<PAGE> 1
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C) OF THE SECURITIES
EXCHANGE ACT OF 1934
Check the appropriate box:
<TABLE>
<CAPTION>
<S> <C>
/ / Preliminary Information Statement / / Confidential, for Use of the Commission
/X/ Definitive Information Statement Only (as permitted by Rule 14c-5(d)(2))
</TABLE>
American Architectural Products Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No:
-------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------
<PAGE> 2
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION
755 Boardman - Canfield Road
South Bridge Executive Center
Building G West
Boardman, Ohio 44512
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 29, 1999
- --------------------------------------------------------------------------------
To Our Shareholders:
The 1999 Annual Meeting of Shareholders of AMERICAN ARCHITECTURAL
PRODUCTS CORPORATION, a Delaware corporation (the "Company"), will be held at
the Holiday Inn Metroplex, 1620 Motor Inn Drive, Girard, Ohio 44420, on April
29, 1999, at 9:00 a.m., E.D.T., for the following purposes:
1. To elect members of the Company's Board of Directors to serve
for the next year or until their successors are elected.
2. To approve an increase in the number of shares of Common Stock
authorized for issuance under the Company's 1996 Employee
Stock Option Plan from 10% to 15% of the total shares of
Common Stock issued and outstanding.
3. To ratify the appointment of Ernst & Young, LLP as the
independent auditors for the Company for the fiscal year
ending December 31, 1999.
4. To transact such other business as may properly come before
the meeting or any adjournment(s) thereof. Management is
presently aware of no other business to come before the
meeting.
The Board of Directors has fixed the close of business on April 5,
1999, as the record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting or any adjournment(s) thereof (the
"Record Date"). Shares of Common Stock can be voted at the Annual Meeting only
if the holder is present at the meeting in person or by valid proxy. Management
is not soliciting proxies in connection with the Annual Meeting, and
shareholders are requested not to send proxies to the Company. Your attention is
directed to the attached Information Statement.
The Company's management cordially invites you to attend the Annual
Meeting.
By Order of the Board of Directors
Frank J. Amedia
President and Chief Executive Officer
Boardman, Ohio
April 8, 1999
<PAGE> 3
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION
755 Boardman - Canfield Road
South Bridge Executive Center
Building G West
Boardman, Ohio 44512
-----------------------------------------------------------------
INFORMATION STATEMENT
-----------------------------------------------------------------
This Information Statement is being furnished to the shareholders of
AMERICAN ARCHITECTURAL PRODUCTS CORPORATION, a Delaware corporation (the
"Company"), in connection with the Annual Meeting of the Shareholders of the
Company to be held on April 29, 1999, at 9:00 a.m., E.D.T., and any adjournment
or postponement thereof (the "Annual Meeting"). A copy of the Notice of the
Annual Meeting accompanies this Information Statement. It is anticipated that
the mailing of this Information Statement will commence on April 9, 1999.
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
VOTING
Only shareholders of record at the close of business on April 5, 1999
(the "Record Date") are entitled to notice of and to vote at the Annual Meeting
or any adjournment or postponement thereof. On the Record Date, 13,942,211
shares of the common stock, $.001 par value per share (the "Common Stock"), were
issued and outstanding. Each holder of Common Stock is entitled to one vote,
exercisable in person or by proxy, for each share of Common Stock held of record
on the Record Date. There is no cumulative voting with respect to the election
of directors.
THE PROPOSALS FOR WHICH SHAREHOLDER APPROVAL IS BEING SOUGHT CANNOT BE
APPROVED WITHOUT THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE VOTES
PRESENT, IN PERSON OR BY PROXY, AT THE ANNUAL MEETING. Abstentions and broker
non-votes will be included in the determination of the number of shares
represented for a quorum. In order to vote their shares in person at the
meeting, shareholders who own their shares in "street name" must obtain a
special proxy card from their broker.
The Board of Directors does not know of any matters, other than (i) the
election of members of the Company's Board of Directors, (ii) the modification
of the Company's 1996 Employee Stock Option Plan (the "1996 Option Plan"), and
(iii) ratification of the appointment of Ernst & Young, LLP as the independent
auditors for the Company for the fiscal year ending December 31, 1999, that are
expected to be presented for consideration at the Annual Meeting.
1
<PAGE> 4
BOARD OF DIRECTORS
IN GENERAL
At the Annual Meeting, the members of the Company's Board of Directors
will be elected to serve until the Company's next annual meeting or until their
successors are elected and qualified. Subject to the requirements of applicable
Delaware law, the Board may from time to time determine the number of directors
of the Company.
AAP Holdings, Inc. ("AAPH") and Mr. Frank J. Amedia, who collectively
have voting power over a majority in interest of the Common Stock, intend to
vote FOR each of the nominees listed below. Accordingly, it is expected that
each of such nominees will be elected to the Company's Board of Directors. If
any nominee becomes unavailable for any reason, or if a vacancy should occur
before the election, AAPH and Mr. Amedia will vote their shares in favor of the
election of such other person or persons as they may determine. The nominees
receiving the highest number of votes cast at the Annual Meeting will be
elected.
INFORMATION CONCERNING DIRECTORS AND NOMINEES
Each of the individuals listed below currently serves as a member of
the Company's Board of Directors and has been nominated to stand for reelection
at the Annual Meeting. Information regarding the names, ages (as of December 31,
1998), tenure as a member of the Board of Directors and recent business
experience of each of the nominees is set forth below. Each director has served
continuously with the Company since his first election to the Board of Directors
as indicated below.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
NAME AGE POSITION DIRECTOR SINCE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
George S. Hofmeister 47 Chairman of the Board 1996
- -------------------------------------------------------------------------------------------------------
Frank J. Amedia 46 President, Chief Executive 1994
Officer and Director
- -------------------------------------------------------------------------------------------------------
John J. Cafaro 47 Director 1996
- -------------------------------------------------------------------------------------------------------
Joseph Dominijanni 42 Director and Treasurer 1996
- -------------------------------------------------------------------------------------------------------
W.R. Jackson, Jr. 65 Director 1996
- -------------------------------------------------------------------------------------------------------
John Masternick 73 Director 1994
- -------------------------------------------------------------------------------------------------------
Joseph C. Lawyer 53 Director 1998
- -------------------------------------------------------------------------------------------------------
Charles E. Trebilcock 72 Director 1994
- -------------------------------------------------------------------------------------------------------
</TABLE>
George S. Hofmeister has served as the Chairman of the Board of
Directors of the Company since December 19, 1996. Mr. Hofmeister has served as
Chief Executive Officer and Chairman of the Board of American Commercial
Holdings, Inc. ("ACH"), the parent company AAPH, since January 1996 and
continues to serve in such roles. Mr. Hofmeister continues to serve as Vice
Chairman of AP Automotive Systems, Inc., a manufacturer of automobile exhaust
systems. Mr. Hofmeister has held that position since
2
<PAGE> 5
February 1996. From June 1991 until December 1995, Mr. Hofmeister served as
Chief Executive Officer and Chairman of the Board of EWI, Inc., a manufacturer
of automotive metal stampings.
Frank J. Amedia joined the Company's Board of Directors in June 1994
following the acquisition of Forte, Inc. ("Forte") by the Company, and has
served as its President and Chief Executive Officer since that date. From June
8, 1994 until December 19, 1996, Mr. Amedia also served as the Chairman of the
Board of Directors of the Company. Prior to joining the Company, Mr. Amedia was
President and Chief Executive Officer of Forte, which he founded in 1989 in
Youngstown, Ohio as a welded aluminum security screen and storm door fabricator.
Forte's products were distributed through a manufacturers' representative
distribution business established by Mr. Amedia in 1986. Prior to founding the
manufacturers' representative business, Mr. Amedia served in various capacities
for the Youngstown Metropolitan Housing Authority.
John J. Cafaro joined the Board of Directors in December 1996. Mr.
Cafaro is the Executive Vice President of The Cafaro Company, a major domestic
shopping mall developer engaged in the ownership, operation and management of
enclosed regional shopping centers. Mr. Cafaro has been a principal officer of
The Cafaro Company for the past 20 years.
Joseph Dominijanni has served as the Company's Treasurer since December
19, 1996. Mr. Dominijanni has also served as the Vice President - Finance of
Eagle & Taylor Company, a wholly owned subsidiary of the Company ("ETC"), since
its inception in June 1996. Mr. Dominijanni also currently serves as Vice
President - Finance of ACH and American Commercial Industries, Inc. ("ACI"),
which is principally engaged in the manufacturing of automotive components. Mr.
Dominijanni joined ACH and ACI in May 1996. Mr. Dominijanni served as Vice
President - Finance of EWI, Inc., a manufacturer of automotive metal stampings,
from June 1991 until April 1996. Prior to 1990, Mr. Dominijanni was with the
accounting firm of Price Waterhouse.
W.R. Jackson, Jr. has served as a director of the Company since
December 19, 1996. Mr. Jackson has also served since 1982 on the Board of
Directors of Pitt-Des Moines, Inc., a steel construction, engineering and metal
products manufacturer. Mr. Jackson was also President and Treasurer of Pitt-Des
Moines, Inc. from 1983 to 1987.
John Masternick has been a director of the Company since June 14, 1994.
Mr. Masternick is a practicing attorney in Girard, Ohio, and since prior to 1994
has been the Chairman of the Board of Directors of Omni Manor, Inc. and Windsor
House, Inc., owners and operators of skilled nursing and extended care
facilities in northeastern Ohio and western Pennsylvania.
Joseph C. Lawyer has been a member of the Board since April 1998. Mr.
Lawyer has served as President, Chief Executive Officer and Director of Chatwins
Group, Inc., a manufacturer of a broad range of fabricated and machined
industrial parts and products, since 1986. Prior to 1986, Mr. Lawyer served as
General Manager of the Specialty Steel Products Division of USX Corporation,
where he was employed for over 17 years. Mr. Lawyer has been a director of
Respironics, Inc., a company engaged in the design, manufacture and sale of home
and hospital respiratory medical products, since November 1994.
Charles E. Trebilcock has been a director of the Company since June 14,
1994. Since 1964, Mr. Trebilcock has served as Chairman of Liberty Industries,
Inc., an Ohio-based manufacturer of industrial lumber packaging products and
equipment. Mr. Trebilcock is also a partner in Kings Company, which is also a
manufacturer of industrial lumber packaging products and equipment.
3
<PAGE> 6
MEETINGS AND COMPENSATION
The Company's Board of Directors is currently comprised of eight
members, with one additional Board position that is currently vacant. Directors
are elected for a period of one year at the Company's annual meeting of
shareholders and serves until their successors are duly elected and qualified.
During the fiscal year ended December 31, 1998, the Board of Directors of the
Company met 9 times. All other actions taken by the Board of Directors during
the fiscal year ended December 31, 1998 were accomplished by means of unanimous
written consent. During the period in which they served as directors, Messrs.
Cafaro and Lawyer attended fewer than 75% of the meetings of the Board of
Directors. All other Directors attended 75% or more of the meetings of the Board
of Directors and of the meetings held by committees of the Board on which they
served.
During the fiscal year ended December 31, 1998, members of the Board of
Directors who were not employees of the Company or of ACH or its affiliates
("non-employee directors") received a fee of $1,000 for each meeting of the
Board of Directors attended in person and were reimbursed for expenses incurred
in connection with their attendance at meetings of the Board. Pursuant to a
resolution of the Board, each non-employee director serving on December 31, 1998
who attended at least four of the regularly scheduled meetings of the Board and
at least 75% of all meetings of the Board during 1998 was granted options to
purchase 2,000 shares of the Company's common stock at an exercise price equal
to the average of the reported closing bid and asked prices on the date of
grant, vesting in full upon issuance. Such options are exercisable for a period
of five years following the vesting date and were issued pursuant to the
Company's 1996 Option Plan. For the fiscal year ending December 31, 1999, each
non-employee director of the Company will receive the same compensation as
described above.
The Company's Audit Committee, which is comprised of William R.
Jackson, Jr., Charles E. Trebilcock and Joseph Dominijanni, is responsible for
reviewing and making recommendations regarding the Company's employment of
independent auditors, the annual audit of the Company's financial statements and
the Company's internal accounting controls, practices and policies. The Audit
Committee was established on August 28, 1997 and met twice during the year.
The Compensation Committee was established on August 28, 1997 and did
not meet during the year. The Company's Compensation Committee is responsible
for making recommendations to the Board of Directors regarding compensation
arrangements for executive officers of the Company, including annual bonus
compensation, and consults with management of the Company regarding compensation
policies and practices. The Compensation Committee also makes recommendations
concerning the adoption of any compensation plans in which management is
eligible to participate, including the granting of stock options and other
benefits under such plans. The Compensation Committee is comprised of George S.
Hofmeister, Frank J. Amedia, and John Masternick.
Since the Compensation Committee did not meet during 1998, the entire
Board of Directors performed the functions of this committee. The Board of
Directors considered the input of the Chief Executive Officer in making
compensation decisions. The Chief Executive Officer made recommendations to the
entire Board of Directors as to compensation levels for all of the Company's
executive officers. The entire Board of Directors, with the exception of Mr.
Amedia who is also an executive officer, then considered and discussed these
recommendations and made compensation determinations for all executive officers.
None of the Company's executive officers, including Mr. Amedia, participated in
the Board's discussion of executive officer compensation.
4
<PAGE> 7
INFORMATION CONCERNING OTHER EXECUTIVE OFFICERS
In addition to Frank Amedia and Joseph Dominijanni, each of the
individuals listed below currently serves as an executive officer of Company.
Information regarding the names, ages (as of December 31, 1998) and recent
business experience of each of the officers is set forth below.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
NAME AGE POSITION
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Richard L. Kovach 36 Vice President and Chief Financial Officer
- -------------------------------------------------------------------------------------------------------
David J. McKelvey 46 Vice President - Development
- -------------------------------------------------------------------------------------------------------
Jeffrey V. Miller 52 Vice President - Operations
- -------------------------------------------------------------------------------------------------------
Donald E. Lambrix, Jr. 57 Vice President - Manufacturing
- -------------------------------------------------------------------------------------------------------
J. Larry Powell 56 Vice President - Marketing & Sales
- -------------------------------------------------------------------------------------------------------
Jonathan K. Schoenike 38 General Counsel and Secretary
- -------------------------------------------------------------------------------------------------------
</TABLE>
Richard L. Kovach joined the Company in January 1997 as its Vice
President and Chief Financial Officer. From 1991 until joining the Company, Mr.
Kovach assisted clients with finance and operations management issues in the
Financial Advisory Services and Management Consulting practice of Ernst & Young,
most recently as a senior manager. From 1988 until 1991, Mr. Kovach was Manager
of Financial Planning at Ferro Corporation. Prior to joining Ferro Corporation,
Mr. Kovach was a staff auditor with Arthur Andersen & Co.'s Small Business
Group.
David J. McKelvey joined the Company as Vice President in August 1995
and also served as Secretary from December 1996 through November 1997. From 1992
through 1995, Mr. McKelvey was an executive at The Cafaro Company, a major
domestic shopping mall developer engaged in the ownership, operation and
management of enclosed regional shopping centers, most recently as Executive
Vice President of Administration and Development. From 1992 through 1995, Mr.
McKelvey also served as Executive Regional Director of Real Estate for The
Cafaro Company.
Jeffrey V. Miller joined the Company in May 1997 as Vice President -
Operations. From 1995 to 1997, Mr. Miller served as President of the North
American Window Division of Gentek Building Products. From 1992 through 1994,
Mr. Miller was Director of Vinyl Operations for SNE Corporation, a division of
Ply Gem Industries. Mr. Miller was general manager of the New Construction
Window Division and Vice President of Technology and Corporate Development for
Chelsea Building Products from 1989 to 1992.
Donald E. Lambrix, Jr. was appointed the Company's Vice President -
Manufacturing in December 1996 after serving as Vice President of Operations for
the Company's Forte subsidiary since 1990. Mr. Lambrix previously served as Vice
President of a multiple facility fenestration products manufacturer.
J. Larry Powell, the Company's Vice President - Marketing and Sales,
joined the Company in October 1996. Mr. Powell co-founded Blackhawk
Architectural Products, a manufacturer of steel security screen and storm door
products, in 1992 and served on its Board of Directors and as its Vice President
until 1996. From 1987 to 1991, Mr. Powell served as Vice President - Marketing
and Sales for Sugarcreek
5
<PAGE> 8
Window & Door. Mr. Powell has been employed in the fenestration industry since
the early 1970s, principally in the marketing of residential and commercial
steel and aluminum window products and doors. In addition, Mr. Powell founded
and developed a nationwide marketing representative group that sells a full
range of fenestration products.
Jonathan K. Schoenike joined the Company in August 1997 as General
Counsel and has served as Secretary since November 1997. Prior to joining the
Company, Mr. Schoenike served for over 5 years as Assistant Counsel for The
Cafaro Company, a major domestic shopping mall developer engaged in the
ownership, operation and management of enclosed regional shopping centers.
EXECUTIVE COMPENSATION
The following table summarizes all annual and long-term compensation
paid to the Company's Chief Executive Officer and the other most highly
compensated executive officers of the Company whose total annual salary and
bonus exceeded $100,000 during the fiscal year ending December 31, 1998
(collectively, the "Named Executive Officers") for services rendered in all
capacities to the Company and its subsidiaries during the fiscal years ended
December 31, 1998, 1997 and 1996.
<TABLE>
<CAPTION>
Long Term
Compensation
--------------------
Annual Compensation (1) Awards (2)
-------------------------------------- --------------------
Securities Other
Name and Underlying Compensation
Principal Position Year Salary Bonus Options/SARs (#) ($) (3)
- ---------------------------------- ------- ----------- ----------- -------------------- -----------------
<S> <C> <C> <C> <C> <C>
Frank J. Amedia 1998 350,000 329,990 50,000 6,258
President and 1997 266,807 250,000 100,000 --
Chief Executive Officer 1996 168,718 -- -- --
Jeffrey V. Miller 1998 143,750 15,000 55,000 5,000
Vice President- 1997 90,000 25,000 -- --
Operations
J. Larry Powell 1998 141,125 15,000 30,000 5,000
Vice President- 1997 114,167 25,000 25,000 --
Marketing & Sales
Richard L. Kovach 1998 138,750 15,000 30,000 3,369
Vice president and 1997 119,390 75,000 25,000 --
Chief Financial Officer
Jonathan K. Schoenike 1998 131,250 20,000 30,000 5,000
General Counsel 1997 35,245 10,000 25,000 --
</TABLE>
(1) Other annual compensation to the Named Executive Officers did not
exceed $50,000 or 10% of total annual salary and bonus during any
fiscal year.
(2) Represents awards of options to purchase shares of common stock under
the 1996 Option Plan.
(3) Amounts include Company matching contributions under the 401(k) plan
for all officers (in an amount equal to 50% of the officers
contribution) and $1,258 for insurance premiums paid by the Company for
Mr. Amedia.
BOARD OF DIRECTORS' REPORT ON REPRICING OF OPTIONS
The Board of Directors believes that the value of the Company is
necessarily dependent on upon its ability to attract and retain qualified and
competent employees. The 1996 Option Plan was expressly
6
<PAGE> 9
established to provide an incentive to attract and retain quality officers and
employees. In February 1998, the Board of Directors concluded that the value of
some of the stock options previously granted to key employees under the 1996
Option Plan had eroded to such an extent that the intended incentive to these
employees had failed. As a result, the Board of Directors concluded that it
would be in the best interest of the Company, and the best interest of the
shareholders of the Company, to regrant such options with an exercise price that
reflected the market price of the common stock at that time. The Board of
Directors believes that by repricing the options previously granted under the
1996 Option Plan, we have restored the incentive for these key employees. In
each case, we granted options in replacement of previously granted options at an
exercise price equal to the market price of the underlying common stock on the
grant date. The number of shares subject to exercise, the vesting periods and
the other terms remain unchanged by the replacement options.
Submitted by the American Architectural Products
Corporation Board of Directors
March 26, 1999
George S. Hofmeister Frank J. Amedia
John J. Cafaro Joseph Dominijanni
W.R. Jackson, Jr. John Masternick
Joseph C. Lawyer Charles E. Trebilcock
The following table sets forth information concerning repricing of
stock options during the period beginning when the Company first became a
reporting company under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and continuing through December 31, 1998.
10-YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
Length of
Number of Original
Securities Market Price Exercise Option Term
Underlying of Stock at Price at Remaining at
Options Time of Time of Date of
Repriced or Repricing or Repricing or New Exercise Repricing or
Name Date Amended Amendment Amendment Price Amendment
---- ---- ------- --------- --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Frank J. Amedia 2/25/98 100,000 $3.56 $6.19 $3.92(1) 108 months
Richard L. Kovach 2/25/98 25,000 $3.56 $5.63 $3.56 108 months
Donald E. Lambrix, Jr. 2/25/98 25,000 $3.56 $5.63 $3.56 108 months
David J. McKelvey 2/25/98 25,000 $3.56 $5.63 $3.56 108 months
J. Larry Powell 2/25/98 25,000 $3.56 $5.63 $3.56 108 months
</TABLE>
(1) Options granted at 110% of market price.
No stock options, stock appreciation rights or restricted stock awards
were granted as compensation to any officers, directors or employees of the
Company or its subsidiaries during the period from June 19, 1996 (date of
inception) through December 31, 1996. The Company entered into definitive stock
option agreements with Mr. Amedia and Mr. John Masternick dated December 18,
1996,
7
<PAGE> 10
memorializing the terms of stock options granted to them in 1994 as shareholders
of Forte in connection with the acquisition by the Company of Forte. The Company
issued options to purchase up to 424,000 and 857,500 shares of common stock to
various officers, directors and employees of the Company or its subsidiaries
during the fiscal years ended December 31, 1997 and 1998, respectively. The
following table sets forth certain information concerning individual grants of
stock options to each of the Named Executive Officers during the year ended
December 31, 1998.
<TABLE>
<CAPTION>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
Potential
Individual Grants Realizable
Percent ------------------ Value at Assumed
Number of of Total Annual Rates of
Securities Options/SARs Stock Price
Underlying Granted to Exercise or Appreciation
Options/SARs Employees in Base Price Expiration for Option Term
Name Granted(#) Fiscal Year ($/Sh)(1) Date 5%($) 10%($)
---- ---------- ----------- --------- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Frank J. Amedia 50,000 6% 3.92 2/28/08 54,000 120,000
Jeffrey V. Miller 40,000 5% 3.56 2/28/08 90,000 227,000
15,000 2% 3.88 7/23/08 37,000 93,000
J. Larry Powell 15,000 2% 3.56 2/28/08 34,000 85,000
15,000 2% 3.88 7/23/08 37,000 93,000
Richard L. Kovach 15,000 2% 3.56 2/28/08 34,000 85,000
15,000 2% 3.88 7/23/08 37,000 93,000
Jonathan K. Schoenike 15,000 2% 3.56 2/28/08 34,000 85,000
15,000 2% 3.88 7/23/08 37,000 93,000
</TABLE>
(1) Represents market price at date of grant except for Mr. Amedia, whose
options are granted at 110% of the market price at date of grant.
The following table sets forth certain information concerning each
exercise of stock options during the year ended December 31, 1998 by each of the
Named Executive Officers and the aggregated fiscal year-end value of the
unexercised options of each Named Executive Officer.
AGGREGATED OPTION EXERCISES IN FISCAL 1998 AND
OPTION VALUE AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs at
Shares at Fiscal Year End(#) Fiscal Year End($)(1)
Acquired on Value --------------------------- --------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Frank J. Amedia 0 0 446,244 130,000 0 0
Jeffrey V. Miller 0 0 0 55,000 0 0
J. Larry Powell 0 0 5,000 50,000 0 0
Richard L. Kovach 0 0 5,000 50,000 0 0
Jonathan K. Schoenike 0 0 5,000 50,000 0 0
</TABLE>
(1) Based on the average of reported bid and asked prices for the Common
Stock on December 31, 1998.
EMPLOYEE STOCK OPTION PLANS
1992 Incentive Stock Option Plan. In May 1992, the Board of Directors
of the Company adopted an Employee Incentive Stock Option Plan (the "Option
Plan"). Options to purchase an aggregate of up to 500,000 shares of the
Company's common stock are authorized under the Option Plan. Options granted
8
<PAGE> 11
under the Option Plan have a maximum duration of ten years from the date of
grant. Currently, there are no options outstanding under the Option Plan.
1996 Option Plan. The Company's 1996 Option Plan, which was approved by
the shareholders of the Company, authorizes the Board to grant options to
Directors and employees of the Company to purchase in the aggregate an amount of
shares of common stock equal to 10% of the shares of common stock issued and
outstanding from time to time, but which aggregate amount shall in no event
exceed 10,000,000 shares of common stock. As described elsewhere herein, the
Board of Directors has approved an increase in the maximum number of shares of
common stock issuable under the 1996 Option Plan to an amount equal to 15% of
the shares of common stock issued and outstanding from time to time (subject to
a maximum of 10,000,000 shares as described above). Directors, officers and
other employees of the Company who, in the opinion of the Board of Directors,
are responsible for the continued growth and development and the financial
success of the Company are eligible to be granted options under the 1996 Option
Plan. Options may be nonqualified options, incentive stock options, or any
combination of the foregoing. In general, options granted under the 1996 Option
Plan are not transferable and expire ten (10) years after the date of grant. The
per share exercise price of an incentive stock option granted under the 1996
Option Plan may not be less than the fair market value of the common stock on
the date of grant. Incentive stock options granted to persons who have voting
control over 10% or more of the Company's common stock are granted at 110% of
the fair market value of the underlying shares on the date of grant and expire
five years after the date of grant. No option may be granted after December 19,
2006.
The 1996 Option Plan provides the Board of Directors with the
discretion to determine when options granted thereunder will become exercisable.
Generally, such options may be exercised after a period of time specified by the
Board of Directors at any time prior to expiration, so long as the optionee
remains employed by the Company. No option granted under the 1996 Option Plan is
transferable by the optionee other than by will or the laws of descent and
distribution, and each option is exercisable during the lifetime of the optionee
only by the optionee.
As of December 31, 1998, options to purchase a total of 2,584,425
shares of the Company's common stock were outstanding, consisting of options
outstanding under the 1996 Option Plan as well as options to purchase 707,655
shares issued to AAPH on December 18, 1996 with an exercise price of $3.75 per
share, options to purchase 471,770 shares issued to Mr. Amedia and Mr.
Masternick (issued in connection with the acquisition of Forte) with an exercise
price of $3.75 per share, and other options issued outside of the stock option
plans described above.
EMPLOYEE STOCK PURCHASE PLAN
On February 26, 1998, the Board of Directors adopted the 1998 Employee
Stock Purchase Plan (the "1998 Purchase Plan") and reserved 1,200,000 shares of
common stock for issuance thereunder. At the Company's annual meeting, the 1998
Purchase Plan was approved by the stockholders. In general, the 1998 Purchase
Plan is designed to encourage common stock ownership by the Company's employees
through payroll deductions. If qualified in accordance with Section 423 of the
Code, the 1998 Purchase Plan will enable the Company to sell shares of common
stock to its employees at a price discount of up to 15% of market price based on
the lower of the price of the common stock at the beginning or end of the option
period.
9
<PAGE> 12
401(k) PLAN
Eligible employees of the Company may direct that a portion of their
compensation, up to a legally established maximum, be withheld by the Company
and contributed to a 401(k) plan. All 401(k) plan contributions are placed in a
trust fund to be invested by the 401(k) plan's trustee, except that the 401(k)
plan permits participants to direct the investment of their account balances
among mutual or investment funds available under the Plan. The 401(k) plan
provides a matching contribution of 50% of a participant's contributions up to a
maximum of seven percent of the participant's annual salary. Amounts contributed
to participant accounts under the 401(k) plan and any earnings or interest
accrued on the participant accounts are generally not subject to federal income
tax until distributed to the participant and generally may not be withdrawn
until death, retirement or termination of employment.
EMPLOYMENT AGREEMENT
On November 17, 1997, the Company entered into an employment agreement
with Frank J. Amedia for services as Chief Executive Officer and President. This
agreement requires Mr. Amedia to devote his full time to the Company during
normal business hours in exchange for a base annual salary of $350,000, subject
to annual increases at the discretion of the Board of Directors. In addition,
Mr. Amedia is entitled to receive bonuses at the discretion of the Board of
Directors in accordance with the Company's bonus plans in effect from time to
time, and the Company will pay certain life and disability insurance premiums on
behalf of Mr. Amedia. The agreement has an initial three-year term and provides
that Mr. Amedia may not compete with the Company anywhere in the United States
while he is employed by the Company and for a two-year period following the
termination of Mr. Amedia's employment. In addition, the Board of Directors has
approved the payment to Mr. Amedia of a bonus equal to 0.39% of the total
consideration paid by the Company for each acquisition transaction consummated
during 1998. The amount of this bonus paid in 1998 was $230,000. In December
1998, the Board of Directors increased this acquisition bonus percentage to
0.56% of total consideration paid for acquisitions completed in 1999.
In addition, in 1998 the Company entered into employment agreements
with Jonathan K. Schoenike, J. Larry Powell, Richard L. Kovach and Jeffrey V.
Miller for services as General Counsel, Vice President - Sales and Marketing,
Vice President - Chief Financial Officer and Vice President -Operations,
respectively. The agreements require Messrs. Schoenike, Powell, Kovach and
Miller to devote their full time to the Company in exchange for annual base
salaries of $160,000, $159,500, $160,000 and $160,000, respectively, subject to
annual increases. In addition, Messrs. Schoenike, Powell, Kovach and Miller are
entitled to receive bonuses at the discretion of the Board of Directors in
accordance with the Company's bonus plans in effect from time to time, and the
Company will pay certain life insurance premiums and other benefits. The
agreements have an initial three-year term. The Company has also entered into
employment agreements with certain other officers and key employees.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS OR FUTURE FILINGS UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
EXCHANGE ACT OF 1934 THAT MIGHT INCORPORATE BY REFERENCE THIS INFORMATION
STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING REPORT AND THE PERFORMANCE GRAPH
WHICH FOLLOWS SHALL NOT BE DEEMED TO BE INCORPORATED BY REFERENCE INTO ANY SUCH
FILINGS.
10
<PAGE> 13
COMPENSATION PHILOSOPHY
Decisions on compensation of the Company's executive officers are made
by the Board of Directors. The Board of Directors is responsible for setting and
administering the policies which govern both annual compensation and stock
ownership programs. In general, the Board of Directors compensation policies and
practices of the Board of Directors are based upon the following subjective
principles:
- Compensation programs should reflect and promote the Company's
goals and reward individuals for contributions to the
Company's success in achieving its goals.
- Compensation should be related to the value created for the
Company's stockholders.
- Compensation programs should integrate both the long- and
short-term strategies of the Company.
- Compensation programs should provide incentive for excellence
in individual performance and promote teamwork among the
Company's management.
- Compensation programs should be designed to attract and retain
executives critical to the success of the Company.
- Stock ownership by management and stock-based compensation
plans are beneficial in aligning management's and the
stockholders' interest in the enhancement of stockholder
value.
Total compensation for each member of senior management is set at
levels which the Board of Directors believes are competitive in relation to
companies of similar type and size; however, no independent investigation of
such levels has been conducted by the Board of Directors. The components of
executive compensation include base salary, equity participation in the Company
in the form of options to purchase common stock, and a discretionary bonus
program. Compensation for executive officers of the Company is usually set by
the Board of Directors prior to the beginning of each fiscal year. Due to the
level of compensation received by the executive officers of the Company, the
Board of Directors has not yet deemed it necessary to adopt a policy regarding
the one million dollar cap on deductibility of certain executive compensation
under Section 162(m) of the Internal Revenue Code.
BASE SALARY
The Board of Directors establishes base salaries for the company's
executive officers at levels considered appropriate in light of the duties and
scope of responsibilities of each officer's position. In this regard, the Board
considers the compensation practices and corporate financial performance of
similarly situated companies. In evaluating base salary levels, the Board of
Directors takes into account a number of factors, including (but not limited to)
management's efforts to improve levels of sales and profitability and to expand
the markets into which the Company's products are distributed and sold. The
Board also takes into account management's consistent commitment to the
long-term success of the Company through the development of new and improved
products and through developing and implementing strategic business acquisition
opportunities.
11
<PAGE> 14
Based upon its evaluation of these factors, the Board of Directors
believes that senior management is dedicated to achieving long-term financial
improvements, and that the compensation policies, plans and programs
administered by the Board contribute to management's commitment. The Board of
Directors attempts to assimilate all of the foregoing factors when it renders
its compensation decisions; however, the Board recognizes that its decisions are
primarily subjective in nature due to the subjective nature of the criteria. The
Board of Directors does not assign any specified weight to the criteria it
considers.
Base salary recommendations are fixed at levels which the Board
believes is paid to management with comparable qualifications, experience and
responsibilities at other corporations of similar size engaged in businesses
similar to that of Company; however, the Board of Directors has conducted no
formal investigation of compensation level at other companies.
STOCK OPTIONS
The Board of Directors administers the Company's 1996 Option Plan and
determines those employees of the Company who are eligible to participate in the
1996 Option Plan. The exercise price of options granted under the 1996 Option
Plan is never less than the fair market value of the Company's common stock on
the day of grant. The number of options granted by the Board of Directors under
the 1996 Option Plan are based upon the Board's evaluation of the same factors
described above under "Base Salary." The Board of Directors also takes into
account the relative scope of accountability and the anticipated performance
requirements and contributions of each participating employee, as well as each
participating employee's current equity participation in the Company. In
addition, the Board seeks the recommendation of senior management with respect
to options granted to all participating employees, including the Chief Executive
Officer and other senior management. During the fiscal year ending December 31,
1998, options to purchase up to 857,500 shares of common stock pursuant to the
1996 Option Plan were granted to various officers, directors and employees of
the Company and its subsidiaries.
BONUS COMPENSATION
Bonus compensation is paid at the discretion of the Board of Directors.
Determinations of the Board of Directors with regard to the award of bonus
compensation are generally based upon the Board's evaluation of the same factors
described above under "Base Salary" and other subjective criteria. The Board of
Directors approved a bonus of $329,990 to the Company's Chief Executive Officer
(a portion of which was based on the successful consummation of acquisition
transactions, and a portion of which was at the discretion of the Board of
Directors) and bonuses to certain other officers, employees and consultants of
the Company during the fiscal year ended December 31, 1998.
12
<PAGE> 15
CHIEF EXECUTIVE OFFICER
Mr. Amedia has served as President and Chief Executive Officer of the
Company since 1994. As Chief Executive Officer, Mr. Amedia receives a base
salary and is eligible to receive stock options under the 1996 Option Plan and
is eligible to receive bonus compensation. A portion of Mr. Amedia's bonus is
based on the successful consummation of acquisition transactions, and a portion
is at the discretion of the Board of Directors. The Board's evaluation process
with respect to the Chief Executive Officer's compensation is comprised of the
same components that are utilized by the Board in evaluating the compensation of
other members of senior management.
Submitted by the American Architectural Products
Corporation Board of Directors
George S. Hofmeister Frank J. Amedia
John J. Cafaro Joseph Dominijanni
W.R. Jackson, Jr. John Masternick
Joseph C.Lawyer Charles E. Trebilcock
STOCK PRICE PERFORMANCE
Set forth below is a line graph comparing the cumulative total return
of the Company's Common Stock with the cumulative total return of the Nasdaq
Stock Market Index (U.S.) and a peer group of Nasdaq-listed companies engaged in
the manufacture of millwork, veneer, plywood and structural wood products (SIC
codes 2430 - 2439) for the period from March 31, 1995 through December 31, 1998
(including the reinvestment of dividends, if any). Price data for the Company's
Common Stock is based on the bid price for the relevant measurement dates as
reported by National Quotation Bureau, LLC (which quotations represent prices
between dealers and do not include retail markup, markdown or commissions and do
not reflect actual transactions). The performance graph below shall not be
deemed incorporated by reference by any general statement incorporating this
Information Statement by reference into any filing under, and shall not
otherwise be deemed filed under, either the Securities Act of 1933 or the
Exchange Act, except to the extent that the Company specifically incorporates
this information by reference.
13
<PAGE> 16
[Line graph depicting the amounts listed in table below]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
3/31/95 12/29/95 12/31/96 12/31/97 12/31/98
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
American Architectural Products Corporation 100 28.6 114.3 65.7 48.6
- -------------------------------------------------------------------------------------------------------------------------
Nasdaq Stock Market Index 100 129.7 159.5 195.7 275.7
- -------------------------------------------------------------------------------------------------------------------------
Peer Group: SIC Codes 2430 - 2439 100 104.5 150.7 171.5 213.8
(Millwork, Veneer, Plywood and Structural
Wood Members)
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the
beneficial ownership of the Company's Common Stock as of December 31, 1998, by
(i) each beneficial owner of more than 5% of the Company's Common Stock, (ii)
each director of the Company, (iii) each Named Executive Officer of the Company,
and (iv) all Named Executive Officers and directors as a group. This information
was determined in accordance with Rule 13(d)-3 under the Exchange Act, and is
based upon the information furnished by the persons listed below. Except as
otherwise indicated, each shareholder listed possesses sole voting and investing
power with respect to the shares indicated as being beneficially owned.
14
<PAGE> 17
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
SHARES OF COMMON STOCK
BENEFICIALLY OWNED
---------------------------------------------------------------------------------------------
NAME AND ADDRESS(1) NUMBER OF SHARES PERCENTAGE
---------------------------------------------------------------------------------------------
<S> <C> <C>
AAP Holdings, Inc. 7,548,633(2) 54.2%
---------------------------------------------------------------------------------------------
George S. Hofmeister 7,551,133(3) 54.1%
---------------------------------------------------------------------------------------------
Frank J. Amedia 3,429,326(4) 23.8%
---------------------------------------------------------------------------------------------
Amedia Family Limited Partnership 1,500,000 10.8%
---------------------------------------------------------------------------------------------
John Masternick 371,680(5) 2.7%
---------------------------------------------------------------------------------------------
William R. Jackson, Jr. 73,287(6) *
---------------------------------------------------------------------------------------------
Charles E. Trebilcock 40,513(7) *
---------------------------------------------------------------------------------------------
Joseph Dominijanni 27,000(8) *
---------------------------------------------------------------------------------------------
Joseph C. Lawyer 4,000 *
---------------------------------------------------------------------------------------------
Richard L. Kovach 13,000(9) *
---------------------------------------------------------------------------------------------
J. Larry Powell 23,412(9) *
---------------------------------------------------------------------------------------------
Jeffrey V. Miller 8,000(10) *
---------------------------------------------------------------------------------------------
Jonathan K. Schoenike 9,000(10) *
---------------------------------------------------------------------------------------------
All directors and Named Executive Officers 11,576,351(11) 79.2%
of the Company as a group (15 persons)
---------------------------------------------------------------------------------------------
</TABLE>
* Less than 1%
(1) The address of AAP Holdings, Inc. and George S. Hofmeister is 6500
Brooktree Road, Suite 202, Wexford, Pennsylvania 15090. The address of
all other beneficial owners is c/o American Architectural Products
Corporation, 755 Boardman-Canfield Road, Building G West, Boardman,
Ohio 44512.
(2) Does not include 707,655 shares of common stock which are subject to
unexercised options that are exercisable only upon the occurrence of
certain contingencies.
(3) Includes shares of common stock held by AAP Holdings, Inc. George S.
Hofmeister, the Chairman of the Board of Directors of the Company, is
the controlling shareholder of the corporate parent of AAP Holdings,
Inc.
(4) Includes 476,244 shares of common stock which are subject to
unexercised options that were exercisable on February 28, 1999 or
within sixty days thereafter. Also includes 1,500,000 shares of common
stock owned by the Amedia Family Limited Partnership, in which Mr.
Amedia and his spouse are the general partners and each holds 48% of
the partnership interests.
15
<PAGE> 18
(5) Includes 47,526 shares of common stock which are subject to unexercised
options that were exercisable on February 28, 1999 or within sixty days
thereafter.
(6) Includes 57,143 shares of common stock which are subject to unexercised
warrants that were exercisable on February 28, 1999 or within sixty
days thereafter.
(7) Includes 13,513 shares of common stock owned individually and 25,000
shares held by a custodian for the benefit of an individual retirement
account of Mr. Trebilcock. Also includes 2,000 shares of common stock
which are subject to unexercised options that were exercisable on
February 28, 1999 or within sixty days thereafter.
(8) Includes 25,000 shares of common stock which are subject to unexercised
options that were exercisable on February 28, 1999 or within sixty days
thereafter.
(9) Includes 13,000 shares of common stock which are subject to unexercised
options that were exercisable on February 28, 1999 or within sixty days
thereafter.
(10) Includes 8,000 shares of common stock which are subject to unexercised
options that were exercisable on February 28, 1999 or within sixty days
thereafter.
(11) Includes 675,913 shares of common stock which are subject to
unexercised options and warrants that were exercisable on February 28,
1999 or within sixty days thereafter as described above.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Exchange Act, requires the Company's officers and
directors, and persons who beneficially own more than ten percent (10%) of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than ten-percent stockholders are required by
Exchange Act regulations to furnish the Company with copies of all Section 16(a)
forms they file.
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons, the Company believes
that: (i) Lawrence J. O'Dowd, who is no longer a director of the Company, failed
to timely file an initial report of beneficial ownership upon becoming a
reporting person under Section 16(a) of the Exchange Act, and Mr. O'Dowd
subsequently filed an initial report of beneficial ownership as required by
Section 16(a) of the Exchange Act; (ii) Mr. Lawyer failed to timely file an
initial report of beneficial ownership upon becoming a reporting person under
Section 16(a) of the Exchange Act, and Mr. Lawyer subsequently filed an initial
report of beneficial ownership as required by Section 16(a) of the Exchange Act;
(iii) Mr. Amedia failed to file a timely report relating to the extension of the
expiration date of certain derivative securities, and Mr. Amedia subsequently
reported this transaction as required by Section 16(a) of the Exchange Act; (iv)
Mr. Masternick failed to file a timely report relating to the extension of the
expiration date of certain derivative securities, and Mr. Masternick
subsequently reported this transaction as required by Section 16(a) of the
Exchange Act; (v) AAPH and Mr. Hofmeister, who is the controlling shareholder of
AAPH, failed to file a timely report relating to the extension of the expiration
date of certain derivative securities, and AAPH and Mr. Hofmeister subsequently
reported this transaction as required by Section 16(a) of the Exchange Act; (vi)
Mr. Jackson failed to file a timely report relating to the extension of the
expiration date of certain derivative securities, and Mr. Jackson subsequently
reported this transaction as required by Section 16(a) of the Exchange Act;
16
<PAGE> 19
and (vii) except as set forth above, all filing requirements applicable to its
officers, directors, and greater than ten-percent beneficial owners were
complied with during the fiscal year ending December 31, 1998.
CERTAIN TRANSACTIONS
Mr. George S. Hofmeister, Chairman of the Board of Directors of the
Company, is the controlling shareholder of the corporate parent of AAPH. The
Company has agreed to pay AAPH an acquisition consulting fee of 1% for 1997 and
1998, increased to 1.44% for 1999, of the transaction price of each acquisition
transaction consummated by the Company with respect to which AAPH or its
affiliates provides acquisition consulting services. For purposes of calculating
the acquisition fee, the transaction price means the aggregate amount of
consideration paid by the Company or its affiliates for the acquisition in the
form of cash, stock, stock options, warrants, debt instruments and other assumed
liabilities. Acquisition consulting fees in 1977 and 1998 approximated $835,000
and $590,000, respectively. In addition, the Company paid AAPH fees of $821,000
and $345,000 for management and other transaction services provided in 1997 and
1998, respectively. AAPH charges the Company on an hourly basis at competitive
rates based on time incurred. The Company expects to continue to use these
services charged at rates comparable to prior rates.
The Company contracts for air charter services with a company
affiliated with AAPH and Mr. Amedia. The Company paid approximately $450,000 and
$530,000 to this company for air charter services in 1997 and 1998,
respectively. The Company pays for these services at rates comparable to those
charged to unaffiliated parties. The Company expects to continue to use those
services at levels similar to prior years.
In November 1990, the U.S. Small Business Administration loaned
$409,000 to Forte (the "SBA Loan"). The SBA Loan was payable in monthly
installments and the final installment was scheduled to be due on January 1,
2001. Mr. Amedia and his wife were personally liable on the SBA Loan. As of
December 31, 1997, the balance owed on the SBA Loan were approximately $172,000.
The Company repaid this loan in January 1998.
The Company acquired all of the issued and outstanding common stock of
Forte from Frank Amedia and John Masternick on June 8, 1994, in exchange for
3,311,010 shares of the Company's common stock and options to acquire 475,770
shares of the Company's common stock. Through a series of extensions approved by
the Board of Directors, the options are currently scheduled to expire in January
2000.
Pursuant to reorganization of the Company and AAP on December 18, 1996
(the "Reorganization") the Company issued 1,000,000 shares of Series A Preferred
Stock in exchange for all of the issued and outstanding stock of AAP. In April
1997, AAPH converted the Series A Preferred Stock pursuant to its terms into
7,548,633 shares of common stock of the Company. In addition, the Company issued
to AAPH options to purchase 879,834 shares of common stock, of which options to
purchase 172,179 shares have subsequently terminated. Through a series of
extensions approved by the Board of Directors, these options are currently
scheduled to expire in January 2000. Such options are identical in price and
exercise terms to certain options held by Messrs. Amedia and Masternick and are
exercisable only upon the exercise of the options held by Mr. Amedia and Mr.
Masternick.
Profile Extrusion Company ("PEC") loaned the Company $92,537 on May 19,
1997 and an additional $5,203 on September 28, 1997. This combined indebtedness
had an interest rate of 15% per
17
<PAGE> 20
annum and was payable in full on or before December 31, 1997. In connection
therewith, the Company issued to PEC warrants to purchase a total of 27,926
shares of common stock at an exercise price of $3.50 per share, expiring on
September 1, 1998. The Company repaid this loan on December 10, 1997. PEC is a
wholly-owned subsidiary of ACH, of which George Hofmeister is the controlling
shareholder. These warrants were extended to and expired unexercised on January
15, 1999.
In June 1997, Mr. Amedia pledged 133,333 shares of common stock to
secure the repayment of a short-term debt incurred by the Company in the
original principal amount of $250,000. The Company agreed to issue shares of
common stock to Mr. Amedia to replace any shares as to which the lender
exercises its security interest. The Company repaid this loan on January 16,
1998.
In September 1997, William R. Jackson, Jr., a director of the Company,
loaned the Company $200,000. This indebtedness had an interest rate of 15% per
annum and was payable in full in December 1997. In connection therewith, the
Company issued to Mr. Jackson warrants to purchase a total of 57,143 shares of
common stock at an exercise price of $3.50 per share, expiring in September
1998. The Company repaid this loan on December 10, 1997. Through a series of
extensions in 1998, the warrants are now due to expire in January 2000.
In January 1998, the Company purchased substantially all of the assets
of Blackhawk Architectural Products (Blackhawk) for approximately $400,000. The
assets were purchased at their approximate book value, which approximated fair
market value, as approved by the Board of Directors. J. Larry Powell, an officer
of the Company, co-founded and owned a 20% equity interest in Blackhawk at the
time of this transaction.
In March, 1998, the Company sold Mallyclad, a division of ETC, to a
company controlled by one of its shareholders for approximately $1.1 million.
The Company sold this division at its book value which approximated fair market
value as approved by the Board of Directors, therefore, no gain or loss was
recognized on this transaction.
In July 1998, the Company sold windows in the amount of $160,000 to
Hughes O'Neill, a company owned by the wife of J. Larry Powell. These windows
were sold at normal market prices.
In October 1998, the Company entered into an operating lease at market
rates with a company affiliated with AAPH. Amounts paid under this lease were
$75,000 for the year ended December 31, 1998. The Company is committed to future
minimum lease payments of $225,000 in 1999 under this lease.
During the last quarter of 1998 and first quarter of 1999, the Company
sold, at cost, approximately $100,000 of windows to Mr. Hofmeister. This
transaction was approved by the Board of Directors.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
At the Annual Meeting, the Company will seek the election of George
Hofmeister, Frank J. Amedia, John J. Cafaro, Joseph Dominijanni, W.R. Jackson,
Jr., Joseph C. Lawyer, John Masternick and Charles Trebilcock as directors, each
to hold office until the Company's next annual meeting or until his successor is
elected and qualified. One additional Board position is currently vacant, and
the Board of Directors has not, as of the date of this Information Statement,
selected a nominee for such position.
18
<PAGE> 21
REQUIRED VOTE
The Board consists of nine (9) positions, one of which is currently
vacant. The nominees receiving the highest number of votes cast at the Annual
Meeting will be elected. There is no cumulative voting with respect to the
election of directors.
AAPH and Mr. Frank J. Amedia, who collectively have voting power over a
majority in interest of the Common Stock, intend to vote FOR each of the
nominees listed above. Accordingly, it is expected that each of such nominees
will be elected to the Company's Board of Directors. If any nominee becomes
unavailable for any reason, or if a vacancy should occur before the election,
AAPH and Mr. Amedia will vote their shares in favor of the election of such
other person or persons as they may determine. The nominees receiving the
highest number of votes cast at the Annual Meeting will be elected.
PROPOSAL 2
AMENDMENT OF THE 1996 EMPLOYEE STOCK OPTION PLAN
The Company's 1996 Option Plan currently authorizes the Board to grant
options to employees of the Company to purchase up to an aggregate of ten
percent (10%) of the total Common Stock outstanding. The Board of Directors has
determined that the 1996 Option Plan should be amended to increase the number of
shares issuable pursuant to the 1996 Option Plan to fifteen percent (15%) of the
shares of Common Stock issued and outstanding, from time to time. In addition,
the Board would have the ability to lower this percentage under the 1996 Option
Plan from time to time, in its discretion. The purpose of increasing the number
of shares available for issuance under the 1996 Option Plan is to ensure that
the Company will continue to be able to grant stock options as incentives to
those individuals upon whose efforts the Company relies for the continued
success, development and growth of its business.
Accordingly, the Board of Directors proposes to amend Section 3 of the
1996 Option Plan in its entirety to read as follows:
"Common Stock Subject to the Plan. Subject to the provisions
of Section 11 of the Plan, the maximum aggregate number of
Shares which may be optioned and sold under the Plan shall be
equal to 15% (such percentage to be subject to reduction from
time to time in the discretion of the Board) of the Shares of
Common Stock issued and outstanding from time to time, but
which maximum aggregate number of Shares which may be optioned
and sold under the Plan shall in no event exceed 10,000,000
shares of Common Stock. The Shares which may be optioned and
sold under the Plan may be authorized, but unissued, or
previously issued Shares acquired or to be acquired by the
Company and held in treasury.
If an option should expire or become unexerciseable for any
reason without having been exercised in full, the unpurchased
Shares covered by such Option shall, unless the Plan shall
have been terminated, be available for future grants of
options."
This amendment to the 1996 Option Plan has been approved by the Board
of Directors and will be voted upon at the Annual Meeting. The affirmative vote
of a majority of the shares of Common Stock present or represented by valid
proxy and entitled to vote at the Annual Meeting will be required to approve
this amendment to the 1996 Option Plan.
19
<PAGE> 22
REQUIRED VOTE
Approval of the modification to the 1996 Option Plan requires the
written consent of the holders of a majority in interest of the Common Stock.
AAPH and Mr. Frank J. Amedia, presently intend to vote FOR approval of
the modification of the 1996 Option Plan. Accordingly, it is expected that the
1996 Option Plan modification will be approved; however, neither AAPH nor Mr.
Amedia is obligated to vote in favor of the modification of the 1996 Option
Plan.
PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
On December 16, 1998, BDO Seidman, LLP ("BDO") resigned as the
principal accountants of the Company. BDO's reports on the Company's financial
statements for the prior two fiscal years, and any subsequent interim periods,
contained no adverse opinion and no disclaimer of opinion, nor were such reports
qualified or modified as to uncertainty, audit or accounting principles. In
connection with the audits of the Company's financial statements for each of the
two fiscal years ended December 31, 1996 and 1997, and in subsequent interim
periods, there were no disagreements with BDO on any matters of accounting
principles or practices, financial statement disclosure or auditing scope or
procedures which, if not resolved to the satisfaction of BDO, would have caused
BDO not to respond fully to any inquiries from Ernst & Young, LLP.
The Company requested BDO to furnish it a letter addressed to the
Securities and Exchange Commission stating whether it agrees with the above
statement. BDO furnished the Company with a copy of a letter dated December 22,
1998 containing such a statement, which was filed as Exhibit 1 to Amendment No.
1 to the Company's current Report on Form 8-K dated December 23, 1998.
The Board of Directors of the Company approved the engagement of Ernst
& Young, LLP as independent accountants and auditors of the books of account for
the Company and to advise the Company on accounting matters, effective as of
December 21, 1998. It is presently contemplated that Ernst & Young, LLP will be
retained as the principal accounting and auditing firm to be utilized by the
Company throughout the fiscal year ending December 31, 1999. The Company
anticipates that a representative of Ernst & Young, LLP will attend the Annual
Meeting for the purpose of responding to appropriate questions. At the Annual
Meeting, a representative of Ernst & Young, LLP will be provided an opportunity
to make a statement (if such representative so desires).
REQUIRED VOTE
Ratification of the selection of Ernst & Young, LLP as the Company's
independent auditors requires the affirmative vote of a majority of the voting
power of the Common Stock present at the Annual Meeting in person or by valid
proxy.
AAPH and Mr. Frank J. Amedia, who collectively have voting power over a
majority in interest of the Common Stock, presently intend to vote FOR
ratification of the selection of Ernst & Young, LLP as the Company's independent
auditors for the fiscal year ending December 31, 1998. Accordingly, it is
expected that such selection will be ratified; however, neither AAPH nor Mr.
Amedia is obligated to vote in favor of such ratification.
20
<PAGE> 23
PROPOSALS BY STOCKHOLDERS
Any shareholder who wishes to present any proposal for shareholder
action at the next Annual Meeting of Shareholders to be held in 2000, must be
received by the Company's Secretary, at the Company's offices, not later than
December 10, 1999, in order to be included in the Company's proxy statement and
form of proxy for that meeting. Such proposals should be addressed to the
Corporate Secretary, American Architectural Products Corporation, 755
Boardman-Canfield Road, Building G West, Boardman, Ohio 44512. If a shareholder
proposal is introduced at the 2000 Annual Meeting of Shareholders without any
discussion of the proposal in the Company's proxy statement, and the shareholder
does not notify the Company on or before February 23, 2000, as required by SEC
Rule 14(a)-4(c)(1), of the intent to raise such proposal at the Annual Meeting
of Shareholders, then proxies received by the Company for the 2000 Annual
Meeting will be voted by the persons named as such proxies in their discretion
with respect to such proposal. Notice of such proposal is to be sent to the
above address.
OTHER BUSINESS
The Annual Meeting is being held for the purposes set forth in the
Notice that accompanies this Information Statement. The Board of Directors is
not presently aware of any business to be transacted at the Annual Meeting other
than as set forth in such Notice.
BY ORDER OF THE BOARD OF DIRECTORS
JONATHAN K. SCHOENIKE
SECRETARY
Boardman, Ohio
April 8, 1999
21
