<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
MODTECH HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
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previously. Identify the previous filing by registration statement number,
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<PAGE> 2
MODTECH HOLDINGS, INC.
2830 Barrett Avenue
Perris, California 92571
(909) 943-4014
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 1, 2000
To the Holders of Common Stock of Modtech Holdings, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Modtech
Holdings, Inc. will be held at the Hilton Irvine Hotel, 18800 MacArthur
Boulevard, Irvine, California 92612 on August 1, 2000 at 1:00 P.M., local time,
for the following purposes:
1 To elect a board of eight (8) directors, with each director so elected
to hold office until the next Annual Meeting and until their successors
have been duly elected and qualified;
2. To transact such other business as may properly come before the Annual
Meeting and any continuation or adjournment thereof.
The Board of Directors has fixed the close of business on June 15, 2000 as
the record date for the determination of the shareholders entitled to notice of
and to vote at the Annual Meeting, and only shareholders of record at the close
of business on that date will be entitled to vote at the Annual Meeting.
All shareholders are cordially invited to attend the Annual meeting in
person. YOU ARE URGED TO PROMPTLY COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED
PROXY IN THE ACCOMPANYING PRE-ADDRESSED, STAMPED ENVELOPE. Your proxy will not
be used if you are present at the Annual Meeting and desire to vote your shares
personally.
By Order of the Board of Directors,
Evan M. Gruber, Chief Executive Officer
Perris, California
June 30, 2000
IMPORTANT: IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON, IT IS
IMPORTANT THAT YOUR SHARES BE REPRESENTED SO THAT THE PRESENCE OF
A QUORUM MAY BE ASSURED. PLEASE SIGN AND DATE THE ENCLOSED PROXY
AND MAIL IT PROMPTLY. NO POSTAGE REQUIRED IF MAILED IN THE UNITED
STATES.
<PAGE> 3
MODTECH HOLDINGS, INC.
2830 Barrett Avenue
Perris, California 92571
-------------------
PROXY STATEMENT
-------------------
ANNUAL MEETING OF SHAREHOLDERS
To Be Held August 1, 2000
This Proxy Statement is being furnished to the shareholders of Modtech
Holdings, Inc., a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Company's Board of Directors for use at the
Annual Meeting of Shareholders of the Company to be held at the Hilton Irvine
Hotel, 18800 MacArthur Boulevard, Irvine, California 92612, on August 1, 2000 at
1:00 P.M., local time, and at any continuation or adjournment thereof.
This Proxy Statement, and the accompanying Notice of Annual Meeting and proxy
card, are first being mailed on or about June 30, 2000 to shareholders of record
on June 15, 2000, the record date for the determination of the stockholders
entitled to notice of and to vote at the Annual Meeting. A copy of the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1999, is
concurrently being mailed to all shareholders of record as of June 15, 2000.
The cost of soliciting proxies will be borne by the Company. In addition to
the solicitation of proxies by mail, solicitation may be made by telephone,
telegraph or personal interview by Directors, officers and other regular
employees of the Company, without extra compensation. Brokerage houses,
nominees, fiduciaries and other custodians will be requested to forward
soliciting material to the beneficial owners of shares and will be reimbursed
for their expenses.
VOTING RIGHTS
As of June 15, 2000, the record date for the determination of the
shareholders of the Company entitled to notice of and to vote at the Annual
Meeting, there were 13,177,092 shares of the Company's Common Stock outstanding.
Each share of Common Stock entitles the holder to one vote on each matter to
come before the Annual Meeting.
Properly executed and returned proxies, unless revoked, will be voted as
directed by the shareholder, or in the absence of such direction, by the persons
named therein FOR the election of the eight director nominees listed below. As
to any other business which may properly come before the Annual Meeting, the
proxy holders will vote in accordance with their best judgment. A proxy may be
revoked at any time before it is voted by delivery of written notice of
revocation to the Secretary of the Company or by delivery of a subsequently
dated proxy, or by attendance at the Annual Meeting and voting in person.
Attendance at the Annual Meeting without also voting will not in and of itself
constitute the revocation of a proxy.
2
<PAGE> 4
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth information regarding the ownership of the
Company's Common Stock as of April 15, 2000, by (i) each of the current
directors and nominees for election as a director of the Company, (ii) each
person or group known by the Company to be the beneficial owner of more than 5%
of the Company's outstanding Common Stock, and (iii) all current directors and
executive officers of the Company as a group. Except as otherwise noted and
subject to community property laws where applicable, each beneficial owner has
sole voting and investment power with respect to all shares shown as
beneficially owned by them. Except as otherwise indicated, the address of each
holder identified below is in care of the Company, 2830 Barrett Avenue, Perris,
California 92571.
<TABLE>
<CAPTION>
Name and Address Shares Percent of
of Beneficial Owner Beneficially Owned (1) Class (1)
------------------- ---------------------- ---------
<S> <C> <C>
Evan M. Gruber (2) 613,370 5.6%
Patrick Van Den Bossche (3) 275,608 2.5
Michael G. Rhodes (4) 257,009 2.6
Shari L. Walgren (5) 14,750 *
Daniel J. Donahoe III (6) 11,400 *
Robert W. Campbell (7) 21,213 *
Charles R. Gwirtsman (8) 367,183 2.9
Charles A. Hamilton (9) 1,776,090 13.6
Charles C. McGettigan (10) (15) 1,812,718 13.8
Myron A. Wick III (10) (15) 1,812,718 13.8
Jon D. Gruber (11) (15) 3,530,957 26.8
Gruber & McBaine Capital Management (12) (15) 1,670,114 12.7
Infrastructure and Environmental Private Equity Fund III, L.P. 1,401,161 10.6
J. Patterson McBaine (13) (15) 3,480,589 26.4
Proactive Partners, L.P. (14) (15) 1,773,002 13.5
All directors and executive officers as a group
(10 people) (2) (3) (4) (5) (6) (7) (8) (9) (10) 5,171,407 38.4
</TABLE>
--------------------------
* Less than one percent.
(1) In calculating beneficial and percentage ownership, all shares of
Common Stock which a named shareholder will have the right to acquire
within 60 days of the record date for the Annual Meeting upon exercise
of stock options are deemed to be outstanding for the purpose of
computing the ownership of such shareholder, but are not deemed to be
outstanding for the purpose of computing the percentage of Common
Stock owned by any other shareholder. As of April 15, 2000, an
aggregate of 13,177,092 shares of Common Stock were outstanding. This
does not give effect to the potential issuance of 2,488,678 shares
issuable upon exercise of options granted or which may be granted
under the Company's stock option plans. See "Election of Directors -
Stock Options."
(2) Includes 595,571 shares issuable upon exercise of stock options, but
does not include 168,353 shares issuable upon exercise of stock options
which have been granted but currently are not exercisable. Evan M.
Gruber and Jon D. Gruber are not related.
(3) Includes 122,689 shares issuable upon exercise of stock options, but
does not include 53,156 shares issuable upon exercise of stock options
which have been granted but currently are not exercisable.
(4) Includes 201,587 shares issuable upon exercise of stock options, but
does not include 94,595 shares issuable upon exercise of stock options
which have been granted but currently are not exercisable.
3
<PAGE> 5
(5) Includes 14,750 shares issuable upon exercise of stock options, but
does not include 57,609 shares issuable upon exercise of stock options
which have been granted but currently are not exercisable.
(6) Includes 11,400 shares issuable upon exercise of stock options, but
does not include 15,000 shares issuable upon exercise of stock options
which have been granted but currently are not exercisable.
(7) Includes 21,213 shares issuable upon exercise of stock options, but
does not include 15,000 shares issuable upon exercise of stock options
which have been granted but currently are not exercisable.
(8) Includes 182,669 shares held by Capital Resources Growth, Inc., an
entity of which Mr. Gwirtsman is the sole stockholder, and 179,514
shares held directly by Mr. Gwirtsman and his wife and trusts formed
for the benefit of their children. Also includes 5,000 shares issuable
upon exercise of stock options to Mr. Gwirtsman, but does not include
15,000 shares issuable upon exercise of stock options which have been
granted but currently are not exercisable.
(9) Includes 19,637 shares held by Mr. Hamilton, 1,401,161 shares held by
Infrastructure and Environmental Private Equity Fund III, L.P.
("IEPEF") and 350,292 shares held by Environmental & Information
Technology Private Equity Fund III ("EITPEF"). Also includes 5,000
shares issuable upon exercise of stock options to Mr. Hamilton, but
does not include 15,000 shares issuable upon exercise of stock options
which have been granted but currently are not exercisable. Mr. Hamilton
is a principal of one of the members of a limited liability company
that serves as general partners of IEPEF and the investment manager of
EITPEF. Mr. Hamilton disclaims beneficial ownership of all shares held
by IEPEF and the investment manager of EITPEF except to the extent of
his pecuniary interest therein.
(10) Includes 17,650 shares owned of record directly by each of Messrs.
McGettigan and Wick, and 1,773,002 shares owned of record by Proactive
Partners, L.P. and affiliates of which Messrs. McGettigan and Wick are
general partners. Also includes options to purchase 22,066 shares which
have been granted to each of Messrs. McGettigan and Wick for serving on
the Company's Board of Directors, but does not include 15,000 shares
issuable upon exercise of stock options which have been granted but
currently are not exercisable.
(11) Includes 87,841 shares owned of record directly by Mr. Gruber, all
shares owned of record by Proactive Partners, L.P. and affiliates of
which Mr. Gruber is a general partner, and all shares owned of record
by Gruber & McBaine Capital Management and affiliates, of which Mr.
Gruber is a general partner. Jon D. Gruber and Evan M. Gruber are not
related.
(12) Includes 93,758 shares owned of record directly by Gruber & McBaine
Capital Management, all shares owned of record by Proactive Partners,
L.P. and affiliates, and all shares owned of record by Lagunitas
Partners, Gruber & McBaine International and GMJ Investments,
affiliated entities.
(13) Includes 37,473 shares owned of record directly by Mr. McBaine, all
shares owned of record by Proactive Partners, L.P. and affiliates, of
which Mr. McBaine is a general partner, and all shares owned of record
by Gruber & McBaine Capital Management and affiliates, of which Mr.
McBaine is a general partner.
(14) Includes 1,773,002 shares owned of record by Proactive Partners, L.P.
and the shares owned of record by Fremont Proactive Partners, an
affiliated entity.
(15) The address of each of Charles C. McGettigan, Myron A. Wick III, Jon D.
Gruber, J. Patterson McBaine, Gruber & McBaine Capital Management and
Proactive Partners, L.P. is 50 Osgood Place, San Francisco, CA 94133.
4
<PAGE> 6
ELECTION OF DIRECTORS
The Company's current Board of Directors has nominated eight (8)
individuals, Evan M. Gruber, Robert W. Campbell, Daniel J. Donahoe III, Charles
R. Gwirtsman, Charles A. Hamilton, Charles C. McGettigan, Patrick Van Den
Bossche and Myron A. Wick III, for election as directors of the Company at the
Annual Meeting, each to serve as such until the next annual meeting of the
Company's shareholders and until their respective successors are elected and
qualified. Each of the nominees is a current member of the Company's Board of
Directors. Although it is not presently contemplated that any nominee will
decline or be unable to serve as a Director, in either such event, the proxies
will be voted by the proxy holder for such other persons as may be designated by
the present Board of Directors should any nominee become unavailable to serve.
NOMINEES
Certain information concerning the eight individuals nominated by the
Company's Board of Directors for election at the Annual Meeting to serve as
directors of the Company for the ensuing year is set forth below:
Evan M. Gruber, age 46, joined the Company's predecessor, Modtech, Inc. in
January 1989 as its Chief Financial Officer and was elected Chief Executive
Officer in January 1990. Prior to joining Modtech, Inc., Mr. Gruber, who is a
certified public accountant, founded his own public accounting firm in Costa
Mesa, California in 1978.
Robert W. Campbell, age 43, who was elected to the Board of Directors of
Modtech, Inc. in 1991, is the Managing Director of Corporate Finance at L.H.
Friend, Weinress, Frankson & Presson, Inc. From 1993 to 1995, Mr. Campbell was
Senior Vice President - Investment Banking at Baraban Securities, Incorporated.
From 1982 to 1993, Mr. Campbell was employed by the Seidler Companies, Inc. as
Senior Vice President - Corporate Finance.
Daniel J. Donahoe III, age 66, who was elected to the Board of Directors of
Modtech, Inc. in 1998, is co-founder and President of Red Rock Resorts, which
operated special, unique boutique resorts in the Western United States. He also
serves as Chairman of Daybreak Investments, a privately-held investment company.
Mr. Donahoe has been actively involved in the commercial and residential real
estate market in the southwest over the past 26 years.
Charles R. Gwirtsman, age 45, has been a director of the Company since
February 2000. He is Managing Director of KRG Capital Partners, LLC. Prior to
joining KRG Capital in 1996, Mr. Gwirtsman served as Senior Vice President of
FCM Fiduciary Capital Management Company, the manager of two mezzanine debt
funds, from January 1994 to June 1996. Prior to this, Mr. Gwirtsman was employed
as a Corporate Vice President at PaineWebber, Incorporated from 1988 to 1993 as
a member of the Private Finance Group. Mr. Gwirtsman serves on the Board of
Directors of a number of privately held companies. From September 1995 through
January 1996, at the request of his then employer, FCM Fiduciary Capital
Management Company, Mr. Gwirtsman served as a director of Canadian's Corp., a
women's specialty clothing retailer. This company filed for bankruptcy
protection in February 1996 and was liquidated under Chapter 7 of the federal
bankruptcy code in December 1997.
Charles A. Hamilton, age 51, has been a director of the Company since
February 2000. Mr. Hamilton has over 27 years of investment experience in the
fields of securities analysis, corporate finance and venture capital. He is
currently a principal in the private equity group at Robertson, Stephens Funds,
which has been a wholly-owned subsidiary of BancAmerica since October 1997. He
had previously served as managing director of Robertson, Stephens & Company
since 1981. Mr. Hamilton has served as a director of numerous venture-financed
companies in recent years and he is presently on the board of White Cap
Industries, Inc., a public company, and ten private companies.
Charles C. McGettigan, age 55, has been a director of Modtech, Inc. since
June 1994. Mr. McGettigan is a co-founder and managing director of the
investment banking firm of McGettigan, Wick & Co., Inc. and a co-founder and
general partner of Proactive Investment Managers, L.P., the general partner of
Proactive Partners, L.P., a merchant banking fund. Prior to founding McGettigan,
Wick & Co., Inc., he was a Principal, Corporate Finance of Hambrecht & Quist and
a Senior Vice President of Dillon, Read & Co. Mr. McGettigan serves on the
boards of directors of Cuisine Solutions, Inc., Digital Dictation, Inc.; I-Flow
Corporation; Onsite Energy, PMR Corporation, Sonex Research Corporation,
Tanknology-NDE, and Wray-Tek Instruments, Inc.
5
<PAGE> 7
Patrick Van Den Bossche, age 38, served as Chief Executive Officer,
President and a director of SPI Holdings, Inc., a manufacturer of commercial and
light industrial modular buildings, since February 1997 until its acquisition by
the Company in February 2000. Mr. Van Den Bossche joined SPI in 1991 and was
appointed as Vice President of Operations in 1993. Mr. Van Den Bossche also
serves as a director of Modular Building Institute ("MBI"), a national trade
organization for the modular building industry, and is a member of MBI's
statistics committee.
Myron A. Wick III, age 56, became a director of Modtech, Inc. in June 1994.
Mr. Wick is currently a managing director and co-founder of McGettigan, Wick &
Co., Inc., an investment banking firm formed in 1988, and a general partner of
Proactive Investment Managers, L.P., the general partner of Proactive Partners,
L.P., a merchant banking fund formed in 1991. Mr. Wick is a director of
Children's Discovery Centers, Digital Dictation, Inc., Electrostatic Devices,
Sonex Research Corporation, Tanknology-NDE, and Wray-Tek Instruments, Inc.
STRUCTURE AND FUNCTION OF THE BOARD OF DIRECTORS
During the last fiscal year, the Board of Directors of the Company held four
regular and special meetings or otherwise took action by written consent. The
Board has established both an Audit Committee, which is comprised of Messrs.
Gwirtsman, Campbell and McGettigan, and a Compensation Committee, which is
comprised of Messrs. Donahoe, Hamilton and Wick. The Audit Committee meets to
consult with the Company's independent auditors concerning their engagement and
audit plan, and thereafter concerning the auditor's report and management letter
and with the assistance of the independent auditors, also monitors the adequacy
of the Company's internal accounting controls. With respect to compensation, the
Compensation Committee determines the compensation of corporate officers, and
will determine the persons entitled to participate in stock option, bonus and
other similar plans. The Board of Directors continues to meet as a whole to
nominate the individuals to be proposed by the Board of Directors for election
as directors of the Company, and has no separate nominating committee.
Each non-employee director is paid an annual retainer of $4,000 plus $1,000
for each board and board committee meeting attended. Each non-employee director
will be granted an option to purchase 20,000 shares of Common Stock, with 25%
vesting over a 4-year period of service on the Board of Directors. The Company
reimburses the expenses of its non-employee directors in attending Board
meetings. No compensation is paid to any of the employee directors.
There is no family relationship between any nominee and any other nominee or
executive officer of the Company.
EXECUTIVE OFFICERS
The executive officers of the Company are Evan M. Gruber, Chief Executive
Officer; Patrick Van Den Bossche, President; Michael G. Rhodes, Chief Operating
Officer and Shari L. Walgren, Chief Financial Officer. Subject to the terms of
applicable employment agreements, officers serve at the pleasure of the Board of
Directors.
Mr. Rhodes joined the Company's predecessor, Modtech, Inc. in 1988 and was
its controller through 1992. In 1993 he was elected Chief Financial Officer, and
in 1996 was elected Chief Operating Officer. Prior to joining Modtech, Inc., Mr.
Rhodes worked for a public accounting firm.
Ms. Walgren joined the Company in 1999. Prior to joining the Company, Ms.
Walgren, who is a certified public accountant, worked for a public accounting
firm.
6
<PAGE> 8
COMPENSATION OF EXECUTIVE OFFICERS
The following table summarizes the annual and long term compensation paid by
the Company during fiscal years ended December 31, 1997, 1998 and 1999 to those
persons who were, as of December 31, 1999 (i) the Chief Executive Officer and
(ii) the other compensated executive officers whose total annual salary and
bonus exceeded $100,000 during the year ended December 31, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------ ------------------------ -------
RESTRICTED
STOCK ALL OTHER
SALARY BONUS OTHER AWARDS OPTIONS LTIP COMPENSATION
NAME AND PRINCIPAL POSITION YEAR $ $ $ $ # PAYOUTS $ (1)
- --------------------------- ---- ------- ------- ----- ---------- ------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Evan M. Gruber 1999 300,000 87,000 -- -- 127,222 -- 5,000
Chief Executive Officer 1998 200,000 547,546 -- -- 66,778 -- 5,000
and Director 1997 200,000 459,000 -- -- 133,000 -- 4,750
Patrick Van Den Bossche 1999 250,000 72,000 -- -- 24,000 -- 5,000
President and Director (2) 1998 -- -- -- -- -- -- --
1999 -- -- -- -- -- -- --
Michael G. Rhodes 1999 200,000 58,000 -- -- 56,409 -- 5,000
Chief Operating Officer 1998 125,000 153,216 -- -- 51,591 -- 5,000
1997 125,000 142,500 -- -- 82,500 -- 4,750
Shari L. Walgren 1999 95,000 27,000 -- -- 59,000 -- 4,784
Chief Financial Officer (2) 1998 -- -- -- -- -- -- --
1997 -- -- -- -- -- -- --
</TABLE>
- -------------
(1) The figures shown in the column designated "All Other Compensation"
represent the executive officer's share of the Company's contribution to
the 401(k) plan, see "401(k) Plan."
(2) Mr. Van Den Bossche and Ms. Walgren joined the Company in 1999.
EMPLOYMENT AGREEMENTS
The Company entered into employment agreements in February 2000 with Messrs.
Gruber, Van Den Bossche and Rhodes. These agreements are for five years each,
provide for early severance payments of between one and two years salary and
include, among other provisions, base annual salary of $300,000 for Mr. Gruber,
$250,000 for Mr. Van Den Bossche, and $200,000 for Mr. Rhodes. The base salaries
are subject to annual percentage increases and each individual is entitled to
earn bonuses of up to 100% of annual base salary. The bonuses are based on
performance and include a cash component and a stock option component based on
performance. Concurrently with the acquisition of SPI Holdings, Inc., Mr. Gruber
received an option to purchase 50,000 shares of Common Stock. The option became
immediately vested for 10,000 shares and will continue to vest at the rate of
10,000 shares per year. The option was credited against the stock option
component of bonuses earned by Mr. Gruber in the first year of the employment
agreement. Mr. Gruber's new employment agreement also includes a buy-out of his
previous employment agreement with Modtech, Inc.
7
<PAGE> 9
401(K) PLAN
Under the Company's 401(k) Plan, officers and other employees of the Company
may elect to defer up to 12% of their compensation, subject to limitations under
the Internal Revenue Code. The Company makes annual contributions on a 50%
matching basis. Amounts deferred are deposited by the Company in a trust account
for distribution to employees upon retirement, attainment of age 59-1/2,
permanent disability, death, termination of employment or the occurrence of
conditions constituting extraordinary hardship. For the year ended December 31,
1999, the Company contributed $5,000 each as matching contributions for the
accounts of Mr. Gruber, Mr. Van Den Bossche and Mr. Rhodes and $4,784 for the
account of Ms. Walgren.
8
<PAGE> 10
STOCK OPTIONS
The Company granted stock options under its 1989 Stock Option Plan (the
"1989 Plan"), its March 1994 Stock Option Plan (the "March 1994 Plan"), its May
1994 Option Plan (the "May 1994 Plan") its 1996 Stock Option Plan (the "1996
Plan") and its 1999 Stock Option Plan (the "1999 Plan"). As of December 31,
1999, options to purchase 1,670,041 shares, at a weighted average exercise price
of $6.32 per share, were outstanding under the Company's Stock Option Plans at
exercise prices ranging from $1.19 to $20.57.
The following table sets forth certain information regarding options granted
by the Company during the year ended December 31, 1999 to the executive officers
of the Company identified in the Summary Compensation Table set forth above:
OPTIONS GRANTED IN FISCAL YEAR 1999
<TABLE>
<CAPTION>
Potential Realized
Value at Assumed
No. of % of Annual Rates of Stock
Shares Total Price Appreciation
Name Subject to Options For Option Term (3)
of Options Granted to Exercise Expiration ---------------------------
Optionee Granted (1) Employees Price (2) Date 5% 10%
-------- ----------- ---------- --------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Evan M. Gruber 127,222 29% $ 9.25 3/29/2009 $ 740,086 $1,875,523
Patrick Van Den Bossche 24,000 6% $ 9.25 3/29/2009 $ 139,615 $ 353,811
Michael G. Rhodes 56,409 13% $ 9.25 3/29/2009 $ 328,147 $ 831,588
Shari L. Walgren 59,000 13% $ 9.25 3/29/2009 $ 343,219 $ 869,603
</TABLE>
- ----------
(1) Options are exercisable starting 12 months after the grant date with 25%
vesting each year.
(2) The exercise price was the market price of a share of the Company's Common
Stock on the date of grant.
(3) However, on December 31, 1999, the closing price for a share of the
Company's Common Stock was $6.00.
The following table sets forth information regarding options exercised
during the year ended December 31, 1999 by the executive officers of the Company
identified in the Summary Compensation Table set forth above, as well as the
aggregate value of unexercised options held by such executive officers at
December 31, 1999. The Company has no outstanding stock appreciation rights,
either freestanding or in tandem with options.
AGGREGATED OPTION EXERCISES LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised in-the-money Options
Options at Fiscal Year End at Fiscal Year End ($) (1)
Shares --------------------------- ---------------------------
Acquired on Value
Name Exercise(#) Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Evan M. Gruber 12,799 87,993 528,598 193,138 $ 1,829,413 $ --
Patrick Van Den Bossche -- -- 87,517 53,172 378,837 126,278
Michael G. Rhodes 40,958 248,521 161,238 111,085 258,418 --
Shari L. Walgren -- -- -- 59,000 -- --
</TABLE>
- ------------
(1) Calculated based on the closing price of the Company's Common Stock as
reported on the NASDAQ National Market System on December 31, 1999, which
was $6.00 per share.
9
<PAGE> 11
CERTAIN TRANSACTIONS
The Company leases one facility located in Perris, California, and the land
on which the manufacturing facility is located in Lathrop, California, from
general partnerships of which Mr. Gruber owns an approximate 20% interest,
pursuant to standard industrial leases. Under the terms of these leases, the
Company is obligated to pay aggregate annual rentals of $372,000, subject to
escalation in accordance with changes in applicable cost of living indices.
Mr. Gruber owns 33% of the capital stock of Class Leasing, Inc., a
California corporation, in which the Company has no ownership interest. Class
Leasing purchases modular relocatable classrooms from the Company., upon
standard terms and at standard wholesale prices, and leases them to third
parties primarily under three-year leases, cancelable yearly. During the years
ended December 31, 1997, 1998, and 1999, the Company sold modular relocatable
classrooms to Class Leasing, Inc. and predecessor entities for aggregate
purchase prices of $2,942,313, $2,675,457 and $6,271,813, respectively, which
represented approximately 2%, 2% and 4% of the its net sales for each of those
years.
Messrs. Gruber and Rhodes have personally guaranteed certain of the
obligations of the Company and the repayment of amounts which surety companies
may be required to expend under the terms of performance bonds issued in
connection with manufacturing contracts. No payments have been made to Messrs.
Gruber and Rhodes for the guarantees provided by them.
COMPENSATION COMMITTEE REPORT
Report on Annual Compensation of Executive Officers
It is the policy of the Company's Compensation Committee to establish
compensation levels for the executive officers, which reflect the Company's
overall performance and their performance, responsibilities and contributions to
the long-term growth and profitability of the Company. The committee determines
compensation based on its evaluation of the Company's overall performance,
including various quantitative factors, primarily the Company's financial
performance, sales and earnings against the Company's operating plan, as well as
various qualitative factors such as new product development, the Company's
product and service quality, the extent to which the executive officers have
contributed to forming a strong management team and other factors which the
committee believes are indicative of the Company's ongoing ability to achieve
its long-term growth and profit objectives.
The principal component of the compensation of the executive officers is
their base salaries. The committee also retains the discretion to award bonuses
based on corporate or individual performance. The committee evaluates the
practices of various industry groups, market data, including data obtained from
time to time from outside compensation consultants, and other economic
information to determine the appropriate ranges of base salary levels which will
enable the Company to retain and incentivize the executive officers. Throughout
the year, the committee members review the corporate and individual performance
factors described above. The committee, based upon its review of performance for
the previous year and its review of the Company's operating plan, establishes
salary levels and awards any bonuses to the executive officers.
The Compensation Committee also considers grants of stock options for the
Company's key employees, including executive officers. The purpose of the stock
option program is to provide incentives to the Company's management to work to
maximize shareholder value. The option program also utilizes vesting periods to
encourage key employees to continue in the employ of the Company. Individual
amounts of annual stock option grants are derived based upon review of
competitive compensation practices with respect to the same or similar executive
positions, overall corporate performance and individual performance.
10
<PAGE> 12
STOCK PERFORMANCE GRAPH
The graph set forth below compares the stock price of the Company since
January 1, 1995 against (1) the S&P 500, and (2) the composite of the companies
listed by Media General Financial Services in its non-residential building
construction ("Peer Group"). The graph is based upon information provided to the
Company by Media General Financial Services.
COMPARISON OF CUMULATIVE TOTAL RETURN OF ONE OR MORE
COMPANIES, PEER GROUPS, INDUSTRY INDEXES AND/OR BROAD MARKETS
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COMPANY/INDEX/MARKET 12/30/1994 12/29/1995 12/31/1996 12/31/1997 12/31/1998 12/31/1999
Modtech Holdings Inc. 100.00 154.55 572.73 1,418.18 1,109.09 436.36
Nonresidential Building Constr. 100.00 71.93 99.83 139.75 125.33 170.03
S&P Composite 100.00 137.58 169.17 225.61 290.09 351.13
</TABLE>
SOURCE: MEDIA GENERAL FINANCIAL SERVICES
P.O. BOX 85333
RICHMOND, VA 23293
PHONE: 1-(800) 446-7922
FAX: 1-(804) 649-6826
The current composition of SIC Code 154 -- Nonresidential Building Constr -- is
as follows:
ABRAMS INDUSTRIES INC.
CHINA PROSP INT'L HOLGS
GIBBS CONSTRUCTION INC.
PERINI CORP
11
<PAGE> 13
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
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
own more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership (Forms 3, 4
and 5) with the Securities and Exchange Commission, and to furnish the Company
with copies of all such forms which they file.
To the Company's knowledge, based solely on the Company's review of such
reports or written representations from certain reporting persons that no Forms
5 were required to be filed by those persons, the Company believes that during
the year ended December 31, 1999 filing requirements applicable to the officers
and directors of the Company and other persons subject to Section 16 of the
Exchange Act were complied with.
INDEPENDENT ACCOUNTANTS
KPMG LLP has been retained to serve as the Company's independent certified
public accountants for the fiscal year ending December 31, 2000. A
representative of KPMG LLP is expected to be present at the Annual Meeting, and
to be available to respond to any shareholder questions directed to KPMG LLP.
This representative will have an opportunity to make a statement if KPMG LLP so
desires.
SHAREHOLDER PROPOSALS
In order to be considered for inclusion in the Company's proxy statement and
form of proxy relating to the Company's next annual meeting of shareholders,
proposals by the Company's shareholders intended to be presented at such annual
meeting must be received by the Company no later than March 2, 2001.
ANNUAL REPORTS
The Company's 1999 Annual Report on Form 10-K, which includes audited
financial statements for the fiscal year ended December 31, 1999, is
concurrently being mailed with this proxy statement to shareholders of record on
June 15, 2000. A copy of the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1999, and any amendments thereto, is available without
charge to any shareholder of the Company upon written request to Evan Gruber,
Chief Executive Officer, Modtech Holdings, Inc., 2830 Barrett Avenue, Perris,
California 92571.
OTHER MATTERS
The Board of Directors knows of no other matters to be presented for action
at the meeting. However, if any matters not included in this Proxy Statement
properly come before the meeting, it is the intention of the person named in the
enclosed proxy to vote under the authority therein given in accordance with his
best judgment.
By Order of the Board of Directors,
Evan M. Gruber, Chief Executive Officer
June 30, 2000.
12
<PAGE> 14
[ Front of Proxy Card ]
MODTECH HOLDINGS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Evan M. Gruber as attorney-in-fact and
proxy for the undersigned, with full power of substitution, to represent the
undersigned and vote, as designated below, all of the shares of Common Stock of
Modtech Holdings, Inc. (the "Company") which the undersigned is entitled to vote
at the Company's Annual Meeting of Shareholders to be held on August 1, 2000, or
at any adjournment or continuation thereof.
1. ELECTION OF DIRECTORS:
[ ] FOR ALL NOMINEES LISTED BELOW [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for the nominees
listed below
Evan M. Gruber, Robert W. Campbell, Daniel J. Donahoe III, Charles R. Gwirtsman,
Charles A. Hamilton, Charles C. McGettigan, Patrick Van Den Bossche and Myron A.
Wick III.
(INSTRUCTION: To withhold authority to vote for any nominee, write the
nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
2. In their discretion, upon such other business as may properly come before the
Annual Meeting or any adjournment or continuation thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER HEREIN SPECIFIED
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS INDICATED, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF EACH OF THE EIGHT NOMINEES LISTED ABOVE TO THE
COMPANY'S BOARD OF DIRECTORS, AND IN ACCORDANCE WITH THE DISCRETION OF THE
PROXIES ON ANY OTHER MATTERS TO COME BEFORE THE ANNUAL MEETING.
<PAGE> 15
[Back of Proxy Card]
Please sign exactly as name appears below, date and
return this card promptly using the enclosed
envelope. Executors, administrators, guardians,
officers of corporations, and others signing in a
fiduciary capacity should state their full titles as
such.
Dated ........................................ , 2000
-----------------------------------------------------
Signature
-----------------------------------------------------
Signature (if held jointly)
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO MARK,
SIGN, DATE AND PROMPTLY RETURN THIS PROXY, USING THE ENCLOSED ENVELOPE.
