
1. Approve an amendment to our articles of incorporation to increase the
number of authorized shares of our common stock and to decrease the
stated par value of our common stock;
2. Approve the Fresh America Corp. 2001 Stock Option Plan;
3. Elect one director to our board of directors;
4. Ratify the appointment of the independent auditors for the fiscal year
ending December 31, 2001; and
5. Transact any other business that may properly come before the meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF EACH OF
THE ABOVE PROPOSALS.
Whether or not you plan to attend the annual meeting, I urge you to complete,
sign and promptly return the enclosed proxy card to assure that your shares will
be voted at the meeting.
The proxy statement that accompanies this letter provides you with detailed
information about the proposals. I encourage you to read the proxy statement
carefully.
On behalf of the Board of Directors, I thank you for your support and urge you
to vote for the approval of each of the above proposals.
Very truly yours,
Arthur W. Hollingsworth
Chairman of the Board
Fresh America Corp.
1049 Avenue H East
Arlington, Texas 76011
(972) 774-0575
________________________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 6, 2001
To Our Shareholders:
This is a notice that the Annual Meeting of Shareholders of Fresh America Corp.
will be held on December 6, 2001 at 10:00 a.m., Central Time, at our corporate
offices located at 1049 Avenue H East, Arlington, Texas 76011. The purpose of
this meeting is for you to:
1. Approve an amendment to our articles of incorporation to increase the
number of authorized shares of our common stock from 10 million to 250
million shares and to decrease the stated par value of our common stock
from $.01 to $.0001 per share. The proposed restated articles of
incorporation, which includes these charter amendments, is attached as
Appendix A;
2. Approve the Fresh America Corp. 2001 Stock Option Plan. The proposed
stock option plan is attached as Appendix B;
3. Elect one director to our board of directors;
4. Ratify the appointment of the independent auditors for the fiscal year
ending December 31, 2001; and
5. Transact any other business that may properly come before the meeting.
Our board of directors has determined that only holders of shares of our common
stock at the close of business on October 30, 2001, will be entitled to notice
of, and to vote at, the annual meeting or any adjournments or postponements of
the annual meeting. A form of proxy and a proxy statement containing more
detailed information with respect to the matters to be considered at the annual
meeting accompany this notice.
By Order of the Board of Directors,
Cheryl A. Taylor
Secretary
Arlington, Texas
November 5, 2001
TABLE OF CONTENTS
2001 Annual Meeting of Shareholders Proxy Statement.................................................. 1
Date, Time and Place of the Annual Meeting..................................................... 1
Matters to be Considered at the Annual Meeting................................................. 1
Proxy Solicitation............................................................................. 1
Record Date and Quorum Requirement............................................................. 1
Voting Procedures.............................................................................. 2
Voting and Revocation of Proxies............................................................... 2
Other Matters to be Considered................................................................. 3
Security Ownership of Certain Beneficial Owners...................................................... 3
Proposal 1. Amendment to the Articles of Incorporation.............................................. 6
Vote Required.................................................................................. 7
Background of the Restructuring................................................................ 7
Terms of Restructuring......................................................................... 7
Description of Common Stock Warrants........................................................... 9
Description of Preferred Stock................................................................. 9
Effect of the Failure to Receive Shareholder Approval.......................................... 12
Board Recommendation........................................................................... 12
Proposal 2. Adoption of Fresh America Corp. 2001 Stock Option Plan.................................. 14
Description of Stock Option Plan............................................................... 14
New Plan Benefits.............................................................................. 18
Proposal 3. Election of Director.................................................................... 20
Information with Respect to the Nominee, Continuing Directors and Executive Officers........... 20
Nominees and Continuing Directors.............................................................. 22
Current Officers Who are Not Nominees or Directors............................................. 24
Board of Directors and Committees.............................................................. 24
Audit Committee............................................................................. 25
Report of the Audit Committee............................................................... 25
Compensation Committee...................................................................... 26
Compensation of Directors................................................................... 26
Proposal 4. Ratification of Independent Auditors.................................................... 26
Executive Compensation............................................................................... 27
Summary Compensation Table..................................................................... 27
Option Grants During Fiscal Year 2000.......................................................... 29
401(k) Plan.................................................................................... 29
Compensation Committee Interlocks and Insider Participation.................................... 29
Compensation Committee's Report on Executive Compensation...................................... 30
Employment Agreements.......................................................................... 31
Severance Agreements........................................................................... 33
Stock Performance Graph........................................................................ 33
Certain Relationships and Related Transactions....................................................... 35
Section 16(A) Beneficial Ownership Reporting Compliance.............................................. 35
Shareholder Proposals................................................................................ 36
Other Business....................................................................................... 36
Appendices:
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Appendix A Restated Articles of Incorporation of Fresh America Corp.
Appendix B 2001 Stock Option Plan
Appendix C Audit Committee Charter
Fresh America Corp.
1049 Avenue H East
Arlington, Texas 76011
2001 ANNUAL MEETING OF SHAREHOLDERS
PROXY STATEMENT
Date, Time and Place of the Annual Meeting
The annual meeting will be held on December 6, 2001 at 10:00 a.m., Central Time
at our corporate offices located at 1049 Avenue H East, Arlington, Texas 76011.
Matters to be Considered at the Annual Meeting
The purpose of the annual meeting is to consider and vote upon:
. an amendment to our articles of incorporation;
. the adoption of the Fresh America Corp. 2001 Stock Option Plan;
. the election of one director to our board;
. the ratification of the appointment of our independent auditors for the
fiscal year ending December 31, 2001;and
. the transaction of any other business that may properly come before the
meeting.
Proxy Solicitation
Our board of directors is soliciting your proxy for use at the annual meeting to
be held on December 6, 2001, or at any continuation, adjournment or postponement
thereof, for the purposes set forth herein and in the Notice of Annual Meeting
of Shareholders. We will pay all expenses incurred in connection with
solicitation of the enclosed proxy. Our officers, directors and regular
employees may solicit proxies in person or by telephone. They will receive no
additional compensation for their services. We also have retained Georgeson
Shareholder Communications, Inc. to assist with the proxy solicitation process
for a fee of $5,000, plus reimbursement of out-of-pocket expenses. We have
requested brokers and nominees who hold stock in their names to furnish this
proxy statement to their customers, and we will reimburse these brokers and
nominees for their related out-of-pocket expenses. This proxy statement and the
accompanying proxy card are being mailed to shareholders on or about November 5,
2001.
Record Date and Quorum Requirement
Our common stock, par value $.01 per share ("Common Stock") is our only
outstanding voting security with respect to matters to be considered at the
annual meeting. Our board has fixed the close of business on October 30, 2001 as
the record date for the determination of shareholders
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entitled to notice of, and to vote at, the annual meeting and any adjournments
or postponements of the annual meeting. If you held our Common Stock at the
close of business on the record date, you will be entitled to one vote for each
share you hold on each matter submitted to a vote of shareholders. At the close
of business on the record date, there were 8,410,098 shares of our Common Stock
issued and outstanding. Shareholders representing 47% of our issued and
outstanding Common Stock have entered into written voting agreements to vote in
favor of the proposal to amend our articles of incorporation at the annual
meeting. See "Proposal 1. Amendment to the Articles of Incorporation."
The holders of a majority of the outstanding shares entitled to vote at the
annual meeting must be present in person or represented by proxy to constitute a
quorum for the transaction of business. Abstentions are counted as present for
purposes of determining the presence or absence of a quorum for the transaction
of business. In the event that there are not sufficient votes for a quorum or to
approve or ratify any proposal at the time of the annual meeting, the annual
meeting may be adjourned in order to permit the further solicitation of proxies.
Our Series D Cumulative Redeemable Preferred Stock, $1.00, par value per share
(the "Preferred Stock") is not a voting security, except in certain situations
described under "Proposal 1. Amendments to the Articles of Incorporation"
below. At the close of business on the record date, there were 77,000 shares of
our Preferred Stock issued and outstanding.
Voting Procedures
Approval of the amendment to our articles of incorporation will require the
affirmative vote of two-thirds of the shares of our Common Stock outstanding as
of the record date. Approval of the stock option plan will require the votes
cast favoring the stock option plan to exceed the votes cast opposing the stock
option plan, not counting abstentions. The election of the director will be
determined by plurality vote. Abstentions will have a neutral effect on the
election of directors and the approval of the stock option plan. However,
abstentions or the failure to vote on the amendment to our articles of
incorporation will have the same effect as votes cast against approval of the
proposal.
Your broker and, in many cases, your nominee will not have discretionary power
to vote on the amendment to our articles of incorporation or the stock option
plan. Accordingly, you should instruct your broker or nominee how to vote any
shares of our Common Stock that they hold in your name or on your behalf. A
broker non-vote occurs if a broker or other nominee does not have discretionary
authority and has not received instructions with respect to a particular item. A
broker non-vote will have the same effect as an abstention on the stock option
plan and a vote against the amendment to our articles of incorporation.
Voting and Revocation of Proxies
You may revoke your proxy at any time before it is exercised by:
. filing with our Secretary an instrument revoking it;
. submitting a properly executed proxy bearing a later date; or
. voting in person at the annual meeting.
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Unless revoked, all of your shares represented by a properly executed proxy
received by our Secretary will be voted in accordance with your instructions.
Shares represented by each proxy that is properly executed and returned and upon
which no contrary instructions are indicated will be voted:
. "FOR" the amendment to our articles of incorporation to increase the
number of authorized shares of Common Stock and decrease the stated par
value of our Common Stock;
. "FOR" the adoption of the Fresh America Corp. 2001 Stock Option Plan;
. "FOR" the election of our nominee to the board of directors; and
. "FOR" the ratification of the appointment of our independent auditors
for the fiscal year ending December 31, 2001.
Your shares will be voted by proxy at the annual meeting if your proxy card is
properly signed, dated and received by our Corporate Secretary prior to or at
the annual meeting.
Other Matters to be Considered
Our board of directors is not aware of any other matter that will be brought
before the annual meeting. If, however, other matters are presented, your proxy
will be voted in the discretion of the holder of your proxy.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as to those persons believed by
management to be beneficial owners of more than 5% of our outstanding shares of
Common Stock as of the record date, or as disclosed in certain reports received
as of such date regarding such ownership filed by such persons with the Company
and with the SEC, in accordance with Sections 13(d) and 13(g) of the Securities
Exchange Act of 1934, as amended ("Exchange Act").
Amount and Nature of
Beneficial Owner Beneficial Ownership Percent of Class/(1)/
---------------- -------------------- ---------------------
North Texas Opportunity Fund LP
13355 Noel Road, Suite 2210 3,944,094/(2)/ 46.9%
Dallas, TX 75240
John Hancock Financial Services, Inc. -0-/(3)/ *
John Hancock Place, P.O. Box 111
Boston, MA 02117
3
Larry Martin 3,176,694/(4)/ 37.7%
2729 Sunrise Drive
Arlington, TX 76006
Gruber & McBaine Capital Management 767,400/(5)/ 9.1%
50 Osgood Place
San Francisco, CA 94133
DiMare Homestead, Inc. 528,300/(6)/ 6.3%
258 NW 1/st/ Avenue
Florida City, FL 33034
__________________
*Does not exceed 1% of the outstanding common stock.
(1) Percentages with respect to each person or group of persons have been
calculated on the basis of 8,410,098 shares, the total number of shares of
Common Stock outstanding on September 24, 2001, plus the number of shares
of Common Stock which such person or group of persons has the right to
acquire, without contingency, within 60 days after September 24, 2001.
(2) Does not include warrants to purchase 84,100,980 shares of Common Stock
owned by NTOF and its affiliate, Arthur Hollingsworth, due to the existence
of a material contingency (the need for shareholder approval of the Charter
Amendment so that there are sufficient number of authorized shares of
Common Stock for issuance upon exercise of the warrants) that is not within
NTOF's control and that is required to be satisfied prior to exercise of
the warrants.
North Texas Opportunity Fund LP ("NTOF") is a direct beneficial owner of
the Common Stock. North Texas Opportunity Fund Capital Partners LP ("NTOF
Partners"), is an indirect beneficial owner of the Common Stock given that
NTOF Partners is the general partner of NTOF; NTOF LLC ("NTOF LLC") is an
indirect beneficial owner of the Common Stock given that NTOF LLC is the
general partner of NTOF Partners; North Texas Investment Advisors LLC ("NT
Advisors") is an indirect beneficial owner of the Common Stock given that
NT Advisors is the investment manager of NTOF; Arthur W. Hollingsworth
("Hollingsworth") is an indirect beneficial owner of the Common Stock given
that Hollingsworth is a manager of NTOF LLC and of NT Advisors; Luke M.
Sweetser ("Sweetser") is an indirect beneficial owner of the Common Stock
given that Sweetser is a manager of NTOF LLC and of NT Advisors; and
Gregory A. Campbell ("Campbell") is an indirect beneficial owner of the
Common Stock given that Campbell is a manager of NTOF LLC and of NT
Advisors.
Of the 3,944,094 shares beneficially owned by NTOF, 3,176,694 shares are
beneficially owned by NTOF by virtue of a Voting Agreement and Irrevocable
Proxy, dated September 4, 2001, granted to NTOF by Larry Martin, and
767,400 shares are beneficially owned by NTOF by virtue of a Voting
Agreement and Irrevocable Proxy, dated September 10, 2001, granted to NTOF
by Gruber & McBaine Capital Management, LLC.
4
(3) Does not include warrants to purchase 45,414,529 shares of Common Stock
owned by the Hancock Entities and reported by the Hancock Entities in a
Schedule 13D filed with the SEC on September 17, 2001, due to the existence
of a material contingency (the need for shareholder approval of the Charter
Amendment so that there are sufficient number of authorized shares of
Common Stock for issuance upon exercise of the warrants) that is not within
the Hancock Entities' control and that is required to be satisfied prior to
exercise of the warrants.
(4) Based on information set forth in a Schedule 13D filed with the SEC on
April 24, 2001, Mr. Martin beneficially owns 3,166,694 shares of Common
Stock and options to purchase 10,000 shares of Common Stock which are
exercisable within 60 days.
Mr. Martin and NTOF share voting power over 3,176,694 shares of Common
Stock by virtue of a Voting Agreement and Irrevocable Proxy dated September
4, 2001, granted to NTOF by Mr. Martin.
(5) Based on information provided to the Company by Gruber & McBaine Capital
Management, LLC ("GMCM") pursuant to which GMCM reported voting and
dispositive power over 767,400 shares of Common Stock.
GMCM and NTOF share voting power over 767,400 shares of Common Stock by
virtue of a Voting Agreement and Irrevocable Proxy dated September 10,
2001, granted to NTOF by GMCM.
(6) Based on information set forth in Schedule 13D filed with the SEC on June
16, 2000, by DiMare Homestead, Inc. ("DiMare"), DiMare has sole voting and
dispositive power with regard to 528,300 shares of Common Stock.
5
PROPOSAL 1. AMENDMENT TO THE ARTICLES OF INCORPORATION
Under our present capital structure as set forth in the articles of
incorporation, we have 10,000,000 authorized shares of common stock, par value
$.01 per share, and 1,000,000 authorized shares of preferred stock, par value
$1.00 per share. Our board of directors believes that this capital structure is
inadequate for the present and future needs of the Company. Accordingly, our
board of directors has adopted a proposal to amend our articles of incorporation
to increase the number of authorized shares of Common Stock from 10,000,000
shares to 250,000,000 shares and to decrease the stated par value of each share
of Common Stock from $.01 to $.0001 (the "Charter Amendment"). As of October 30,
2001, 8,410,098 shares of Common Stock were outstanding, 300,000 shares have
been reserved for issuance pursuant to outstanding warrants and 422,540 shares
of Common Stock are reserved for issuance under current benefit plans, resulting
in 867,362 shares remaining and available for our present and future needs.
As part of our financial restructuring, which is described in greater detail
below, we issued warrants exercisable for an aggregate of 129,515,509 shares of
our Common Stock to our subordinated lenders and a new investor as a necessary
incentive to complete the restructuring. Although the warrants are by their
terms immediately exercisable, we presently do not have a sufficient number of
authorized shares of Common Stock to issue upon exercise of the warrants.
Therefore, before the warrants may be exercised, we must amend our articles of
incorporation to increase the number of authorized shares of Common Stock and to
decrease the stated par value of the Common Stock.
In addition, if our shareholders adopt our 2001 Stock Option Plan as set forth
under Proposal 2 herein, we will have to reserve an additional 29,553,813
shares of Common Stock for issuance pursuant to our 2001 Stock Option Plan.
Further, authorizing additional shares of Common Stock would provide the Company
with more flexibility to issue as needed shares of its Common Stock for possible
stock splits, acquisitions, financings and other corporate purposes from time to
time as it deems necessary and in the best interests of the Company.
Pending shareholder approval of this proposal to increase the number of
authorized shares of Common Stock to 250,000,000 shares and Proposal 2 to adopt
the Fresh America Corp. 2001 Stock Option Plan, and taking into account shares
reserved or to be reserved for issuance (i) pursuant to the exercise of the
warrants issued in connection with the restructuring, (ii) warrants for 300,000
shares that are currently outstanding, and (iii) upon the exercise of
outstanding options granted pursuant to our existing benefit plans, we will have
81,798,040 authorized shares of Common Stock available for future needs of the
Company.
Our board believes that it is necessary to have the ability to issue additional
shares of our Common Stock for general corporate purposes, as well as to
effectuate the financial restructuring described below and Proposal 2 herein,
relating to our 2001 Stock Option Plan. Therefore, our board of directors
believes that our best interests and the best interests of our shareholders will
be served by amending our articles of incorporation to increase the number of
authorized shares of
6
Common Stock and decrease the stated par value of the Common Stock. If approved
by you, it is anticipated that the amendment will become effective as soon as
practicable following the annual meeting.
Vote Required
Approval of the amendment to our articles of incorporation will require the
affirmative vote of at least two-thirds of our shares of Common Stock
outstanding as of the record date. Shareholders representing 47% of our issued
and outstanding Common Stock have entered into written voting agreements to vote
in favor of the proposed amendment at the annual meeting. As a result, we need
additional votes representing at least 19.67% of our issued and outstanding
Common Stock to adopt the amendment to our articles of incorporation.
Background of the Restructuring
During the past two years, we pursued various re-financing alternatives in an
effort to restructure our debt. For more than twelve months, we had been
operating under waivers from our lenders for not complying with certain
covenants under the terms of our agreements with those lenders and from certain
equipment lessors. In addition, we failed to make the semi-annual interest
payment due to our subordinated lenders on May 1, 2001. In late May 2001, we
signed a letter of intent for a $5 million equity-financing proposal with a
private equity fund, North Texas Opportunity Fund LP ("NTOF"). In connection
with the letter of intent, we received extensions of our senior credit facility
and extensions for the semi-annual interest payment on our subordinated debt as
well as payments owed to other creditors in order to allow for the negotiation
of a definitive agreement with respect to the equity-financing proposal. On
August 14, 2001 we entered into definitive agreements for the equity-financing
with NTOF, including a Securities Exchange and Purchase Agreement (the "Purchase
Agreement") and a Shareholders Agreement (the "Shareholders Agreement" and,
together with the Purchase Agreement, the "Agreements"), in each case entered
into by and among the Company, NTOF, and each of John Hancock Life Insurance
Company, John Hancock Variable Life Insurance Company, Signature 1A (Cayman),
Ltd., Signature 3 Limited and Investors Partner Life Insurance Company
(collectively, the "Hancock Entities"). On September 5, 2001, we effected the
restructuring pursuant to the Agreements and a Post-Closing Agreement dated as
of September 5, 2001, by and among the Company, NTOF and the Hancock Entities.
Terms of Restructuring
In connection with our financial restructuring, NTOF utilized its operating
capital to purchase for cash 50,000 shares of Preferred Stock and warrants
exercisable for 84,100,980 shares of Common Stock. The purchase price for the
Preferred Stock and warrants purchased by NTOF was $5 million. Subsequently,
Arthur Hollingsworth, an affiliate of NTOF, purchased from NTOF 3,500 of their
50,000 Preferred shares at the same price paid by NTOF. In connection with that
purchase, Mr. Hollingsworth also received 5,887,069 of the 84,100,980 warrants,
purchased by NTOF. The warrants purchased by NTOF, including those warrants that
were subsequently purchased by Arthur Hollingsworth, are herein referred to as
the "NTOF Warrants."
7
In addition, as part of our financial restructuring, the Hancock Entities
exchanged $20 million in the aggregate principal amount of subordinated notes,
warrants to purchase 576,134 shares of Common Stock, 50,000 shares of Series C
Cumulative Redeemable Preferred Stock and all accrued interest and dividends
related to each of the foregoing for 27,000 shares of Preferred Stock and
warrants exercisable for 45,414,529 shares of Common Stock (the "Hancock
Warrants").
The following table sets forth certain pro forma information concerning the
beneficial ownership of Common Stock following the completion of our financial
restructuring and assuming approval of the Charter Amendment by our
shareholders. The table assumes the exercise of all outstanding warrants and
options which have been issued as of the record date, regardless of whether such
warrants or options have vested or are subject to any contingencies, including,
but not limited to, shareholder approval of the Charter Amendment.
Amount and Nature of
Beneficial Owner Beneficial Ownership Percent of Class/(1)/
---------------- -------------------- ---------------------
North Texas Opportunity Fund LP and Affiliates 84,100,980/(2)/ 50.0%
The Hancock Entities 45,414,529/(3)/ 27.0%
Existing Shareholders other than Management 8,398,316/(5)/ 5.0%
Management:
Darren Miles 2,724,872/(4)/ 1.6%
Gary Wiener 2,760,472/(6)//(7)/ 1.6%
Steve Finberg 2,751,372/(6)//(8)/ 1.6%
Cheryl Taylor 2,724,872/(6)/ 1.6%
Colon Washburn 1,122,435/(9)/ 0.7%
Existing Warrants 300,000 0.2%
Additional Options under '93 and '96 Plans not
held by Management 249,787 0.1%
Option Pool to be issued to Existing Management 11,899,055 7.1%
Option Pool to be issued to Future Management 5,755,270 3.4%
__________________
(1) Percentages are based upon 8,410,098 shares (the total number of shares of
Common Stock outstanding on the record date) plus the total number of
shares underlying all outstanding options and warrants regardless of
whether such options or warrants are currently exercisable or subject to
contingency.
8
(2) Includes warrants to purchase 84,100,980 shares of Common Stock owned by
NTOF and affiliates.
(3) Includes warrants to purchase 45,414,529 shares of Common Stock owned by
the Hancock Entities.
(4) Includes options to purchase 2,724,872 shares of Common Stock which are
immediately exercisable subject to the approval of the Charter Amendment.
(5) Includes 3,166,694 shares of Common Stock and options to purchase 20,000
shares of Common Stock which are held by Larry Martin. Mr. Martin has
tendered his resignation from the Company's employment effective
December 1, 2001.
(6) Includes options to purchase 2,724,872 shares of Common Stock, of which
options to purchase 681,218 shares are immediately exercisable and the
remainder of which are subject to future vesting, and all of which are
subject to the approval of the Charter Amendment.
(7) Includes options to purchase 35,500 shares of Common Stock which are
currently exercisable.
(8) Includes options to purchase 26,500 shares of Common Stock which are
currently exercisable.
(9) Includes options to purchase 1,000,000 shares of Common Stock which are
immediately exercisable subject to the approval of the Charter Amendment.
Includes options to purchase 90,753 shares of Common Stock which are
currently exercisable.
Description of Common Stock Warrants
In general, the NTOF Warrants and the Hancock Warrants are exercisable at any
time prior to August 14, 2011. The exercise price of these warrants is $.0001
per share, and the warrants are subject to anti-dilution provisions that adjust
the number of shares of Common Stock into which the warrants are exercisable if
we effect any recapitalization, stock dividend, stock split, reorganization,
merger or similar transaction or if we undertake certain issuances of Common
Stock for less than market value.
Description of Preferred Stock
Board of Director Representation
In accordance with the Agreements, our board of directors consists of five
members. The holders of Preferred Stock are entitled to appoint four members to
our board of directors. NTOF has the right to designate three members of our
board of directors, and the Hancock Entities have the right to designate one
member of our board of directors, unless the Hancock Entities waive this right,
in which case NTOF has the right to designate a fourth member to our board. The
Hancock Entities advised the Company and NTOF that they did not intend to
exercise their right to designate a director and, accordingly, NTOF designated
four members to our board of directors. Effective October 15, 2001, the NTOF
designees, Arthur W. Hollingsworth, Luke M. Sweetser, Gregory A. Campbell and
Darren L. Miles became members of our board of directors.
9
Special Voting Rights
Pursuant to the terms of the Agreements, we must obtain the consent of the
holders of our Preferred Stock prior to taking certain actions in the operation
of our business. Prior to taking the following actions, we must obtain the
consent of 100% of the holders of Preferred Stock:
. amending our organizational documents in a manner that is adverse to the
holders of the Preferred Stock;
. declaring any dividends with respect to any of our capital stock (except
as required pursuant to the terms of the Preferred Stock);
. entering into any transaction (other than an arms-length transaction)
with any of our affiliates;
. increasing the compensation of any of our executive officers by more
than 5% during any fiscal year;
. adopting any new employee benefit plan; or
. granting any equity-based compensation to any key employee of the
Company or any subsidiary.
The prior written consent of at least 66 2/3% of the holders of the Preferred
Stock is required for the following actions:
. selling or issuing any additional shares of our capital stock or any of
the capital stock of any of our subsidiaries (except in connection with
the exercise of existing warrants or pursuant to its employee stock
option plan); or
. reclassifying any shares of our capital stock into any other capital
stock.
The prior written consent of at least a majority of the holders of Preferred
Stock is required before:
. selling or leasing any of our assets other than in the ordinary course
of business;
. effecting any merger, consolidation or other corporate reorganization
involving the Company;
. entering into any new line of business or acquiring any substantial
business operation or assets (through a stock or asset purchase or
otherwise);
. entering into any contract or agreement pursuant to which we must pay
more than $250,000 per year;
10
. terminating any of our key employees;
. acquiring any debt or equity interest in any other person or entity;
. incurring any indebtedness in excess of $8 million;
. acquiring more than $500,000 of property or assets from any person or
entity during any 12 month period; or
. making any capital expenditure greater than $250,000 individually or
$1,000,000 in the aggregate.
Put Option Granted to Holders of Preferred Stock
Under the Agreements, each holder of Preferred Stock has the right to sell its
Preferred Stock to us at a price per share equal to $100 plus any and all
accrued and unpaid dividends and interest with respect to such share at any time
after August 14, 2004 or earlier upon the occurrence of certain triggering
events (the "Put Option"). Among the events triggering the acceleration of these
put rights are the following:
. any material breach by us of the provisions of the Agreements (other
than our failure to pay dividends with respect to the Preferred Stock);
. any merger, consolidation or share exchange involving the Company in
which we are not the surviving or resulting entity or as a result of
which our beneficial owners prior to such a transaction will,
immediately after the transaction, own less than a majority of our
capital stock;
. a sale of substantially all of our assets or operations;
. any substantial change in the type of business we conduct;
. any change in control of the Company; and
. the consummation of any underwritten public offering or any private
equity financing, in either case as a result of which we receive at
least $20,000,000 in cash proceeds.
If, during the time period which a holder of Preferred Stock has the right to
put its shares of Preferred Stock to us as described above, we receive any bona
fide third-party proposal relating to the sale of all or substantially all of
our assets, a merger, consolidation or share exchange involving the Company that
would result in a change in the beneficial ownership of our capital stock or a
change in control of the Company, and if we accept the proposal within the time
periods mandated by the Shareholders Agreement, then we must use good faith and
commercially reasonable efforts to consummate the transactions described in the
proposal. If, however, we do not accept the proposal within the time periods
mandated by the Shareholders
11
Agreement, then each holder of Preferred Stock will also have the right to cause
us to purchase all of the capital stock of the Company that the holder owns for
an amount of cash equal to the consideration that would have been paid to the
holder had we accepted the proposal.
Effect of the Failure to Receive Shareholder Approval
If we do not receive the requisite shareholder approval of the Charter
Amendment, then the Agreements provide that many of the rights and preferences
associated with the Preferred Stock will become substantially more favorable
to NTOF and the Hancock Entities. The primary changes in the rights and
preferences of the Preferred Stock that will occur if shareholder approval of
the Charter Amendment is not obtained are as follows:
Special Voting Rights. The holders of Preferred Stock will be entitled to vote
as a separate class on all matters on which the holders of our Common Stock are
entitled to vote, with each share of Preferred Stock being entitled to one vote
per share. In addition, the holders of the Preferred Stock will be entitled to
vote together with the holders of Common Stock on all matters on which the
holders of Common Stock are entitled to vote, but with each share of Preferred
Stock being entitled to 250 votes per share. As a result, on any matters voted
on by holders of the Common Stock, NTOF and the Hancock Entities will have
12,500,000 votes and 6,750,000 votes, respectively, which, in the aggregate,
would represent approximately 68% of the voting power of our outstanding capital
stock on a fully diluted basis.
12
Liquidation Preference. In the event of a dissolution of the Company or upon the
occurrence of certain other liquidation events and upon the payment in full of
all liquidation payments owed to the holders of the Preferred Stock as described
above, the holders of Preferred Stock will be entitled to receive an amount
equal to 90% of the fair market value of our remaining assets and other funds,
and the holders of our Common Stock will be entitled to receive an amount equal
to 10% of the fair market value of our remaining assets and other funds.
Put Option. Upon our failure to obtain shareholder approval of the Charter
Amendment, the price per share at which we would be required to purchase the
shares of Preferred Stock upon the triggering events described above would
increase to three times the price that would otherwise be payable upon the
exercise of the put rights by the holders of Preferred Stock.
Dividends. The annual cumulative dividend rate on each share of Preferred Stock
will increase to $18 per share.
Board Recommendation
The board of directors (which then consisted of Messrs. Washburn, Martin, Gier
and McKinney) held a meeting on August 9, 2001 to consider and vote upon the
Agreements and the proposed amendment to our articles of incorporation. At such
meeting the board considered various factors, including:
. the status of the Company's business and its credit facilities;
. the Company's recent operating results and liquidity constraints;
. the Company's relationships with its suppliers, customers, employees and
creditors;
. the terms of the NTOF proposal, the Agreements and the Charter
Amendment;
. the effect of the NTOF proposal on the Company's shareholders, creditors
and other stakeholders; and
. the Company's prospects if the NTOF proposal was not accepted.
At such meeting, the board determined unanimously (with Mr. Martin, a
creditor of the Company, abstaining) to authorize the Agreements and the Charter
Amendment and recommend approval of the Charter Amendment to the shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE
PROPOSED AMENDMENT TO OUR ARTICLES OF INCORPORATION.
13
PROPOSAL 2. ADOPTION OF THE FRESH AMERICA CORP.
2001 STOCK OPTION PLAN
Our board of directors proposes that our shareholders approve the terms of the
Fresh America Corp. 2001 Stock Option Plan (the "Plan"), a copy of which is
attached as Appendix B. The purpose of the Plan is to enable the Company to
attract officers, key employees and consultants and to provide them with
appropriate incentives and rewards for superior performance. The Plan affords
the Company significant flexibility in the area of key employee and executive
compensation. The Plan is designed to be an omnibus plan that gives the Company
the ability to grant a wide range of compensatory awards including stock
options, stock appreciation rights, restricted stock and performance awards. The
Plan is intended to encourage stock ownership by recipients by providing for or
increasing their proprietary interests in the Company, thereby encouraging them
to remain in the Company's employment. The Plan has been prepared to comply with
the requirements of the Internal Revenue Code of 1986, as amended (the "Code").
Description of the Stock Option Plan
The following general description of certain features of the Plan is qualified
in its entirety by reference to the Stock Option Plan.
Shares Reserved
Subject to adjustment as provided in the Plan, the number of shares of Common
Stock that may be issued or transferred, plus the amount of shares of Common
Stock covered by outstanding awards granted under the Plan, shall not in the
aggregate exceed 29,553,813.
Administration
The Plan is to be administered by the board or a committee of the board of
directors (the "Compensation Committee") which shall consist of two or more
directors. In connection with its administration of the Plan, the board (or
Compensation Committee) is authorized to interpret the Plan and related
agreements and other documents. The board (or Compensation Committee) may make
grants to participants under any or a combination of all of the various
categories of awards that are authorized under the Plan.
Eligibility
Officers, directors, employees of and consultants to the Company may be selected
by the board (or Compensation Committee) to receive awards under the Plan.
Awards
The Plan authorizes the Company to grant options to purchase shares of Common
Stock ("Options"), stock appreciation rights ("SARs"), restricted stock
("Restricted Stock") and performance awards ("Performance Awards"). The terms
applicable to these various types of awards, including those terms that may be
established by the board (or Compensation
14
Committee) when making or administering particular awards, are set forth in
greater detail in the Plan.
. Options. The board (or Compensation Committee) may grant Options that
-------
entitle the optionee to purchase shares of Common Stock at a price less
than, equal to or greater than market value on the date of grant. The
option price is payable at the time of exercise: (i) in cash or cash
equivalent; (ii) by the transfer to the Company of shares of Common Stock
that are already owned by the optionee and having a value at the time of
exercise equal to the option price; (iii) in the board's discretion, by
executing a promissory note in favor of the Company for the number of
shares specified and paid for; (iv) by the deferred payment of the option
price from the proceeds of sale through a broker on the date of exercise of
some or all of the shares of Common Stock to which the exercise relates
provided that the Common Stock is publicly traded (as defined by the Plan);
or (v) by any combination of the foregoing methods of payment.
Options granted under the Plan may be Options that are intended to qualify
as incentive stock options ("ISOs") within the meaning of Section 422 of
the Internal Revenue Code of 1986 (the "Code") or Options that are not
intended to qualify as ISOs ("Nonqualified Stock Options"). The Plan
permits the granting of ISOs or Nonqualified Stock Options at the
discretion of the Board (or Compensation Committee). The exercise price for
Nonqualified Stock Options granted may be less than, equal to, or greater
than the fair market value per share of the Company's Common Stock on the
date of grant. The exercise price for ISOs may not be less than 100% of the
fair market value per share of the Company's Common Stock on the date of
grant, and ISOs granted to persons owning more than 10% of the Company's
voting stock must have an exercise price of not less than 110% of the fair
market value per share of the Company's Common Stock on the date of grant.
All options granted must be exercised within ten years of grant, except
that ISOs granted to 10% or greater stockholders must be exercised within
five years of grant. The aggregate market value (as determined as of the
date of grant) of the Common Stock for which any optionee may be awarded
ISOs which are first exercisable by such optionee during any calendar year
may not exceed $100,000.
Options generally vest over a three (3) year period so that 25% of an award
vests as of the date of grant and 25% of the award vests on each one year
anniversary thereafter.
. SARs. SARs granted under the Plan represent the right to receive from the
----
Company the difference (the "Spread") between the base price per share of
Common Stock and the market value of the Common Stock on the date of
exercise of the Appreciation Right. A SAR may specify that the amount
payable by the Company upon exercise may be paid in cash, Common Stock or a
combination thereof.
. Restricted Stock. An award of Restricted Stock involves the transfer by the
----------------
Company to a recipient of ownership of a specific number of shares of
Common Stock. The recipient of the Restricted Stock has voting, dividend
and other ownership rights in the shares. The transfer may be made without
additional consideration from the participant or in consideration of a
15
payment by the participant that is less than the fair market value of the
shares on the date of grant, as the board (or Compensation Committee) may
determine.
Restricted Stock will be subject to a "substantial risk of forfeiture"
within the meaning of Section 83 of the Code for a period to be determined
by the board (or Compensation Committee). In order to enforce the
forfeiture provisions, the transferability of Restricted Stock will be
restricted as prescribed by the board (or Compensation Committee) for the
period during which the forfeiture provisions are in effect.
. Performance Awards. A Performance Award is an outright grant of cash and/or
------------------
stock to the recipient on account of meeting one or more performance goals
established by the board (or Compensation Committee).
Transferability
Awards generally are restricted as to transferability although certain awards
may be transferable by will or the laws of descent and distribution and/or to a
recipient's spouse, lineal ascendants, lineal descendants, or to a duly
established trust for the benefit of one or more of these individuals.
Adjustments
The maximum number of shares of Common Stock that may be issued or transferred
under the Plan, the number of shares covered by outstanding awards and the
option prices or base prices per share applicable thereto, are subject to
adjustment in the event of stock dividends, stock splits, combinations of
shares, recapitalization, mergers, consolidations, spin-offs, reorganizations
and similar transactions or events. In the event of any such transaction or
event, the board (or Compensation Committee) shall make proportionate
adjustments to the number of shares issued/issuable under the Plan and the
exercise prices thereof.
Amendments to the Plan
The Plan may be amended from time to time by the board without further approval
by the Stockholders of the Company, provided that such amendment does not
increase the aggregate number of shares reserved for issuance under the Plan.
Federal Income Tax Consequences
The following is a brief summary of certain of the federal income tax
consequences of certain transactions under the Plan. This summary is not
intended to be exhaustive and does not address state or local tax consequences.
. ISOs. If an option granted under the Plan is treated as an ISO, the
----
optionee will not recognize any income upon either the grant or the
exercise of the option, and the Company will not be allowed a deduction for
federal tax purposes. Upon a sale of the shares, the tax treatment to the
optionee and the Company will depend primarily upon whether the optionee
16
has met certain holding period requirements at the time he or she sells the
shares. In addition, as discussed below, the exercise of an ISO may subject
the optionee to alternative minimum tax liability. If an optionee exercises
an ISO and does not dispose of the shares received within two years of the
date of receipt of the option or within one year after the transfer of the
shares to him or her, any gain realized upon the disposition will be
characterized as long-term capital gain and, in such case, the Company will
not be entitled to a federal tax deduction. If the optionee disposes of the
shares either within two years of the date the option is granted or within
one year after the transfer of the shares to him or her, such disposition
will be treated as a "disqualifying disposition" and an amount equal to the
lesser of (1) the fair market value of the shares on the date of exercise
minus the purchase price, or (2) the amount realized on the disposition
minus the purchase price, will be taxed as ordinary income to the optionee
in the taxable year in which the disposition occurs. (However, in the case
of gifts, sales to related parties, and certain other transactions, the
full difference between the fair market value of the stock and the purchase
price will be treated as compensation income). The excess, if any, of the
amount realized upon disposition over the fair market value at the time of
the exercise of the option will be treated as long-term capital gain if the
shares have been held for more than one year following the exercise of the
option. The exercise of an ISO may subject an optionee to alternative
minimum tax liability because the excess of the fair market value of the
shares at the time an ISO is exercised over the purchase price of the
shares is included in income for purposes of the alternative minimum tax
even though it is not included in taxable income for purposes of
determining the regular tax liability of an employee.
In general, the Company will not be entitled to a federal income tax
deduction upon the grant, exercise or termination of an ISO. However, in
the event an optionee sells or disposes of stock received on the exercise
of an ISO in a disqualifying disposition, the Company will be entitled to a
deduction for federal income tax purposes in an amount equal to the
ordinary income, if any, recognized by the optionee upon disposition of the
shares, provided that the deduction is not otherwise disallowed under the
Code.
. Nonqualified Stock Options. Nonqualified Stock Options granted under the
--------------------------
Plan do not qualify as "incentive stock options" and do not qualify for any
of the special tax benefits that apply to ISOs. An optionee generally will
not recognize any taxable income at the time he or she is granted a
Nonqualified Stock Option. However, upon its exercise, the optionee will
recognize ordinary income for federal income tax purposes measured by the
excess of the then fair market value of the shares over the exercise price.
The income realized by the optionee will be subject to income and other
employee withholding taxes. The optionee's basis for determination of gain
or loss upon the subsequent disposition of shares acquired upon the
exercise of a Nonqualified Stock Option will be the amount paid for such
shares plus any ordinary income recognized as a result of the exercise of
such option. Upon disposition of any shares acquired pursuant to the
exercise of a Nonqualified Stock Option, the difference between the sale
price and the optionee's basis in the shares will be treated as a capital
gain or loss and generally will be characterized as long-term capital gain
or loss if the shares have been held for more than one year at their
disposition. In general, there will be no federal income tax deduction
allowed to the Company upon the grant or termination of a Nonqualified
Stock Option or a sale or disposition of the shares acquired upon the
exercise of
17
a Nonqualified Stock Option. However, upon the exercise of a Nonqualified
Stock Option, the Company will be entitled to a deduction for federal
income tax purposes equal to the amount of ordinary income that an optionee
is required to recognize as a result of the exercise, provided that the
deduction is not otherwise disallowed under the Code.
. SARs. SARs are taxed to recipients and are deductible by the Company in
----
substantially the same manner as Nonqualified Stock Options. A recipient
generally will not recognize any taxable income at the time he or she is
granted a SAR. However, upon its exercise, the recipient will recognize
ordinary income for federal income tax purposes measured by the excess of
(i) the then fair market value on the date of exercise of one share of
Common Stock over (ii) the price per share specified in the Award
Agreement, multiplied by (iii) the number of shares awarded. Upon exercise,
the Company will be entitled to a deduction for federal income tax purposes
equal to the amount of ordinary income that a recipient is required to
recognize as a result of the exercise, provided that the deduction is not
otherwise disallowed under the Code.
. Restricted Stock. A recipient of Restricted Stock generally will be subject
----------------
to tax at ordinary income rates on the fair market value of the Restricted
Stock (reduced by any amount paid by the recipient) at the time when the
shares are no longer subject to a substantial risk of forfeiture for
purposes of Section 83 of the Code. However, a recipient who elects under
Section 83(b) of the Code within 30 days of the date of transfer of the
shares will recognize ordinary income on the date of transfer of the shares
equal to the excess of the fair market value of the share (determined
without regard to the risk of forfeiture or restrictions on transfer) over
the purchase price paid, if any, for the shares.
. Performance Awards. Performance Awards are taxable to recipients as
------------------
ordinary income in an amount equal to the cash received and/or the fair
market value of the stock received in the year of receipt. The Company is
entitled to a deduction for federal income tax purposes equal to the amount
of ordinary income that a recipient is required to recognize, provided that
the deduction is not otherwise disallowed under the Code
New Plan Benefits
The following table provides certain information with respect to all options
which (a) have been granted as of the record date under the Plan, subject to
shareholder approval of the Charter Amendment and Plan; and (b) are intended to
be granted under the Plan immediately after the annual meeting, assuming
shareholder approval of the Charter Amendment and the Plan is obtained. The
table specifies the amounts granted or to be granted to each named executive
officer individually, all current executive officers as a group, all current
directors who are not executive officers as a group, and all employees,
including all current officers who are not executive officers, as a group. As of
the record date, no stock awards have been made under the Plan and no stock
awards are intended to be granted immediately following the annual meeting.
18
NEW PLAN BENEFITS
Stock Option Awards
---------------------------------------
Name and Position Dollar Value (1) Number of Options
------------------- -------------------
Colon O. Washburn
Director and former Chief Executive Officer -- 1,000,000 (2)
Gary D. Wiener
Executive Vice President and Chief Operating Officer -- 2,724,872 (3)
Steven C. Finberg
Vice President of Sales and Marketing -- 2,724,872 (3)
All current executive officers as a group (5 persons) -- 10,899,488 (4)
All current directors of the Company as a group who are not
executive officers (4 persons) -- 1,000,000 (2)
All employees, who are not executive officers, as a group (___
persons) --
________________________
(1) The "dollar value" for options to be granted pursuant to the Plan on the
date of grant will be zero, as the exercise price for such options will be
no less than fair market value on the date of grant which is intended to be
the date shareholder approval is obtained.
(2) Options are immediately exercisable subject to shareholder approval.
(3) Includes options to purchase 681,218 shares of Common Stock which are
immediately exercisable and the remainder of which are subject to future
vesting, and all of which are subject to shareholder approval.
(4) Includes options to purchase 4,768,526 shares of Common Stock which are
immediately exercisable and the remainder of which are subject to future
vesting, and all of which are subject to shareholder approval.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE
ADOPTION OF OUR 2001 STOCK OPTION PLAN.
19
PROPOSAL 3. ELECTION OF DIRECTOR
The board of directors currently consists of five members. Pursuant to our
bylaws, each director holds office for a term of one year or until such
director's successor is elected and qualified or until such director's earlier
resignation, death or removal. Our board of directors has nominated Colon O.
Washburn for election as a director. The remaining four members of our board of
directors were designated by NTOF in October 2001 under the terms of our
Preferred Stock as described in "Proposal 1. Amendment to the Articles of
Incorporation" above. These directors are Arthur W. Hollingsworth, Luke M.
Sweetser, Gregory A. Campbell and Darren L. Miles.
Should Mr. Washburn become unable or decline to serve at the time of the annual
meeting, the shares represented by all valid proxies will be voted for the
election of such substitute as the board of directors may recommend. At this
time, the board of directors has no reason to believe that Mr. Washburn will be
unable or unwilling to serve if elected.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE
ELECTION OF MR. WASHBURN AS DIRECTOR.
Information with Respect to the Nominee, Continuing Directors and Executive
Officers
The following table sets forth, as of the record date, the names of our current
directors, nominees for director, our current executive officers and each named
executive officer (as defined below) of the Company; their respective ages;
their position with the Company; and, with respect to each director, the year in
which they became a director of the Company; and the year in which their term
(or in the case of the nominee, his proposed term) as director expires. The
table also sets forth the amount of Common Stock and the percent thereof
beneficially owned by each director, nominee for director, executive officer and
named executive officer and by all directors and executive officers as a group
as of the record date.
Nominee for Director
Director Term to Amount and Nature of Percent
Name Position Age Since Expire Beneficial Ownership of Class/(1)/
---- -------- --- ----- ------ -------------------- --------
Colon O. Washburn Director 56 1993 2002 122,435/(4)/ 1.5%
20
Continuing Directors
Director Term to Amount and Nature of Percent
Name Position Age Since Expire Beneficial Ownership of Class/(1)/
---- -------- --- ----- ------ -------------------- --------
Arthur W. Hollingsworth Director 38 2001 2002 3,944,094/(2)/ 46.9%
Luke M. Sweetser Director 29 2001 2002 3,944,094/(2)/ 46.9%
Gregory A. Campbell Director 48 2001 2002 3,944,094/(2)/ 46.9%
Darren L. Miles Director, 42 2001 2002 --/(3)/ *
President and
Chief Executive
Officer
Current Executive Officers Who Are Neither Nominees Nor Directors
Director Term to Amount and Nature of Percent
Name Position Age Since Expire Beneficial Ownership of Class/(1)/
---- -------- --- ----- ------ -------------------- --------
Gary D. Wiener Executive Vice 49 -- -- 35,600/(6)/ *
President and Chief
Operating Officer
Steven C. Finberg Vice President of 32 -- -- 26,500/(6)/ *
Sales and Marketing
Cheryl A. Taylor Executive Vice 33 -- -- --/(6)/ *
President, Chief
Financial Officer
and Secretary
Helen Mihas Vice President, 35 -- -- -- *
Treasurer,
Controller and
Assistant Secretary
All Directors and 4,128,629/(7)/ 49.1%
Executive Officers as a
Group (4 persons)
Named Executive Officers Who Are Not Current Officers, Nominees or Directors
Director Term to Amount and Nature of Percent
Name Position Age Since Expire Beneficial Ownership of Class/(1)/
---- -------- --- ----- ------ -------------------- --------
David I. Sheinfeld Former Chairman of the 46 -- -- 513,697/(8)/ 6.0%
Board and President
-------------------------
* Does not exceed 1% of the outstanding common stock
21
(1) Percentages with respect to each person or group of persons have been
calculated on the basis of 8,410,098 shares, the total number of shares
of Common Stock outstanding on September 24, 2001, plus the number of
shares of Common Stock which such person or group of persons has the
right to acquire, without contingency, within 60 days after September
24, 2001.
(2) As managers of NTOF LLC and NT Advisors, Messrs. Hollingsworth,
Campbell and Sweetser are deemed to be indirect beneficial owners of
shares of our Common Stock that are beneficially owned by NTOF. NTOF
LLC is the general partner of NTOF Partners, the general partner of
NTOF. NT Advisors is the investment manager of NTOF.
(3) Does not include options to purchase 2,724,872 shares of Common Stock
which are immediately exercisable subject to the approval of the
Charter Amendment.
(4) Does not include options to purchase 1,000,000 shares of Common Stock
which are immediately exercisable subject to the approval of the
Charter Amendment.
(5) Messrs. Gier and McKinney resigned from the Board of Directors
effective as of October 15, 2001.
(6) Does not include options to purchase 2,724,872 shares of Common Stock,
of which options to purchase 681,218 shares are immediately exercisable
and the remainder of which are subject to future vesting, subject to
the approval of the Charter Amendment.
(7) Includes 152,753 shares subject to options issued to certain directors
and executive officers of the Company that are exercisable within 60
days.
(8) Consists of 328,037 shares held of record by David I. Sheinfeld, as
trustee of the Sheinfeld Family Trust, 70,100 shares held of record by
the Sheinfeld Family Partnership, 10,023 shares held of record by Mr.
Sheinfeld and 105,537 shares subject to options issued to Mr. Sheinfeld
under our stock option plans that are exercisable within 60 days. Mr.
Sheinfeld's address is 42 Downs Lake Circle, Dallas, TX 75230. Mr.
Sheinfeld resigned from all positions with the Company effective
November 2000.
Nominees and Continuing Directors
The following biographies provide a brief description of the principal
occupation and business experience of each nominee and continuing director, as
well as any directorships held by such persons.
Colon O. Washburn. Mr. Washburn resigned his position as our Chief Executive
Officer in August, 2001. Mr. Washburn had been appointed Chief Executive Officer
in October, 1999. Since his resignation, Mr. Washburn has remained with the
Company as a member of our board of directors and continues to serve as an
advisor to management. Mr. Washburn has been a director of the Company since
July 1993. From 1971 until January 1993, Mr. Washburn was employed by Wal-Mart
Stores, Inc. ("Wal-Mart"), where he served most recently as Executive Vice
President of Sam's Wholesale Club, a division of Wal-Mart, and also as Senior
Vice President of Wal-Mart. Since February 1993, Mr. Washburn has been President
of Beau Chene Farms, a real estate development company. Additionally, Mr.
Washburn serves as a director of Tandycrafts, Inc.
22
Arthur W. Hollingsworth. Since October, 2001, Mr. Hollingsworth has been the
Chairman of our Board of Directors. Since August 2000, Mr. Hollingsworth has
been a Co-founder and Partner of North Texas Opportunity Fund LP, a venture
capital/private equity firm located in Dallas, TX. From 1989 to the present, Mr.
Hollingsworth has also been a Partner of Lewis Hollingsworth LP, a venture
capital/private equity firm located in Dallas, TX. Mr. Hollingsworth is Chairman
of the Boards of Belding Hausman Incorporated (textile manufacturer), Instaff
Personnel, Inc. (temporary staffing services), and the North Dallas Chamber of
Commerce, and is also Co-Chairman of BillMatrix Corporation (payment
processing). In addition, Mr. Hollingsworth serves on the board of directors of
Hollingsworth & Vose Company (paper manufacturing), Logex Corporation
(industrial gas transportation), PrimeSource Foodservice Equipment, Inc.
(foodservice equipment distribution), and the Zale Lipshy University Medical
Center, Inc. (healthcare).
Gregory A. Campbell. Since October 2001, Mr. Campbell has served as a member of
our Board of Directors. Since August 2000, Mr. Campbell has been a Co-founder
and Partner of North Texas Opportunity Fund LP, a venture capital/private equity
firm in Dallas, TX. Since September 1988, Mr. Campbell has served as President
of Rainmaker, Inc., a management consulting firm located in Dallas, TX. Mr.
Campbell is also President of Campbell Consulting Group, a strategic management
consulting group that he founded in 1988. In addition, Mr. Campbell presently
serves as a director on the boards of Trycos Incorporated (software
development), PrimeSource Foodservice Equipment, Inc. (foodservice equipment
distribution), InStaff Personnel, Inc. (temporary staffing services), IBIS
Communications and MLN Holding Corporation. Mr. Campbell is founding director
and chairman of both the National Black Business Council and the Greater Dallas
Chamber of Commerce Small Business Council. Mr. Campbell was once honored as one
of Business Week's "Top 50 Corporate Executives Under 35" and was selected as
Texas Male Entrepreneur of the Year by the Austin Metropolitan Resource Center.
Mr. Campbell earned an MBA from Harvard University and a Bachelor of Science
degree from Cornell University.
Luke M. Sweetser. Since October 2001, Mr. Sweetser has served as a member of our
Board of Directors. Since August 2000, Mr. Sweetser has been a Co-founder and
Partner of North Texas Opportunity Fund LP, a venture capital/private equity
firm located in Dallas, TX. Since July 1994, Mr. Sweetser has been a Partner and
Managing Director of Lewis Hollingsworth LP, a venture capital/private equity
firm located in Dallas, TX. Mr. Sweetser is a director of InStaff Personnel
(temporary staffing services), PrimeSource Foodservice Equipment, Inc.
(foodservice equipment distribution), Trycos Incorporated (software development)
and the Dallas-Ft. Worth Private Equity Forum. Mr. Sweetser has served as a
director for the City of Dallas Housing Finance Corporation since
1994 and has served as its Chief Investment Officer since 1996. Mr. Sweetser
holds the designation of Chartered Financial Analyst from the Association of
Investment Management and Research.
Darren L. Miles. Since October 2001, Mr. Miles has served as our President and
as a member of our Board of Directors. In August 2001, Mr. Miles was appointed
President and Chief Executive Officer of the Company. Since 2000, Mr. Miles has
been a director of Lewis Hollingsworth LP, a venture capital/private equity firm
in Dallas, TX. From 1998 to 2000, Mr. Miles was Chief Financial Officer and
Executive Vice President of ACS Incorporated, a commodity distribution company.
From 1984 to 1998, Mr. Miles was Chief Financial Officer, Executive Vice
President, and a Principal of Hutson Companies Inc., a privately-held
wholesale/retail distribution company.
23
Current Officers Who are Not Nominees or Directors
The following biographies provide a brief description of the principal
occupation and business experience of each executive officer, as well as any
directorships held by such persons.
Gary D. Wiener. Mr. Wiener joined the Company in 1993. In March 2000, Mr. Wiener
was appointed our Executive Vice President and Chief Operating Officer. From
1996 to 1999, Mr. Wiener served as our Vice President of Operations. Mr. Wiener
served the Company in many capacities between 1993 and 1995, including Regional
Director of Operations.
Cheryl A. Taylor. Ms. Taylor joined the Company in April 2001 and has served as
our Chief Financial Officer, Executive Vice President and Secretary since May
2001. From 1994 until April 2001, Ms. Taylor was employed by The Great Train
Store Company, a nationwide specialty retailer, including serving as its Chief
Financial Officer and Vice President of Finance and Administration from 1996
until April 2001. From 1989 to 1994, Ms. Taylor served as a certified public
accountant with Coopers & Lybrand LLP, an international accounting and auditing
firm.
Steven C. Finberg. In October 1999, Mr. Finberg was named as our Vice President
of Sales and Marketing. From 1997 to October 1999, Mr. Finberg had been our
Director of Merchandising. From 1989 to 1997, Mr. Finberg held a variety of
upper management and executive positions within the Company, including Regional
Director of Operations.
Helen Mihas. In April 2001, Ms. Mihas was named as our Controller, Vice
President and Assistant Secretary. Since March 2000, Ms. Mihas had served as our
Assistant Controller. From 1993 until 2000, Ms. Mihas was employed by Columbia
and Tenet Healthcare Corporations, two major national healthcare corporations,
in various financial positions. From 1988 to 1993, Ms. Mihas held an accounting
position at McNeil Real Estate Management.
BOARD OF DIRECTORS AND COMMITTEES
Our business is managed under the direction of our board of directors. Our board
of directors meets during the fiscal year to review significant developments
affecting the Company and to act on matters requiring board approval. Our board
of directors held four meetings during the fiscal year ended December 29, 2000
and acted by unanimous written consent on seven occasions. All directors of the
Company attended at least seventy-five (75%) of the total number of meetings of
the board of directors held during fiscal year 2000.
Our board of directors currently has established audit and compensation
committees. We do not have a standing nominating committee. Nominees for
director are selected by our board of directors. The committees devote attention
to specific subjects and assist the board of directors in the discharge of its
responsibilities. The current functions of each committee and its current
members are described below.
24
Audit Committee
Our audit committee currently is composed of two members, Messrs. Hollingsworth
and Sweetser, both of whom were appointed to the committee in October 2001.
Neither of the current directors on the committee are independent as defined by
the listing standards of The Nasdaq Stock Market.
Our audit committee did not meet during 2000. Our audit committee is responsible
for reporting to the board of directors on the general financial condition of
the Company and the results of our annual audit, and are responsible for
ensuring that the Company's activities are conducted in accordance with
applicable laws and regulations. Our Board of Directors adopted an audit
committee charter for the Company on June 12, 2000 by written consent. A copy of
the audit committee charter is attached to this proxy statement as Appendix C.
The following Report of the Audit Committee was approved and adopted by Mark
Gier and Keith McKinney, former members of the audit committee who resigned from
our board of directors effective October 15, 2001.
Report of the Audit Committee
The report of the Audit Committee shall not be deemed incorporated by reference
by any general statement incorporating by reference this proxy statement into
any filing under the Securities Act of 1933, as amended (the "Securities Act")
or the Exchange Act, except as to the extent that we specifically incorporate
this information by reference and shall not otherwise be deemed filed under such
Acts.
In accordance with its written charter adopted by the Board of Directors, the
Audit Committee (the "Committee") assists the Board of Directors in fulfilling
its responsibility for overseeing the quality and integrity of the accounting,
auditing and financial reporting practices of the Company and their systems of
internal controls.
In discharging its oversight responsibility as to the audit process for fiscal
year 2000, the Committee obtained from its independent accountants a written
statement describing all relationships between the accountants and the Company
that might bear on the accountants' independence consistent with Independence
Standards Board Standard No. 1, "Independence Discussions with Audit
Committees," discussed with the accountants any relationships that may have
impacted their objectivity and independence, and satisfied itself as to the
accountants' independence.
The Committee discussed and reviewed with its independent accountants
communications required by generally accepted auditing standards, including
those described in Statement on Auditing Standards No. 61, as amended,
"Communication with Audit Committees" and discussed and reviewed the results of
the independent accountants' examination of the consolidated financial
statements.
Each of the Committee, Company management, and the independent accountants
reviewed the audited consolidated financial statements of the Company as of and
for the year ended December
25
29, 2000. Subsequent to the filing by the Company of its Form 10-K annual report
for the fiscal year 2000 with the Securities and Exchange Commission, the audit
committee met with management and the independent accountants and confirmed that
they had no objection to the inclusion of the audited consolidated financial
statements in Company's 10-K.
The Audit Committee
Mark Gier
Keith McKinney
Compensation Committee
The compensation committee presently consists of two members, Messrs.
Hollingsworth and Campbell, both of whom were appointed to the compensation
committee in October 2001 and neither of whom are officers or employees of the
Company. The compensation committee determines the compensation of our Chief
Executive Officer and, with the assistance of management, of our senior
executive employees (including salary, bonus, equity participation through
grants of stock options, and benefits). Our compensation committee did not meet
during the 2000 fiscal year.
Compensation of Directors
For fiscal year 2000, our non-employee directors received cash compensation in
the amount of $10,000 for serving on our board of directors and were reimbursed
for expenses reasonably incurred in connection with their services as directors.
For fiscal year 2001, each of our non-employee directors will receive $2,500 for
each meeting of our board of directors attended and will be reimbursed for
expenses reasonably incurred in connection with their services as directors.
Pursuant to the monitoring agreement described in "Certain Relationships and
Related Transactions" herein, Messrs. Hollingsworth, Campbell and Sweetser will
not receive any compensation for serving as members of our board of directors
during fiscal year 2001, but will be reimbursed for expenses reasonably incurred
in connection with such services. In addition, Darren L. Miles will not receive
compensation for his service on the board of directors during fiscal year 2001.
PROPOSAL 4. RATIFICATION OF INDEPENDENT AUDITORS
Our independent auditors for the fiscal year ended December 29, 2000 were KPMG
LLP. Our board of directors has reappointed KPMG LLP to continue as our
independent auditors for the fiscal year ending December 31, 2001, subject to
ratification of such appointment by the shareholders.
Representatives of KPMG LLP are expected to attend the annual meeting. They will
be given an opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions from shareholders present at the
annual meeting.
26
The following aggregate fees were billed to the Company for professional
services rendered by our independent auditors during fiscal year 2000:
Audit Fees $239,000
Financial Information Systems Design and Implementation Fees -0-
All Other Non-Audit Fees $ 23,000
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF
THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT AUDITORS
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information regarding compensation paid
during each of the last three fiscal years to the Company's Chief Executive
Officer and each of the Company's other most highly compensated executive
officers (the "named executive officers").
27
Long-Term
Annual Compensation Compensation
------------------- ------------
Name and Shares Underlying All Other
Principal Position Year Salary Bonus Other Options Compensation/(1)/
------------------ ---- ------ ----- ---- ------- ------------
Colon O. Washburn/(2)/ 2000 240,000 - - 60,000 2,215
Chief Executive Officer and 1999 56,308 - 4,940 5,000 -
Chairman of the Board 1998 - - - - -
Gary D. Wiener 2000 138,051 - - 25,000 2,233
Executive Vice President and 1999 113,473 - - - 1,777
Chief Operating Officer 1998 112,936 5,000 - - 1,949
Steven C. Finberg 2000 113,424 - - 20,000 3,201
Vice President of Sales 1999 96,750 11,500 - - 4,191
and Marketing 1998 91,731 - - - 3,461
David I. Sheinfeld/(3)/ 2000 264,231 - 341,923/(4)/ 60,000 5,796
Chairman of the 1999 302,874 - - - 4,800
Board and President 1998 298,819 50,000 - 20,000 4,800
John H. Gray/(5)/ 2000 175,000 - - - 4,586
Executive Vice President, Chief 1999 165,000 - - - 1,333
Financial Officer and Secretary 1998 33,635 5,000 - - -
Michael J. Hinson/(6)/ 2000 99,230 15,000 - 12,000 1,385
Vice President, Treasurer, 1999 - - - - -
Controller and Assistant 1998 - - - - -
Secretary
(footnotes on following page)
_____________________
(1) These amounts consist of contributions by the Company to a 401(k) plan
on behalf of the named executive officer.
(2) Effective October 1999, Mr. Washburn was appointed Chief Executive
Officer of the Company. Mr. Washburn's annual base compensation was
$240,000. Effective August 2001, Mr. Washburn resigned his position as
Chief Executive Officer and Darren Miles became Chief Executive
Officer.
(3) Effective November 2000, Mr. Sheinfeld resigned his position as
Chairman of the Board of Directors, President, and as a member of the
board of directors.
(4) Amount includes all payments due Mr. Sheinfeld pursuant to the
Resignation Agreement and Contract for Services entered into with the
Company on November 9, 2000, including those payments which will be
made in 2001. Amount does not include the forgiveness of a $300,000
loan and accrued interest thereon owed by Mr. Sheinfeld to the
Company.
(5) Effective May 2001, Mr. Gray resigned as Executive Vice President,
Chief Financial Officer, and Secretary.
(6) Effective April 2001, Mr. Hinson resigned as Vice President,
Controller, and Assistant Secretary.
28
Option Grants During Fiscal Year 2000
The following table sets forth certain information concerning options to
purchase Common Stock issued to the named executive officers during fiscal year
2000 under the 1996 Fresh America Corp. Stock Option and Award Plan as Amended
and Restated effective May 22, 1998.
Percent of Potential Realizable
Number of Total Options Value At Assumed Annual
Securities Granted to Rate of Stock Price
Underlying Employees Exercise Appreciation for Option
Name Options Granted In 2000 Price Expiration Date Term/(1)/
---- --------------- ------- ----- --------------- ------------------------
5% 10%
------------------------
Gary D. Wiener 25,000 6.3% $2.00 6/2/2010 $31,445 $79,687
Steven C. Finberg 20,000 5.0% $2.00 6/2/2010 $25,156 $63,750
__________________
(1) The "Potential Realizable Value" portion of the table illustrates
value that might be realized upon the exercise of the options
immediately prior to the expiration of their term, assuming the
specified compounded rates of appreciation of the Common Stock over
the term of the options.
401(k) Plan
We maintain a 401(k) Profit Sharing Plan, a tax-qualified retirement plan under
Section 401(k) of the Internal Revenue Code of 1986, as amended (the "Code").
Our 401(k) Plan provides participants with retirement benefits and may also
provide benefits upon death, disability or termination of employment with the
Company. Employees are eligible to participate in our 401(k) Plan following the
completion of three (3) months of employment. In addition, employees must be at
least twenty-one (21) years of age to be eligible for participation in the
401(k) Plan. Participants may make elective salary reduction contributions to
the 401(k) Plan up to the lesser of 15% of the participant's compensation or the
legally permissible limit (currently $10,500) imposed by the Code. The Company
may, in its sole discretion, make a matching employer contribution for employees
of the amount of the percentage of each employee contribution up to a maximum
contribution of 3% of the contributing employee's compensation. In addition, the
Company may, in its sole discretion, make nonelective contributions to the
401(k) Plan for participants who are not considered to be "highly compensated
employees" under the Plan. Contributions by the Company vest over a period of
five (5) years. Enrollment in the 401(k) Profit Sharing Plan may be effected on
the first day of the month following the date the employee meets the eligibility
requirements of the Plan.
Compensation Committee Interlocks and Insider Participation
During the 2000 fiscal year, the compensation committee of the board of
directors consisted of Sheldon Stein and Mr. Washburn; however, Mr. Stein
resigned from the compensation committee in September 2000. Mr. Washburn became
the Company's Chief Executive Officer in October 1999, and continued to serve on
the compensation committee until February 2001. Mr. Washburn resigned as our
Chief Executive Officer in August 2001.
29
Compensation Committee's Report on Executive Compensation
The Compensation Committee was formed in April 1994 in anticipation of the
Company's initial public offering. Prior to the establishment of the
Compensation Committee, the entire Board of Directors was responsible for
determining executive compensation. Since its formation, the Compensation
Committee has been responsible for recommending bonuses and any increase in base
salaries for the Company's executive officers.
The Compensation Committee believes that, in order for the Company to succeed,
it must be able to attract and retain qualified executive officers. In
determining the type and amount of executive officer compensation, the
objectives of the Compensation Committee are to provide levels of base
compensation, bonuses and long-term incentives (in the form of stock options or
other plans) that will attract and retain talented executive officers and align
their interests with the success of the Company. The Company's executive officer
compensation program currently is comprised of base salary, bonus plan,
long-term incentive compensation (in the form of stock options) and various
benefits generally available to employees of the Company (such as health and
disability insurance). Under the supervision of the Compensation Committee and
the Board of Directors, the Company has developed and implemented compensation
policies, plans and programs that seek to enhance the profitability of the
Company and increase shareholder value.
Base Salaries
The Company's policy is to maintain base salaries competitive with salaries paid
to similarly situated executive officers of companies of similar size in
comparable industries. Although neither the Board of Directors nor the
Compensation Committee has conducted a formal review of base salaries paid to
similarly situated executive officers, the Company believes that the base
salaries payable to its executive officers are comparable to those paid by
similar companies located in the Company's geographical area and engaged in
industries comparable to the Company's. The Compensation Committee anticipates
that adjustments to base compensation will generally be made based upon assigned
responsibility and performance and successful attainment of specific goals and
objectives of the Company and individual employees.
Bonuses
Year-end cash bonuses are designed to motivate the Company's executive officers
to achieve specific annual financial goals and to achieve favorable returns for
the Company's shareholders. At the end of each fiscal year, the Compensation
Committee will assess each executive's contributions to the Company as well as
the degree to which specific annual financial, strategic, and operating
objectives were met by the Company.
Long-Term Incentives
Stock option grants under the Company's stock option plans form the basis of the
Company's long-term incentive compensation for executive officers and employees.
The specific objective of the Company's stock option plans is to align the
long-term interests of the Company's executive officers and employees with those
of shareholders by creating a strong link between executive pay and shareholder
returns. The Company encourages its executive officers and employees to develop
30
and maintain a significant, long-term stock ownership position in the Company's
Common Stock. Stock options are awarded to executive officers and employees in
order to encourage future management actions aimed at improving the Company's
sales efforts, product quality and profitability. The Company believes that
success in these endeavors will increase the value of the Company's Common Stock
for shareholders. Recipients of options will have the opportunity to share in
the increased value that results from their efforts. The Plan Administration
Committee makes specific awards of options based on an individual's ability to
impact Company-wide performance and in light of the total compensation
appropriate for the individual's position. The Compensation Committee and the
Plan Administration Committee may also consider other bonus or long-term
incentives at their discretion.
Chief Executive Officer Compensation
In approving Mr. Washburn's compensation, the Board of Directors evaluated and
compared Mr. Washburn's duties, responsibilities and performance results, and
the overall results of the Company, to industry norms to determine the minimum
level of base compensation required. The compensation committee did not
recommend a cash bonus for fiscal 2000.
In November 2000, the Company entered into a resignation agreement and contract
for services with Mr. Sheinfeld. Pursuant to the resignation agreement, both
notes totaling $300,000 in principal and all accrued interest thereon were
forgiven in full. In addition, the Company paid Mr. Sheinfeld $16,923 on
December 1, 2000 and $25,000 on January 1, 2001. The Company paid Mr. Sheinfeld
$33,333 per month for the six months of January through June 2001. The payments
decreased to $8,333 for the last six months of 2001. There are no other payments
due.
This Report is submitted by the members of the Compensation Committee of the
Board of Directors.
Colon O. Washburn
Employment Agreements
The Company has entered into employment agreements with Gary Wiener, Steven
Finberg, and Colon Washburn. These employment agreements set forth the basic
terms of Mr. Wiener's, Mr. Finberg's, and Mr. Washburn's employment with the
Company, and also contain provisions regarding non-competition, non-solicitation
of Company employees, non-solicitation of Company customers, and confidentiality
of certain Company information.
Mr. Wiener's agreement for employment with the Company as its Chief Operating
Officer has a term of three years, commencing on October 5, 2001. The term of
the employment agreement may be extended by a written extension agreement signed
by both parties. Mr. Wiener is obligated under the agreement to devote his full
professional working time to the Company and shall not otherwise be employed or
otherwise engaged in any other business or enterprise without the written
permission of the Company. The agreement provides for a base salary of $160,000
per year, which is to be reviewed annually by the Company, but which may not be
decreased. In addition to the base salary, the agreement provides for, among
other things, participation in
31
benefit plans and other fringe benefits applicable to similarly situated
officers and managers, reimbursement for business expenses in accordance with
Company policy, and eligibility to receive a performance-based annual bonus. The
bonus will be awarded beginning on the first day of the calendar year following
October 5, 2001, only if the economic performance of the Company during twelve
consecutive months has achieved or exceeded an "adjusted target budget" as
determined by the Board of Directors and subject to adjustment as set forth in
the agreement. The agreement provides that the Company may terminate for cause
(as defined in the agreement) at any time. The agreement terminates
automatically in the event of disability (as defined in the agreement) and also
terminates automatically upon death. Termination by either the employee or the
Company (except for in the event of death) requires two weeks' written notice.
Mr. Finberg's agreement for employment with the Company as a Vice President
Sales and Marketing has a term of three years, commencing on October 5, 2001.
The term of the employment agreement may be extended by a written extension
agreement signed by both parties. Mr. Finberg is obligated under the agreement
to devote his full professional working time to the Company and shall not
otherwise be employed or otherwise engaged in any other business or enterprise
without the written permission of the Company. The agreement provides for a base
salary of $145,000 per year, which is to be reviewed annually by the Company,
but which may not be decreased. In addition to the base salary, the agreement
provides for, among other things, participation in benefit plans and other
fringe benefits applicable to similarly situated officers and managers,
reimbursement for business expenses in accordance with Company policy, and
eligibility to receive performance-based annual bonus. The bonus will be awarded
beginning on the first day of the calendar year following October 5, 2001, only
if the economic performance of the Company during twelve consecutive months has
achieved or exceeded an "adjusted target budget" as determined by the Board of
Directors and subject to adjustment as set forth in the agreement. The agreement
provides that the Company may terminate for cause (as defined in the agreement)
at any time. The agreement terminates automatically in the event of disability
(as defined in the agreement) and also terminates automatically upon death.
Termination by either the employee or the Company (except for in the event of
death) requires two weeks' written notice.
Mr. Washburn's agreement for employment with the Company as an Executive
Consultant provides for a one-year term commencing on October 5, 2001, which may
be renewed for up to three successive one-year periods thereafter. Renewal is
automatic unless either party gives thirty days' notice prior to the expiration
of the term. During Mr. Washburn's term of employment, he may continue the
business relationships he already has, and any new consulting or part-time
employment arrangements as may arise. He otherwise agrees to devote his full
professional working time to the Company and shall not otherwise be employed or
otherwise engaged in any other business or enterprise without the written
permission of the Company. The agreement provides that Mr. Washburn shall have a
base salary of $150,000, which will be reviewed and modified from time to time,
but which shall not be decreased. In addition to the base salary, the agreement
provides for, among other things, participation in benefit plans and other
fringe benefits applicable to similarly situated employees and reimbursement for
business expenses in accordance with Company policy. The agreements provides for
termination by the Company for cause (as defined in the agreement), at any time.
The agreement terminates
32
automatically in the event of disability as defined in the agreement, and also
terminates automatically upon death. Termination by either the employee or the
Company (except for death) requires two weeks' written notice.
Each of Mr. Wiener's, Mr. Finberg's and Mr. Washburn's employment agreements
further provide that during the employment term, each of them shall observe a
non-competition clause, and shall not without prior written consent directly or
indirectly engage in or have a financial interest in any other business,
continue or assume any other corporate affiliations, or pursue any other
commercial activities which would in any way compete with the Company or result
in a conflict of interest for the employee. For one year after termination of
employment, each of them agrees not to compete with the Company or have any
financial interest in any entity competing with the Company or an affiliate of
the Company for which the employee performed services, within any region or
locality in which the Company is then doing business or marketing its products.
They further agree to non-solicitation of Company employees, non-solicitation of
Company customers, and to maintain the confidentiality of the Company's
confidential information (as defined in the agreement), both during their
employment and for one year after termination.
Severance Agreements
On November 9, 2000, the Company and Mr. Sheinfeld entered into a Resignation
Agreement and Contract for Services in connection with Mr. Sheinfeld's
resignation as Chairman of the Board of Directors and an employee of the
Company. Pursuant to the agreement, Mr. Sheinfeld was entitled to receive a
severance payment of $50,000, $25,000 of which was paid on November 9, 2000 with
the remaining $25,000 paid on February 1, 2001. In addition, Mr. Sheinfeld is
eligible to receive a bonus in the amount of $25,000 on December 31, 2001, if,
in the reasonable judgment of the Company, Mr. Sheinfeld has satisfactorily
performed the services required by the Company. Further, the Company agreed to
forgive Mr. Sheinfeld's debt to the Company in the amount of $300,000. In
conjunction therewith, the Company additionally agreed to release Mr. Sheinfeld
from further liability for interest on his debts which, as of November 9, 2000,
was in the amount of $59,379.83. The Company also agreed to extend the period
during which Mr. Sheinfeld may exercise his stock options to purchase 105,537
shares of the Company's Common Stock from November 9, 2000 to November 9, 2001.
The agreement contemplates that Mr. Sheinfeld would be engaged as an independent
contractor to the Company for a period commencing on November 9, 2000 and ending
December 31, 2001, unless terminated earlier pursuant to the agreement. The
agreement provides for total compensation of $291,923.07 for such services
during the term of the agreement. The agreement also includes certain
non-competition, confidentiality and indemnification covenants.
Stock Performance Graph
The following graph shows a five year comparison of shareholder return on the
Company's Common Stock based on the market price of the Common Stock (assuming
reinvestment of dividends), the cumulative total returns of companies on the
Nasdaq Stock Market Index of U.S.
33
Companies, and companies with standard industry classifications (SIC codes) with
the same range as Fresh America's. The data was supplied by the Center for
Research in Security Prices, Graduate School of Business, The University of
Chicago.
Comparison of Five-Year Cumulative Total Returns
Fresh America Corp., Nasdaq Stock Market and Nasdaq Stocks
(Performance Results through 12/29/2000)
[GRAPH]
Period Ending
----------------------------------------------------
Index 12/1995 12/1996 12/1997 12/1998 12/1999 12/2000
-----------------------------------------------------------------------------------------------------
Fresh America Corp. 100.0 171.4 200.0 174.0 50.6 11.7
Nasdaq Stock Market (US Companies) 100.0 123.0 150.7 212.4 394.8 237.5
NASDAQ Stocks (SIC 5140-5149 US Companies) 100.0 155.5 264.3 312.9 207.5 308.2
Groceries and Related Products
*Source: CRSP (www.crsp.uchicago.edu), Center for Research in Security Prices,
Graduate School of Business, The University of Chicago. Used with permission.
All rights reserved.
34
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We entered into a six-month consulting agreement with Mr. Thomas Hubbard
effective October 1, 1999, at which time Mr. Hubbard was a director of the
Company. The agreement paid Mr. Hubbard $8,000 per month. The agreement called
for Mr. Hubbard to provide managerial oversight of King's Onion House, a
wholly-owned subsidiary of Fresh America. The agreement was extended for an
additional twelve-month period, which ended April 1, 2001.
In December 1999, we made an unsecured loan in the principal amount of $175,000
to Mr. David Sheinfeld, our former Chairman, Chief Executive Officer and
President. At such time, we also extended an existing $125,000 unsecured loan
made to Mr. Sheinfeld in December 1994. The extended note and the new note were
both to bear interest at the Bank of America, N.A. prime rate and were due and
payable in December 2001. These notes were forgiven pursuant to the resignation
agreement discussed in the compensation committee's report and in the "Severance
Agreements" section above.
On September 5, 2001, we entered into a Monitoring Agreement with North Texas
Investment Advisors ("NT Advisors"), an affiliate of NTOF, as a condition to the
Agreements between NTOF and the Company. The Monitoring Agreement provides that
NT Advisors will monitor our progress and performance for which we will pay NT
Advisors a fee of $20,000 per month. Messrs. Hollingsworth, Campbell and
Sweetser hold positions as managers of NT Advisors, as well as being partners in
NTOF and directors of the Company. The terms of the Monitoring agreement provide
that affiliates of NT Advisors or NTOF will not be paid compensation as
directors of the Company.
On September 5, 2001, we issued an unsecured promissory note to Larry Martin, a
former director and a shareholder owning more than 5% of our outstanding common
stock, in the amount of $1,239,233. The promissory note bears no interest and
becomes due and payable on the earlier of (i) January 3, 2002 or (ii) our
repayment of our senior secured line of credit with Bank of America, N.A. The
promissory note evidences a deferred purchase price payment owed to Mr. Martin
pursuant a Stock Purchase Agreement entered into with Mr. Martin's former
company on December 17, 1997.
We contemplate entering into a staffing agreement with Instaff Personnel, Inc.,
a company in which NTOF is a significant shareholder. In addition, Arthur W.
Hollingsworth is Chairman of the Board of Instaff and Gregory A. Campbell and
Luke M. Sweetser serve on Instaff's board of directors. Although details of the
agreement have not yet been finalized, it is anticipated that fees paid to
Instaff will exceed $60,000 during the current fiscal year.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers (as defined in
regulations promulgated by the SEC thereunder) and directors, and persons who
own more than ten percent (10%) of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with the SEC.
Officers, directors and greater than ten percent shareholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
35
Based solely on a review of copies of all reports of ownership furnished to the
Company, the Company believes that during the last year it complied with all
filing requirements applicable to its officers, directors and greater than ten
percent (10%) beneficial owners.
SHAREHOLDER PROPOSALS
To be considered for inclusion in our proxy statement and form of proxy relating
to our 2002 annual meeting a shareholder proposal must be received by the
Corporate Secretary at our principal executive offices not later than
__________. Any such proposal will be subject to the rules and regulations of
the Securities Exchange Act of 1934, as amended.
Our bylaws provide an advance notice procedure for a shareholder to properly
bring business before an annual meeting. The shareholder must provide proper
notice to the Corporate Secretary at our principal executive offices not less
than sixty (60) days nor more than ninety (90) days prior to the anniversary
date of the immediately preceding annual meeting; provided, however, in the
event that the annual meeting is called for a date that is not within thirty
(30) days before or after such anniversary date, notice by the shareholder in
order to be timely must be received by the Corporate Secretary not later than
the close of business on the tenth (10th) day following the day on which notice
of the date of the annual meeting was mailed or public disclosure of the date of
the annual meeting was made, whichever first occurs.
OTHER BUSINESS
Our board of directors knows of no business which will be presented for
consideration at the annual meeting other than as stated in the accompanying
Notice of Annual Meeting of Shareholders. If, however, other matters are
properly introduced, the persons named in the accompanying proxy will vote the
shares they represent in accordance with their best judgment.
By Order of the Board of Directors
Cheryl A. Taylor
Corporate Secretary
Arlington, Texas
November 5, 2001
YOU ARE CORDIALLY INVIITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE
REQUESTED TO COMPLETE, DATE, SIGN AND PROMPTLY
RETURN THE ACCOMPANYING PROXY CARD IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
36
FRESH AMERICA CORP.
Board of Directors Proxy for the Annual Meeting
of Shareholders at 10:00 A.M., Thursday, December 6, 2001
---------------------------------------------------------
The undersigned shareholder of Fresh America Corp. (the "Company") hereby
appoints Arthur W. Hollingsworth and Luke M. Sweetser, or either or them, as
proxies, each with full powers of substitution, to vote the shares of the
undersigned at the above-stated Annual Meeting and at any adjournment(s)
thereof:
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE VOTED IN
ACCORDANCE WITH THE SPECIFICATIONS MADE ON THE REVERSE SIDE. IF A CHOICE IS NOT
INDICATED WITH RESPECT TO ITEMS (1), (2), (3) AND (4) THIS PROXY WILL BE VOTED
"FOR" SUCH ITEM. THE PROXIES WILL USE THEIR DISCRETION WITH RESPECT TO ANY
MATTER REFERRED TO IN ITEM (5). THIS PROXY IS REVOCABLE AT ANY TIME BEFORE IT IS
EXERCISED.
Receipt herewith of the Company's Annual Report and Notice of Meeting and Proxy
Statement, dated November 5, 2001 is hereby acknowledged.
(Continued and to be signed on the reverse side)
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Shareholders
FRESH AMERICA CORP.
December 6, 2001
[X] Please mark your votes as indicated in this example
(1) Approval of amendment to the Company's Articles of Incorporation to
increase the number of authorized shares of Common Stock from 10
million to 250 million shares and to decrease the stated par value of
the common stock from $.01 to $.0001 per share.
[_] FOR [_] AGAINST [_] ABSTAIN
(2) Approval of the Fresh America Corp. 2001 Stock Option Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
(3) Election of Director.
[_] FOR the nominee [_] WITHHOLD
listed to right AUTHORITY Nominee: Colon O. Washburn
(except as provided to vote for the
to the contrary nominee
below)
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name here):______________________________________________________
(4) Ratification of the selection of KPMG LLP as the Company's independent
auditors for the fiscal year 2001.
[_] FOR [_] AGAINST [_] ABSTAIN
(5) In their discretion, the proxies are authorized to vote upon such other
business or matters as may properly come before the meeting or any
adjournment thereof.
PLEASE SIGN, DATE AND MAIL TODAY.
(Signature(s) of Shareholder(s)) ________________________ Dated: _________, 2001
NOTE: (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.)
APPENDIX A
RESTATED ARTICLES OF INCORPORATION
OF
FRESH AMERICA CORP.
Fresh America Corp., pursuant to the provisions of Article 4.07 of the
Texas Business Corporation Act, hereby adopts restated articles of
incorporation, which accurately copy the articles of incorporation and all
amendments thereto that are in effect to date and as further amended by such
restated articles of incorporation as hereinafter set forth and which contain no
other change in any provision thereof.
1. The name of the corporation is FRESH AMERICA CORP.
2. The following amendments to the Restated Articles of Incorporation
were duly adopted by a written consent of the Board of Directors and by vote of
the shareholders of the corporation taken at an annual meeting of shareholders:
a. Article Four of the Restated Articles of Incorporation is amended
and restated in its entirety (i) to increase the authorized capital stock
of the corporation and (ii) to reduce the par value of the corporation's
common stock.
3. Each amendment made by the Restated Articles of Incorporation has been
effected in conformity with the provisions of the Texas Business Corporation Act
(the "TBCA"), and the Restated Articles of Incorporation and such amendments
were duly adopted by the shareholders at an annual meeting of shareholders held
on December 6, 2001 in accordance with Article 4.02 of the TBCA.
4. The number of shares of common stock outstanding is 8,410,098, all of
which shares were entitled to vote on the Restated Articles of Incorporation and
_________ shares of common stock were voted in favor thereof (and none were
voted against) by written consent dated as of _______________, 2001. Holders of
the corporation's outstanding Preferred Stock, Series D (the "Series D Stock")
were entitled to vote as a class on the Restated Articles of Incorporation. The
number of shares of Series D Stock outstanding was 77,000, and 77,000 shares of
Series D Stock were voted in favor thereof (and none were voted against) by
written consent dated as of _______________, 2001.
5. As a result of the decrease in par value of the 8,410,098 outstanding
shares of common stock from $.01 per share to $.0001 per share, the stated
capital of the corporation will decrease from $84,100.98 to $841.01.
6. The Statement Designating a Series of Preferred Stock, filed by the
corporation with the Secretary of State of Texas on September 5, 2001, remains
valid and effective for all purposes.
-1-
7. The Articles of Incorporation and all amendments and supplements
thereto are hereby superseded by the following Restated Articles of
Incorporation which accurately copy the entire text thereof and as amended above
set forth:
ARTICLE ONE
The name of the corporation is FRESH AMERICA CORP.
ARTICLE TWO
The period of its duration is perpetual.
ARTICLE THREE
The purposes for which the corporation is organized are to transact
any lawful business for which corporations may be incorporated under the
Texas Business Corporation Act.
ARTICLE FOUR
Capital Stock
-------------
The aggregate number of shares that the corporation shall have the
authority to issue is 250,000,000 shares of common stock having a par value
of $.0001 per share (the "Common Stock") and 1,000,000 shares of Preferred
Stock having a par value of $1.00 per share (the "Preferred Stock"). The
preferences, limitations and relative rights in respect of the shares of
each class of capital stock of the corporation and the authority vested in
the Board of Directors to divide the Preferred Stock into series and the
variations in the relative rights and preferences between the shares of
such series so established are as follows:
Section 1. Preferred Stock. The shares of Preferred Stock may be
--------- ---------------
divided into and issued in series, and each series shall be so designated
as to distinguish the shares from the shares of all other series. All
shares of Preferred Stock shall be of equal rank and identical except to
the extent that variations in the relative rights and preferences
enumerated in subparagraphs (a) through (h) may be fixed and determined,
from time to time, by the Board of Directors between series hereinafter
established; and each share of a series shall be identical in all respects
with the other shares of such series, except that shares of any one series
issued at different times may differ as to the dates from which dividends
thereon shall be cumulative. Shares of any series which have been retired
or cancelled in any manner, including shares redeemed or treasury shares
returned and shares which have been converted into Common Stock or
exchanged for shares of Preferred Stock of any other series, shall have the
status of authorized but unissued shares of Preferred Stock.
-2-
Authority is expressly granted to the Board of Directors, within the
limitations and restrictions stated herein, to divide the shares of
Preferred Stock into one or more series and, with respect to each series,
to fix and determine in the resolution or resolutions providing for the
issue of such shares the following relative rights and preferences as to
which there may be variations between the series so established:
(a) the distinctive designation of such series and the number of
shares that shall constitute such series, which number may be
increased (except where otherwise provided by the Board of Directors
in creating such series) or decreased (but not below the number of
shares thereof then outstanding) from time to time by like action of
the Board of Directors;
(b) the rate of dividends payable on shares of such series, the
conditions upon which and the dates when such dividends shall be
payable;
(c) the price or prices at, and the terms and conditions on
which, shares of such series may be redeemed;
(d) the amount payable on shares of such series in the event of
any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the corporation;
(e) the terms and conditions and the date or dates on which the
shares of such series may be converted into shares of Common Stock;
(f) subject to the limitations contained in Article 2.12B of the
Texas Business Corporation Act, the rights, if any, of the holders of
shares of such series to convert such shares into, or exchange shares
for, shares of any other class or shares of any series of the same or
any other class, and the terms and conditions of such conversion or
exchange;
(g) whether or not the shares of such series shall be subject to
the operation of a retirement or sinking fund, and, if so, the manner
in which any such retirement or sinking fund shall be applied to the
purchase or redemption of the shares of such series for retirement and
the terms and provisions relative to the operation thereof; and
(h) the rights, if any, of the holders of shares of such series
to vote.
Section 2. Common Stock. The Common Stock is junior to the Preferred
--------- -------------
Stock and is subject to all the rights, privileges, preferences and
priorities of the Preferred Stock as herein set forth or as may be stated
in any resolution or resolutions of the Board of Directors providing for
the issue of a series of Preferred Stock. Subject to the prior and superior
rights of the Preferred Stock and subject to the provisions and on the
conditions set forth in Section 1 of this Article Four, or in any
---------
resolution or resolutions providing for the issue of a series of Preferred
Stock, such dividends (payable in cash, stock or otherwise) as may be
determined by the Board of Directors, may be declared and paid on the
Common Stock from time to time out of any funds legally available therefor.
In the
-3-
event of any liquidation, dissolution or winding up of the affairs of the
corporation, after payment to the holders of Preferred Stock of the amounts
to which they are entitled pursuant to the resolution or resolutions of the
Board of Directors providing for the issue of a series of Preferred Stock,
the holders of Common Stock shall be entitled to share ratably in all
assets then remaining subject to distribution to the shareholders.
Section 3. Voting Rights. Except as otherwise provided by law, by
--------- -------------
these Articles of Incorporation, or by the resolution or resolutions of the
Board of Directors providing for the issue of any series of Preferred
Stock, the holders of Common Stock shall have the exclusive right to vote
for the election of directors and for all other purposes, each holder of
Common Stock being entitled to one vote for each share held.
ARTICLE FIVE
The corporation will not commence business until it has received for
the issuance of shares, consideration of the value of at least $1,000 in
money, labor done or property actually received.
ARTICLE SIX
The street address of the registered office is ____________________,
Dallas, Texas _____, and the name of the registered agent at such address
is CT Corporation.
ARTICLE SEVEN
Section 1. Board of Directors. The number of directors shall from
--------- ------------------
time to time be fixed by, or in the manner provided in, the Bylaws of the
corporation.
Section 2. Names and Addresses. The names and addresses of the persons
--------- -------------------
currently serving as directors of the corporation are:
Name Address
---- -------
Arthur W. Hollingsworth 13355 Noel Road, Suite 2210
Dallas, Texas 75240
Luke M. Sweetser 13355 Noel Road, Suite 2210
Dallas, Texas 75240
Gregory Campbell 3625 North Hall Street, Suite 610
Dallas, Texas 75219
__________________ ________________________
________________________
Colon Washburn 210 N. Walton Blvd., Suite 30
-4-
Bentonville, Arkansas 72712
Section 3. Increase or Decrease of Directors. The number of directors
--------- ---------------------------------
may be increased or decreased from time to time by amendment to, or in the
manner provided in, the Bylaws of the corporation; but no decrease shall
have the effect of shortening the term of any incumbent director.
ARTICLE EIGHT
Pre-emptive rights are hereby denied. No shareholder of this
corporation shall, by reason of such shareholder's ownership of stock, have
a pre-emptive or other right to purchase, subscribe for, receive or acquire
all or any part of any capital stock (either the unissued or treasury
stock), notes, bonds, debentures, securities, stock options or warrants, or
other securities convertible into or entitling the holder thereof to
purchase any such capital stock (whether authorized by the Articles of
Incorporation or by any amendment thereto) to be issued, optioned, sold,
transferred or otherwise disposed of by the corporation at any time. Any
part of any such stock, notes, bonds, debentures, securities, stock options
or warrants may at any time be issued, optioned, sold, transferred or
otherwise disposed of by this corporation to such persons and upon such
terms as may seem proper to the Board of Directors in its absolute
discretion, without first offering same or any part thereof to any existing
shareholder.
ARTICLE NINE
(a) The corporation shall indemnify, to the fullest extent permitted
by Texas law, every person who is or was a director of the corporation or
is or was serving at the request of the corporation with respect to all
costs and expenses incurred by such person as a result of such person being
made or threatened to be made a defendant or respondent in a proceeding by
reason of such person being a director of the corporation.
(b) The corporation shall indemnify, to the fullest extent that
indemnification for directors is permitted by Texas law, every person who
is or was an executive officer of the corporation and any person who, while
a director or executive officer of the Corporation, is or was serving at
the request of the corporation as a director or officer or similar
functionary of another foreign or domestic corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan or other
enterprise with respect to all costs and expenses incurred by such person
as a result of such person being made or threatened to be made a defendant
or respondent in a proceeding by reason of his holding a position named
above in this paragraph.
(c) The corporation shall advance expenses to any person named in
paragraph (a) or (b) of this Article who was, is or is threatened to be
made a party in a proceeding by reason of such person's holding a position
named in paragraph (a) or (b), to the fullest extent permitted by Texas
law.
(d) It is the intent of the corporation to indemnify the persons
referred to in this Article to the fullest extent permitted by law. The
indemnification provided by this
-5-
Article shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any law, agreement, vote of
shareholders or directors, the corporation's bylaws or otherwise, or under
any policy or policies of insurance purchased and maintained by the
corporation on behalf of any such person, both as to action in such
person's official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be
a director or officer, and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(e) The indemnification provided by this Article shall be subject to
all valid and applicable laws, including, without limitation, Article 2.02-
1 of the Texas Business Corporation Act, and, in the event this Article or
any of the provisions hereof or the indemnification contemplated hereby are
found to be inconsistent with or contrary to any such valid laws, the
latter shall be deemed to control and this Article shall be regarded as
modified accordingly, and, as so modified, shall continue in full force and
effect.
ARTICLE TEN
A director of the corporation is not liable to the corporation or its
shareholders for monetary damages for an act or omission in the director's
capacity as a director, except that this provision does not eliminate or
limit such director's liability for:
1. A breach of the director's duty of loyalty to the
corporation or its shareholders or members;
2. An act or omission not in good faith that constitutes a
breach of duty of the director to the corporation, or an act or
omission that involves intentional misconduct or a knowing violation
of the law;
3. A transaction from which the director received an improper
benefit, whether or not the benefit resulted from an action taken
within the scope of the director's office; or
4. An act or omission for which the liability of a director is
expressly provided for by an applicable statute.
ARTICLE ELEVEN
Any action required by the Texas Business Corporation Act to be taken
at any annual or special meeting of shareholders, or any action which may
be taken at any annual or special meeting of shareholders, may be taken
without a meeting, without prior notice, and without a vote, if a consent
or consents in writing, setting forth the action so taken, shall be signed
by the holder or holders of shares having not less than the minimum number
of votes that would be necessary to take such action at a meeting at which
the holders of all shares entitled to vote on the action were present and
voted.
-6-
ARTICLE TWELVE
Special meetings of the shareholders of the corporation may be called
by the Chairman of the Board, the President, the Board of Directors or the
holders of at least fifty percent (50%) of all the shares entitled to vote
at the proposed special meeting, but not by any other person or persons.
ARTICLE THIRTEEN
The Bylaws of the corporation may be altered, amended or repealed in
whole or in part by the affirmative vote of the majority of the directors
of the Board of Directors or by the affirmative vote of the holders of at
least 66 2/3% of the issued and outstanding shares then entitled to vote on
such amendment. The words "amend" and "amended" shall be broadly
interpreted to include alterations, modifications, additions and repeal, in
whole or in part.
-7-
EXECUTED THIS _____ day of _______________, 2001.
FRESH AMERICA CORP.
By: ________________________
Name: ______________________
Title: _____________________
-8-
APPENDIX B
FRESH AMERICA CORP.
2001 STOCK OPTION PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN
Fresh America Corp. (the "Company") hereby establishes the Fresh America
Corp. 2001 Stock Option Plan (the "Plan") upon the terms and conditions
hereinafter stated.
ARTICLE II
DEFINITIONS
2.01 "Award" means any stock option granted to a Participant under the
Plan.
2.02 "Board" means the Board of Directors of the Company.
2.03 "Code" means the Internal Revenue Code of 1986, as amended.
2.04 "Common Stock" means shares of the common stock, $0.0001 par value
per share, of the Company.
2.05 "Disability" means any physical or mental impairment which qualifies
an Employee for disability benefits under any applicable long-term disability
plan maintained by the Company or, if no such plan applies, which would qualify
such Employee for disability benefits under the Federal Social Security System.
2.06 "Effective Date" means the date upon which the Board approves this
Plan.
2.07 "Employee" means any person who is employed by the Company or a
subsidiary thereof, and whose wages are reported on a Form W-2. The Company
classification as to who is an Employee shall be determinative for purposes of
an individual's eligibility under the Plan.
2.08 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
2.09 "Fair Market Value" of a share of the Company's Common Stock for all
purposes under the Plan on a particular date shall be the most recent valuation
adopted by the Board in good faith of the fair market value of each share of the
Company's Common Stock; provided that, in the event the Common Stock becomes
registered under Section 12 or Section 15 of the Exchange Act, the Fair Market
Value of the Company' Common Stock shall be the mean between the high and low
sales price per share of Common Stock on such date, or in case no such sale
takes place on such date, the last date on which a sale occurred, in either case
as reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on a national securities
exchange or included for quotation on the Nasdaq market, or if the Common Stock
is not listed or admitted for trading or included for quotation, in the over-the
-counter market, as reported by the NASD Automatic Quotation System or, if such
system is no longer in use, the principal other automated quotations system that
may then be in use or, if the Common Stock is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional
Page 1 0f 10
market maker making a market in the Common Stock, or such other method of
valuation as may be selected by the Board in good faith.
If the relevant date is not a trading day, the determination shall be made
as of the next preceding trading day. As used herein, the term "trading day"
means a day on which public trading of securities occurs and as reported in the
principal consolidated reporting system referred to above, or if the Common
Stock is not listed or admitted to trading on a national securities exchange or
included for quotation on the Nasdaq National Market, any business day.
2.10 "Grantee" refers to any Participant in the Plan who receives an
Award.
2.11 "Incentive Stock Option" means any Award granted under this Plan
which the Board intends (at the time it is granted) to be an incentive stock
option within the meaning of Section 422 of the Code. All Incentive Stock
Options issued under this Plan are intended to comply with the requirements of
Section 422 of the Code, and the regulations thereunder, and all provisions
hereunder shall be read, interpreted and applied with that purpose in mind.
2.12 "Non-Qualified Stock Option" means any Award granted under this Plan
which is a stock option but is not an Incentive Stock Option.
2.13 "Officer" means any Employee of the Company or any of its
subsidiaries who is designated by the Board as a corporate officer.
2.14 "Participant" means any Employee, Officer, director, consultant or
independent contractor who is designated by the Board pursuant to Article VI to
participate in the Plan.
2.15 "Retirement" means a termination of employment which constitutes a
"retirement" under any applicable qualified pension benefit plan maintained by
the Company as that term is defined by the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") or if no such plan is maintained by the
Company, a termination of employment following attainment of age 65.
2.16 "Stock Award Agreement" means the written agreement pursuant to
Article VI hereof that sets forth the terms, conditions, restrictions and
privileges for an Award and that incorporates the terms of the Plan.
ARTICLE III
ADMINISTRATION OF THE PLAN AND MISCELLANEOUS
3.01 Plan Administration. The Plan shall be administered by the
Compensation Committee (the "Committee") comprised of not fewer than two (2)
Board members as appointed by a majority of the Board. A simple majority of the
members of the Committee shall constitute a quorum for the transaction of
business. The Committee shall be responsible to the Board for the overall
administration and operation of the Plan, although the Committee may, in its
discretion, delegate to one or more officers responsibility for the day-to-day
operation of the Plan. The Board, or the Committee if so designated by the
Board, shall make all determinations with respect to participation in the Plan
by Employees, Officers, directors, consultants or independent contractors of the
Company or any of its subsidiaries, and with respect to the extent of that
participation. The interpretation and construction of any provision of the Plan
by the Board or the Committee shall be
Page 2 of 10
final. No member of the Board or the Committee shall be liable for any action or
determination made by him in good faith
3.02 Revocation for Misconduct. The Board may by resolution immediately
revoke, rescind and terminate any Award, or portion thereof, under this Plan,
whether or not vested, to a Participant who is discharged from the employ of the
Company or any of its subsidiaries (or whose personal services contract is
terminated in the case of an independent contractor) because of the
Participant's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, or willful violation of any law, rule, or regulation (other than traffic
violations or similar offenses).
3.03 Repurchase Rights. In the event the Company or any of its
subsidiaries terminates either the employment, or personal services contract of
a Participant, upon receipt of written demand by the Board, the Participant
shall, for a period of ninety (90) days following the date of such termination,
be required to offer to sell back to the Company all shares of Common Stock
acquired pursuant to the terms of this Plan and Stock Award Agreement(s) at the
lesser of: (a) the per share exercise price paid for shares acquired pursuant to
the terms of this Plan and Stock Award Agreement(s); or (b) the then current
Fair Market Value. Each Participant whose employment or personal services
contract with the Company or any of its subsidiaries is terminated at the
Participant's election, and such termination is for reasons other than due to
death, Retirement, or Disability, may be required to offer for sale to the
Company on his final day of employment, or on the last day that he provides
services to the Company or any of its subsidiaries pursuant to a personal
service contract, all shares of Common Stock acquired pursuant to the terms of
this Plan and Stock Award Agreement(s) acquired pursuant to the terms of this
Plan and Stock Award Agreement(s) at the per share exercise price paid for such
shares.
3.04 Limitation on Liability. No Board member shall be liable for any
action or determination made in good faith with respect to the Plan. To the
maximum extent allowed by law and the Company's bylaws, the Board shall be
indemnified by the Company in respect of all their activities under the Plan.
3.05 Compliance with Law and Regulations. All Awards granted hereunder
shall be subject to all applicable federal and state laws, rules and regulations
and to such approvals by any government or regulatory agency as may be required.
The Company shall not be required to issue or deliver any certificates for
shares of Common Stock prior to the completion of any registration or
qualification of or obtaining of consents or approvals with respect to such
shares under any Federal or state law or any rule or regulation of any
government body, which the Company shall, in its sole discretion, determine to
be necessary or advisable.
3.06 Restrictions on Transfer. The Company may place a legend upon any
certificate representing shares acquired pursuant to an Award granted hereunder
noting that the transfer of such shares may be restricted by applicable laws and
regulations.
3.07 Market Stand-Off. In connection with any underwritten public offering
by the Company of its equity securities pursuant to an effective registration
statement filed under the Securities Act, including the Company's initial public
offering, Participants shall not directly or indirectly sell, make any short
sale of, loan, hypothecate, pledge, offer, grant or sell any option or other
contract for the purchase of, purchase any option or other contract for the sale
of, or otherwise dispose of or transfer, or agree to engage in any of the
foregoing transactions with respect
Page 3 of 10
to, any common stock received pursuant to the Plan without the prior written
consent of the Company or its underwriters. Such restriction (the "Market Stand-
Off") shall be in effect for a period of time following the date of the final
prospectus for the offering as may be requested by the Company or its
underwriters. In the event of the declaration of a stock dividend, a spin-off, a
stock split, an adjustment in conversion ratio, a recapitalization or a similar
transaction affecting the Company's outstanding securities without receipt of
consideration, any new, substituted or additional securities which are by reason
of such transaction distributed with respect to any common stock subject to the
Market Stand-Off, or into which such common stock thereby become convertible,
shall immediately be subject to the Market Stand-Off. In order to enforce the
Market Stand-Off, the Company may impose stop-transfer instructions with respect
to common stock received pursuant to the Plan until the end of the applicable
stand-off period. The Company's underwriters shall be beneficiaries of the
agreement set forth in this Section 3.07.
3.08 Mergers and Other Sale Events. In the case of and subject to the
-----------------------------
consummation of (i) a dissolution or liquidation of the Company, (ii) the sale
of all or substantially all of the assets of the Company to an unrelated person
or entity, (iii) a merger, reorganization or consolidation in which the holders
of the Company's outstanding voting power immediately prior to such transaction
do not own a majority of the outstanding voting power of the surviving or
resulting entity immediately upon completion of such transaction, or (iv) any
other transaction in which the owners of the Company's outstanding voting power
prior to such transaction do not own at least a majority of the outstanding
voting power of the relevant entity after the transaction, in each case,
regardless of the form thereof (in each case, a "Sale Event"), the Board (or the
Committee) shall pay to each Participant with a vested Award an amount equal to
(i) the excess of the fair market value of a share of Common Stock as of the
date of the Sale Event less the per share exercise price applicable to such
Award, multiplied by (ii) the number of vested options, unless provision is made
in connection with such transaction in the sole discretion of the parties
thereto for the assumption of Awards granted under the Plan, or the substitution
for such Awards of new Awards of the successor entity, with such adjustment as
to the number and kind of shares and the per share exercise prices as the
parties to the Sale Event shall agree.
ARTICLE IV
ELIGIBILITY
Awards may be granted to such Employees, Officers, directors, consultants
or independent contractors as may be designated from time to time by the Board,
or the Committee if so designated by the Board, pursuant to guidelines, if any,
which may be adopted by the Board (or the Committee) from time to time.
ARTICLE V
COMMON STOCK AVAILABLE FOR THE PLAN
The aggregate number of shares of Common Stock which may be issued pursuant
to this Plan shall be twenty-nine million seven-hundred sixteen thousand five-
hundred sixty-six (29,716,566). If and to the extent that the number of issued
shares of Common Stock shall be increased or reduced by change in par value,
split up, reclassification, distribution of a dividend payable in Common Stock,
merger, consolidation, reorganization, recapitalization, reincorporation, or the
like, the Board shall make appropriate adjustment in the number of shares of
Common Stock authorized by the Plan and in the number and exercise price of
shares covered by outstanding Awards under the Plan.
Page 4 of 10
In the event of any adjustment in the number of shares covered by any Award, any
fractional shares resulting from such adjustment shall be disregarded and each
such Award shall cover only the number of full shares resulting from such
adjustment. The Board shall make such adjustments, and its determination shall
be final, binding and conclusive.
The Board also may adjust the number of shares subject to outstanding
Awards and the exercise price and the terms of outstanding Awards to take into
consideration material changes in accounting practices or principles,
extraordinary dividends, acquisitions or dispositions of stock or property or
any other event if it is determined by the Board that such adjustment is
appropriate or equitably required in order to prevent dilution or expansion of
the rights of Participants, provided that no such adjustment shall be made in
the case of an Incentive Stock Option, without the consent of the participant,
if such adjustment would constitute a modification, extension or renewal of the
Option within the meaning of Section 424(h) of the Code.
No shares shall be the subject of more than one Award at any time, but if
an Award as to any shares is surrendered before exercise, or expires or
terminates for any reason without having been exercised in full, or for any
other reason ceases to be exercisable, the number of shares covered thereby
shall again become available for grant under the Plan as if no Awards had been
previously granted with respect to such shares.
ARTICLE VI
PARTICIPATION; STOCK AWARD AGREEMENT
The Board, or the Committee if so designated by the Board, shall, in its
discretion, determine from time to time which Employees, Officers, directors,
consultants or independent contractors will participate in the Plan and receive
Awards under the Plan. In making all such determinations there shall be taken
into account the duties, responsibilities and performance of each respective
Employee, Officer, director, consultant or independent contractor, his/her
present and potential contributions to the growth and success of the Company,
his/her cash compensation and such other factors as the Board (or Committee)
shall deem relevant to accomplishing the purposes of the Plan.
Awards may be granted individually or in tandem with other Awards. All
awards are subject to the terms, conditions, restrictions and privileges of the
Plan in addition to the terms, conditions, restrictions and privileges for an
Award contained in the Stock Award Agreement. No Award under this Plan shall be
effective unless memorialized in writing by the Board (or the Committee) in a
Stock Award Agreement delivered to and signed by the Participant.
ARTICLE VII
AWARDS
7.01 Stock Options. The Board (or the Committee) may from time to time
grant to eligible participants Awards of Incentive Stock Options or Non-
Qualified Stock Options, provided however that Awards of Incentive Stock Options
shall be limited to Employees of the Company or any of its subsidiaries. Options
intended to qualify as Incentive Stock Options must have an exercise price at
least equal to the Fair Market Value of a share of Common Stock at the time of
grant, except as provided in Section 8.05. Non-Qualified Stock Options may have
an exercise price that is equal to, below, or above the Fair Market Value of a
share of Common Stock at the time of
Page 5 of 10
grant. The exercise price applicable to a particular Award shall be set forth in
each individual Award Agreement.
7.02 Stock Appreciation Rights. The Board (or the Committee) may from time
to time grant to eligible participants Awards of Stock Appreciation Rights
("SARs"). A SAR entitles the Grantee to receive, subject to the provisions of
the Plan and the Stock Award Agreement, a payment having an aggregate value
equal to the product of (i) the excess of (a) the Fair Market Value on the
exercise date of one share of Common Stock over (b) the base price per share
specified in Stock Award Agreement, multiplied by (ii) the number of shares
specified in the Stock Award Agreement which are exercised. Payment by the
Company of the amount receivable upon any exercise of a SAR may be made by the
delivery of Common Stock or cash, or any combination of Common stock and cash,
as determined in the sole discretion of the Company. If upon settlement of the
exercise of a SAR a Grantee is to receive a portion of such payment in shares of
Common stock, the number of shares shall be determined by dividing such portion
by the Fair Market Value of a share of Common Stock on the exercise date. No
fractional shares shall be used for such payment and the Board (or the
Committee) shall determine whether cash shall be given in lieu of such
fractional shares or whether such fractional shares shall be eliminated.
7.03 Restricted Stock. The Board (or the Committee) may from time to time
grant restricted Stock Awards to eligible participants in such amounts, on such
terms and conditions, and for such consideration, including no consideration or
such minimum consideration as may be required by law, as it shall determine.
7.04 Performance Awards. The Board (or the Committee) may, in its
discretion, grant performance awards which become payable on account or
attainment of one or more performance goals established by the Board (or the
Committee). Performance awards may be paid by the delivery of Common Stock or
cash, or any combination thereof, as determined in the sole discretion of the
Board (or the Committee).
ARTICLE VIII
OPTION AWARDS
8.01 Vesting of Options
(a) General Rules. Incentive Stock Options and Non-Qualified Stock
Options granted to Participants shall become vested so that 25% of the Option
Award shall vest as of the date of the grant and 25% of the Option Award shall
vest on each one year anniversary thereafter, so that 100% of such Option Award
shall be vested as of the third anniversary of the date of grant, unless
otherwise determined in the discretion of the Board. Notwithstanding the
foregoing, no vesting shall occur on or after the date that an Employee's
employment or personal services contract with the Company or any of its
subsidiaries terminates for any reason other than his Death, Disability or
Retirement. In determining the number of shares of Common Stock with respect to
which such Awards are vested and/or exercisable, fractional shares will be
rounded up to the nearest whole number if the fraction is 0.5 or higher, and
down if it is less.
(b) Vesting Upon Death, Disability or Retirement. Only those Awards
granted to Participants under this Plan which are vested and exercisable on the
date of a Participant's death, Disability or Retirement shall be vested and
exercisable by the Participant or the Participant's representative subject to
Section 8.03.
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8.02 Duration of Options.
(a) General Rule. Except as provided in Section 8.05, each Award granted
to a Participant shall be exercisable at any time on or after it vests until the
earlier of (i) ten (10) years after its date of grant or (ii) the date that is
six (6) months (ninety (90) days in the case of Incentive Stock Options granted
to Employees) following the last day on which the Participant is employed or
renders services for the benefit of the Company or its subsidiaries.
(b) Exception for Termination Due to Death, Disability or Retirement. If
a Participant dies while in the employ of the Company or any of its subsidiaries
or terminates employment with the Company or any of its subsidiaries as a result
of Disability or Retirement without having fully exercised his Awards, the
Participant or his legal representative or guardian, or the executors,
administrators, legatees or distributees of his estate shall have the right,
during the twelve (12) month period following the earlier of his death,
Disability or Retirement, to exercise such Awards to the extent vested on the
date of such death, Disability or Retirement. In no event, however, shall any
Award be exercisable more than ten (10) years from the date it was granted.
(c) Notice of Disposition; Withholding; Escrow. A Grantee shall
immediately notify the Company in writing of any sale, transfer, assignment or
other disposition (or action constituting a disqualifying disposition within the
meaning of Section 421 of the Code) of any shares of Common Stock acquired
through exercise of an Incentive Stock Option, within two (2) years after the
grant of such Incentive Stock Option or within one (1) year after the
acquisition of such shares, setting forth the date and manner of disposition,
the number of shares disposed of and the price at which such shares were
disposed. The Company shall be entitled to withhold from any compensation or
other payments then or thereafter due to the Grantee such amounts as may be
necessary to satisfy any withholding requirements of Federal or state law or
regulation and, further, to collect from the Grantee any additional amounts
which may be required for such purpose. The Board may, in its discretion,
require shares of Common Stock acquired by a Grantee upon exercise of an
Incentive Stock Option to be held in an escrow arrangement for the purpose of
enabling compliance with the provisions of this Section 8.02(c).
8.03 Nonassignability. Awards shall not be transferable by a Grantee
except by will or the laws of descent or distribution, and during a Grantee's
lifetime shall be exercisable only by such Grantee or the Grantee's guardian or
legal representative. Notwithstanding the foregoing, or any other provision of
this Plan, a Grantee who holds Non-Qualified Stock Options may transfer such
Awards to his or her spouse, lineal ascendants, lineal descendants, or to a duly
established trust for the benefit of one or more of these individuals. Awards so
transferred may thereafter be transferred only to the Grantee who originally
received the grant or to an individual or trust to whom the Grantee would have
initially transferred the Award pursuant to this Section 8.03. Awards which are
transferred pursuant to this Section 8.03 shall be exercisable by the transferee
according to the same terms and conditions as applied to the Grantee.
8.04 Manner of Exercise. To the extent vested and exercisable, awards may
be exercised in part or in whole from time to time by execution of a written
notice directed to the Company, at the Company' principal place of business,
accompanied by cash or a check in payment of the exercise price for the number
of shares specified and paid for, although the Board may, in its discretion,
permit a Grantee to execute a promissory note in favor of the Company for the
number of shares specified and paid for. The Board, may in its discretion,
permit a Grantee to exercise vested and exercisable options awarded under this
Plan by surrendering an amount of Common Stock already owned by the Grantee
equal to the options' exercise price, but only in instances where
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the shares to be surrendered have been held by the Grantee for a period of at
least six (6) months. Subject to the limitations set forth in the Stock Award
Agreement, in the event of, and after such time as the Common Stock is listed or
admitted to trading on a national securities exchange or included for quotation
on the Nasdaq market, the Grantee may make payment by arranging with a third
party broker to sell a number of shares otherwise deliverable to the Grantee and
attributable to the exercise of the Award in order to pay the exercise price of
the Award.
8.05 $100,000 Limitation. Notwithstanding any contrary provisions
contained elsewhere in this Plan and as long as required by Section 422 of the
Code, the aggregate Fair Market Value, determined as of the time an Incentive
Stock Option is granted, of the Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by the Grantee during any
calendar year, under this Plan and stock options that satisfy the requirements
of Section 422 of the Code under any other stock option plan or plans maintained
by the Company, shall not exceed $100,000. To the extent that the aggregate
value of shares of common stock to be received by the Grantee for the first time
in any one year pursuant to the exercise of an Incentive Stock Option ("ISO
Stock") exceeds $100,000 based on the fair market value of the Common Stock as
of the date of the Incentive Stock Option's grant, such excess shall be treated
as Common Stock received pursuant to the exercise of a Nonqualified Stock Option
("NQSO Stock"). The Company shall designate which shares of Common Stock to be
received by the Grantee will be treated as ISO Stock and which shares of Common
Stock, if any, will be treated as NQSO Stock by issuing separate share
certificates identifying in the Company's share transfer records which shares
are ISO Stock.
8.06 Limitation on Ten Percent Stockholders. The price at which shares of
Common Stock may be purchased upon exercise of an Incentive Stock Option granted
to an individual who, at the time such Incentive Stock Option is granted, owns,
directly or indirectly, more than ten percent (10%) of the total combined voting
power of all classes of stock issued to stockholders of the Company, shall be no
less than one hundred and ten percent (110%) of the Fair Market Value of a share
of the Common Stock of the Company at the time of grant, and such Incentive
Stock Option shall by its terms not be exercisable after the expiration of five
(5) years from the date such Incentive Stock Option is granted.
ARTICLE IX
AMENDMENT AND TERMINATION OF THE PLAN
The Board may, by resolution, at any time terminate or amend the Plan with
respect to any shares of Common Stock or Awards which have not been granted, but
no such action shall adversely affect the rights under any outstanding Award
without the holder's consent. If and to the extent necessary to ensure that
Incentive Stock Options granted under the Plan remain qualified under Section
422 of the Code, Plan amendments shall be subject to approval by the Company's
stockholders who are eligible to vote at a meeting of stockholders.
ARTICLE X
EMPLOYMENT RIGHTS
Neither the Plan nor any Award hereunder shall create any right on the part
of any Employee of the Company or any of its subsidiaries to continue in such
capacity.
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ARTICLE XI
WITHHOLDING
The Company may withhold from any cash payment made under this Plan
sufficient amounts to cover any applicable withholding and employment taxes, and
if the amount of such cash payment is insufficient, the Company may require the
Grantee to pay to the Company the amount required to be withheld as a condition
to delivering the shares acquired pursuant to an Award. The Company also may
withhold or collect amounts with respect to a disqualifying disposition of
shares of Common Stock acquired pursuant to exercise of an Incentive Stock
Option, as provided in Section 8.02(c).
The Board is authorized to adopt rules, regulations or procedures which
provide for the satisfaction of a Participant's tax withholding obligation by
the retention of shares of Common Stock to which he otherwise would be entitled
pursuant to an Award or by the Participant's delivery of previously-owned shares
of Common Stock or other property. However, if the Company adopts rules,
regulations or procedures which permit withholding obligations to be met by the
retention of Common Stock to which a Grantee otherwise would be entitled
pursuant to an Award, the fair market value of the Common Stock retained for
such purpose shall not exceed the minimum required Federal, state and local tax
withholding due upon exercise of the Award.
ARTICLE XII
EFFECTIVE DATE OF THE PLAN; TERM
12.01 Effective Date of the Plan. This Plan shall become effective on the
Effective Date, and Awards may be granted hereunder as of or after the Effective
Date and prior to the termination of the Plan, provided that no Incentive Stock
Option issued pursuant to this Plan shall qualify as such unless this Plan is
approved by the requisite vote of the holders of the outstanding voting shares
of the Company at a meeting of stockholders of the Company held within twelve
(12) months before or after the Effective Date.
12.02 Term of Plan. Unless sooner terminated, this Plan shall remain in
effect for a period of ten (10) years ending on the tenth anniversary of the
Effective Date. Termination of the Plan shall not affect any Awards previously
granted and such Awards shall remain valid and in effect until they have been
fully exercised or earned, are surrendered or by their terms expire or are
forfeited.
ARTICLE XIII
GOVERNING LAW
To the extent not governed by Federal law, this Plan shall be construed
under the laws of the State of Texas.
IN WITNESS WHEREOF, the Company has caused a duly authorized officer to
execute this Fresh America Corp. 2001 Stock Option Plan, and to apply the
Corporate seal hereto as of the _____day of _______________, 2001.
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FRESH AMERICA CORP.
By: _____________________
Name: ___________________
Title: __________________
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APPENDIX C
Fresh America
Charter of the Audit Committee of the Board of Directors
I. AUDIT COMMITTEE PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in overseeing the Company's financial reporting process and its
outside auditors as required by Federal Securities Laws. The Audit
Committee's primary duties and responsibilities are to:
* Monitor the integrity of the Company's financial reporting process and
systems of internal controls regarding:
. finance
. accounting
. legal compliance
* Monitor the independence and performance of:
. the company's independent auditors
. internal auditing functions
* Provide an avenue of communication among:
. The independent auditors
. Management
. The internal auditing functions
. The Board of Directors
The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct access to
the independent auditors as well as anyone in the organization. The Audit
Committee has the ability to retain, at the Company's expense, special
legal, accounting, or other consultants or experts it deems necessary in
the performance of its duties.
II. AUDIT COMMITTEE COMPOSITION AND MEETINGS
Audit Committee members shall meet the requirements of the NASDAQ Exchange.
The Audit Committee shall be comprised of at least three but no more than
five directors, each of whom shall be independent non-executive directors,
free from any relationship, as determined by the Board, that would
interfere with the exercise of his or her independent judgment. All
members of the Committee shall have a basic understanding of finance and
accounting, as interpreted by the Board in its business judgment, and be
able to read and
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understand fundamental financial statements, and at least one member of
the Committee shall have accounting or related financial management
expertise.
Under exceptional and limited circumstances, the Board may allow for one
non-independent director to serve on the Audit Committee if the board
determines that it is in the best interest of the Company, and the Board
discloses the reasons for the determination in the Company's next annual
proxy statement.
Audit Committee members shall be appointed by the Board and if an audit
Committee Chair is not designated or present the members of the Committee
may designate a Chair by majority vote of the Committee membership.
The Committee shall meet at least two times annually, or more frequently
as circumstances dictate. The Audit Committee Chair shall prepare and/or
approve an agenda in advance of each meeting. The Committee may meet as
often as it deems appropriate in its business judgment, and may ask
members of Management, the Outside Auditors, the Internal Auditors or
others to attend any of its meetings and to provide any information it may
deem appropriate. To the extent it deems necessary in its business
judgment, the Audit Committee will meet with Management, the Outside
Auditors and the Internal Auditors, either with all or one or more of such
group being present at any meeting, to discuss matters for which the Audit
Committee has responsibility.
III. AUDIT COMMITTEE RESPONSIIBILITIES AND DUTIES
The Audit Committee will, as it deems necessary in its Business Judgment,
exercise oversight of, and review and discuss with Management, the Outside
Auditors and the Internal Auditors:
Review Procedures
-----------------
1. Review and reassess the adequacy of this Charter at least annually.
Submit the charter to the Board of Directors for approval and have the
document published at least every three years in accordance with SEC
regulations.
2. Review the Company's annual audited financial statements prior to
filing or distribution. Review should include discussion with
management and independent auditors of significant issues regarding
accounting principles, practices, and judgments.
3. In consultation with the management and the independent auditors,
consider the integrity of the Company's financial reporting processes
and controls. Review significant findings prepared by the independent
auditors together with management's responses.
4. Review with financial management and the independent auditors the
company's quarterly financial results prior to the release of earnings
and/or the company's quarterly financial statements prior to filing or
distribution. Discuss any significant changes to the Company's
accounting principles and any items required to be communicated by the
independent auditors in accordance with SAS 61 as amended
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by SAS 90. (see item 9). The Chair of the Committee may represent the
entire Audit Committee for purposes of this review.
IV. INDEPENDENT AUDITORS
5. The independent auditors are ultimately accountable to the Audit
Committee and the Board of Directors. The Audit Committee shall review
the independence and performance of the auditors and annually
recommend to the Board of Directors the appointment of the independent
auditors or approve any discharge of auditors when circumstances
warrant.
6. Approve the fees and other significant compensation to be paid to the
independent auditors.
7. On an annual basis, the Committee should review and discuss with the
Outside Auditors all significant relationships they have with the
Company that could impair the auditors' independence. The Audit
Committee will be responsible for ensuring that the Outside Auditors
provide a formal written statement delineating relationships between
the Auditor and the Company.
8. Review the independent auditors audit plan - discuss scope, staffing,
locations, reliance upon management, internal audits and general
audit.
9. Prior to releasing the year-end earnings, discuss the results of the
audit with the independent auditors. Discuss certain matters required
to be communicated to audit Committees in accordance with AICPA SAS 61
and SAS 90.
10. Consider the independent auditors' judgments about the quality and
appropriateness of the Company's accounting principles as applied in
its financial reporting.
V. LEGAL COMPLIANCE
11. Review significant internal audit reports together with management's
response and follow-up to these reports.
12. On at least an annual basis, review with the Company's counsel any
legal matters that could have a significant impact on the
organization's financial statements, the Company's compliance with
applicable laws and regulations, and inquiries received from
regulators or governmental agencies.
VI. OTHER AUDIT COMMITTEE RESPONSIBILITIES
13. Annually prepare a report to shareholders as required by the
Securities and Exchange Commission. The report should be included in
the Company's annual proxy statement.
14. Perform any other activities consistent with this Charter, the
Company's by-laws, and governing law, as the Committee or the Board
deems necessary or appropriate.
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15. Maintain minutes of meetings and periodically report to the Board of
Directors on significant results of the foregoing activities.
VII. MISCELLANEOUS
16. Nothing in this Charter will, or will be deemed to, increase, expand
or modify in any manner adverse to any member of the Audit Committee
the duties, obligations, or responsibilities of any such member of
the Audit Committee, it being the intent and purpose of this Charter
to grant enabling power to the Audit Committee.
17. Nothing in this Charter will, or will be deemed to, decrease or
modify in any manner adverse to any member of the Audit Committee,
such member's right to rely on statements and certifications made by
the Company's officers, employees, agents, counsel, experts and
auditors.
18. Nothing in this Charter will, or will be deemed to, adversely affect
in any manner the rights of members of the Audit Committee to
indemnification and advancement of expenses under the Articles of
Incorporation or Bylaws of the Company or under any contract,
agreement, arrangement or understanding benefiting such member.
19. Notwithstanding any other provision of this Charter, no provision of
this Charter will, except to the extent required by applicable law,
be construed to create any duty, liability or obligation on the part
of the Audit Committee or any of its members.
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