SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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 ss. 240.14a-11(c) or ss. 240.14a-12
AMERICAN BUILDINGS COMPANY
................................................................................
(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:
.....................................................................
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:
.......................................................................
2) Form, Schedule or Registration Statement No.:
.......................................................................
3) Filing Party:
.......................................................................
4) Date Filed:
.......................................................................
-1-
<PAGE>
AMERICAN BUILDINGS COMPANY
1150 STATE DOCKS ROAD
EUFAULA, ALABAMA 36027
334-687-2032
March 26, 1998
Dear Stockholder:
You are cordially invited to attend the Company's Annual Meeting of
Stockholders to be held at 10:30 A.M. on Tuesday, April 28, 1998 at the offices
of Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New York, New York 10103.
At the meeting you will be asked to elect seven directors of the Company,
to approve an amendment to the Company's 1994 Stock Option Plan which would
increase the number of shares available for grant thereunder and to approve
amendments to the Company's Stock Option Plan for Non-Employee Directors which
would increase the number of shares available for grant thereunder and increase
the number of shares included in each option grant. In addition, we will be
pleased to report on the affairs of the Company and a discussion period will be
provided for questions and comments of general interest to stockholders.
We look forward to greeting personally those stockholders who are able to
be present at the meeting; however, whether or not you plan to be with us at the
meeting, it is important that your shares be represented. Accordingly, you are
requested to sign and date the enclosed proxy and mail it in the envelope
provided at your earliest convenience.
Thank you for your cooperation.
Very truly yours,
William L. Selden
Chairman of the Board
of Directors
Robert T. Ammerman
Chief Executive Officer
<PAGE>
AMERICAN BUILDINGS COMPANY
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------
Eufaula, Alabama
March 26, 1998
Notice is hereby given that the Annual Meeting of Stockholders of American
Buildings Company will be held on Tuesday, April 28, 1998 at 10:30 A.M. at the
offices of Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New York, New York
10103 for the following purposes:
(1) To elect seven directors to serve for the ensuing year;
(2) To consider and vote upon a proposal to amend the Company's 1994 Stock
Option Plan to increase the number of shares available for grant
thereunder;
(3) To consider and vote upon a proposal to amend the Company's Stock
Option Plan for Non-Employee Directors to increase the number of
shares available for grant thereunder and increase the number of
shares included in each option grant; and
(4) To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Stockholders of record at the close of business on March 16, 1998 will be
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person. Stockholders who are unable to attend the Annual Meeting in person are
requested to complete and date the enclosed form of proxy and return it promptly
in the envelope provided. No postage is required if mailed in the United States.
Stockholders who attend the Annual Meeting may revoke their proxy and vote their
shares in person.
PEGGY S. WOODHAM
Secretary
<PAGE>
AMERICAN BUILDINGS COMPANY
1150 STATE DOCKS ROAD
EUFAULA, ALABAMA 36027
------------------
PROXY STATEMENT
------------------
GENERAL INFORMATION
PROXY SOLICITATION
This Proxy Statement is furnished to the holders of Common Stock, par value
$.01 per share (the "Common Stock"), of American Buildings Company (the
"Company") in connection with the solicitation by the Board of Directors of the
Company of proxies for use at the Annual Meeting of Stockholders to be held on
Tuesday, April 28, 1998, or at any adjournment thereof, pursuant to the
accompanying Notice of Annual Meeting of Stockholders. The purposes of the
meeting and the matters to be acted upon are set forth in the accompanying
Notice of Annual Meeting of Stockholders. The Board of Directors is not
currently aware of any other matters which will come before the meeting.
Proxies for use at the meeting are being solicited by the Board of
Directors of the Company. Proxies will be mailed to stockholders on or about
March 26, 1998 and will be solicited chiefly by mail. The Company will make
arrangements with brokerage houses and other custodians, nominees and
fiduciaries to send proxies and proxy material to the beneficial owners of the
shares and will reimburse them for their expenses in so doing. Should it appear
desirable to do so in order to ensure adequate representation of shares at the
meeting, officers, agents and employees of the Company may communicate with
stockholders, banks, brokerage houses and others by telephone, facsimile or in
person to request that proxies be furnished. All expenses incurred in connection
with this solicitation will be borne by the Company. The Company has no present
plans to hire special employees or paid solicitors to assist in obtaining
proxies, but reserves the option of doing so if it should appear that a quorum
otherwise might not be obtained.
REVOCABILITY AND VOTING OF PROXY
A form of proxy for use at the Annual Meeting of Stockholders and a return
envelope for the proxy are enclosed. Stockholders may revoke the authority
granted by their execution of proxies at any time before their effective
exercise by filing with the Secretary of the Company a written notice of
revocation or a duly executed proxy bearing a later date, or by voting in person
at the meeting. Shares of the Company's
<PAGE>
Common Stock represented by executed and unrevoked proxies will be voted in
accordance with the choice or instructions specified thereon. If no
specifications are given, the proxies intend to vote the shares represented
thereby to approve Proposal Nos. 1, 2 and 3 as set forth in the accompanying
Notice of Annual Meeting of Stockholders and in accordance with their best
judgment on any other matters which may properly come before the meeting.
RECORD DATE AND VOTING RIGHTS
Only stockholders of record at the close of business on March 16, 1998 are
entitled to notice of and to vote at the Annual Meeting or any and all
adjournments thereof. On March 16, 1998 there were 5,275,087 shares of Common
Stock outstanding; each such share is entitled to one vote on each of the
matters to be presented at the Annual Meeting. The holders of a majority of the
outstanding shares of Common Stock, present in person or by proxy and entitled
to vote, will constitute a quorum at the Annual Meeting. Abstentions and broker
non-votes will be counted for purposes of determining the presence or absence of
a quorum. "Broker non-votes" are shares held by brokers or nominees which are
present in person or represented by proxy, but which are not voted on a
particular matter because instructions have not been received from the
beneficial owner. Under applicable Delaware law, the effect of broker non-votes
on a particular matter depends on whether the matter is one as to which the
broker or nominee has discretionary voting authority under the applicable rule
of the New York Stock Exchange. The effect of broker non-votes on the specific
items to be brought before the Annual Meeting of Stockholders is discussed under
each item.
-2-
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information as of February 1, 1998 (except
as otherwise noted in the footnotes), regarding the beneficial ownership
(determined in accordance with the rules of the Securities and Exchange
Commission (the "SEC"), which generally attributes beneficial ownership of
securities to persons who possess sole or shared voting power and/or investment
power with respect to those securities) of the Company's Common Stock of: (i)
each person known by the Company to own beneficially more than five percent of
the Company's outstanding Common Stock; (ii) each director and nominee for
director of the Company; (iii) each executive officer named in the Summary
Compensation Table (see "Executive Compensation"); and (iv) all directors and
executive officers of the Company as a group. Except as otherwise specified, the
named beneficial owner has the sole voting and investment power over the shares
listed.
Amount and Nature of
Beneficial Ownership of Percentage of
Name of Beneficial Owner Common Stock Common Stock
- ------------------------ ----------------------- -------------
SAFECO Corporation (1).................. 602,250 11.4%
Heartland Advisors, Inc.(2)............. 502,000 9.5%
Neuberger & Berman, LLC(3).............. 499,900 9.5%
Mellon Bank Corporation (4)............. 389,705 7.4%
Marvin Schwartz(5)...................... 333,700 6.3%
Wellington Management Company,
LLP(6)................................ 296,000 5.6%
Robert T. Ammerman(7)................... 173,217 3.2%
Harold J. Levy(8)....................... 21,132 *
Douglas L. Newhouse(9).................. 85,217 1.6%
Ralph S. Saul(10)....................... 4,375 *
William L. Selden(11)................... 115,812 2.2%
Robert F. Shapiro(8).................... 15,875 *
Kendrick R. Wilson III(8)............... 14,875 *
R. Charles Blackmon(12)................. 52,618 1.0%
William R. Buchholz(13)................. 53,983 1.0%
Barry L. Milling(13).................... 51,348 1.0%
Joel R. Voelkert(14).................... 80,887 1.5%
All directors and executive
officers as a group
(14 persons)(15)...................... 681,783 11.8%
- ----------
* Less than 1%
-3-
<PAGE>
(1) The amount and nature of beneficial ownership of Common Stock is based on
information set forth in a Schedule 13G dated February 10, 1998 filed by
SAFECO Corporation ("SAFECO"), SAFECO Asset Management Company ("SAMCO")
and SAFECO Common Stock Trust (the "Trust"). The Schedule 13G states that
SAFECO disclaims beneficial ownership of the shares reported on the
Schedule 13G, which are owned beneficially by registered investment
companies for which a subsidiary of SAFECO serves as an adviser. The
Schedule 13G states that SAMCO disclaims beneficial ownership of the shares
reported on the Schedule 13G, which are owned beneficially by registered
investment companies for which SAMCO serves as an adviser. The Schedule 13G
states that the Trust beneficially owns 372,400 shares (7.1%). Such
entities share voting and dispositive power with respect to such shares.
The address of SAFECO and SAMCO is SAFECO Plaza, Seattle, WA 98185 and the
address of the Trust is 601 Union Street, Suite 2500, Seattle, WA 98101.
(2) The amount and nature of beneficial ownership of Common Stock is based on
information set forth in a Schedule 13G dated January 23, 1998 filed by the
beneficial owner. The Schedule 13G states that the shares are held in
investment advisory accounts of Heartland Advisors, Inc., and that the
interests of one such account, Heartland Value Fund, a series of Heartland
Group, Inc., a registered investment company, relates to more than 5% of
the class. The Schedule 13G states that the beneficial owner has sole
voting and dispositive power with respect to such shares. The address of
such beneficial owner is 790 North Milwaukee Street, Milwaukee, WI 53202.
(3) The amount and nature of beneficial ownership of Common Stock is based on
information set forth in a Schedule 13G dated February 5, 1998 filed by the
beneficial owner. The Schedule 13G states that such beneficial owner has
sole voting power with respect to 328,600 shares and shared dispositive
power with respect to 499,900 shares. The Schedule 13G states that it does
not include 67,000 shares owned by principals of Neuberger & Berman, LLC,
and notes that Marvin Schwartz, a principal of Neuberger & Berman, LLC, is
deemed to be the beneficial owner of 333,700 shares. (See note 5 below).
The address of such beneficial owner is 605 Third Avenue, New York, NY
10158.
(4) The amount and nature of beneficial ownership of Common Stock is based on
information set forth in a Schedule 13G dated January 15, 1998 filed by the
beneficial owner. The Schedule 13G states that such beneficial owner has
sole voting power with respect to 364,915 shares, shared voting power with
respect to 1,160 shares, sole dispositive power with respect to 388,855
shares and shared dispositive power with respect to 850 shares. The address
of such beneficial owner is One Mellon Bank Center, Pittsburgh, PA 15258.
(5) The amount and nature of beneficial ownership of Common Stock is based on
information set forth in a Schedule 13D filed November 7, 1997 by the
beneficial owner. The Schedule 13D states that Mr. Schwartz has sole voting
and dispositive power with respect to 106,300 shares and shared dispositive
power with respect to 227,400 shares. The Schedule 13D states that 47,000
shares are owned by Mr. Schwartz for his personal account, and 286,700
shares are beneficially owned as follows: 59,300 shares are owned by the
N&B Profit Sharing Trust, over which Mr. Schwartz has sole dispositive and
voting power, and 227,400 shares are held in accounts for the benefit of
Mr. Schwartz's family, for which shares he has shared dispositive power.
The address of such beneficial owner is c/o Neuberger & Berman, LLC, 605
Third Avenue, New York, NY 10158.
(6) The amount and nature of beneficial ownership of Common Stock is based on
information set forth in a Schedule 13G dated January 12, 1998 filed by the
beneficial owner. The Schedule 13G states that such beneficial owner shares
voting power with respect to 136,000 shares and dispositive power with
respect to 296,000 shares. The address of such beneficial owner is 75 State
Street, Boston, MA 02109.
-4-
<PAGE>
(7) Includes 125,825 shares of Common Stock issuable pursuant to options which
are exercisable within 60 days of February 1, 1998. Does not include shares
of Common Stock issuable pursuant to options which are not exercisable
within 60 days of February 1, 1998.
(8) Includes 10,875 shares of Common Stock issuable pursuant to options which
are exercisable within 60 days of February 1, 1998. Does not include shares
of Common Stock issuable pursuant to options which are not exercisable
within 60 days of February 1, 1998.
(9) Includes 7,625 shares issuable pursuant to options which are exercisable
within 60 days of February 1, 1998 and 77,592 shares which are owned by
Sterling ABC/Metbuild Corporation ("Sterling ABC"), a corporation in which
Mr. Newhouse owns one-third of the outstanding shares. Mr. Newhouse
disclaims beneficial ownership of the shares owned by Sterling ABC, other
than the shares in which he has a pecuniary interest. Does not include
shares of Common Stock issuable pursuant to options which are not
exercisable within 60 days of February 1, 1998.
(10) Consists of 3,375 shares of Common Stock issuable pursuant to options which
are exercisable within 60 days of February 1, 1998 and 1,000 shares which
are owned by a charitable remainder trust. Does not include shares of
Common Stock issuable pursuant to options which are not exercisable within
60 days of February 1, 1998.
(11) Includes 15,875 shares issuable pursuant to options which are exercisable
within 60 days of February 1, 1998 and 77,592 shares which are owned by
Sterling ABC, a corporation in which Mr. Selden owns one-third of the
outstanding shares. Mr. Selden disclaims beneficial ownership of the shares
owned by Sterling ABC, other than the shares in which he has a pecuniary
interest. Does not include shares of Common Stock issuable pursuant to
options which are not exercisable within 60 days of February 1, 1998.
(12) Includes 50,618 shares of Common Stock issuable pursuant to options which
are exercisable within 60 days of February 1, 1998. Does not include shares
of Common Stock issuable pursuant to options which are not exercisable
within 60 days of February 1, 1998.
(13) Includes 47,804 shares of Common Stock issuable pursuant to options which
are exercisable within 60 days of February 1, 1998. Does not include shares
of Common Stock issuable pursuant to options which are not exercisable
within 60 days of February 1, 1998.
(14) Consists of shares of Common Stock issuable pursuant to options which are
exercisable within 60 days of February 1, 1998. Does not include shares of
Common Stock issuable pursuant to options which are not exercisable within
60 days of February 1, 1998.
(15) Includes 77,592 shares owned by Sterling ABC, 1,000 shares owned by a
charitable remainder trust and 502,474 shares issuable pursuant to options
which are exercisable within 60 days of February 1, 1998. Does not include
shares of Common Stock issuable pursuant to options which are not
exercisable within 60 days of February 1, 1998.
PROPOSAL NO. 1--ELECTION OF DIRECTORS
Seven directors (constituting the entire Board) are to be elected at the
Annual Meeting. Unless otherwise specified, the enclosed proxy will be voted in
favor of the persons named below to serve until the next annual meeting of
stockholders and until their successors shall have been duly elected and shall
qualify. In the event any of these nominees shall be unable to serve as a
director, the shares represented by the proxy will be voted for the person, if
any, who is designated by the Board of Directors
-5-
<PAGE>
to replace the nominee. All nominees have consented to be named and have
indicated their intent to serve if elected. The Board of Directors has no reason
to believe that any of the nominees will be unable to serve or that any vacancy
on the Board of Directors will occur.
The nominees, their ages, the year in which each first became a director
and their principal occupations or employment during the past five years are:
<TABLE>
<CAPTION>
Year First Principal Occupation
Nominee Age Became Director During the Past Five Years
- ------- --- --------------- --------------------------
<S> <C> <C> <C>
Robert T. Ammerman 58 1992 Chief Executive Officer and a director
since joining the Company in July 1992
and President from July 1992 to August
1996. From 1973 until he joined the
Company, Mr. Ammerman was employed
by United Dominion Industries, Inc. and
its affiliates, including Varco-Pruden
Buildings, a manufacturer of metal
buildings. Mr. Ammerman served in
various capacities, including
Vice-President/General Manager Eastern
Division of Varco-Pruden Buildings and
President of the Buildings segment of
United Dominion Industries, Inc., which
included Varco-Pruden Buildings, Stran
Buildings and AEP/Span. Mr. Ammerman
was Chairman and a member of the
Executive Committee of the Metal
Building Manufacturers Association, an
industry trade association, in 1995.
William L. Selden 50 1993 Director of the Company since January
1993 and Chairman of the Board of
Directors of the Company since February
1993. Mr. Selden is a partner and
co-founder of Sterling Ventures Limited, a
company formed in 1991 for the purpose
of making private equity investments. Mr.
Selden is Chairman of the Board of
Directors of Tidewater Holdings, Inc. and
a director of McArthur/Glen Europe
Holdings, Ltd.
</TABLE>
-6-
<PAGE>
<TABLE>
<CAPTION>
Year First Principal Occupation
Nominee Age Became Director During the Past Five Years
- ------- --- --------------- --------------------------
<S> <C> <C> <C>
Harold Levy 44 1993 Director of the Company since January
1993. Mr. Levy is a Principal of Iridian
Asset Management. Prior to co-founding
Iridian Asset Management in April 1996,
Mr. Levy was Senior Vice President at
Arnhold and S. Bleichroeder Inc. from
September 1991 until March 1996 and
was Vice President from December 1984
to September 1991. Mr. Levy is a director
of Assistive Technology and Triac Corp.
Douglas L. Newhouse 44 1993 Director of the Company since January
1993. Mr. Newhouse is a partner and co-
founder of Sterling Ventures Limited.
Prior to co-founding Sterling Ventures in
1991, Mr. Newhouse was President of
Middex Capital Corp., which specialized in
the acquisition of middle market
companies, for one and one-half years.
Prior to his employment with Middex, Mr.
Newhouse was a Senior Vice President in
the Corporate Finance Department of
Lehman Brothers, Inc. Mr. Newhouse is a
director of Aavid Thermal Technologies,
Inc.
Ralph S. Saul 75 1993 Director of the Company since May 1993.
Mr. Saul is also a director of Horace Mann
Educators Corp., Commonwealth Ventures
and PH-II, Inc. He is on the board of The
Brookings Institution, the Committee for
Economic Development, the Regulatory
Advisory Committee to The New York
Stock Exchange Board of Directors, and
the Advisory Board of the Wharton
Entrepreneurial Center. Mr. Saul was
Chairman and Co-Chief Executive Officer
of CIGNA Corp. from 1982 to 1985 and
was President of the American Stock
Exchange from 1966 to 1971.
</TABLE>
-7-
<PAGE>
<TABLE>
<CAPTION>
Year First Principal Occupation
Nominee Age Became Director During the Past Five Years
- ------- --- --------------- --------------------------
<S> <C> <C> <C>
Robert F. Shapiro 63 1993 Director of the Company since May 1993.
Mr. Shapiro is a partner of
Klingenstein, Fields & Co., L.L.C. and
the President of RFS & Associates, a
private investment and consulting firm.
He is also an independent general
partner of Equitable Capital Partners
and currently is a director of the TJX
Companies, Inc., The Burnham Fund, Inc.
and Magainin Pharmaceuticals. Mr.
Shapiro was formerly a Co-Chairman of
Wertheim Schroder & Co. Incorporated, an
investment banking firm, a Director of
Schroders PLC, Chairman of New Street
Capital Corp., a director of Lehman
Brothers, Inc., a Governor of the
American Stock Exchange and a Chairman
of the Securities Industry Association.
Kendrick R. Wilson III 51 1994 Director of the Company since February
1994. Mr. Wilson is a Managing Director
of Goldman, Sachs & Co. Prior to joining
Goldman, Sachs & Co. in March 1998, Mr.
Wilson was Vice Chairman of Lazard
Freres & Co. LLC. Prior to joining Lazard
Freres & Co. LLC at the end of 1989, Mr.
Wilson was President and Chief Operating
Officer of Ranieri Wilson & Company Inc.,
a merchant banking firm he co-founded.
Prior to 1988, Mr. Wilson was a Senior
Executive Vice President of E.F. Hutton &
Company Inc. and head of Hutton's
Corporate Finance Department, and prior
thereto was a Managing Director at
Salomon Brothers Inc. Mr. Wilson is a
director of Bank United and American
Marine Holdings, Inc.
</TABLE>
All directors hold office until the next meeting of the stockholders of the
Company and until their successors are elected and qualified.
The Board of Directors has a Finance and Audit Committee which is charged
with reviewing the Company's internal accounting procedures, consulting with and
reviewing the selection of the Company's independent auditors and reviewing the
Company's financing needs. The Finance and Audit Committee currently consists of
Messrs. Newhouse and Saul. During 1997, the Finance and Audit Committee met
twice. The Board of Directors also has a Compensation Committee charged with
recommending to the Board the compensation for the Company's executives. The
Compensation Committee is currently composed of Messrs. Newhouse and Shapiro.
-8-
<PAGE>
During 1997, the Compensation Committee met once. The Board of Directors has
also established an Executive Committee charged with exercising powers of the
Board of Directors expressly delegated to it. The Executive Committee is
currently composed of Messrs. Ammerman, Levy and Selden. The Executive Committee
did not act during 1997.
During the fiscal year ended December 31, 1997, the Board of Directors held
four meetings and acted once by unanimous written consent in lieu of a meeting.
Each director attended at least 75% of the meetings of the Board of Directors
held when he was a Director and of all committees of the Board of Directors on
which he served.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who beneficially own more than ten percent of the
Company's Common Stock, to file initial reports of ownership and reports of
changes in ownership with the SEC and the National Association of Securities
Dealers, Inc. Executive officers, directors and greater than ten percent
beneficial owners are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.
Based upon on a review of the copies of such forms furnished to the Company
and written representations from the Company's executive officers and directors,
the Company believes that during fiscal 1997 all Section 16(a) filing
requirements applicable to its executive officers, directors and greater than
ten percent beneficial owners were complied with.
VOTE REQUIRED
The seven nominees receiving the highest number of affirmative votes of the
shares present in person or represented by proxy and entitled to vote for them,
a quorum being present, shall be elected as directors. Only votes cast for a
nominee will be counted, except that the accompanying proxy will be voted for
all nominees in the absence of instruction to the contrary. Abstentions, broker
non-votes and instructions on the accompanying proxy card to withhold authority
to vote for one or more nominees will result in the respective nominees
receiving fewer votes. However, the number of votes otherwise received by the
nominee will not be reduced by such action.
THE BOARD OF DIRECTORS DEEMS "PROPOSAL NO. 1-ELECTION OF DIRECTORS" TO BE
IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE
"FOR" APPROVAL THEREOF.
-9-
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning all cash and non-cash
compensation paid or to be paid by the Company as well as certain other
compensation awarded, earned by and paid, during the fiscal years indicated, to
the President and Chief Executive Officer and each of the four other most highly
compensated executive officers of the Company for such period in all capacities
in which they served.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
--------------------------------------- -----------------------------
Awards
------
Other All
Annual Securities Other
Name and Principal Compen- Underlying Compen-
Position Year Salary Bonus(1) sation Options/SARs sation(2)
------------------ ---- ------ -------- ------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Robert T. Ammerman
Chief Executive Officer............... 1997 $250,000 $305,777 - 45,000 $10,323
1996 250,000 14,805 - - 8,525
1995 215,000 215,000 $45,399(3) 27,193 6,599
Joel R. Voelkert
President-Construction Products
Group................................. 1997 191,400 175,568 - 19,000 12,001
1996 166,400 8,488 - - 8,455
1995 160,000 120,000 - 8,000 7,104
R. Charles Blackmon
Executive Vice President-Chief
Financial Officer..................... 1997 142,000 103,431 - 24,000 9,559
1996 122,500 3,880 - - 3,101
1995 115,500 57,750 - 8,000 708
Barry L. Milling
Vice President-Technical Services..... 1997 141,700 103,557 - 10,000 8,258
1996 137,500 4,387 - - 5,461
1995 128,500 64,250 - 6,000 5,508
William R. Buchholz
Vice President-Operations ............ 1997 134,300 97,944 - 10,000 10,671
1996 125,500 3,852 - - 9,296
1995 115,500 57,750 - 6,000 6,920
</TABLE>
- ----------
(1) For each of 1997, 1996 and 1995, represents bonuses paid during the
following year for services rendered in that year. In 1996, the Company
adopted a shareholder value added plan for key senior and middle management
executives. The plan entitles participants to receive cash bonuses based on
a fixed percentage of Shareholder Value Added (as defined in the plan) and
the change in Shareholder Value Added. Does not include amounts allocated
to the Shareholder Value Added plan's bank, which amounts are subject to
change based on the Company's performance and will be paid in future years
if the individual remains with the Company. At December 31, 1997, the bank
balance for Messrs. Ammerman, Voelkert, Blackmon, Milling and Buchholz was
$111,554, $64,038, $36,463, $37,074 and $34,730, respectively. Prior to
1996, key senior and middle management executives received bonuses under an
incentive bonus plan adopted in 1993. The bonus plan entitled participants
to receive cash bonuses equal to a specified percentage of their salary
based upon the Company's earnings before interest, taxes, depreciation and
amortization and certain specified expenses ("EBITDA") for the year as
compared to EBITDA in the Company's plan for such year.
-10-
<PAGE>
(2) Includes the Company's contributions to the American Buildings Company
Savings Plan (the "Savings Plan") of $3,800, $3,800, $2,917, $3,800 and
$2,763 in 1997, $3,174, $4,880, $2,125, $3,175 and $4,347 in 1996 and
$4,406, $6,013, $3,588, $4,351 and $5,838 in 1995 to Messrs. Ammerman,
Voelkert, Blackmon, Milling and Buchholz, respectively. The Company is
obligated to contribute at least 25% of the amount of compensation elected
to be deferred by such individual; however, the Company has the opportunity
to increase this amount. In addition, the Company is required to contribute
1% of its eligible gross payroll to participants in the Savings Plan
pursuant to a formula based on compensation and years of service (the
"Additional Contribution"). In 1995, 1996 and 1997, the Company contributed
50%, 25% and 40% of the amount of compensation elected to be deferred by
each named individual plus the Additional Contribution to each named
individual. The balance of the amounts in this column consists of insurance
premiums on term life insurance paid by the Company for the benefit of the
named individuals and a car allowance for each of Messrs. Ammerman,
Voelkert, Blackmon, Milling and Buchholz.
(3) Represents the value of stock issued to Mr. Ammerman in such year at a
purchase price below fair market value, based on the difference between the
purchase price of $0.01883 per share and the fair market value of the
Common Stock on the date of purchase. At December 31, 1997, Mr. Ammerman
held an aggregate of 11,947 shares of restricted stock granted to him
pursuant to his employment agreement, of which 2,654 shares were issued to
him in 1995. The value of such restricted shares was $301,662 at December
31, 1997, based on the $25.25 closing price of the Common Stock as
reported by the Nasdaq National Market on December 31, 1997. Mr. Ammerman
is entitled to any dividends paid on the restricted shares of Common Stock
owned by him. The Company currently does not anticipate paying dividends.
The Company's option to repurchase such shares upon termination of Mr.
Ammerman's employment was terminated in connection with the Company's
initial public offering.
STOCK OPTIONS
The following table sets forth information with respect to option grants in
1997 to the persons named in the Summary Compensation Table.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO MARKET
UNDERLYING EMPLOYEES EXERCISE OR PRICE ON
OPTIONS IN FISCAL BASE PRICE DATE OF EXPIRATION
NAME GRANTED(#)(1) YEAR (2) ($/SH) GRANT DATE
- ---- ------------- ---------- -------- ------- ------
<S> <C> <C> <C> <C> <C>
Robert T. Ammerman............. 15,000 7.6% $25.25 $25.25 2/5/07
30,000(4) 15.2 28.25 28.25(5) 10/17/07
Joel R. Voelkert............... 9,000 4.6 25.25 25.25 2/5/07
10,000 5.1 28.25 28.25(5) 10/17/07
R. Charles Blackmon............ 9,000 4.6 25.25 25.25 2/5/07
15,000(4) 7.6 28.25 28.25(5) 10/17/07
Barry L. Milling............... 5,000 2.5 25.25 25.25 2/5/07
5,000 2.5 28.25 28.25(5) 10/17/07
William R. Buchholz............ 5,000 2.5 25.25 25.25 2/5/07
5,000 2.5 28.25 28.25(5) 10/17/07
</TABLE>
POTENTIAL REALIZED
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
OPTION TERM (3)
NAME ----------------
- ----
5% ($) 10% ($)
------- --------
$238,200 $ 603,600
Robert T. Ammerman............. 533,100 1,350,600
142,920 362,160
Joel R. Voelkert............... 177,700 450,200
142,920 362,160
R. Charles Blackmon............ 266,550 675,300
79,400 201,200
Barry L. Milling............... 88,850 225,100
79,400 201,200
William R. Buchholz............ 88,850 225,100
- ----------
-11-
<PAGE>
(1) Options become exercisable in four equal annual installments commencing on
the first anniversary date of the grant; however, options become
immediately exercisable upon a change in control of the Company. See
"--Employment Agreements."
(2) Based upon options to purchase 197,000 shares granted to all employees in
1997.
(3) These amounts represent assumed rates of appreciation in the price of the
Company's Common Stock during the terms of the options in accordance with
rates specified in applicable federal securities regulations. Actual gains,
if any, on stock option exercises will depend on the future price of the
Common Stock and overall stock market conditions. The 5% rate of
appreciation over the 10 year option term of the $25.25 stock price on the
date of grant would result in a stock price of $41.13. The 10% rate of
appreciation over the 10 year option term of the $25.25 stock price on the
date of grant would result in a stock price of $65.49. The 5% rate of
appreciation over the 10 year option term of the $28.25 stock price on the
date of grant would result in a stock price of $46.02. The 10% rate of
appreciation over the 10 year option term of the $28.25 stock price on the
date of grant would result in a stock price of $73.27. There is no
representation that the rates of appreciation reflected in this table will
be achieved.
(4) Of these options 29,624 and 7,938 were granted to Messrs. Ammerman and
Blackmon, respectively, subject to stockholder's approval of an amendment
to the Company's 1994 Stock Option Plan to increase the number of shares
available for grant thereunder. See "Proposal No. 2--Amendment to 1994
Stock Option Plan."
(5) Options granted on October 17, 1997 were granted at an exercise price equal
to the market price of the Common Stock on the third business day following
the Company's announcement of its agreement to acquire the Windsor Door
division of United Dominion Industries, Inc. The market price of the Common
Stock on October 17, 1997, the date of grant, was $29.875.
The following table sets forth the aggregate options exercised during the
year ended December 31, 1997 and the number of securities underlying unexercised
options and the value of unexercised options held by each of the executive
officers named in the Summary Compensation Table at December 31, 1997:
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Year End Options at Year End(1)
---------------------- ----------------------
Shares
Acquired Value
Name on Exercise Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert T. Ammerman......... 0 0 114,773 69,298 $1,728,372 $180,945
Joel R. Voelkert........... 0 0 74,389 31,398 1,178,251 104,613
R. Charles Blackmon........ 0 0 44,120 36,398 590,502 104,613
Barry L. Milling........... 0 0 42,306 20,773 598,972 98,316
William R. Buchholz........ 0 0 42,306 20,773 598,972 98,316
</TABLE>
- ----------
(1) Computed based upon the difference between the stock option exercise price
and the closing price of the Company's Common Stock on December 31, 1997
($25.25).
-12-
<PAGE>
MANAGEMENT RETIREMENT AND DEATH BENEFIT PLAN
The Company has a noncontributory retirement and death benefit plan which
covers certain management employees. The plan provides a death benefit if a
covered employee dies prior to reaching retirement age, as defined by the plan,
to be paid over a minimum ten-year period and a mutually exclusive retirement
benefit, after reaching the defined retirement age, to be paid over a ten-year
period. Termination of employment with the Company for any reason prior to
reaching this defined retirement age results in plan members forfeiting all
benefit rights and claims. Benefits under this plan do not vest until retirement
or, if earlier, death, and the Company has the right to modify or terminate this
plan at any time.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements, effective as of January
1, 1998, with each of Robert Ammerman, Charles Blackmon, William Buchholz, Barry
Milling, William Riley, President of ABC Transportation Company, Roy Smith, the
Company's Vice President--Polymer Division, and Joel Voelkert for terms ending
December 31, 2000. Each of the foregoing agreements (collectively, the
"Employment Agreements") provides for automatic renewal for successive one year
terms unless either party notifies the other to the contrary at least 90 days
prior to its expiration. The agreements require each employee to devote
substantially all of his time and attention to the business of the Company as
necessary to fulfill his duties. The agreements provide for the payment of a
base salary for 1998 to Messrs. Ammerman, Blackmon, Buchholz, Milling, Riley,
Smith and Voelkert at a rate of $400,000, $165,000, 145,000, $152,000, $85,000,
$125,000 and $210,000, respectively. Mr. Ammerman's agreement also provides for
minimum annual salary increases based on increases in the cost of living. The
agreements also provide for the payment of bonuses in such amounts as may be
determined by the Board. Under the agreements, the employee may terminate his
employment upon 30 days' notice. The agreements provide that in the event the
employee's employment is terminated by the Company at any time for any reason
other than justifiable cause, disability or death, the Company shall pay the
employee the employee's base salary and permit participation in benefit programs
for the greater of (i) the remaining term of the agreement or (ii) one year (two
years in the case of Mr. Ammerman); however, if such termination occurs at any
time within one year following a "Change of Control of the Company," the Company
shall pay the employee a lump sum payment equal to two years' annual salary plus
an amount equal to twice the employee's most recently declared bonus, and permit
participation in benefit programs for the period specified above. The Employment
Agreements also provide that in the event the Company chooses not to renew the
agreement, the Company shall pay the employee his base salary for a period of
one year. Each agreement contains confidentiality provisions, whereby each
executive agrees not to disclose any confidential information regarding the
Company, as well as non-competition covenants. The non-competition
covenants survive the termination of an employee's employment for the greater of
(i) the remaining term of the agreement or (ii) two years, except in
-13-
<PAGE>
the event the Company elects not to renew the agreement, terminates the
employee's employment within one year following a "Change in Control of the
Company" or fails to make required severance payments.
For purposes of the Employment Agreements, a "Change in Control of the
Company" shall be deemed to occur if (i) there shall be consummated (x) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the Company's
Common Stock would be converted into cash, securities or other property, other
than a merger of the Company in which the holders of the Company's Common Stock
immediately prior to the merger have the same proportionate ownership of common
stock of the surviving corporation immediately after the merger, or (y) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Company, or (ii) the stockholders of the Company shall approve any plan or
proposal for liquidation or dissolution of the Company, or (iii) any person (as
such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")), shall become the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of 40% or more of the
Company's outstanding Common Stock other than pursuant to a plan or arrangement
entered into by such person and the Company, or (iv) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the entire Board of Directors shall cease for any reason to constitute a
majority thereof unless the election, or the nomination for election by the
Company's stockholders, of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of the period.
The Employment Agreements also provide that if, in connection with a change
of ownership or control of the Company or a change in ownership of a substantial
portion of the assets of the Company (all within the meaning of Section
280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), an
excise tax is payable by the employee under Section 4999 of the Code, then the
Company will pay to the employee additional compensation which will be
sufficient to enable the employee to pay such excise tax as well as the income
tax and excise tax on such additional compensation, such that, after the payment
of income and excise taxes, the employee is in the same economic position in
which he would have been if the provisions of Section 4999 of the Code had not
been applicable.
COMPENSATION OF DIRECTORS
Each non-employee director of the Company (other than Messrs. Newhouse and
Selden) receives a director's fee of $2,500 per quarter, plus $750 per meeting
attended and $250 per telephonic meetings attended. In addition, directors who
are not employees of the Company are compensated through stock options. Messrs.
Newhouse and Selden are partners of Sterling Ventures Limited ("Sterling"),
which receives an annual management fee from the Company. In addition, on
February 5, 1997, Sterling received options to purchase 15,000 shares of Common
Stock at a per share exercise
-14-
<PAGE>
price of $25.25, the closing price of the Common Stock as reported by the Nasdaq
National Market on that date. Sterling subsequently assigned 5,000 of such
options to each of Messrs. Newhouse and Selden, directors of the Company, and
the third stockholder of Sterling. See "Compensation Committee Interlocks and
Insider Participation."
The Company has adopted a Stock Option Plan for Non-Employee Directors (the
"Directors' Option Plan"), pursuant to which options to acquire a maximum of
160,000 shares of Common Stock may be granted to non-employee directors. Options
granted under the Directors' Option Plan do not qualify as incentive stock
options within the meaning of Section 422 of the Code. The Directors' Option
Plan provided that upon adoption of the plan, each of Messrs. Levy, Newhouse,
Saul, Selden, Shapiro and Wilson, its current non-employee directors, was
granted an option to purchase 7,500 shares of Common Stock at a purchase price
per share equal to the initial public offering price of the Common Stock
($10.00). The Directors' Option Plan provides for the automatic grant to each of
the Company's non-employee directors of (1) an option to purchase 7,500 shares
of Common Stock on the date of such director's initial election or appointment
to the Board of Directors (the "Initial Grant"), and (2) an option to purchase
1,500 shares of Common Stock on each annual anniversary of such election or
appointment, provided that such individual is a non-employee director on such
anniversary date (the "Additional Grant"). The options have an exercise price of
100% of the fair market value of the Common Stock on the date of grant and have
a ten-year term. The Initial Grant becomes exercisable in four equal
installments on the six month anniversary of the date such person was first
elected or appointed to the Board of Directors and on the first, second and
third anniversary of the date of such election or appointment. The Additional
Grant becomes exercisable in four equal installments on the six month
anniversary of the date of each Additional Grant and on the first, second and
third anniversary of the date of such Additional Grant. The options may be
exercised by payment in cash, check or shares of Common Stock. On February 25,
1995, 1996, 1997 and 1998, each of Messrs. Levy, Newhouse, Saul, Selden, Shapiro
and Wilson was granted an option to purchase 1,500 shares of Common Stock at a
purchase price of $18.0625, $21.125, $27.00 and $29.625, respectively, equal to
the closing price of the Common Stock on such dates, under the Directors' Option
Plan. See "Proposal No. 3 - Amendment to Stock Option Plan for Non-Employee
Directors" for information concerning proposed amendments to the Directors'
Option Plan to increase the amount of each Additional Grant to 5,000 shares and
to increase the number of shares available for grant thereunder and for
additional information concerning the Directors' Option Plan.
-15-
<PAGE>
COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS
The report of the Compensation Committee (the "Compensation Committee")
shall not be deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing under the
Securities Act of 1933, as amended (the "Securities Act"), or under the Exchange
Act, except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
The Compensation Committee of the Board of Directors was formed in February
1993 and consists of Messrs. Newhouse and Shapiro, each of whom is an
independent non-employee director. The Compensation Committee administers the
Company's executive compensation programs, monitors corporate performance and
its relationship to compensation of executive officers, and makes appropriate
recommendations concerning matters of executive compensation.
COMPENSATION PHILOSOPHY
The Company believes that executive compensation should be closely related
to increased stockholder value. One of the Company's strengths contributing to
its successes is a strong management team, many of whom have been with the
Company for a large number of years. The Committee believes that low executive
turnover has been instrumental to the Company's success, and that the Company's
compensation program has played a major role in limiting executive turnover. The
compensation program is designed to enable the Company to attract, retain and
reward capable employees who can contribute to the continued success of the
Company, principally by linking compensation with the attainment of key business
objectives. Equity participation and a strong alignment to stockholders'
interests are key elements of the Company's compensation philosophy.
Accordingly, the Company's executive compensation program is designed to provide
competitive compensation, support the Company's strategic business goals and
reflect the Company's performance.
The compensation program reflects the following principles:
o Compensation should encourage increased stockholder value.
o Compensation programs should support the short- and long-term
strategic business goals and objectives of the Company.
o Compensation programs should reflect and promote the Company's values
and reward individuals for outstanding contributions toward business
goals.
o Compensation programs should enable the Company to attract and retain
highly qualified professionals.
-16-
<PAGE>
PAY MIX AND MEASUREMENT
The Company's executive compensation is comprised of two components, base
salary and incentives, each of which is intended to serve the overall
compensation philosophy.
BASE SALARY
The Company's salary levels are intended to be consistent with competitive
pay practices and level of responsibility, with salary increases reflecting
competitive trends, the overall financial performance and resources of the
Company, general economic conditions as well as a number of factors relating to
the particular individual, including the performance of the individual
executive, and level of experience, ability and knowledge of the job.
INCENTIVES
Incentives consist of cash awards and stock options. Cash awards are paid
under the Company's incentive bonus plan to key senior and middle management
executives. Beginning with 1996, the Company adopted a Shareholder Value Added
Plan that entitles participants to receive cash bonuses based on an annual
aggregate award plus any deferred award balance from the award bank.
Contributions to the annual aggregate award and the award bank are based on a
fixed percentage of the Shareholder Value Added ("SVA") plus a fixed percentage
of the annual change in SVA. SVA is defined as the amount that Net Operating
Profit After Taxes ("NOPAT") exceeds a capital charge, which is calculated as
Capital Employed (as defined in the plan) multiplied by the associated Cost of
Capital (as defined in the plan). Each participant's share is based on a
specified percentage of their salary in relation to the other participants. For
1997, cash awards equal to 122.3%, 91.7%, 72.8%, 73.1% and 72.9% of their
respective salaries were paid to Messrs. Ammerman, Voelkert, Blackmon, Milling
and Buchholz, respectively, in 1998, and 32.8%, 24.6%, 20.2%, 20.0% and 20.1%,
respectively, of their respective salaries were added to such individual's award
bank. Stock options are granted from time to time to reward key employees'
contributions.
The Committee strongly believes that the pay program should provide
employees with an opportunity to increase their ownership and potentially gain
financially from Company stock price increases. By this approach, the best
interests of stockholders, executives and employees will be closely aligned.
Therefore, executives and other employees are eligible to receive stock options,
giving them the right to purchase shares of Common Stock of the Company at a
specified price in the future. The grant of options is based primarily on a key
employee's potential contribution to the Company's growth and profitability,
based on the Committee's discretionary evaluation. Options are granted at the
prevailing market value of the Company's Common Stock and will only have value
if the Company's stock price increases. Generally, grants of options
-17-
<PAGE>
vest over a period of time and executives must be employed by the Company for
such options to vest.
CHIEF EXECUTIVE OFFICER 1997 COMPENSATION
The base salary for Robert T. Ammerman, the Company's President and Chief
Executive Officer, was $250,000 during the Company's fiscal year ended December
31, 1997. Such base salary of $250,000 was not increased from Mr. Ammerman's
1996 base salary. In 1998 Mr. Ammerman also received a cash bonus of $305,777
for services rendered in 1997 and $81,942 was added to Mr. Ammerman's award
bank, all pursuant to the shareholder value added plan described above. Mr.
Ammerman was granted options to purchase 15,000 shares of Common Stock at an
exercise price of $25.25 per share in February 1997 and options to purchase an
additional 30,000 shares of Common Stock at an exercise price of $28.25 per
share in October 1997, of which options to purchase 29,624 shares were granted
subject to stockholder approval of an amendment to the Company's 1994 Stock
Option Plan increasing the number of shares available for grant thereunder.
These options become exercisable in four equal annual installments on the
anniversary date of the grant. Mr. Ammerman was not granted any options in 1996.
Effective January 1, 1998, the Company entered into a new employment with Mr.
Ammerman providing for a base salary of $400,000 for 1998. The increase in base
salary for 1998 was made in recognition of the Company's 1997 performance and
Mr. Ammerman's role in such performance, the increased size of the Company as a
result of the Company's acquisition of the Windsor Door division of United
Dominion Industries, Inc. and the fact that Mr. Ammerman's salary was not
increased in 1997 from his 1996 salary.
The aggregate compensation paid to Mr. Ammerman was deemed appropriate by
the Compensation Committee considering the overall performance of the Company
and Mr. Ammerman.
TAX EFFECTS
Changes made in 1993 to the Internal Revenue Code of 1986, as amended (the
"Code"), impose certain limitations on the deductibility of executive
compensation paid by public companies. In general, under the limitations, the
Company will not be able to deduct annual compensation paid to certain executive
officers in excess of $1,000,000 except to the extent that such compensation
qualifies as "performance-based compensation" (or meets other exceptions not
here relevant). Non-deductibility would result in additional tax cost to the
Company. It is possible that at least some of the cash and equity-based
compensation paid or payable to the Company's executive officers will not
qualify for the "performance-based compensation" exclusion under the deduction
limitation provisions of the Code. Nevertheless, the Committee anticipates that
in making compensation decisions it will give consideration to the net cost to
the
-18-
<PAGE>
Company (including, for this purpose, the potential limitation on deductibility
of executive compensation).
The Compensation Committee believes that linking executive compensation to
corporate performance results in a better alignment of compensation with
corporate business goals and stockholder value. The Committee believes its
compensation practices are directly tied to stockholder returns and linked to
the achievement of annual and longer-term financial and operational results of
the Company on behalf of the Company's stockholders. In view of the Company's
performance and achievement of goals and competitive conditions, the
Compensation Committee believes that compensation levels during 1997 adequately
reflect the Company's compensation goals and policies.
COMPENSATION COMMITTEE
Douglas L. Newhouse
Robert F. Shapiro
-19-
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
On February 18, 1993, the Company's Board of Directors established a
Compensation Committee, which currently consists of Messrs. Newhouse and
Shapiro, to recommend compensation for the Company's executives.
On February 25, 1995, 1996, 1997 and 1998 each of Messrs. Newhouse and
Shapiro was granted an option to purchase 1,500 shares of the Company's Common
Stock pursuant to the Directors' Option Plan. See "- Compensation of Directors."
The Company is proposing to increase the number of shares granted to each
non-employee director under the Directors' Option Plan. See "Proposal No. 3 -
Amendment to Stock Option Plan for Non-Employee Directors."
In connection with the recapitalization of the Company in January 1993, the
Company entered into a management agreement with Sterling pursuant to which
Sterling agreed to provide financial and management consulting services to the
Company for a fee of $275,000 per annum plus reimbursement of direct
out-of-pocket costs and expenses. In connection with the Company's acquisition
of the Windsor Door Division of United Dominion Industries, Inc. the Company and
Sterling amended the management agreement to increase the fee thereunder to
$375,000 per annum in recognition of Sterling's increased responsibilities
resulting from the increased size of the Company following the acquisition. Each
of Messrs. Newhouse and Selden is an officer, director and holder of one-third
of the shares of Sterling. On February 5, 1997, the Company granted 15,000 stock
options to Sterling with a per share exercise price of $25.25, equal to the
closing price of the Common Stock on such date. Sterling subsequently assigned
5,000 of such options to each of Messrs. Newhouse and Selden, directors of the
Company, and the third stockholder of Sterling. In connection with the
acquisition of the Windsor Door Division, the Company paid Sterling a fee of
$487,500 for its services in connection with the acquisition and the financing
therefor.
THE COMPANY'S PERFORMANCE
The Stock Price Performance Graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act or under the Exchange Act,
except to the extent the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
-20-
<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, INDUSTRY INDEX AND BROAD MARKET
FISCAL YEAR ENDING
----------------------------------------------
COMPANY 1994 1994 1995 1996 1997
- ------- ---- ---- ---- ---- ----
AMERICAN BUILDINGS CO 100.00 166.25 225.00 238.75 252.50
INDUSTRY INDEX 100.00 107.45 136.95 148.92 153.34
BROAD MARKET 100.00 101.44 131.58 163.51 200.01
The above Graph compares the performance of the Company from April 29,
1994, the date that the Company's Common Stock commenced trading on the Nasdaq
National Market, through December 31, 1997, against the performance of the
Nasdaq Market Index and the Company's Peer Group (SIC Code Index) for the same
period. The companies included in the Company's Peer Group are Butler
Manufacturing Company, Mark Solutions Inc., Miller Building Systems Inc., NCI
Building Systems, Inc. and United Dominion Industries, Inc.
-21-
<PAGE>
PROPOSAL NO. 2 - AMENDMENT TO 1994 STOCK OPTION PLAN
On October 17, 1997, the Board of Directors unanimously adopted, subject to
stockholder approval, an amendment to the Company's 1994 Stock Option Plan (the
"Plan") which would increase the aggregate number of shares of Common Stock
which may be issued thereunder from 580,000 shares to 880,000 shares, all of
which would be available for the grant of either "incentive stock options," as
defined in Section 422 of the Code, or options which do not qualify as incentive
stock options (restricted stock options). The primary features of the Plan are
summarized below. The full text of the Plan and the proposed amendment thereto
is set forth in Appendix A to this Proxy Statement and the following discussion
is qualified by reference thereto.
The Board of Directors believes that approval of the amendment will serve
the best interests of the Company and its stockholders by permitting the Company
to continue to utilize stock options as a means to attract and retain key
employees and consultants who are in a position to contribute materially to the
successful conduct of the business and affairs of the Company and, in addition,
to stimulate in such individuals an increased desire to render greater service
to the Company and its subsidiaries. In addition, the availability of shares for
grant under the Plan is important in that it provides the Company an alternative
or additional means of compensating key employees and consultants. As of March
1, 1998, there were no shares available for future grants under the Plan.
The Plan is currently administered by the Board of Directors, which has the
authority to select optionees, designate the number of shares to be covered by
each option and, subject to certain restrictions, specify other terms of the
options; however, the maximum option grant which may be made to an executive
officer of the Company in any calendar year cannot exceed 50,000 shares. Options
may be granted from time to time through February 25, 2004, the termination date
of the Plan, to present and future officers and employees of the Company or a
subsidiary of the Company (a "Subsidiary"), within the meaning of Section 424(f)
of the Code, and to consultants of the Company or a Subsidiary who are not
employees. All employees are eligible to participate in the Plan and as of March
1, 1998, approximately 65 employees were participating in the Plan. The Board
may in its discretion appoint a committee of at least two "non-employee"
directors (as defined in Section 16(b)(3) under the Exchange Act) to administer
the Plan.
The Plan, as currently in effect, permits the granting of options to
purchase up to an aggregate of 580,000 shares of Common Stock of the Company.
Under the Plan, the Company may grant incentive stock options and restricted
stock options (a "non-ISO"). Under the Plan, the exercise price for shares
covered by an incentive stock option may not be less than 100% of the fair
market value (as defined in the Plan) of the Common Stock on the date of grant
(110% in the case of a grant to an employee who owns stock possessing more than
10% of the combined voting power of all classes of stock of the Company or any
subsidiary entitled to vote (a "10% Stockholder")). The exercise price for
shares covered by a non-ISO may not be less than the par value of the
-22-
<PAGE>
Common Stock at the date of grant. All options must expire no later than ten
years (five years in the case of an incentive stock option granted to a 10%
Stockholder) from the date of grant. The Board of Directors has the discretion
to determine the period required for full exercisability of stock options. In no
event, however, can the Board of Directors shorten such period to less than six
months. The Plan also provides that the options will become immediately
exercisable upon a change in control of the Company. For purposes thereof, a
change in control of the Company is deemed to occur if (1) there occurs (A) any
consolidation or merger in which the Company is not the continuing or surviving
entity or pursuant to which shares of the Common Stock would be converted into
cash, securities or other property, other than a merger of the Company in which
the holders of the Common Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation immediately
after the merger, or (B) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all the
Company's assets; (2) the Company's stockholders approve any plan or proposal
for the liquidation or dissolution of the Company; (3) any person (as such term
is used in Sections 13(d) and 14(d)(2) of the Exchange Act) shall become the
beneficial owner (within the meaning of Rule 13d-3 under said Act) of 40% or
more of the Common Stock other than pursuant to a plan or arrangement entered
into by such person and the Company; or (4) during any period of two consecutive
years, individuals who at the beginning of such period constitute the entire
Board of Directors shall cease for any reason to constitute a majority of the
Board unless the election or nomination for election by the Company's
stockholders of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period.
Any option outstanding after February 25, 2004 will remain in effect until
it is exercised, terminates or expires in accordance with its terms. The Plan
provides that the term of an option shall be ten years from the date of grant.
The Plan also provides that, following termination of employment, (i) if an
optionee's employment is terminated for cause, he has thirty days to exercise
his option to the extent it is exercisable on the date of termination of
employment, (ii) if an optionee's employment is terminated without cause or he
voluntarily leaves the employ of the Company, he has three months, or such
longer period as the Committee may at its sole discretion determine, to exercise
his option to the extent exercisable on the date of termination of employment,
and (iii) if an optionee shall cease to be employed by the Company as the result
of his death or disability, he has 12 months to exercise his option to the
extent exercisable on the date he ceased to be employed.
As of March 1, 1998, options to purchase an aggregate of 580,000 shares
have been granted under the Stock Option Plan. Messrs. Ammerman, Voelkert,
Blackmon, Milling and Buchholz have been granted options to purchase an
aggregate of 122,193, 60,594, 65,594, 47,094 and 47,094 shares of Common Stock,
respectively, under the Stock Option Plan, including options to purchase 29,624
shares and 7,938 shares granted to Messrs. Ammerman and Blackmon, respectively,
subject to stockholder approval of an amendment to the Plan increasing the
number of shares available for
-23-
<PAGE>
grant thereunder. No current directors or nominee for election as a director,
other than Mr. Ammerman, received stock options under the Stock Option Plan.
See "Certain Federal Income Tax Considerations" for a brief description of
the tax consequences of the grant of options under the Plan.
VOTE REQUIRED
The affirmative vote of holders of a majority of the shares of Common Stock
issued, outstanding and entitled to vote, present or represented at the meeting,
a quorum being present, is required for the adoption of this proposal. Broker
non-votes with respect to this matter will be treated as neither a vote "for" or
a vote "against" the matter, although they will be counted in determining if a
quorum is present. However, abstentions will be considered in determining the
number of votes required to attain a majority of the shares present or
represented at the meeting and entitled to vote. Accordingly, an abstention from
voting by a stockholder present in person or by proxy at the meeting has the
same legal effect as a vote "against" the matter because it represents a share
present or represented at the meeting and entitled to vote, thereby increasing
the number of affirmative votes required to approve this proposal.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 2 TO BE IN THE BEST INTERESTS OF
THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
PROPOSAL NO. 3 - AMENDMENT TO
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
On October 17, 1997, the Board of Directors unanimously adopted, subject to
stockholder approval, an amendment to the Company's Stock Option Plan for
Non-Employee Directors (the "Directors' Option Plan") which would increase from
1,500 shares to 5,000 shares the number of shares a non-employee director
received on each anniversary date of his or her initial election to the Board.
On January 23, 1998, the Board of Directors unanimously adopted, subject to
stockholder approval, an amendment to the Directors' Option Plan which would
increase the aggregate number of shares of common stock which may be issued
thereunder from 160,000 shares to 260,000 shares. Options granted under the
Directors' Option Plan are intended to be treated as options which do not
qualify as incentive stock options within the meaning of Section 422 of the
Code. In assessing the recommendation of the Board, stockholders should consider
that all current directors other than Mr. Ammerman, who is not eligible to
participate in the Directors' Option Plan, will benefit from the adoption of the
amendments to the Directors' Option Plan and thus may be viewed to have a
conflict of interest. The primary features of the Directors' Option Plan are
summarized below. The full text of the Directors' Option Plan and the proposed
-24-
<PAGE>
amendments thereto is set forth in Appendix B to this Proxy Statement and the
following discussion is qualified by reference thereto.
The Board of Directors believes that the continued growth and success of
the Company will depend, in large part, upon the ability of the Company to
retain on its Board of Directors knowledgeable persons who, through their
efforts and expertise, can make a significant contribution to the success of the
Company's business and to provide incentive for such directors to work for the
best interests of the Company and its stockholders through ownership of its
Common Stock.
Pursuant to the Directors' Option Plan as currently in effect, each person
who is elected a non-employee director will automatically receive an option to
purchase 7,500 shares of the Company's Common Stock on the date of his or her
initial election or appointment to the Board of Directors (the "Initial Grant
Date"). In addition, each non-employee director will automatically receive an
additional option to purchase 1,500 shares of the Company's Common Stock on the
anniversary of the Initial Grant Date (the "Additional Grant Date"). The option
exercise price per share of Common Stock will be the Fair Market Value (as
defined in the Directors' Option Plan) of the Common Stock on the date that the
option is granted. The term of the option will be for a period of ten years from
the date the option is granted. A total of 160,000 shares of Common Stock have
currently been reserved for issuance under the Directors' Option Plan. The
number of shares which may be issued under the Directors' Option Plan is subject
to adjustment to reflect any increase or decrease in the number of shares
resulting from a stock split, stock dividend, consolidation or other similar
capital adjustment.
Except as set forth below, options become exercisable in four equal
installments on the six month and first, second and third anniversaries of the
date of grant. In the event a director ceases to be a director of the Company
for any reason, such person may exercise the option, to the extent exercisable
at the time he or she ceases to be a director of the Company, within six months
after the date he or she ceases to be a director of the Company. The option
agreements for options granted pursuant to the Directors' Option Plan provide
that the options will become immediately exercisable upon a change in control of
the Company. For purposes thereof, a change in control of the Company is deemed
to occur if (1) there occurs (A) any consolidation or merger in which the
Company is not the continuing or surviving entity or pursuant to which shares of
the Common Stock would be converted into cash, securities or other property,
other than a merger of the Company in which the holders of the Common Stock
immediately prior to the merger have the same proportionate ownership of common
stock of the surviving corporation immediately after the merger, or (B) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all the Company's assets; (2) the
Company's stockholders approve any plan or proposal for the liquidation or
dissolution of the Company; (3) any person (as such term is used in Sections
13(d) and 14(d)(2) of the Exchange Act) shall become the beneficial owner
(within the meaning of Rule 13d-3 under said Act) of 40% or more of the Common
Stock other than pursuant to a plan or arrangement entered into by such
-25-
<PAGE>
person and the Company; or (4) during any period of two consecutive years,
individuals who at the beginning of such period constitute the entire Board of
Directors shall cease for any reason to constitute a majority of the Board
unless the election or nomination for election by the Company's stockholders of
each new director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the period.
The Directors' Option Plan is administered by the Board of Directors of the
Company. However, the Directors' Option Plan prescribes the individuals who
would be awarded options, the numbers of shares subject to the options, and the
terms and conditions of each award. The Board of Directors may at any time
terminate the Directors' Option Plan and may from time to time alter or amend
the Directors' Option Plan or any part thereof, provided that the rights of a
director with respect to an option granted prior to such termination, alteration
or amendment may not be impaired. In any event, no stock options may be granted
under the Directors' Option Plan after February 25, 2004.
See "Certain Federal Income Tax Considerations" for a brief description of
the tax consequences of the grant of options under the Directors' Option Plan.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of Common
Stock of the Company present or represented at the Annual Meeting of
Stockholders is required for the adoption of the Directors' Option Plan. Broker
non-votes with respect to this matter will be treated as neither a vote "for"
nor a vote "against" the matter, although they will be counted in determining if
a quorum is present. However, abstentions will be considered in determining the
number of votes required to attain a majority of the shares present or
represented at the meeting and entitled to vote. Accordingly, an abstention from
voting by a stockholder present in person or by proxy at the meeting has the
same legal effect as a vote "against" the matter because it represents a share
present or represented at the meeting and entitled to vote, thereby increasing
the number of affirmative votes required to approve this proposal.
NEW PLAN BENEFITS
The following table sets forth information regarding the benefits which
will be received pursuant to the 1994 Stock Option Plan by: (i) each executive
officer named in the Summary Compensation Table (see "Executive Compensation");
(ii) all current executive officers as a group; (iii) all current directors who
are not executive officers as a group; and (iv) all employees, including all
current officers who are not executive officers, as a group.
-26-
<PAGE>
1994 STOCK OPTION PLAN
----------------------
NUMBER
NAME AND POSITION DOLLAR VALUE OF UNITS
- ----------------- ------------ --------
Robert Ammerman............................ $ (1) 29,624
Chief Executive Officer
Joel Voelkert.............................. $ 0 0
President/Construction
Products Group
R. Charles Blackmon........................ $ (1) 7,938
Executive Vice President-Chief
Financial Officer
Barry Milling.............................. $ 0 0
Vice President-Technical Services
William R. Buchholz........................ $ 0 0
Vice President-Operations
All current executive officers
as a group............................... $ (1) 37,562
All current directors who are not
executive officers as a group............ $ 0 0
All employees, including current
officers who are not executive
officers, as a group..................... $ 0 0
- ----------
(1) See "Executive Compensation - Stock Options" for information regarding the
value of options granted subject to stockholder approval of an amendment to
the Plan at specified rates of appreciation.
If the amendments to the Directors' Option Plan had been in effect in 1997,
each non-employee director would have received an option to purchase 5,000
shares of Common Stock.
FEDERAL INCOME TAX CONSEQUENCES
Following is a summary of the salient Federal income tax consequences
associated with options granted under the Plan and the Directors' Option Plan.
An optionee will not realize taxable income upon the grant of an option. In
general, the holder of a non-ISO will recognize ordinary income when the option
is exercised equal to the excess of the value of the stock over the exercise
price (i.e., the option spread), and the Company receives a corresponding
deduction. (If a non-ISO is exercised within six months after the date of grant
and if the optionee is subject to the six-month restrictions on sale of Common
Stock under Section 16(b) of the Exchange Act, the optionee generally recognizes
ordinary income on the date the restrictions
-27-
<PAGE>
lapse, unless an early income recognition election is made.) Upon a later sale
of the stock, the optionee will realize capital gain or loss equal to the
difference between the selling price and the value of the stock at the time the
option was exercised (or, if later, the time ordinary income was recognized with
respect to the exercise).
The holder of an incentive stock option does not realize taxable income
upon exercise of the option, although the option spread is an item of tax
preference income potentially subject to the alternative minimum tax. If the
stock acquired upon exercise of the incentive stock option is sold or otherwise
disposed of within two years from the incentive stock option grant date or
within one year from the exercise date, then, in general, gain realized on the
sale is treated as ordinary income to the extent of the option spread at the
exercise date, and the Company receives a corresponding deduction. Any remaining
gain is treated as capital gain. If the stock is held for at least two years
from the grant date and one year from the exercise date, then gain or loss
realized upon the sale will be capital gain or loss and the Company will not be
entitled to a deduction. A special basis adjustment applies to reduce the gain
for alternative minimum tax purposes.
In general, if an optionee delivers previously-owned shares in payment of
the exercise price of an option, no gain or loss will be recognized on the
exchange of the previously-owned shares for an equivalent number of newly issued
shares. However, if the previously-owned shares delivered in payment of the
exercise price were acquired pursuant to the exercise of an incentive stock
option and if the requisite incentive stock option holding periods are not
satisfied (see the preceding paragraph), then the optionee will realize ordinary
income on the delivery of the previously-owned shares as in the case of any
other "early" disposition of incentive stock option-acquired shares. If the
option being exercised is a non-ISO, the optionee will realize ordinary income
equal to the amount by which the fair market value of the Common Stock received
exceeds the exercise price (as if the exercise price were paid in cash).
Changes made to the Code in 1993 impose certain limitations on the
deductibility of executive compensation paid by public companies. In general,
under the limitations, the Company will not be able to deduct annual
compensation paid to certain executive officers in excess of $1,000,000 except
to the extent that such compensation qualifies as "performance-based
compensation" (or meets other exceptions not here relevant). Non-deductibility
would result in additional tax cost to the Company. It is contemplated that the
individual grant limitations on options which may be made to any employee in any
calendar year under the Plan will enable options to be granted under the Plan
which would qualify for the "performance-based compensation" exclusion under the
new deduction limitation provisions. Nevertheless, although the net cost to the
Company in making all compensation decisions are considered (including, for this
purpose, the potential limitation on deductibility of executive compensation),
there is no assurance that compensation realized with respect to any particular
award under the Plan would qualify for the deduction limitation exclusion.
-28-
<PAGE>
RELATIONSHIP WITH INDEPENDENT AUDITORS
Arthur Andersen L.L.P. have been the independent auditors for the Company
since December 1990 and will serve in that capacity for the 1998 fiscal year. A
representative of Arthur Andersen L.L.P. will be present (either in person or by
telephone) at the Annual Meeting and will have an opportunity to make a
statement if he desires to do so, and will respond to appropriate questions from
stockholders.
STOCKHOLDER PROPOSALS
All stockholder proposals which are intended to be presented at the 1999
Annual Meeting of Stockholders of the Company must be received by the Company no
later than November 26, 1998 for inclusion in the Board of Directors' proxy
statement and form of proxy relating to that meeting.
OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon at the
Annual Meeting. However, if any other business properly comes before the Annual
Meeting, it is the intention of the persons named in the enclosed proxy to vote
on such matters in accordance with their best judgment.
The prompt return of your proxy will be appreciated and helpful in
obtaining the necessary vote. Therefore, whether or not you expect to attend the
Annual Meeting, please sign the proxy and return it in the enclosed envelope.
By Order of the Board of Directors
Peggy S. Woodham
Secretary
Dated: March 26, 1998
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K WILL BE SENT WITHOUT
CHARGE TO ANY STOCKHOLDER REQUESTING IT IN WRITING FROM: AMERICAN BUILDINGS
COMPANY, ATTENTION: R. CHARLES BLACKMON, 1150 STATE DOCKS ROAD, EUFAULA, ALABAMA
36027.
-29-
<PAGE>
Appendix A
----------
Below is the text of the Company's 1994 Stock Option Plan as proposed to be
amended pursuant to Proposal No. 2. Proposed language to the 1994 Stock Option
Plan is set forth in bold print and the language to be deleted is set forth in
brackets.
AMERICAN BUILDINGS COMPANY
1994 STOCK OPTION PLAN
1. Purpose. The purpose of the American Buildings Company 1994 Stock Option
Plan (the "Plan") is to enable American Buildings Company (the "Company") and
its stockholders to secure the benefits of common stock ownership by employees
of the Company and its subsidiaries. The Board of Directors of the Company (the
"Board") believes that the granting of options under the Plan will foster the
Company's ability to attract, retain and motivate those individuals who will be
largely responsible for the profitability and long-term future growth of the
Company.
2. Stock Subject to the Plan. The Company may issue and sell a total of
880,000 [580,000] shares of its common stock, $.01 par value (the "Common
Stock"), pursuant to the Plan. Such shares may be either authorized and unissued
or held by the Company in its treasury. New options may be granted under the
Plan with respect to shares of Common Stock which are covered by the unexercised
portion of an option which has terminated or expired by its terms, by
cancellation or otherwise.
3. Administration. The Plan will be administered by a committee (the
"Committee") consisting of the Board or, at the option of the Board, at least
two directors appointed by and serving at the pleasure of the Board. If the
Board does not act as the Committee, the members of the Committee shall be
"non-employee directors" within the meaning and for the purposes of Rule 16(b)-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Subject to the provisions of the Plan, the Committee, acting in its sole and
absolute discretion, will have full power and authority to grant options under
the Plan, to interpret the provisions of the Plan, to fix and interpret the
provisions of option agreements made under the Plan, to supervise the
administration of the Plan, and to take such other action as may be necessary or
desirable in order to carry out the provisions of the Plan. A majority of the
members of the Committee will constitute a quorum. The Committee may act by the
vote of a majority of its members present at a meeting at which there is a
quorum or by unanimous written consent. The decision of the Committee as to any
disputed question, including questions of construction, interpretation and
administration, will be final and conclusive on all persons. The Committee will
keep a record of its proceedings and acts and will keep or cause to be kept such
books and records as may be necessary in connection with the proper
administration of the Plan.
4. Eligibility. Options may be granted under the Plan to present or future
officers and employees of the Company or a subsidiary of the Company (a
"Subsidiary")
A-1
<PAGE>
within the meaning of Section 424(f) of the Internal Revenue Code of 1986 (the
"Code"), and to consultants to the Company or a Subsidiary who are not
employees. Options may not be granted to directors of the Company or a
Subsidiary who are not also employees of or consultants to the Company and/or a
Subsidiary. Subject to the provisions of the Plan, the Committee may from time
to time select the persons to whom options will be granted, and will fix the
number of shares covered by each such option and establish the terms and
conditions thereof, including, without limitation, the exercise price,
restrictions on exercisability of the option and/or on the disposition of the
shares of Common Stock issued upon exercise thereof and whether or not the
option is to be treated as an incentive stock option within the meaning of
Section 422 of the Code (an "Incentive Stock Option").
5. Terms and Conditions of Options. Each option granted under the Plan will
be evidenced by a written agreement in a form approved by the Committee. Each
such option will be subject to the terms and conditions set forth in this
paragraph and such additional terms and conditions not inconsistent with the
Plan (and, in the case of an Incentive Stock Option, not inconsistent with the
provisions of the Code applicable thereto) as the Committee deems appropriate.
(a) Option Exercise Price. In the case of an option which is not
treated as an Incentive Stock Option, the exercise price per share may not be
less than the par value of a share of Common Stock on the date the option is
granted; and, in the case of an Incentive Stock Option, the exercise price per
share may not be less than 100% of the fair market value of a share of Common
Stock on the date the option is granted (110% in the case of an optionee who, at
the time the option is granted, owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or a Subsidiary (a
"ten percent shareholder")). For purposes hereof, the fair market value of a
share of Common Stock on any date will be equal to the closing sale price per
share as published by a national securities exchange on which shares of the
Common Stock are traded on such date or, if there is no sale of Common Stock on
such date, the average of the bid and asked prices on such exchange at the
closing of trading on such date or, if shares of the Common Stock are not listed
on a national securities exchange on such date, the closing price or, if none,
the average of the bid and asked prices in the over the counter market at the
close of trading on such date, or if the Common Stock is not traded on a
national securities exchange or the over the counter market, the fair market
value of a share of the Common Stock on such date as determined in good faith by
the Committee.
(b) Option Period. The period during which an option may be exercised
will be fixed by the Committee and will not exceed 10 years from the date the
option is granted (5 years in the case of an Incentive Stock Option granted to a
"ten percent shareholder").
A-2
<PAGE>
(c) Exercise of Options.
(1) General. No option will become exercisable unless the person
to whom the option was granted remains in the continuous employ or service of
the Company or a Subsidiary for at least six months (or for such longer period
as the Committee may designate) from the date the option is granted. The
Committee may determine and set forth in the option agreement any additional
vesting or other restrictions on the exercisability of an option, subject to
earlier termination of the option as provided herein. All or part of the
exercisable portion of an option may be exercised at any time during the option
period. An option may be exercised by transmitting to the Company (a) a written
notice specifying the number of shares to be purchased, and (b) payment of the
exercise price (or, if applicable, delivery of a secured obligation therefor),
together with the amount, if any, deemed necessary by the Committee to enable
the Company to satisfy its income tax withholding obligations with respect to
such exercise (unless other arrangements acceptable to the Company are made with
respect to the satisfaction of such withholding obligations).
(2) Securities Laws Compliance Required. Notwithstanding anything
in the Plan to the contrary, if the shares of Common Stock issuable upon
exercise of options granted under the Plan have not been registered under the
Securities Act of 1993, as amended, the Committee may condition the
exercisability of options upon compliance with applicable federal and state
securities laws.
(d) Payment of Exercise Price. The purchase price of shares of Common
Stock acquired pursuant to the exercise of an option granted under the Plan may
be paid in cash and/or such other form of payment as may be permitted under the
option agreement, including, without limitation, previously-owned shares of
Common Stock. The Committee may permit the payment of all or a portion of the
purchase price in installments (together with interest) over a period of not
more than five years.
(e) Rights as a Stockholder. No shares of Common Stock will be issued
in respect of the exercise of an option granted under the Plan until full
payment therefor has been made (and/or provided for where all or a portion of
the purchase price is being paid in installments). The holder of an option will
have no rights as a stockholder with respect to any shares covered by an option
until the date a stock certificate for such shares is issued to him or her.
Except as otherwise provided herein, no adjustments shall be made for dividends
or distributions of other rights for which the record date is prior to the date
such stock certificate is issued.
(f) Nontransferability of Options. No option shall be assignable or
transferrable except upon the optionee's death to a beneficiary designated by
the optionee in accordance with procedures established by the Committee or, if
no designated beneficiary shall survive the optionee, pursuant to the optionee's
will or by the laws of descent and distribution. During an optionee's lifetime,
options may be exercised only by the optionee or the optionee's guardian or
legal representative.
A-3
<PAGE>
(g) Termination of Employment or Other Service. If an optionee ceases
to be employed by or to perform services for the Company and any Subsidiary for
any reason other than death or disability (defined below), then, unless extended
by the Committee acting in its sole discretion, each outstanding option granted
to him or her under the Plan will terminate on the date three months after the
date of such termination of employment or service, or, if earlier, the date
specified in the option agreement. If an optionee's employment or service is
terminated by reason of the optionee's death or disability (or if the optionee's
employment or service is terminated by reason of his or her disability and the
optionee dies within one year after such termination of employment or service),
then, unless extended by the Committee, acting in its sole discretion each
outstanding option granted to the optionee under the Plan will terminate on the
date one year after the date of such termination of employment or service (or
one year after the later death of a disabled optionee) or, if earlier, the date
specified in the option agreement. For purposes hereof, the term "disability"
means the inability of an optionee to perform the customary duties of his or her
employment or other service for the Company or a Subsidiary by reason of a
physical or mental incapacity which is expected to result in death or be of
indefinite duration.
(h) Incentive Stock Options. In the case of an Incentive Stock Option
granted under the Plan, at the time the option is granted, the aggregate fair
market value (determined at the time of grant) of the shares of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time
by the optionee during any calendar year may not exceed $100,000.
(i) Maximum Option Grant. The maximum option grant which may be made
to an executive officer of the Company in any calendar year shall not cover more
than 50,000 shares.
(j) Other Provisions. The Committee may impose such other conditions
with respect to the exercise of options, including, without limitation, any
conditions relating to the application of federal or state securities laws, as
it may deem necessary or advisable.
6. Change in Control; Capital Changes.
(a) If any event constituting a "Change in Control of the Company"
shall occur, all Options granted under the Plan which are outstanding at the
time a Change of Control of the Company shall occur shall immediately become
exercisable. A "Change in Control of the Company" shall be deemed to occur if
(i) there shall be consummated (x) any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation or pursuant to
which shares of the Company's Common Stock would be converted into cash,
securities or other property, other than a merger of the Company in which the
holders of the Company's Common Stock immediately prior to the merger have the
same proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (y) any sale, lease, exchange or other transfer
(in one transaction or a series of related
A-4
<PAGE>
transactions) of all, or substantially all, of the assets of the Company, or
(ii) the stockholders of the Company shall approve any plan or proposal for
liquidation or dissolution of the Company, or (iii) any person (as such term is
used in Section 13(d) and 14(d)(2) of the Exchange Act), shall become the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of
40% or more of the Company's outstanding Common Stock other than pursuant to a
plan or arrangement entered into by such person and the Company, or (iv) during
any period of two consecutive years, individuals who at the beginning of such
period constitute the entire Board of Directors shall cease for any reason to
constitute a majority thereof unless the election, or the nomination for
election by the Company's stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
(b) In the event of any stock split, stock dividend or similar
transaction which increases or decreases the number of outstanding shares of
Common Stock, appropriate adjustment shall be made by the Board of Directors to
the number and option exercise price per share of Common Stock which may be
purchased under any outstanding Options. In the case of a merger, consolidation
or similar transaction which results in a replacement of the Company's Common
Stock and stock of another corporation but does not constitute Change in Control
of the Company, the Company will make a reasonable effort, but shall not be
required, to replace any outstanding Options granted under the Plan with
comparable options to purchase the stock of such other corporation, or will
provide for immediate maturity of all outstanding Options, with all Options not
being exercised within the time period specified by the Board of Directors being
terminated.
(c) In the event of any adjustment in the number of shares covered by
any option pursuant to the provisions hereof, any fractional shares resulting
from such adjustment will be disregarded and each such option will cover only
the number of full shares resulting from the adjustment.
(d) All adjustments under this paragraph 6 shall be made by the Board,
and its determination as to what adjustments shall be made, and the extent
thereof, shall be final, binding and conclusive.
7. Amendment and Termination of the Plan. The Board may amend or terminate
the Plan. Except as otherwise provided in the Plan with respect to equity
changes, any amendment which would increase the aggregate number of shares of
Common Stock as to which options may be granted under the Plan, materially
increase the benefits under the Plan, or modify the class of persons eligible to
receive options under the Plan shall be subject to the approval of the Company's
stockholders. No amendment or termination may affect adversely any outstanding
option without the written consent of the optionee.
A-5
<PAGE>
No Rights Conferred. Nothing contained herein will be deemed to give any
individual any right to receive an option under the Plan or to be retained in
the employ or service of the Company or any Subsidiary.
8. Governing Law. The Plan and each option agreement shall be governed by
the laws of the State of Delaware.
9. Decisions and Determinations of Committee to be Final. Except to the
extent rights or powers under this Plan are reserved specifically to the
discretion of the Board, all decisions and determinations of the Committee are
final and binding.
10. Number of Shares of Common Stock; Reverse Stock Split Required. It is
expressly understood and agreed that the number of shares of Common Stock set
forth in paragraphs 2 and 5 of the Plan reflects and gives effect to the reverse
stock split of the Company's Common Stock approved by the Company's Board on
February 25, 1994 (the "Reverse Split"). Notwithstanding anything herein to the
contrary, the options granted hereunder may not be exercised unless and until
the amendment to the Company's Restated Certificate of Incorporation reflecting
the Reverse Split has been filed with the Secretary of State of Delaware.
11. Term of the Plan. The Plan shall be effective as of February 25, 1994,
the date on which it was adopted by the Board, subject to the approval of the
stockholders of the Company within one year from the date of adoption by the
Board. The Plan will terminate on the date ten years after the date of adoption
by the Board, unless sooner terminated by the Board. The rights of optionees
under options outstanding at the time of the termination of the Plan shall not
be affected solely by reason of the termination and shall continue in accordance
with the terms of the option (as then in effect or thereafter amended).
A-6
<PAGE>
Appendix B
----------
Below is the text of the American Buildings Company Stock Option Plan for
Non-Employee Directors as proposed to be amended pursuant to Proposal No. 3.
Proposed language to the American Buildings Company Stock Option Plan for
Non-Employee Directors is set forth in bold print and the language to be deleted
is set forth in brackets.
AMERICAN BUILDINGS COMPANY
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
1. Purpose.
The purpose of this Stock Option Plan for Non-Employee Directors (the
"Plan") of American Buildings Company (the "Corporation") is to strengthen the
Corporation's ability to attract and retain the services of knowledgeable and
experienced persons who, through their efforts and expertise, can make a
significant contribution to the success of the Corporation's business by serving
as members of the Corporation's Board of Directors and to provide additional
incentive for such directors to continue to work for the best interests of the
Corporation and its stockholders through ownership of its Common Stock, $.01 par
value (the "Common Stock"). Accordingly, the Corporation will grant to each
non-employee director options to purchase shares of the Corporation's Common
Stock on the terms and conditions hereafter established.
2. Stock Subject to Plan.
The Corporation may issue and sell a total of 260,000 [160,000] shares of
its Common Stock pursuant to the Plan. Such shares may be either authorized and
unissued or held by the Corporation in its treasury. New options may be granted
under the Plan with respect to shares of Common Stock which are covered by the
unexercised portion of an option which has terminated or expired by its terms,
by cancellation or otherwise.
3. Administration of the Plan.
The Plan shall be administered by the Board of Directors of the Corporation
(the "Board"). The interpretation and construction by the Board of any
provisions of the Plan or of any other matters related to the Plan shall be
final. The Board may from time to time adopt such rules and regulations for
carrying out the Plan as it may deem advisable. No member of the Board shall be
liable for any action or determination made in good faith with respect to the
Plan.
B-1
<PAGE>
The Board of Directors may at any time amend, alter, suspend or terminate
the Plan; provided, however, that any such action would not impair any option to
purchase Common Stock theretofore granted under the Plan; and provided further
that without the approval of the Corporation's stockholders, no amendments or
alterations would be made which would (i) increase the number of shares of
Common Stock that may be purchased by each non-employee director under the Plan
(except as permitted by Paragraph 10), (ii) increase the aggregate number of
shares of Common Stock as to which options may be granted under the Plan (except
as permitted by Paragraph 10), (iii) decrease the option exercise price (except
as permitted by Paragraph 10), or (iv) extend the period during which
outstanding options granted under the Plan may be exercised; and provided
further that Paragraph 5 of the Plan shall not be amended more than once every
six months other than to comply with changes in the Internal Revenue Code of
1986, as amended, or the Employee Retirement Income Security Act of 1974, as
amended, or the rules thereunder.
4. Eligibility.
All non-employee directors of the Corporation shall be eligible to receive
options under the Plan. Receipt of stock options under any other stock option
plan maintained by the Corporation or any subsidiary shall not, for that reason,
preclude a director from receiving options under the Plan.
5. Grants.
(i) Except as set forth in Paragraph 5(iii) below, each non-employee
director shall be issued an option to purchase 7,500 shares of the Corporation's
Common Stock (the "Initial Option") on the date of his initial election or
appointment to the Board of Directors (the "Initial Grant Date") at the
following price for the following term and otherwise in accordance with the
terms of the Plan:
(a) The option exercise price per share of Common Stock shall be the
Fair Market Value (as defined below) of the Common Stock covered by such
Initial Option on the Initial Grant Date; provided, however, that with
respect to all non-employee directors who are or become directors prior to
the closing of an underwritten offering of shares of the Corporation's
Common Stock to the public pursuant to a registration statement filed with
and declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended, the option exercise price per share of
Common Stock shall be the initial public offering price (before deducting
underwriting discounts and commissions).
(b) Except as provided herein, the term of an Initial Option shall be
for a period of ten (10) years from the Initial Grant Date.
B-2
<PAGE>
(ii) In addition, each non-employee director shall, on each anniversary of
the Initial Grant Date (the "Additional Grant Date"), if he is still a
non-employee director on such date, be granted an option to purchase 5,000
[1,500] shares of the Corporation's Common Stock (the "Additional Option") at
the following price for the following term and otherwise in accordance with the
terms of the Plan:
(a) The option exercise price per share of Common Stock shall be the
Fair Market Value (as defined below) of the Common Stock covered by such
Additional Option on the Additional Grant Date.
(b) Except as provided herein, the term of an Additional Option shall
be for a period of ten (10) years from the Additional Grant Date.
(iii) In the case of Messrs. Dennis M. Galgano, Holcombe T. Green, Jr.,
Harold Levy, David Lichtenstein, Douglas Newhouse, Ralph Saul, William Selden,
Michael Shannon, Robert Shapiro and Kendrick Wilson III, who were elected
directors of the Corporation on January 19, 1993, February 25, 1994, January 19,
1993, March 27, 1991, January 19, 1993, May 11, 1993, January 19, 1993, March
27, 1991, May 11, 1993 and February 25, 1994, Options for each to purchase 7,500
shares of the Corporation's Common Stock shall be granted under the Plan on
February 25, 1994, the date of the Plan's adoption by the Board of Directors,
and February 25, 1994, shall be the Initial Grant Date for each of these persons
for purposes of Section 5 (ii). Such Options may not be exercised unless and
until the stockholders of the Corporation approve the Plan.
(iv) "Fair Market Value" shall mean, for each Grant Date, (A) if the Common
Stock is listed or admitted to trading on the New York Stock Exchange (the
"NYSE") or the American Stock Exchange (the "ASE"), the average of the high and
low sale price of the Common Stock on such date or, if no sale takes place on
such date, the average of the highest closing bid and lowest closing asked
prices of the Common Stock on such exchange, in each case as officially reported
on the NYSE or the ASE, or (B) if no shares of Common Stock are then listed or
admitted to trading on the NYSE or the ASE, the average of the high and low sale
prices of the Common Stock on such date on the NASDAQ National Market System or,
if no shares of Common Stock are then quoted on the NASDAQ National Market
System, the average of the closing bid and highest asked prices of the Common
Stock on such date on NASDAQ or, if no shares of Common Stock are then quoted on
NASDAQ, the average of the highest bid and lowest asked prices of the Common
Stock on such date as reported in the over-the-counter system. If no closing bid
and highest asked prices thereof are then so quoted or published in the
over-the-counter market, "Fair Market Value" shall mean the fair value per share
of Common Stock (assuming for the purposes of this calculation the economic
equivalence of all shares of classes of capital stock), as determined on a fully
diluted basis in good faith by the Board, as of a date which is 15 days
preceding such Grant Date.
(v) Options granted hereunder shall not be "incentive stock options" within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended.
B-3
<PAGE>
6. Regulatory Compliance and Listing.
The issuance or delivery of any Option may be postponed by the Corporation
for such period as may be required to comply with the Federal securities laws,
any applicable listing requirements of any applicable securities exchange and
any other law or regulation applicable to the issuance or delivery of such
Options, and the Corporation shall not be obligated to issue or deliver any
Options if the issuance or delivery of such options would constitute a violation
of any law or any regulation of any governmental authority or applicable
securities exchange.
7. Restrictions on Exercisability and Sale.
(i) Subject to Paragraph 7(ii) below, each Option granted under the
Plan shall become exercisable as to 25% of the total number of shares issuable
under such Option on the date which is six months after the Grant Date of such
Option and on each of the three successive one-year anniversaries of the Grant
Date of such Option; provided, however, that with respect to Messrs. Dennis M.
Galgano, Holcombe T. Green, Jr., Harold Levy, David Lichtenstein, Douglas
Newhouse, Ralph Saul, William Selden, Michael Shannon, Robert Shapiro and
Kendrick Wilson III, the Grant Date for the Initial Option grant shall be the
date of the initial election or appointment to the Board.
(ii) Notwithstanding anything herein to the contrary, if the shares of
Common Stock issuable upon exercise of Options granted under the Plan have not
been registered under the Securities Act of 1993, as amended, the Board may
condition the exercisability of Options upon compliance with applicable federal
and state securities laws.
8. Cessation as Director.
In the event that the holder of an Option granted pursuant to the Plan
shall cease to be a director of the Corporation for any reason such holder may
exercise any portion of the Option that is exercisable by him at the time he
ceases to be a director of the Corporation, but only to the extent such Option
is exercisable as of such date, within six months after the date he ceases to be
a director of the Corporation.
9. Death.
In the event that a holder of an Option granted pursuant to the Plan shall
die, his estate, personal representative or beneficiary may exercise any portion
of the Option that was exercisable by the deceased Optionee at the time of his
death, but only to the extent such Option is exercisable as of such date, within
twelve months after the date of his death.
B-4
<PAGE>
10. Stock Splits, Mergers, etc.
In the event of any stock split, stock dividend or similar transaction
which increases or decreases the number of outstanding shares of Common Stock,
appropriate adjustment shall be made by the Board of Directors, whose
determination shall be final, to the number and option exercise price per share
of Common Stock which may be purchased under any outstanding Options. In the
case of a merger, consolidation, sale of stock or similar transaction which
results in a change in control of the Corporation, the Corporation will make a
reasonable effort, but shall not be required, to replace any outstanding Options
granted under the Plan with comparable options to purchase the stock of such
other corporation, or will provide for immediate maturity of all outstanding
Options, with all Options not being exercised within the time period specified
by the Board of Directors being terminated.
11. Transferability.
Options are not assignable or transferable, except upon the optionholder's
death to a beneficiary designated by the optionee in accordance with procedures
established the Board or, if no designated beneficiary shall survive the
optionholder, pursuant to the optionholder's will or by the laws of descent and
distribution, to the extent set forth in Paragraph 9, and during the
optionholder's lifetime, may be exercised only by him.
12. Exercise of Options.
An optionholder electing to exercise an Option shall give written notice to
the Corporation of such election and of the number of shares of Common Stock
that he has elected to acquire. An optionholder shall have no rights of a
stockholder with respect to shares of Common Stock covered by his Option until
after the date of issuance of a stock certificate to him upon partial or
complete exercise of his option.
13. Payment.
The Option exercise price shall be payable in cash, check or in shares of
Common Stock upon the exercise of the Option. If the shares of Common Stock are
tendered as payment of the Option exercise price, the value of such shares shall
be the Fair Market Value as of the date of exercise. If such tender would result
in the issuance of fractional shares of Common Stock, the Corporation shall
instead return the difference in cash or by check to the optionholder.
14. Obligation to Exercise Option.
The granting of an Option shall impose no obligation on the director to
exercise such option.
B-5
<PAGE>
15. Continuance as Director.
Nothing in the Plan shall be deemed to create any obligation on the part of
the Board to nominate any director for reelection by the Corporation's
stockholders.
16. Number of Shares of Common Stock; Reverse Stock Split Required.
It is expressly understood and agreed that the number of shares of Common
Stock set forth in the Plan reflects and gives effect to the reverse stock split
of the Corporation's Common Stock approved by the Corporation's Board of
Directors on February 25, 1994 (the "Reverse Split"). Notwithstanding anything
herein to the contrary, the options granted hereunder may not be exercised
unless and until the amendment to the Corporation's Restated Certificate of
Incorporation reflecting the Reverse Split has been filed with the Secretary of
State of Delaware.
17. Term of Plan.
The Plan shall be effective as of the date on which it is adopted by the
Board, subject to the approval of the stockholders of the Corporation within one
year from the date of adoption by the Board. The Plan will terminate on the date
ten years after the date of adoption by the Board, unless sooner terminated by
the Board. The rights of optionees under options outstanding at the time of the
termination of the Plan shall not be affected solely by reason of the
termination and shall continue in accordance with the terms of the option (as
then in effect or thereafter amended).
B-6
<PAGE>
AMERICAN BUILDINGS COMPANY
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints Robert T. Ammerman and William L. Selden,
and each of them, with full power of substitution, as proxies to vote on behalf
of the undersigned all shares which the undersigned may be entitled to vote at
the Annual Meeting of Stockholders of the Company to be held at the offices of
Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New York, New York 10103 at 10:30
A.M. on Tuesday, April 28, 1998, and at any adjournments thereof, with all
powers the undersigned would possess if personally present, upon the matters set
forth in the Notice of Annual Meeting and Proxy Statement, as directed on the
reverse side hereof.
Any proxy heretofore given by the undersigned with respect to such shares
is hereby revoked. Receipt of the Notice of Annual Meeting and Proxy Statement
is hereby acknowledged.
(To be Completed, Signed and Dated on Reverse Side)
<PAGE>
|X| Please mark your
votes as in this
example.
FOR WITHHOLD
1. ELECTION | | |
OF
DIRECTORS
Nominees: Robert T. Ammerman
Harold Levy
Douglas L. Newhouse
Ralph S. Saul
William L. Selden
Robert F. Shapiro
Kendrick R. Wilson III
(Instruction: To withhold authority to vote for any
individual nominee, write that nominee's name below.)
- ------------------------------------------------------
FOR AGAINST ABSTAIN
2. APPROVAL OF THE AMENDMENT | | | | | |
TO THE COMPANY'S 1994
STOCK OPTION PLAN.
FOR AGAINST ABSTAIN
3. APPROVAL OF THE AMENDMENTS | | | | | |
TO THE COMPANY'S
STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS
4. Transaction of such other business as may
properly come before the meeting and any
adjournments thereof.
NOTE: THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS MADE, IT WILL BE VOTED FOR ALL
NOMINEES IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3.
THE PROXIES ARE AUTHORIZED TO VOTE IN THEIR OF
DISCRETION WITH RESPECT TO OTHER MATTERS WHICH MAY
DIRECTORS COME BEFORE THE MEETING.
SIGNATURE___________________________________ DATE__________
SIGNATURE___________________________________ DATE__________
(SIGNATURE IF HELD JOINTLY)
NOTE: Please mark, date and sign exactly as name appears hereon, including
designation as executor, trustee, etc. if applicable. A corporation must
sign in its name by the President or other authorized officer. All
co-owners must sign. PLEASE RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
