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SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(c) OF THE SECURITIES
EXCHANGE ACT OF 1934
Check the appropriate box:
/ / Preliminary Information Statement / / Confidential, for Use of the Commission
/X/ Definitive Information Statement Only (as permitted by Rule 14c-5(d)(2))
American Architectural Products Corporation
(Name of Registrant as Specified In Its Charter)
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/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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AMERICAN ARCHITECTURAL PRODUCTS CORPORATION
755 Boardman - Canfield Road
South Bridge Executive Center
Building G West
Boardman, Ohio 44512
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 30, 1998
To Our Shareholders:
The 1998 Annual Meeting of Shareholders of AMERICAN ARCHITECTURAL
PRODUCTS CORPORATION, a Delaware corporation (the "Company"), will be held at
the Holiday Inn Metroplex, 1620 Motor Inn Drive, Girard, Ohio 44420, on April
30, 1998, at 9:30 a.m., E.D.T., for the following purposes:
1. To elect nine (9) directors to the Company's Board of
Directors to serve for the next year or until their successors
are elected.
2. To approve the Company's Employee Stock Purchase Plan.
3. To ratify the appointment of BDO Seidman LLP as the
independent auditors for the Company for the fiscal year
ending December 31, 1998.
4. To transact such other business as may properly come before
the meeting or any adjournment(s) thereof. Management is
presently aware of no other business to come before the
meeting.
The Board of Directors has fixed the close of business on March 30,
1998, as the record date for the determination of Shareholders entitled to
notice of and to vote at the Annual Meeting or any adjournment(s) thereof (the
"Record Date"). Shares of Common Stock can be voted at the Annual Meeting only
if the holder is present at the meeting in person or by valid proxy. Management
is not soliciting proxies in connection with the Annual Meeting, and
Shareholders are requested not to send proxies to the Company. Your attention is
directed to the attached Information Statement.
The Company's management cordially invites you to attend the Annual
Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
FRANK J. AMEDIA
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Boardman, Ohio
April 8, 1998
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AMERICAN ARCHITECTURAL PRODUCTS CORPORATION
755 Boardman - Canfield Road
South Bridge Executive Center
Building G West
Boardman, Ohio 44512
INFORMATION STATEMENT
This Information Statement is being furnished to the Shareholders of
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION, a Delaware corporation (the
"Company"), in connection with the Annual Meeting of the Shareholders of the
Company to be held on April 30, 1998, at 9:30 a.m., E.D.T., and any adjournment
or postponement thereof (the "Annual Meeting"). A copy of the Notice of the
Annual Meeting accompanies this Information Statement. It is anticipated that
the mailing of this Information Statement will commence on April 8, 1998.
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
VOTING
Only shareholders of record at the close of business on March 30, 1998
(the "Record Date") are entitled to notice of and to vote at the Annual Meeting
or any adjournment or postponement thereof. On the Record Date, 13,458,479
shares of the common stock, $.001 par value per share (the "Common Stock"), were
issued and outstanding. Each holder of Common Stock is entitled to one vote,
exercisable in person or by proxy, for each share of Common Stock held of record
on the Record Date. There is no cumulative voting with respect to the election
of directors.
THE PROPOSALS FOR WHICH SHAREHOLDER APPROVAL IS BEING SOUGHT CANNOT BE
APPROVED WITHOUT THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE VOTES
PRESENT, IN PERSON OR BY PROXY, AT THE ANNUAL MEETING. Abstentions and broker
non-votes will be included in the determination of the number of shares
represented for a quorum. In order to vote their shares in person at the
meeting, shareholders who own their shares in "street name" must obtain a
special proxy card from their broker.
The Board of Directors does not know of any matters, other than (i) the
election of nine (9) members of the Company's Board of Directors, (ii) the
approval of the Company's Employee Stock Purchase Plan, and (iii) ratification
of the appointment of BDO Seidman LLP as the independent auditors for the
Company for the fiscal year ending December 31, 1998, that are expected to be
presented for consideration at the Annual Meeting.
BOARD OF DIRECTORS
IN GENERAL
At the Annual Meeting, nine (9) directors will be elected, each to hold
office until the Company's next annual meeting or until a successor is elected
and qualified. Subject to the requirements of applicable Delaware law, the Board
may from time to time determine the number of directors of the Company.
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AAP Holdings, Inc. ("AAPH") and Mr. Frank J. Amedia, who collectively
have voting power over a majority in interest of the Common Stock, intend to
vote FOR each of the nominees listed below. Accordingly, it is expected that
each of such nominees will be elected to the Company's Board of Directors. If
any nominee becomes unavailable for any reason, or if a vacancy should occur
before the election, AAPH and Mr. Amedia will vote their shares in favor of the
election of such other person or persons as they may determine. The nine (9)
nominees receiving the highest number of votes cast at the Annual Meeting will
be elected.
INFORMATION CONCERNING DIRECTORS AND NOMINEES
Each of the individuals listed below currently serves as a member of
the Company's Board of Directors and has been nominated to stand for reelection
at the Annual Meeting. Information regarding the names, ages (as of December 31,
1997), tenure as a member of the Board of Directors and recent business
experience of each of the nominees is set forth below. Each director has served
continuously with the Company since his first election to the Board of Directors
as indicated below.
NAME AGE POSITION DIRECTOR SINCE
- ---- --- -------- --------------
George S. Hofmeister 45 Chairman of the Board 1996
Frank J. Amedia 45 President, Chief Executive 1994
Officer and Director
John J. Cafaro 45 Director 1996
Joseph Dominijanni 41 Director and Treasurer 1996
W.R. Jackson, Jr. 64 Director 1996
John Masternick 72 Director 1994
James E. Phillips 41 Director 1996
Charles E. Trebilcock 71 Director 1994
James K. Warren 33 Director 1997
George S. Hofmeister has served as the Chairman of the Board of
Directors of the Company since December 19, 1996. Mr. Hofmeister has served as
Chief Executive Officer and Chairman of the Board of American Commercial
Holdings, Inc. ("ACH"), the parent company of AAP Holdings, Inc. ("AAPH"), since
December 15, 1995 and continues to serve in such roles. Mr. Hofmeister served as
Vice Chairman of Tube Products, Inc., a manufacturer of automobile exhaust
systems, from February 14, 1996 until March 25, 1997. From June 1, 1991 until
December 15, 1995, Mr. Hofmeister served as Chief Executive Officer and Chairman
of the Board of EWI, Inc., a manufacturer of automotive metal stampings.
Frank J. Amedia joined the Company's Board of Directors on June 8, 1994
following the acquisition of Forte, Inc. by the Company, and has served as its
President and Chief Executive Officer since that date. From June 8, 1994 until
December 19, 1996, Mr. Amedia also served as the Chairman of the Board of
Directors of the Company. Prior to joining the Company, Mr. Amedia was President
and Chief Executive Officer of Forte, which he founded in 1989 in Youngstown,
Ohio as a welded aluminum security screen and storm door fabricator. Forte's
products were distributed through a manufacturers' representative
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distribution business established by Mr. Amedia in 1986. Prior to founding the
manufacturers' representative business, Mr. Amedia served in various capacities
for the Youngstown Metropolitan Housing Authority.
John J. Cafaro joined the Board of Directors in December 1996. Mr.
Cafaro is the Executive Vice President of The Cafaro Company, a major domestic
shopping mall developer engaged in the ownership, operation and management of
enclosed regional shopping centers. Mr. Cafaro has been a principal officer of
The Cafaro Company for the past 20 years.
Joseph Dominijanni has served as the Company's Treasurer since December
19, 1996. Mr. Dominijanni has also served as the Vice President - Finance of
Eagle & Taylor Company, a wholly owned subsidiary of the Company ("ETC"), since
its inception. Mr. Dominijanni also currently serves as Vice President - Finance
of American Commercial Holdings, Inc. ("ACH"), the parent corporation of AAPH,
and American Commercial Industries, Inc. ("ACI"), which is principally engaged
in the manufacturing of automotive components. Mr. Dominijanni joined ACH and
ACI in May 1996. Mr. Dominijanni served as Vice President - Finance of EWI,
Inc., a manufacturer of automotive metal stampings, from June 1990 until April
1996. Prior to 1990, Mr. Dominijanni was a Senior Manager with the accounting
firm of Price Waterhouse.
W.R. Jackson, Jr. has served as a director of the Company since
December 19, 1996. Mr. Jackson has also served since 1982 on the Board of
Directors of Pitt-Des Moines, Inc., a steel construction, engineering and metal
products manufacturer. Mr. Jackson was also President and Treasurer of Pitt-Des
Moines, Inc. from 1983 to 1987.
John Masternick has been a director of the Company since June 14, 1994.
Mr. Masternick is a practicing attorney in Girard, Ohio, and is the Chairman of
the Board of Directors of Omni Manor, Inc. and Windsor House, Inc., owners and
operators of skilled nursing and extended care facilities in northeastern Ohio
and western Pennsylvania.
James E. Phillips has been a member of the Company's Board of Directors
since December 19, 1996. Mr. Phillips is also an attorney and practiced law with
the law firm of Arter & Hadden from 1985 to December 31, 1997. Additionally, Mr.
Phillips has served as President and director of GPI Incorporated ("GPI") and
Profile Extrusion Company ("PEC") since April 1, 1994 and Daymonex Limited
("Daymonex") since May 2, 1996, respectively. GPI, PEC and Daymonex are engaged
in the aluminum extrusion industry. Mr. Phillips is also Vice Chairman of ACH.
Charles E. Trebilcock has been a director of the Company since June 14,
1994. Since 1964, Mr. Trebilcock has served as Chairman of Liberty Industries,
Inc., an Ohio-based manufacturer of industrial lumber packaging products and
equipment. Mr. Trebilcock is also a partner in Kings Company, which is also a
manufacturer of industrial lumber packaging products and equipment.
James K. Warren has been a director of the Company since February 28,
1997. Mr. Warren holds the office of Vice President - Corporate Planning of ETC.
Since February 1, 1996, Mr. Warren has been employed by American Commercial
Industries, Inc. as its Vice President - Corporate Planning. During the same
time, Mr. Warren has also held the position of Vice President - Corporate
Planning for ACH, the parent company of ACI and AAPH. Mr. Warren was previously
a practicing attorney with the law firm of Arter & Hadden.
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MEETINGS AND COMPENSATION
During the fiscal year ended December 31, 1997, the Board of Directors
of the Company met ten times. All other actions taken by the Board of Directors
during the fiscal year ended December 31, 1997 were accomplished by means of
unanimous written consent. Messrs. Cafaro, Jackson, Masternick and Warren
attended fewer than 75% of the meetings of the Board of Directors. During the
period in which he served as a director, all other directors attended 75% or
more of the meetings of the Board of Directors and of the meetings held by
committees of the Board, if any, on which he served.
During the fiscal year ended December 31, 1997, members of the Board of
Directors who were not employees of the Company or of ACH or its affiliates
("non-employee directors") received a fee of $1,000 for each meeting of the
Board of Directors attended in person and were reimbursed for expenses incurred
in connection with their attendance at meetings of the Board. Each non-employee
director serving on December 31, 1997 who attended at least 4 of the regularly
scheduled meetings of the Board of Directors and at least 75% of all meetings of
the Board of Directors during 1997 was granted options to purchase 2,000 shares
of the Company's common stock at an exercise price equal to the average of the
reported closing bid and asked prices on the date of grant, vesting in full upon
issuance. Such options are exercisable for a period of five years following the
vesting date and were issued pursuant to the Company's 1996 Stock Option Plan.
For the fiscal year ending December 31, 1998, each non-employee director of the
Company will receive the following compensation:
(i) Options to purchase 2,000 shares of the Company's common
stock at an exercise price equal to the average of the reported closing
bid and asked prices on the date of grant, vesting in full after one
year if the director attends at least four of the regularly scheduled
meetings of the Board of Directors and at least 75% of all meetings of
the Board of Directors. Such options will be exercisable for a period
of five years following the vesting date and will be issued pursuant to
the Company's 1996 Stock Option Plan.
(ii) A fee of $1,000 for each Board of Directors meeting
attended in person.
(iii) Reimbursement of expenses incurred in connection with
attending meetings of the Board of Directors.
The Company's Audit Committee, which is comprised of William R.
Jackson, Jr., Charles E. Trebilcock and Joseph Dominijanni, is responsible for
reviewing and making recommendations regarding the Company's employment of
independent auditors, the annual audit of the Company's financial statements and
the Company's internal accounting controls, practices and policies. The Audit
Committee was established on August 28, 1997 and did not meet during the year.
The Compensation Committee was established on August 28, 1997 and met
one time during the year. The Company's Compensation Committee is responsible
for making recommendations to the Board of Directors regarding compensation
arrangements for executive officers of the Company, including annual bonus
compensation, and consults with management of the Company regarding compensation
policies and practices. The Compensation Committee also makes recommendations
concerning the adoption of any compensation plans in which management is
eligible to participate, including the granting of stock options and other
benefits under such plans. The Compensation Committee is comprised of George S.
Hofmeister, Frank J. Amedia, and John Masternick.
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INFORMATION CONCERNING OTHER EXECUTIVE OFFICERS
In addition to Frank Amedia and Joseph Dominijanni, each of the
individuals listed below currently serves as a executive officer of Company.
Information regarding the names, ages (as of December 31, 1997) and recent
business experience of each of the officers is set forth below.
NAME AGE POSITION
- ---- --- --------
Richard L. Kovach 35 Vice President and Chief Financial Officer
David J. McKelvey 45 Vice President - Development
Jeffrey V. Miller 51 Vice President - Operations
Donald E. Lambrix, Jr. 55 Vice President - Manufacturing
J. Larry Powell 55 Vice President - Marketing & Sales
Jonathan K. Schoenike 37 General Counsel and Secretary
Richard L. Kovach joined the Company in January 1997 as its Vice
President and Chief Financial Officer. From 1991 until joining the Company, Mr.
Kovach assisted clients with finance and operations management issues in the
Financial Advisory Services and Management Consulting practice of Ernst & Young.
From 1988 until 1991, Mr. Kovach was Manager of Financial Planning at Ferro
Corporation. Prior to joining Ferro Corporation, Mr. Kovach was a staff auditor
with Arthur Andersen & Co.'s Small Business Group.
David J. McKelvey joined the Company as Vice President in August 1995
and also served as Secretary from December 1996 through November 1997. Prior to
joining the Company, Mr. McKelvey was Executive Vice President of Administration
and Development for The Cafaro Company, a major domestic shopping mall developer
engaged in the ownership, operation and management of enclosed regional shopping
centers. From 1992 through 1995, Mr. McKelvey also served as Executive Regional
Director of Real Estate for The Cafaro Company.
Jeffrey V. Miller joined the Company in May 1997 as Vice President -
Operations. From 1995 to 1997, Mr. Miller served as President of the North
American Window Division of Gentek Building Products. From 1992 through 1994,
Mr. Miller was Director of Vinyl Operations for SNE Corporation, a division of
Ply Gem Industries. Mr. Miller was general manager of the New Construction
Window Division and Vice President of Technology and Corporate Development for
Chelsea Building Products from 1989 to 1992.
Donald E. Lambrix, Jr. was appointed the Company's Vice President -
Manufacturing in December 1996 after serving as Vice President of Operations for
the Company's Forte subsidiary since 1990. Mr. Lambrix previously served as Vice
President of a multiple facility fenestration products manufacturer. Mr. Lambrix
has received industry recognition for his development of state-of-the-art
welding, testing and certification procedures.
J. Larry Powell, the Company's Vice President - Marketing and Sales,
joined the Company in October 1996. Mr. Powell co-founded Blackhawk
Architectural Products, a manufacturer of steel security screen and storm door
products, in 1992 and served on its Board of Directors and as its Vice President
until 1996. From 1987 to 1991, Mr. Powell served as Vice President - Marketing
and Sales for Sugarcreek
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Window & Door. Mr. Powell has been employed in the fenestration industry since
the early 1970s, principally in the marketing of residential and commercial
steel and aluminum window products and doors. In addition, Mr. Powell founded
and developed a nationwide marketing representative group that sells a full
range of fenestration products.
Jonathan K. Schoenike joined the Company in August 1997 as General
Counsel and has served as Secretary since November 1997. Prior to joining the
Company, Mr. Schoenike served for over 5 years as Assistant Counsel for The
Cafaro Company, a major domestic shopping mall developer engaged in the
ownership, operation and management of enclosed regional shopping centers.
EXECUTIVE COMPENSATION
The following table summarizes all annual and long-term compensation
paid to the Company's Chief Executive Officer and the other most highly
compensated executive officers of the Company whose total annual salary and
bonus exceeded $100,000 during the fiscal year ending December 31, 1997
(collectively, the "Named Executive Officers") for services rendered in all
capacities to the Company and its subsidiaries during the fiscal years ended
December 31, 1997, 1996 and 1995.
ANNUAL COMPENSATION
--------------------------------------------------------------
NAME AND YEAR ENDED SALARY BONUS OTHER ANNUAL COMPENSATION
PRINCIPAL POSITION DECEMBER 31, ($) ($) ($)(1)
- -------------------------------- ------------ ---------------- ----------------- ---------------------------
Frank J. Amedia, President and 1997 266,807 250,000 --
Chief Executive Officer
1996 168,718 -- --
1995 193,000 -- --
Richard L. Kovach, Vice 1997 119,390 75,000 --
President and Chief Financial
Officer
J. Larry Powell, Vice President 1997 114,167 25,000 --
- - Marketing and Sales
Jeffrey V. Miller, Vice 1997 90,000 25,000 --
President - Operations
(1) Other compensation to each of the Named Executive Officers did not
exceed $50,000 or 10% of such Named Executive Officer's total annual salary and
bonus during any reported fiscal year.
No stock options previously granted to the executive officers were
subject to repricing during the fiscal year ended December 31, 1997. The Company
does not have a long term incentive plan established for the benefit of its
executive officers or directors. In February 1998, the Board of Directors
rescinded stock options to purchase 209,000 and 100,000 shares of Common Stock
with per share exercise prices of $5.63 and $6.19, respectively. These stock
options were reissued in February 1998 at the following exercise prices: (i)
options to purchase 209,000 shares of Common Stock with an exercise price of
$3.56 per share; and (ii) options to purchase 100,000 shares of Common Stock
with an exercise price of $3.92 per share.
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No stock options, stock appreciation rights or restricted stock awards
were granted as compensation to any officers, directors or employees of the
Company or its subsidiaries during the fiscal years ended December 31, 1995 or
1996. The Company entered into definitive stock option agreements with Mr.
Amedia and Mr. John Masternick dated December 18, 1996, memorializing the terms
of stock options granted to them in 1994 as shareholders of Forte, Inc. in
connection with the acquisition by the Company of Forte, Inc. The Company issued
options to purchase up to 424,000 shares of common stock to various officers,
directors and employees of the Company or its subsidiaries during the fiscal
year ended December 31, 1997. The following table sets forth certain information
concerning individual grants of stock options to each of the Named Executive
Officers during the year ended December 31, 1997.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
INDIVIDUAL GRANTS STOCK PRICE APPRECIATION FOR
- -------------------------------------------------------------------------------------------- OPTION TERM
NUMBER OF PERCENT OF TOTAL ------------------------------
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ------------------------- ----------------- ------------------ -------------- -------------- --------------- --------------
Frank J. Amedia 100,000 33% 6.19 2/27/02 99,000 287,000
Richard L. Kovach 25,000 8% 5.63 2/27/07 88,250 224,000
J. Larry Powell 25,000 8% 5.63 2/27/07 88,250 224,000
Jeffrey V. Miller 0 N/A N/A N/A N/A N/A
The following table sets forth certain information concerning each
exercise of stock options during the year ended December 31, 1997 by each of the
Named Executive Officers and the aggregated fiscal year-end value of the
unexercised options of each Named Executive Officer.
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AGGREGATED OPTION EXERCISES IN FISCAL 1997 AND OPTION VALUE AS OF DECEMBER 31, 1997
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT FISCAL YEAR END IN-THE-MONEY OPTIONS/SARS AT
SHARES (#) FISCAL YEAR END ($)(1)
ACQUIRED ON VALUE -------------------------------- ---------------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- --------------- ------------- -------------- ------------------ -------------- ------------------
Frank J. Amedia 0 0 426,244 100,000 0 0
Richard L. Kovach 0 0 0 25,000 0 0
J. Larry Powell 0 0 0 25,000 0 0
Jeffrey V. Miller 0 0 0 0 0 0
(1) Based on the average of reported bid and asked prices for the
Common Stock on December 31, 1997. None of the options reported above were
in-the-money as of December 31, 1997.
EMPLOYEE STOCK OPTION PLANS
1992 Incentive Stock Option Plan. In May of 1992, the Board of
Directors of the Company adopted an Employee Incentive Stock Option Plan (the
"Option Plan"). Options to purchase an aggregate of up to 500,000 shares of the
Company's common stock are authorized under the Option Plan. Options granted
under the Option Plan have a maximum duration of ten years from the date of
grant.
1996 Stock Option Plan. The Company's 1996 Stock Option Plan (the "1996
Plan"), which was approved by the shareholders of the Company at the 1997 Annual
Meeting, authorizes the Board to grant options to directors and employees of the
Company to purchase in the aggregate an amount of shares of Common Stock equal
to 10% of the shares of Common Stock issued and outstanding from time to time,
but which aggregate amount shall in no event exceed 10,000,000 shares of Common
Stock. Directors, officers and other employees of the Company who, in the
opinion of the Board of Directors, are responsible for the continued growth and
development and the financial success of the Company are eligible to be granted
options under the 1996 Plan. Options may be nonqualified options, incentive
stock options, or any combination of the foregoing. In general, options granted
under the 1996 Plan are not transferable and expire ten (10) years after the
date of grant. The per share exercise price of an incentive stock option granted
under the 1996 Plan may not be less than the fair market value of the Common
Stock on the date of grant. Incentive stock options granted to persons who have
voting control over 10% or more of the Company's capital stock are granted at
110% of the fair market value of the underlying shares on the date of grant and
expire five years after the date of grant. No option may be granted after
December 19, 2006.
The 1996 Plan provides the Board of Directors with the discretion to
determine when options granted thereunder will become exercisable. Generally,
such options may be exercised after a period of time specified by the Board of
Directors at any time prior to expiration, so long as the optionee remains
employed by the Company. No option granted under the 1996 Plan is transferable
by the optionee other than by will or the laws of descent and distribution, and
each option is exercisable during the lifetime of the optionee only by the
optionee.
As of December 31, 1997, options to purchase a total of 1,719,425
shares of the Company's common stock were outstanding, including options to
purchase 707,655 shares of common stock at an exercise price of $3.75 per share
issued to AAP Holdings, Inc. on December 18, 1996, options to purchase an
aggregate of 471,770 shares of common stock at an exercise price of $3.75 per
share issued to Messrs. Amedia and Masternick in connection with the acquisition
by the Company of Forte, Inc. in June 1994,
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options issued pursuant to the Company's stock option plans described above and
other options issued outside of the described employee stock option plans.
401(k) PLAN
Eligible employees of the Company may direct that a portion of their
compensation, up to a legally established maximum, be withheld by the Company
and contributed to a 401(k) plan. All 401(k) plan contributions are placed in a
trust fund to be invested by the 401(k) plan's trustee, except that the 401(k)
plan permits participants to direct the investment of their account balances
among mutual or investment funds available under the Plan. The 401(k) plan
provides a matching contribution of 50% of a participant's contributions up to a
maximum of seven percent of the participant's annual salary. Amounts contributed
to participant accounts under the 401(k) plan and any earnings or interest
accrued on the participant accounts are generally not subject to federal income
tax until distributed to the participant and may not be withdrawn until death,
retirement or termination of employment.
EMPLOYMENT AGREEMENT
On November 17, 1997, the Company entered into an employment agreement
with Frank J. Amedia for services as Chief Executive Officer and President. This
agreement requires Mr. Amedia to devote his full time to the Company during
normal business hours in exchange for a base annual salary of $350,000, subject
to annual increases at the discretion of the Board of Directors. In addition,
Mr. Amedia is entitled to receive bonuses at the discretion of the Board of
Directors in accordance with the Company's bonus plans in effect from time to
time, and the Company will pay certain life and disability insurance premiums on
behalf of Mr. Amedia. The agreement has an initial three-year term and provides
that Mr. Amedia may not compete with the Company anywhere in the United States
while he is employed by the Company and for a two-year period following the
termination of Mr. Amedia's employment. In addition, the Board of Directors has
approved the payment to Mr. Amedia of a bonus equal to 0.39% of the total
consideration paid by the Company for each acquisition transaction consummated
during 1998.
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS OR FUTURE FILINGS UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
EXCHANGE ACT OF 1934 THAT MIGHT INCORPORATE BY REFERENCE THIS INFORMATION
STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING REPORT AND THE PERFORMANCE GRAPH
WHICH FOLLOWS SHALL NOT BE DEEMED TO BE INCORPORATED BY REFERENCE INTO ANY SUCH
FILINGS.
COMPENSATION PHILOSOPHY
Decisions on compensation of the Company's executive officers are made
by the Board of Directors. The Board of Directors is responsible for setting and
administering the policies which govern both annual compensation and stock
ownership programs. In general, the Board of Directors compensation policies and
practices of the Board of Directors are based upon the following subjective
principles:
- Compensation programs should reflect and promote the Company's
goals and reward individuals for contributions to the
Company's success in achieving its goals.
- Compensation should be related to the value created for the
Company's stockholders.
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- Compensation programs should integrate both the long- and
short-term strategies of the Company.
- Compensation programs should provide incentive for excellence
in individual performance and promote teamwork among the
Company's management.
- Compensation programs should be designed to attract and retain
executives critical to the success of the Company.
- Stock ownership by management and stock-based compensation
plans are beneficial in aligning management's and the
stockholders' interest in the enhancement of stockholder
value.
Total compensation for each member of senior management is set at
levels which the Board of Directors believes are competitive in relation to
companies of similar type and size; however, no independent investigation of
such levels has been conducted by the Board of Directors. The components of
executive compensation include base salary, equity participation in the Company
in the form of options to purchase common stock, and a discretionary bonus
program. Compensation for executive officers of the Company is usually set by
the Board of Directors prior to the beginning of each fiscal year. Due to the
level of compensation received by the executive officers of the Company, the
Board of Directors has not yet deemed it necessary to adopt a policy regarding
the one million dollar cap on deductibility of certain executive compensation
under Section 162(m) of the Internal Revenue Code.
BASE SALARY
The Board of Directors establishes base salaries for the company's
executive officers at levels considered appropriate in light of the duties and
scope of responsibilities of each officer's position. In this regard, the Board
considers the compensation practices and corporate financial performance of
similarly situated companies. In evaluating base salary levels, the Board of
Directors takes into account a number of factors, including (but not limited to)
management's efforts to improve levels of sales and profitability and to expand
the markets into which the Company's products are distributed and sold. The
Board also takes into account management's consistent commitment to the
long-term success of the Company through the development of new and improved
products and through developing and implementing strategic business acquisition
opportunities.
Based upon its evaluation of these factors, the Board of Directors
believes that senior management is dedicated to achieving long-term financial
improvements, and that the compensation policies, plans and programs
administered by the Board contribute to management's commitment. The Board of
Directors attempts to assimilate all of the foregoing factors when it renders
its compensation decisions; however, the Board recognizes that its decisions are
primarily subjective in nature due to the subjective nature of the criteria. The
Board of Directors does not assign any specified weight to the criteria it
considers.
Base salary recommendations are fixed at levels which the Board
believes is paid to management with comparable qualifications, experience and
responsibilities at other corporations of similar size engaged in businesses
similar to that of Company; however, the Board of Directors has conducted no
formal investigation of compensation level at other companies.
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STOCK OPTIONS
The Board of Directors administers the Company's 1996 Stock Option Plan
(the "1996 Plan") and determines those employees of the Company who are eligible
to participate in the 1996 Plan. The exercise price of options granted under the
1996 Plan is never less than the fair market value of the Company's common stock
on the day of grant. The number of options granted by the Board of Directors
under the 1996 Plan are based upon the Board's evaluation of the same factors
described above under "Base Salary." The Board of Directors also takes into
account the relative scope of accountability and the anticipated performance
requirements and contributions of each participating employee, as well as each
participating employee's current equity participation in the Company. In
addition, the Board seeks the recommendation of senior management with respect
to options granted to all participating employees, including the Chief Executive
Officer and other senior management. During the fiscal year ending December 31,
1997, options to purchase up to 424,000 shares of common stock pursuant to the
1996 Plan were granted to various officers, directors and employees of the
Company and its subsidiaries.
BONUS COMPENSATION
Bonus compensation is paid at the discretion of the Board of Directors.
Determinations of the Board of Directors with regard to the award of bonus
compensation are generally based upon the Board's evaluation of the same factors
described above under "Base Salary" and other subjective criteria. The Board of
Directors approved a bonus of $250,000 to the Company's Chief Executive Officer
and bonuses to certain other officers, employees and consultants of the Company
during the fiscal year ended December 31, 1997. The bonuses to the Chief
Executive Officer and other executive officers were awarded upon the successful
consummation of the acquisition in December 1997 of Binnings Building Products,
Inc.("Binnings"), Danvid Window Company and Danvid Company, Inc. (collectively,
"Danvid"), American Glassmith, Inc. ("American Glassmith") and Modern Window
Corporation ("Modern").
CHIEF EXECUTIVE OFFICER
Mr. Amedia has served as President and Chief Executive Officer of the
Company since 1994. As Chief Executive Officer, Mr. Amedia receives a base
salary and is eligible to receive stock options under the 1996 Plan and is
eligible to receive bonus compensation at the discretion of the Board of
Directors. The Board's evaluation process with respect to the Chief Executive
Officer's compensation is comprised of the same components that are utilized by
the Board in evaluating the compensation of other members of senior management.
In reflection of the substantial changes in the Company's business as a result
of the acquisitions of Western Insulated Glass, Co., Thermetic Glass, Inc.,
Binnings, Danvid, American Glassmith and Modern, which were consummated at
various dates in 1997, the Board of Directors approved an employment agreement
between the Company and Mr. Amedia, which provides for a base annual salary of
$350,000.
Submitted by the American Architectural Products
Corporation Board of Directors
George S. Hofmeister Frank J. Amedia
John J. Cafaro Joseph Dominijanni
W.R. Jackson, Jr. John Masternick
James E. Phillips Charles E. Trebilcock
James K. Warren
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STOCK PRICE PERFORMANCE
Set forth below is a line graph comparing the cumulative total return
of the Company's Common Stock with the cumulative total return of the Nasdaq
Stock Market Index (U.S.), a peer group of Nasdaq-listed companies engaged in
the manufacture of millwork, veneer, plywood and structural wood products (SIC
codes 2430 - 2439) and a group of Nasdaq-listed companies engaged in the
manufacture of fabricated structural metal products (SIC codes 3440 - 3449) for
the period from March 31, 1995 through December 31, 1997 (including the
reinvestment of dividends, if any). As a result of the acquisitions consummated
in 1997, the Company's standard industrial classification ("SIC") code changed
from the latter peer group to the former. Pursuant to Securities and Exchange
Commission rules, the Company has included data for each peer group herein.
Price data for the Company's Common Stock is based on the bid price for the
relevant measurement dates as reported by National Quotation Bureau, LLC (which
quotations represent prices between dealers and do not include retail markup,
markdown or commissions and do not reflect actual transactions). The performance
graph below shall not be deemed incorporated by reference by any general
statement incorporating this Information Statement by reference into any filing
under, and shall not otherwise be deemed filed under, either the Securities Act
of 1933 or the Securities Exchange Act of 1934, except to the extent that the
Company specifically incorporates this information by reference.
[Line graph depicting the amounts listed in table below ]
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3/31/95 12/29/95 12/31/96 12/31/97
------- -------- -------- --------
American Architectural Products Corporation 100 28.6 114.3 65.7
Nasdaq Stock Market Index 100 129.7 159.6 195.8
Peer Group: SIC Codes 2430 - 2439 (Millwork, Veneer, 100 104.4 150.6 171.3
Plywood and Structural Wood Members)
Peer Group: SIC Codes 3440 - 3449 (Fabricated Structural 100 127.5 123.3 161.2
Metal Products)
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the
beneficial ownership of the Company's Common Stock as of February 5, 1998, by
(i) each beneficial owner of more than 5% of the Company's Common Stock, (ii)
each director of the Company, (iii) each Named Executive Officer of the Company,
and (iv) all Named Executive Officers and directors as a group. This information
was determined in accordance with Rule 13(d)-3 under the Securities Exchange Act
of 1934, as amended, and is based upon the information furnished by the persons
listed below. Except as otherwise indicated, each shareholder listed possesses
sole voting and investing power with respect to the shares indicated as being
beneficially owned.
SHARES OF COMMON STOCK
BENEFICIALLY OWNED
--------------------------------
NAME AND ADDRESS(1) NUMBER OF SHARES PERCENTAGE
------------------- ---------------- ----------
George Hofmeister 7,579,059(2) 56.5%
Frank J. Amedia 3,379,326(3) 24.5%
John Masternick 371,680(4) 2.8%
W.R. Jackson, Jr 73,287(5) *
Charles E. Trebilcock 52,833(6) *
J. Larry Powell 15,412(7) *
Richard L. Kovach 5,000(8) *
Joseph Dominijanni 27,000(9) *
James K. Warren 400 *
AAP Holdings, Inc. 7,548,633(10) 56.5%
Amedia Family Limited Partnership 1,500,000 11.2%
All directors and Named Executive Officers
of the Company as a group (9 persons) 11,458,585(11) 84.1%
* Less than 1%
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(1) The address of each beneficial owner is c/o American Architectural
Products Corporation, 755 Boardman-Canfield Road, South Bridge
Executive Center, Building G West, Boardman, Ohio 44512.
(2) Includes shares of common stock held by AAP Holdings, Inc. and 27,926
shares of common stock which are subject to unexercised warrants held
by Profile Extrusion Company. George S. Hofmeister, the Chairman of the
Board of Directors of the Company, is the controlling shareholder of
the corporate parent of AAP Holdings, Inc and Profile Extrusion
Company.
(3) Includes 446,244 shares of common stock which are subject to
unexercised options that were exercisable on February 5, 1998 or within
sixty days thereafter. Also includes 1,500,000 shares of common stock
owned by the Amedia Family Limited Partnership, in which Mr. Amedia and
his spouse are the general partners and each holds 48% of the
partnership interests.
(4) Includes 47,526 shares of common stock which are subject to unexercised
options that were exercisable on February 5, 1998 or within sixty days
thereafter.
(5) Includes 57,143 shares of common stock which are subject to unexercised
warrants that were exercisable on February 5, 1998 or within sixty days
thereafter.
(6) Includes 25,833 shares of common stock owned individually and 25,000
shares held by a custodian for the benefit of an individual retirement
account of Mr. Trebilcock. Also includes 2,000 shares of common stock
which are subject to unexercised options that were exercisable on
February 5, 1998 or within sixty days thereafter.
(7) Includes 5,000 shares of common stock which are subject to unexercised
options that were exercisable on February 5, 1998 or within sixty days
thereafter.
(8) Includes 5,000 shares of common stock which are subject to unexercised
options that were exercisable on February 5, 1998 or within sixty days
thereafter.
(9) Includes 25,000 shares of common stock which are subject to unexercised
options that were exercisable on February 5, 1998 or within sixty days
thereafter.
(10) Does not include 707,655 shares of common stock which are subject to
unexercised options that are exercisable only upon the occurrence of
certain contingencies.
(11) Includes 560,839 shares of common stock which are subject to
unexercised options and warrants that were exercisable on February 5,
1998 or within sixty days thereafter as described above.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
beneficially 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 Securities and Exchange Commission. Officers, directors and
greater than ten-percent stockholders are required by Exchange Act regulations
to furnish the Company with copies of all Section 16(a) forms they file.
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Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons, the Company believes
that: (i) Mr. Kovach failed to timely file an initial report of beneficial
ownership upon becoming a reporting person under Section 16(a) of the Exchange
Act, and Mr. Kovach subsequently filed an initial report of beneficial ownership
as required by Section 16(a) of the Exchange Act; (ii) Mr. Amedia failed to file
a timely report relating to a disposition of 1,500,000 shares of Common Stock on
November 21, 1997, and Mr. Amedia reported this transaction on a Form 5 filed
subsequent to December 31, 1997; (iii) Mr. Jackson failed to file timely reports
relating to the acquisition of derivative securities, the conversion of such
securities into common stock, and a grant of common stock purchase warrants, and
Mr. Jackson reported these transactions on a Form 5 filed subsequent to December
31, 1997; (iv) Mrs. Lorilee Amedia failed to timely file an initial report of
beneficial ownership upon becoming a reporting person under Section 16(a) of the
Exchange Act, and Mrs. Amedia subsequently filed an initial report of beneficial
ownership as required by Section 16(a) of the Exchange Act; (v) the Amedia
Family Limited Partnership failed to timely file an initial report of beneficial
ownership upon becoming a reporting person under Section 16(a) of the Exchange
Act, and the Amedia Family Limited Partnership subsequently filed an initial
report of beneficial ownership as required by Section 16(a) of the Exchange Act;
(vi) AAP Holdings, Inc. failed to file a timely report relating to the
conversion of derivative securities into common stock on April 1, 1997, and AAP
Holdings, Inc. reported this transaction on a Form 5 filed subsequent to
December 31, 1997; and (vii) except as set forth above, all filing requirements
applicable to its officers, directors, and greater than ten-percent beneficial
owners were complied with during the fiscal year ending December 31, 1997.
CERTAIN TRANSACTIONS
Mr. George S. Hofmeister, Chairman of the Board of Directors of the
Company, is the controlling shareholder of the corporate parent of AAP Holdings,
Inc., a Delaware corporation ("AAPH"). In connection with the Agreement and Plan
of Reorganization between the Company and AAPH dated October 25, 1996 (the
"Reorganization Agreement"), the Company and its subsidiary, American
Architectural Products, Inc. ("AAP"), agreed to use their best efforts to secure
the release of Amedia, Masternick and Hofmeister from all obligations as either
a co-obligor or guarantor of Company or AAP debt. In addition, the Company
agreed to indemnify, defend and hold harmless Amedia, Masternick and Hofmeister
against any loss, cost or expense which any of them may incur as a result of
being a co-obligor or guarantor of any Company or AAP debt. Furthermore, the
Company and AAPH agreed not to dispose of assets securing any Company or AAP
debt without the prior written consent of any person who is a co-obligor or
guarantor of such debt. As described below, Messrs. Amedia, Hofmeister and
Masternick have subsequently been released as guarantors on these obligations.
Pursuant to the Reorganization Agreement, the Company issued 1,000,000
shares of Series A Preferred Stock in exchange for all of the issued and
outstanding stock of AAP. In April 1997, AAPH converted the Series A Preferred
Stock pursuant to its terms into 7,548,633 shares of common stock of the
Company. In addition, the Company issued to AAPH options to purchase up to
879,834 shares of common stock, of which options to purchase 172,178 shares have
subsequently terminated. Such options are identical in price and exercise terms
to the previously outstanding options.
Upon consummation of the transaction contemplated by the Reorganization
Agreement, the Company agreed that AAP would pay a management fee to AAPH of
$250,000 during 1997 and to reimburse AAPH and its affiliates for out-of-pocket
expenses incurred in providing services to AAP. The management fee agreement
expired on December 31, 1997. In addition, the Company agreed to pay AAPH an
acquisition consulting fee of one percent (1%) of the transaction price of each
acquisition transaction consummated by the Company with respect to which AAPH or
its affiliates provides acquisition consulting services. For purposes of
calculating the acquisition fee, the transaction price means the aggregate
amount of consideration paid by the Company or its affiliates for the
acquisition in the form of cash, stock, stock options, warrants, debt
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instruments and other assumed liabilities. The original acquisition consulting
fee agreement was scheduled to expire on December 18, 1997, except with respect
to acquisition transactions already in progress at such date, but was extended
for one year. Acquisition consulting fees in 1997 approximated $835,000.
In connection with the acquisition by the Company of Binnings, Danvid,
American Glassmith and Modern in December of 1997, the Company (i) agreed to pay
ACH, the corporate parent of AAPH, a success fee of $475,000 for services
provided by officers and employees of ACH in connection with such transactions,
and (ii) paid various officers of the Company (including Mr. Amedia) special
bonuses in an aggregate amount of $430,000 in connection with such transactions.
Both the success fee and special bonuses were contingent upon the successful
consummation of such acquisition transactions and were paid prior to December
31, 1997. The success fee paid to ACH was in addition to amounts payable under
the acquisition consulting fee agreement described above.
The Company contracts for air charter services with a company
affiliated with AAPH. The Company paid approximately $450,000 to this company
for air charter services in 1997.
In November 1990, the U.S. Small Business Administration loaned
$409,000 to Forte, Inc. (the "SBA Loan"). The SBA Loan was payable in monthly
installments and the final installment was scheduled to be due on January 1,
2001. Mr. Amedia and his wife were personally liable on the SBA Loan. As of
December 31, 1997, the balance owed on the SBA Loan were approximately $172,000.
The Company repaid this loan in January 1998.
On October 20, 1994, Forte borrowed $850,000 from The City of
Youngstown, Ohio. The final payment on this loan was scheduled to be due on
February 1, 2004. Mr. Amedia and his wife were guarantors of this loan. As of
September 30, 1997, the balance owed to The City of Youngstown under the loan
agreement was approximately $850,000. The Company repaid this loan on December
10, 1997.
In December 1994, Mr. Amedia and Masternick and their spouses executed
guarantees in favor of the Second National Bank of Warren with respect to a loan
to Forte in the original principal amount of $647,030. The proceeds of this loan
were used to finance improvements to Forte's manufacturing facilities. This loan
was scheduled to be repaid in full by December 12, 2004. As of September 30,
1997, the balance owed on this loan was approximately $522,000. The Company
repaid this loan on December 10, 1997.
As security for certain promissory notes dated August 29, 1996 in the
original aggregate principal amount of $8.0 million (the "MascoTech Notes"),
AAPH granted MascoTech, Inc. ("MascoTech") a ten-year option to purchase up to
1,509,728 shares of common stock held by AAPH. As part of the Reorganization
Agreement, AAPH and the Company agreed that if the MascoTech Notes were not
repaid in full on or before December 31, 1997 and MascoTech exercised its option
with respect to any of such shares of common stock, the Company would issue to
AAPH, without payment therefor, a number of additional shares of common stock
equal to the number of shares as to which such option is exercised by MascoTech.
The Company also agreed to use its best efforts to cause all amounts owed under
the MascoTech Notes to be repaid in full on or before December 31, 1997. The
Company repaid the MascoTech Notes in full on December 10, 1997.
In connection with the acquisition of Western in March 1997, Mr. Amedia
and Mr. Hofmeister co-signed unsecured promissory notes in the aggregate
original principal amount of $453,753 payable to the former shareholders of
Western and the organization that brokered the acquisition. The final monthly
installment payment on each note was due March 15, 1998. As of September 30,
1997, the outstanding balance on the notes was $453,753. In addition, Mr. Amedia
co-signed a promissory note to one of the former shareholders of Western in the
original principal amount of $100,000. The amount outstanding under this Note
was approximately $100,000 as of September 30, 1997. The Company repaid these
loans on December 10, 1997.
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Profile Extrusion Company ("PEC") loaned the Company $92,537 on May 19,
1997 and an additional $5,203 on September 28, 1997. This combined indebtedness
had an interest rate of 15% per annum and was payable in full on or before
December 31, 1997. In connection therewith, the Company issued to PEC warrants
to purchase a total of 27,926 shares of common stock at an exercise price of
$3.50 per share, expiring on September 1, 1998. The Company repaid this loan on
December 10, 1997. PEC is a wholly-owned subsidiary of American Commercial
Holdings, Inc., of which Mr. Hofmeister is the controlling shareholder.
In June 1997, Mr. Amedia pledged 133,333 shares of common stock to
secure the repayment of a short-term debt incurred by the Company in the
original principal amount of $250,000. The Company agreed to issue shares of
common stock to Mr. Amedia to replace any shares as to which the lender
exercises its security interest. The Company repaid this loan on January 16,
1998.
In September 1997, William R. Jackson, Jr., a director of the Company,
loaned the Company $200,000. This indebtedness had an interest rate of 15% per
annum and was payable in full in December 1997. In connection therewith, the
Company issued to Mr. Jackson warrants to purchase a total of 57,143 shares of
common stock at an exercise price of $3.50 per share, expiring in September
1998. The Company repaid this loan on December 10, 1997.
In January 1998, the Company purchased substantially all of the assets
of Blackhawk Architectural Products ("Blackhawk"). J. Larry Powell, an officer
of the Company, co-founded and owned a 20% equity interest in Blackhawk at the
time of this transaction.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
At the Annual Meeting, the Company will seek the election of George
Hofmeister, Frank J. Amedia, John J. Cafaro, Joseph Dominijanni, W.R. Jackson,
Jr., John Masternick, James E. Phillips, Charles Trebilcock and James K. Warren
as directors, each to hold office until the Company's next annual meeting or
until his successor is elected and qualified.
REQUIRED VOTE
The nine (9) nominees receiving the highest number of votes cast at the
Annual Meeting will be elected. There is no cumulative voting with respect to
the election of directors.
AAP Holdings, Inc. and Mr. Frank J. Amedia, who collectively have
voting power over a majority in interest of the Common Stock, intend to vote FOR
each of the nominees listed above. Accordingly, it is expected that each of such
nominees will be elected to the Company's Board of Directors. If any nominee
becomes unavailable for any reason, or if a vacancy should occur before the
election, AAP Holdings, Inc. and Mr. Amedia will vote their shares in favor of
the election of such other person or persons as they may determine. The nominees
receiving the highest number of votes cast at the Annual Meeting will be
elected.
PROPOSAL 2
RATIFICATION AND APPROVAL OF THE 1998 EMPLOYEE STOCK PURCHASE PLAN
On February 26, 1998, the Board of Directors adopted the 1998 Employee
Stock Purchase Plan (the "1998 Purchase Plan") and reserved 1,200,000 shares of
Common Stock for issuance thereunder, subject to stockholder approval. At the
Annual Meeting, the stockholders are being asked to approve the 1998 Purchase
Plan and the reservation of shares thereunder.
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REASONS FOR ADOPTION
The Board of Directors has adopted the 1998 Purchase Plan. The Board of
Directors believes that offering such a plan is necessary to attract qualified
employees. Accordingly, the Board of Directors believes it is in the best
interests of the Company and its stockholders to adopt the 1998 Purchase Plan,
which contains six-month offering periods and a total of 1,200,000 shares
available for issuance.
SUMMARY OF THE 1998 PURCHASE PLAN
The essential features of the 1998 Purchase Plan are outlined below. A
copy of the 1998 Purchase Plan is attached as Exhibit I to this Information
Statement, and the following summary is qualified in its entirety by reference
to the actual terms of the 1998 Purchase Plan.
Purpose. The purpose of the 1998 Purchase Plan is to provide employees
with an opportunity to purchase Common Stock of the Company through payroll
deductions in a manner that qualifies under Section 423 of the Internal Revenue
Code (the "Code").
Administration. The 1998 Purchase Plan is administered by the Board of
Directors or a Committee of the Board (collectively, the "Administrator").
Eligibility. Only employees employed by the Company or its subsidiaries
on the first day of an offering period may participate in the 1998 Purchase
Plan. For this purpose, an "employee" is any person who is regularly employed at
least twenty hours per week and at least five months per calendar year by the
Company or any of its subsidiaries. No employee shall be granted an option under
the 1998 Purchase Plan if: (i) immediately after the grant of the option, the
employee (or any other person whose stock would be attributed to the employee
pursuant to Section 424(d) of the Code) would own five percent or more of the
total combined voting power or value of the stock of the Company or any of its
subsidiaries; or (such participant's rights to purchase stock under all employee
stock purchase plans of the Company and its subsidiaries have accrued at a rate
which exceeds $25,000 worth of stock (determined with reference to the fair
market value of the Common Stock at the time of grant) in a calendar year.
Subject to these eligibility criteria, the 1998 Purchase Plan permits eligible
employees to purchase Common Stock through payroll deductions subject to certain
limitations described below. See "Payment of Purchase Price; Payroll
Deductions."
Offering Period. The 1998 Purchase Plan is implemented by offering
periods lasting six months with a new offering period commencing every six
months. Offering periods commence on or about May 1 and November 1 of each year.
The first offering period will last six months, commencing on the first trading
day on or after May 1, 1998 and ending on the last trading day on or before
October 31, 1998. Normally, a participant's payroll deductions are accumulated
throughout an offering period and, at the end of the offering period, shares of
the Company's Common Stock are purchased with the accumulated payroll
deductions.
Purchase Price. The purchase price per share at which shares will be
sold in an offering under the 1998 Purchase Plan is the lower of (i) 85% of the
fair market value of a share of Common Stock on the first day of an offering
period or (ii) 85% of the fair market value of a share of Common Stock on the
last day of each offering period. The fair market value of the Common Stock on a
given date is (i) if the Common Stock is listed on any established stock
exchange or a national market system, the closing sales price for such stock for
the last market trading day, (ii) if the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, the mean of
the closing bid and asked prices for the Common Stock on the date of such
determination, or (iii) if no established market for the Common Stock exists, as
determined in good faith by the Board.
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Payment of Purchase Price; Payroll Deductions. The purchase price of
the shares is accumulated by payroll deductions over the offering period. The
1998 Purchase Plan provides that the aggregate of such payroll deductions during
the offering period shall not exceed 10% of the participant's compensation
during any offering period. During the offering period, a participant may
discontinue his or her participation in the 1998 Purchase Plan, and may decrease
or increase the rate of payroll deductions in an offering period within limits
set by the Administrator.
All payroll deductions made for a participant are credited to the
participant's account under the 1998 Purchase Plan, are withheld in whole
percentages only and are included with the general funds of the Company. Funds
received by the Company pursuant to exercises under the 1998 Purchase Plan are
also used for general corporate purposes. A participant may not make any
additional payments into his or her account.
Withdrawal. A participant may terminate his or her participation in the
1998 Purchase Plan at any time by giving the Company a written notice of
withdrawal. In such event, the payroll deductions credited to the participant's
account will be returned, without interest, to such participant. Payroll
deductions will not resume unless a new subscription agreement is delivered in
connection with a subsequent offering period.
Termination of Employment. Termination of a participant's employment
for any reason, including death, cancels his or her participation in the 1998
Purchase Plan immediately. In such event the payroll deductions credited to the
participant's account will be returned without interest to such participant, his
or her designated beneficiaries or the executors or administrators of his or her
estate.
Adjustments Upon Changes in Capitalization. In the event of any changes
in the capitalization of the Company effected without receipt of consideration
by the Company, such as a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, resulting in an increase or
decrease in the number of shares of Common Stock, proportionate adjustments will
be made by the Board in the shares subject to purchase and in the price per
share under the 1998 Purchase Plan. In the event of liquidation or dissolution
of the Company, the offering periods then in progress will terminate immediately
prior to the consummation of such event unless otherwise provided by the Board.
In the event of a sale of all or substantially all of the assets of the Company,
or the merger of the Company with or into another corporation, the offering
period will be shortened and the Board will set a new exercise date, which will
be prior to the date of the proposed sale or merger. The Board will notify each
participant in writing that the exercise date has changed and that option shall
be exercised automatically on the new exercise date unless, prior to the new
exercise date, the participant has terminated his or her part in the 1998
Purchase Plan.
Amendment and Termination. The Board may at any time and for any reason
amend or terminate the 1998 Purchase Plan, except that no such termination shall
affect options previously granted and no amendment shall make any change in an
option granted prior thereto which adversely affects the rights of any
participant. Shareholder approval for amendments to the 1998 Purchase Plan shall
be obtained in such a manner and to such a degree as required to comply with all
applicable laws or regulations. The Plan will terminate in 2008, unless
terminated earlier by the Board in accordance with the 1998 Purchase Plan.
Certain Federal Income Tax Information. The 1998 Purchase Plan, and the
right of participants to make purchases thereunder, is intended to qualify under
the provisions of Sections 421 and 423 of the Code. Under these provisions, no
income will be taxable to a participant until the shares purchased under the
1998 Purchase Plan are sold or otherwise disposed of. Upon sale or other
disposition of the shares, the participant will generally be subject to tax in
an amount that depends upon the holding period. If the shares are sold or
otherwise disposed of more than two years from the Enrollment Date and one year
from the applicable Exercise Date, the participant will recognize ordinary
income measured as the lesser of (a) the excess of the fair market value of the
shares at the time of such sale or disposition over the purchase price, or (b)
an amount equal to 15% of the fair market value of the shares as of the
Enrollment Date. Any additional gain will be treated as long-term capital gain.
If the shares are sold or otherwise disposed of before the expiration
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of these holding periods, the participant will recognize ordinary income
generally measured as the excess of the fair market value of the shares on the
date the shares are purchased over the purchase price. Any additional gain or
loss on such sale or disposition will be long-term or short-term capital gain or
loss, depending on the holding period. The Company generally is not entitled to
a deduction for amounts taxed as ordinary income or capital gain to a
participant except to the extent of ordinary income recognized by participants
upon a sale or disposition of shares prior to the expiration of the holding
periods described above.
THE FOREGOING BRIEF SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION
UPON THE PARTICIPANT AND THE COMPANY WITH RESPECT TO THE SHARES PURCHASED UNDER
THE 1998 PURCHASE PLAN DOES NOT PURPORT TO BE COMPLETE AND DOES NOT DISCUSS THE
TAX CONSEQUENCES OF A PARTICIPANT'S DEATH OR THE INCOME TAX LAWS OF ANY
MUNICIPALITY STATE OR FOREIGN COUNTRY IN WHICH THE PARTICIPANT MAY RESIDE.
REQUIRED VOTE
Approval of the 1998 Purchase Plan requires the written consent of the
holders of a majority in interest of the Common Stock.
AAP Holdings, Inc. and Mr. Frank J. Amedia, presently intend to vote
FOR approval of the 1998 Purchase Plan. Accordingly, it is expected that the
1998 Purchase Plan will be approved; however, neither AAP Holdings, Inc. nor Mr.
Amedia is obligated to vote in favor of the 1998 Purchase Plan.
PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
On February 17, 1997, Semple & Cooper, P.L.C. ("Semple & Cooper")
resigned as the principal accountants of the Company. Semple & Cooper's reports
on the Company's financial statements for the prior two fiscal years contained
no adverse opinion and no disclaimer of opinion, nor were such reports qualified
or modified as to uncertainty, audit scope or accounting principles. In the
Company's two most recent fiscal years and the subsequent interim period
preceding the resignation of Semple & Cooper, there were no disagreements with
Semple & Cooper on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which disagreements, if not
resolved to the satisfaction of Semple & Cooper, would have caused it to make a
reference to the subject matter of the disagreements in connection with its
reports. Semple & Cooper furnished the Company with a letter addressed to the
Securities and Exchange Commission pursuant to Item 304(a)(3) of Regulation S-K,
which was filed by the Company on Form 8-K/A dated February 21, 1997.
The Board of Directors of the Company approved the engagement of BDO
Seidman LLP as independent accountants and auditors of the books of account for
the Company and to advise the Company on accounting matters, effective as of
February 17, 1997. It is presently contemplated that BDO Seidman LLP will be
retained as the principal accounting and auditing firm to be utilized by the
Company throughout the fiscal year ending December 31, 1998. The Company
anticipates that a representative of BDO Seidman LLP will attend the Annual
Meeting for the purpose of responding to appropriate questions. At the Annual
Meeting, a representative of BDO Seidman LLP will be provided an opportunity to
make a statement (if such representative so desires).
REQUIRED VOTE
Ratification of the selection of BDO Seidman LLP as the Company's
independent auditors requires the affirmative vote of a majority of the voting
power of the Common Stock present at the Annual Meeting in
20
23
person or by valid proxy.
AAP Holdings, Inc. and Mr. Frank J. Amedia, who collectively have
voting power over a majority in interest of the Common Stock, presently intend
to vote FOR ratification of the selection of BDO Seidman LLP as the Company's
independent auditors for the fiscal year ending December 31, 1997. Accordingly,
it is expected that such selection will be ratified; however, neither AAP
Holdings, Inc. nor Mr. Amedia is obligated to vote in favor of such
ratification.
PROPOSALS BY STOCKHOLDERS
Any stockholder proposal that is intended to be presented at the
Company's 1998 Annual Meeting of Stockholders must be received at the Company's
principal executive offices by no later than February 5, 1999, if such proposal
is to be considered for inclusion in the Company's proxy statement and form of
proxy or information statement relating to such meeting.
OTHER BUSINESS
The Annual Meeting is being held for the purposes set forth in the
Notice that accompanies this Information Statement. The Board of Directors is
not presently aware of any business to be transacted at the Annual Meeting other
than as set forth in such Notice.
BY ORDER OF THE BOARD OF DIRECTORS
JONATHAN K. SCHOENIKE
SECRETARY
Boardman, Ohio
April 8, 1998
24
EXHIBIT I
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION
1998 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 1998 Employee Stock
Purchase Plan of American Architectural Products Corporation.
1. PURPOSE. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the intention
of the Company to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.
2. DEFINITIONS.
(a) "BOARD" shall mean the Board of Directors of American
Architectural Products Corporation.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "COMMON STOCK" shall mean the common stock, $.001 par
value, of American Architectural Products Corporation.
(d) "COMPANY" shall mean of American Architectural Products
Corporation and any Designated Subsidiary thereof.
(e) "COMPENSATION" shall mean all base straight time gross
earnings and commissions, but exclusive of payments for overtime shift premium,
incentive compensation, incentive payments, bonuses, and other compensation.
(f) "CURRENT PURCHASE PERIOD" shall mean any Purchase Period
which is scheduled to end in the current calendar year.
(g) "DESIGNATED SUBSIDIARIES" shall mean the Subsidiaries
which have been designated by the Board from time to time in its sole discretion
as eligible to participate in the Plan.
(h) "EMPLOYEE" shall mean any individual who is an employee
of the Company for tax purposes whose customary employment with the Company is
at least twenty (20) hours per week and more than five (5) months in any
calendar year. For purposes of the Plan, the employment relationship shall be
treated as continuing while the individual is on sick leave or other leave of
absence approved by the Company. Where the period of leave exceeds ninety (90)
days and the individual's right to reemployment is not guaranteed either by
statute or
25
by contract, the employment relationship shall be deemed to have terminated on
the ninety-first (91st) day of such leave.
(i) "ENROLLMENT DATE" shall mean the first day of each
Offering Period.
(j) "EXERCISE DATE" shall mean the last day of each Purchase
Period.
(k) "FAIR MARKET VALUE" shall mean, as of any date, the value
of Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation The
Nasdaq National Market or The Nasdaq Small Cap Market, its Fair Market Value
shall be the closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such exchange or system for the last market trading
day prior to the time of determination, as reported in The Wall Street Journal
or such other source as the Administrator deems reliable, or;
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean of the closing bid and asked prices for the
Common Stock on the date of such determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable, or;
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Board.
(l) "NEW EXERCISE DATE" shall mean the new Exercise Date set
for Purchase Periods in the event of a proposed sale of all or substantially all
of the assets of the Company, or the merger of the Company with or into another
corporation in accordance with Section 18(c).
(m) "OFFERING PERIODS" shall mean the periods of
approximately six (6) months during which an option granted pursuant to the Plan
may be exercised, commencing on the first Trading Day on or after May 1 and
November 1 of each year and terminating on the last Trading Day in the periods
ending six months later; provided, however, that the first Offering Period under
the Plan shall commence with the first Trading Day on or after the effective
date of the Company's registration statement on Form S-8 or similar form and
shall end on the last Trading Day on or before October 31, 1998. The duration
and timing of Offering Periods may be changed pursuant to Section 4 of this
Plan.
(n) "PLAN" shall mean this American Architectural Products
Corporation 1998 Employee Stock Purchase Plan.
(o) "PURCHASE PRICE" shall mean an amount equal to
eighty-five percent (85%) of the Fair Market Value of a share of Common Stock on
the Enrollment Date or on the Exercise Date, whichever is lower.
(p) "PURCHASE PERIOD" shall mean the approximately six (6)
month period commencing after one Exercise Date and ending with the next
Exercise Date, except that the first Purchase Period of any Offering Period
shall commence on the Enrollment Date and end with the
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next Exercise Date.
(q) "RESERVES" shall mean the number of shares of Common
Stock covered by each option under the Plan which have not yet been exercised
and the number of shares of Common Stock which have been authorized for issuance
under the Plan but not yet placed under option.
(r) "SUBSIDIARY" shall mean a corporation, domestic or
foreign, of which not less than fifty percent (50%) of the voting shares are
held by the Company or a Subsidiary, whether or not such corporation now exists
or is hereafter organized or acquired by the Company or a Subsidiary.
(s) "TRADING DAY" shall mean a day on which national stock
exchanges and the Nasdaq System are open for trading.
3. ELIGIBILITY.
(a) Any Employee, who shall be employed by the Company on a
given Enrollment Date shall be eligible to participate in the Plan.
(b) Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option under the Plan (i) to
the extent that, immediately after the grant, such Employee (or any other person
whose stock would be attributed to such Employee pursuant to Section 424(d) of
the Code) would own capital stock of the Company and/or hold outstanding options
to purchase such stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of the capital stock of the
Company or of any Subsidiary, or (ii) to the extent that his or her rights to
purchase stock under all employee stock purchase plans of the Company and its
subsidiaries accrues at a rate which exceeds twenty-five thousand dollars
($25,000) worth of stock (determined at the fair market value of the shares at
the time such option is granted) for each calendar year in which such option is
outstanding at any time.
4. OFFERING PERIODS. The Plan shall be implemented by consecutive,
overlapping Offering Periods with a new Offering Period commencing on the first
Trading Day on or after May 1 and November 1 each year, or on such other date as
the Board shall determine, and continuing thereafter until terminated in
accordance with Section 19 hereof. The Board shall have the power to change the
duration of Offering Periods (including the commencement dates thereof) with
respect to future offerings without shareholder approval if such change is
announced at least two (2) days prior to the scheduled beginning of the first
Offering Period to be affected thereafter.
5. PARTICIPATION.
(a) An eligible Employee may become a participant in the Plan
by completing a subscription agreement authorizing payroll deductions in the
form of Exhibit A to this Plan and filing it with the Company's payroll office
prior to the applicable Enrollment Date.
(b) Payroll deductions for a participant shall commence on
the first payroll following the Enrollment Date and shall end on the last
payroll in the Offering Period to which
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27
such authorization is applicable, unless sooner terminated by the participant as
provided in Section 10 hereof.
6. PAYROLL DEDUCTIONS.
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay day
during the Offering Period in an amount not exceeding ten percent (10%) of the
Compensation which he or she receives on each pay day during the Offering
Period.
(b) All payroll deductions made for a participant shall be
credited to his or her account under the Plan and shall be withheld in whole
percentages only. A participant may not make any additional payments into such
account.
(c) A participant may discontinue his or her participation in
the Plan as provided in Section 10 hereof, or may increase or decrease the rate
of his or her payroll deductions during the Offering Period by completing or
filing with the Company a new subscription agreement authorizing a change in
payroll deduction rate. The Board may, in its discretion, limit the number of
participation rate changes during any offering Period. The change in rate shall
be effective with the first full payroll period commencing after the Company's
receipt of the new subscription agreement unless the Company elects to process a
given change in participation more quickly. A participant's subscription
agreement shall remain in effect for successive Offering Periods unless
terminated as provided in Section 10 hereof.
(d) Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and Section 3(b) hereof, a
participant's payroll deductions may be decreased to zero percent (0%) at any
time during any Offering Period. Payroll deductions shall recommence at the rate
provided in such participant's subscription agreement at the beginning of the
first Purchase Period which is scheduled to end in the following calendar year,
unless terminated by the participant as provided in Section 10 hereof.
(e) At the time the option is exercised, in whole or in part,
or at the time some or all of the Company's Common Stock issued under the Plan
is disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock. At any time,
the Company may, but shall not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefits attributable to sale or early disposition of
Common Stock by the Employee.
7. GRANT OF OPTION. On the Enrollment Date of each Offering
Period, each eligible Employee participating in such offering Period shall be
granted an option to purchase on each Exercise Date during such Offering Period
(at the applicable Purchase Price) up to a number of shares of the Company's
Common Stock determined by dividing such Employee's payroll deductions
accumulated prior to such Exercise Date and retained in the Participant's
account as of the Exercise Date by the applicable Purchase Price; provided that
in no event shall an Employee be permitted to purchase during each Purchase
Period more than a number of shares determined by dividing twenty-five thousand
dollars ($25,000) by the Fair Market Value of a
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28
share of the Company's Common Stock on the Enrollment Date, and provided further
that such purchase shall be subject to the limitations set forth in Sections
3(b) and 12 hereof and in Code Section 423(b)(8). Exercise of the option shall
occur as provided in Section 8 hereof, unless the participant has withdrawn
pursuant to Section 10 hereof. The option shall expire on the last day of the
Offering Period.
8. EXERCISE OF OPTION. Unless a participant withdraws from the
Plan as provided in Section 10 hereof, his or her option for the purchase of
shares shall be exercised automatically on the Exercise Date, and the maximum
number of full shares subject to option shall be purchased for such participant
at the applicable Purchase Price with the accumulated payroll deductions in his
or her account. No fractional shares shall be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Purchase Period or Offering Period, subject to earlier withdrawal by the
participant as provided in Section 10 hereof. Any other monies left over in a
participant's account after the Exercise Date shall be returned to the
participant. During a participant's lifetime, a participant's option to purchase
shares hereunder is exercisable only by him or her.
9. DELIVERY. As promptly as practicable after each Exercise Date
on which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of a certificate representing the shares
purchased upon exercise of his or her option or shall cause an appropriate entry
to be made in participant's brokerage account reflecting the shares purchased.
10. WITHDRAWAL; TERMINATION OF EMPLOYMENT.
(a) A participant may withdraw all but not less than all the
payroll deductions credited to his or her account and not yet used to exercise
his or her option under the Plan at any time by giving written notice to the
Company in the form of Exhibit B to this Plan. All of the participant's payroll
deductions credited to his or her account shall be paid to such participant
promptly after receipt of notice of withdrawal and such participant's option for
the offering Period shall be automatically terminated, and no further payroll
deductions for the purchase of shares shall be made for such Offering Period. If
a participant withdraws from an Offering Period, payroll deductions shall not
resume at the beginning of the succeeding Offering Period unless the participant
delivers to the Company a new subscription agreement.
(b) Upon a participant's ceasing to be an Employee for any
reason, he or she shall be deemed to have elected to withdraw from the Plan and
the payroll deductions credited to such participant's account during the
Offering Period but not yet used to exercise the option shall be returned to
such participant or, in the case of his or her death, to the person or persons
entitled thereto under Section 14 hereof, and such participant's option shall be
automatically terminated. The preceding sentence notwithstanding, a participant
who receives payment in lieu of notice of termination of employment shall be
treated as continuing to be an Employee for the participant's customary number
of hours per week of employment during the period in which the participant is
subject to such payment in lieu of notice.
(c) A participant's withdrawal from an Offering Period shall
not have any effect upon his or her eligibility to participate in any similar
plan which may hereafter be adopted
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29
by the Company or in succeeding Offering Periods which commence after the
termination of the Offering Period from which the participant withdraws.
11. INTEREST. No interest shall accrue on the payroll deductions
of a participant in the Plan.
12. STOCK.
(a) The maximum number of shares of the Company's Common
Stock which shall be made available for sale under the Plan shall be One Million
Two Hundred Thousand (1,200,000) shares. If, on a given Exercise Date, the
number of shares with respect to which options are to be exercised exceeds the
number of shares then available under the Plan, the Company shall make a pro
rata allocation of the shares remaining available for purchase in as uniform a
manner as shall be practicable and as it shall determine to be equitable.
(b) The participant shall have no interest or voting right in
shares covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan
shall be registered in the name of the participant or in the name of the
participant and his or her spouse.
13. ADMINISTRATION.
The Plan shall be administered by the Board or a committee of
members of the Board appointed by the Board. The Board or its committee shall
have full and exclusive discretionary authority to construe, interpret and apply
the terms of the Plan, to determine eligibility and to adjudicate all disputed
claims filed under the Plan. Every finding, decision and determination made by
the Board or its committee shall, to the full extent permitted by law, be final
and binding upon all parties.
14. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
participant's account under the Plan in the event of such participant's death
subsequent to an Exercise Date on which the option is exercised but prior to
delivery to such participant of such shares and cash. In addition, a participant
may file a written designation of a beneficiary who is to receive any cash from
the participant's account under the Plan in the event of such participant's
death prior to exercise of the option. If a participant is married and the
designated beneficiary is not the spouse, spousal consent shall be required for
such designation to be effective.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse,
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dependent or relative is known to the Company, then to such other person as the
Company may designate.
15. TRANSFERABILITY. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 14 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.
16. USE OF FUNDS. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions.
17. REPORTS. Individual accounts shall be maintained for each
participant in the Plan. Statements of account shall be given to participating
Employees at least annually, which statements shall set forth the amounts of
payroll deductions, the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.
18. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION,
LIQUIDATION, MERGER OR ASSET SALE.
(a) CHANGES IN CAPITALIZATION. Subject to any required action
by the shareholders of the Company, the Reserves, as well as the price per share
and the number of shares of Common Stock covered by each option under the Plan
which has not yet been exercised, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of shares of Common Stock effected without receipt of consideration by
the Company; provided, however, that conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration". Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an option.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, the offering Periods shall terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Board.
(c) MERGER OR ASSET SALE. In the event of a proposed sale of
all or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, any Purchase Periods then in progress
shall be shortened by setting a new Exercise Date and any Offering Periods then
in progress shall end on the New Exercise Date. The New Exercise Date shall be
before the date of the Company's proposed sale or merger. The Board shall notify
each participant in writing, at least ten (10) business days prior to the New
Exercise
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31
Date, that the Exercise Date for the participant's option has been changed to
the New Exercise Date and that the participant's option shall be exercised
automatically on the New Exercise Date, unless prior to such date the
participant has withdrawn from the Offering Period as provided in Section 10
hereof.
19. AMENDMENT OR TERMINATION.
(a) The Board of Directors of the Company may at any time and
for any reason terminate or amend the Plan. Except as provided in Section 18
hereof, no such termination can affect options previously granted, provided that
an Offering Period may be terminated by the Board of Directors on any Exercise
Date if the Board determines that the termination of the Plan is in the best
interests of the Company and its shareholders. Except as provided in Section 18
hereof, no amendment may make any change in any option theretofore granted which
adversely affects the rights of any participant. To the extent necessary to
comply with Section 423 of the Code (or any successor rule or provision or any
other applicable law, regulation, or stock exchange rule), the Company shall
obtain shareholder approval in such a manner and to such a degree as required.
(b) Without shareholder consent and without regard to whether
any participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable
which are consistent with the Plan.
20. NOTICES. All notices or other communications by a participant
to the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.
21. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
with respect to an option unless the exercise of such option and the issuance
and delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an option, the Company may
require the person exercising such option to represent and warrant at the time
of any such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by
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any of the aforementioned applicable provisions of law.
22. TERM OF PLAN. The Plan shall become effective upon the
effective date of the Company's registration statement on Form S-8 or similar
form covering the Plan. It shall continue in effect for a term of ten (10) years
unless sooner terminated under Section 19 hereof.
23. AUTOMATIC TRANSFER TO LOW PRICE OFFERING PERIOD. To the extent
permitted by any applicable laws, regulations, or stock exchange rules, if the
Fair Market Value of the Common Stock on any Exercise Date in an Offering Period
is lower than the Fair Market Value of the Common Stock on the Enrollment Date
of such Offering Period, then all participants in such offering Period shall be
automatically withdrawn from such Offering Period immediately after the exercise
of their option on such Exercise Date and automatically re-enrolled in the
immediately following Offering Period as of the first day thereof.
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EXHIBIT A
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION
1998 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_____ Original Application Enrollment Date: __________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)
1. ___________________________________________ hereby elects to
participate in the American Architectural Products Corporation 1998
Employee Stock Purchase Plan (the "Employee Stock Purchase Plan") and
subscribes to purchase shares of the Company's Common Stock in
accordance with this Subscription Agreement and the Employee Stock
Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount
of _____% of my Compensation on each payday (from 1% to 10%) during the
Offering Period in accordance with the Employee Stock Purchase Plan.
(Please note that no fractional percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise
my option.
4. I have received a copy of the complete Employee Stock Purchase Plan. I
understand that my participation in the Employee Stock Purchase Plan is
in all respects subject to the terms of the Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan should
be issued in the name(s) of (Employee OR Employee and Spouse only):
_________________________________________________________________
6. I understand that if I dispose of any shares received by me pursuant to
the Plan within two (2) years after the Enrollment Date (the first day
of the Offering Period during which I purchased such shares) or one (1)
year after the Exercise Date, I will be treated for federal income tax
purposes as having received ordinary income at the time of such
disposition in an amount equal to the excess of the fair market value
of the shares at the time such shares were purchased by me over the
price which I paid for the shares. I hereby agree to notify the Company
in writing within thirty (30) days after the date of any disposition of
my shares and I will make adequate provision for Federal, state or
other tax withholding obligations, if any, which arise upon the
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34
disposition of the Common Stock. The Company may, but will not be
obligated to, withhold from my compensation the amount necessary to
meet any applicable withholding obligation including any withholding
necessary to make available to the Company any tax deductions or
benefits attributable to sale or early disposition of Common Stock by
me. If I dispose of such shares at any time after the expiration of the
two (2) year and one (1) year holding periods, I understand that I will
be treated for federal income tax purposes as having received income
only at the time of such disposition, and that such income will be
taxed as ordinary income only to the extent of an amount equal to the
lesser of (a) the excess of the fair market value of the shares at the
time of such disposition over the purchase price which I paid for the
shares, or (b) 15% of the fair market value of the shares on the first
day of the Offering Period. The remainder of the gain, if any,
recognized on such disposition will be taxed as capital gain.
7. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent
upon my eligibility to participate in the Employee Stock Purchase Plan.
In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:
NAME: (Please print)___________________________________________________
(First) (Middle) (Last)
____________________________________ __________________________________
Relationship
__________________________________
(Address)
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated:__________________________ __________________________________
Signature of Employee
__________________________________
Spouse's Signature (If beneficiary
other than spouse)
Employee's Social Security Number:_______________________________
Employee's Address:______________________________________________
______________________________________________
______________________________________________
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EXHIBIT B
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION
1998 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the
American Architectural Products Corporation 1998 Employee Stock Purchase Plan
which began on ____________, ____ (the "Enrollment Date") hereby notifies the
Company that he or she hereby withdraws from the Offering Period. He or she
hereby directs the Company to pay to the undersigned as promptly as practicable
all the payroll deductions credited to his or her account with respect to such
Offering Period. The undersigned understands and agrees that his or her option
for such Offering Period will be automatically terminated. The undersigned under
stands further that no further payroll deductions will be made for the purchase
of shares in the current Offering Period and the undersigned shall be eligible
to participate in succeeding Offering Periods only by delivering to the Company
a new Subscription Agreement.
Employee's Name:__________________________________
Employee's Address: _________________________________
_________________________________
_________________________________
Employee's Social Security Number:__________________________________
Employee's Signature:__________________________________
Date:__________________________________
B-1