SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of
1934 (Amendment No. ____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as
permitted by Rule 14a6(e)(2))
Gibraltar Steel Corporation
(Name of Registrant as specified in its character)
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: __/
(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:
GIBRALTAR STEEL CORPORATION
3556 Lake Shore Road PO Box 2028
Buffalo, New York 14219-0228
____________________________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD May 15, 2001
____________________________________________________
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
of Gibraltar Steel Corporation, a Delaware corporation (the
"Company"), will be held at the Company's offices, 3556 Lake
Shore Road, Buffalo, New York, on May 15, 2001, at 10:00 a.m.,
local time, for the following purposes:
1. To elect two Class II Directors to hold office until the
2004 Annual Meeting and until their successors have been elected
and qualified.
2. To consider and take action upon the proposed Fifth
Amendment and Restatement of the Gibraltar Steel Corporation
Incentive Stock Option Plan.
3. To take action upon and transact such other business as may
be properly brought before the meeting or any adjournment or
adjournments thereof.
The Board of Directors has fixed the close of business on March
19, 2001, as the record date for the determination of
stockholders entitled to receive notice of and to vote at the
Annual Meeting.
Stockholders who do not expect to attend the meeting in person
are urged to vote, sign and date the enclosed proxy and return it
promptly in the envelope enclosed for that purpose.
NEIL E. LIPKE
Secretary
Dated: April 23, 2001
GIBRALTAR STEEL CORPORATION
3556 Lake Shore Road
PO Box 2028
Buffalo, New York 14219-0228
_________________________________________________
PROXY STATEMENT
_________________________________________________
This Proxy Statement and the accompanying form of proxy are
being furnished in connection with the solicitation, by the Board
of Directors of Gibraltar Steel Corporation, a Delaware
corporation (the "Company"), of proxies to be voted at the Annual
Meeting of Stockholders to be held at the Company's offices, 3556
Lake Shore Road, Buffalo, New York, on May 15, 2001, at 10:00
a.m., local time, and at any adjournment or adjournments thereof.
The close of business on March 19, 2001, has been fixed as the
record date for the determination of stockholders entitled to
receive notice of and to vote at the meeting. At the close of
business on March 19, 2001, the Company had outstanding
12,579,147 shares of common stock, $.01 par value per share
("Common Stock"), the holders of which are entitled to one vote
per share on each matter properly brought before the Annual
Meeting.
The cost of solicitation of proxies in the accompanying form
will be borne by the Company, including expenses in connection
with preparing and mailing this Proxy Statement. In addition to
the use of the mail, proxies may be solicited by personal
interviews and telephone by Directors, officers and employees of
the Company. Arrangements will be made with brokerage houses,
banks and other custodians, nominees and fiduciaries for the
forwarding of solicitation material to the beneficial owners of
Common Stock, and the Company will reimburse them for reasonable
out-of-pocket expenses incurred by them in connection therewith.
The shares represented by all valid proxies in the enclosed
form will be voted if received in time for the Annual Meeting in
accordance with the specifications, if any, made on the proxy
card. If no specification is made, the proxies will be voted FOR
the nominees for Director named in this Proxy Statement and FOR
the approval of the adoption of the Fifth Amendment and
Restatement of the Gibraltar Steel Corporation Incentive Stock
Option Plan as described in this Proxy Statement.
The presence, in person or by proxy, of the holders of a
majority of the outstanding shares of Common Stock entitled to
vote at the Annual Meeting will constitute a quorum. Each nominee
for election as a Director requires a plurality of the votes cast
in order to be elected. A plurality means that the nominees with
the largest number of votes are elected as Director up to the
maximum number of Directors to be elected at the Annual Meeting.
Each other proposal submitted to the stockholders requires the
affirmative vote of the holders of a majority of the votes
present at the meeting, in person or by proxy, and entitled to
vote. With respect to the election of Directors, only shares
that are voted in favor of a particular nominee will be counted
towards achievement of a plurality; where a stockholder properly
withholds authority to vote for a particular nominee, such shares
will not be counted towards such nominee's or any other nominee's
achievement of plurality. With respect to the other proposals to
be voted upon: (i) if a stockholder specifies an abstention from
voting on a proposal, such shares are considered present at the
meeting for such proposal but, since they are not affirmative
votes for the proposal, they will have the same effect as votes
against the proposal; and (ii) shares registered in the names of
brokers or other "street name" nominees for which proxies are
voted on some but not all matters will be considered to be voted
only as to those matters actually voted, and will not have the
effect of either an affirmative or negative vote as to the
matters with respect to which a beneficial holder has not
provided voting instructions.
The execution of a proxy will not affect a stockholder's right
to attend the Annual Meeting and to vote in person. A
stockholder who executes a proxy may revoke it at any time before
it is exercised by giving written notice to the Secretary, by
appearing at the Annual Meeting and so stating, or by submitting
another duly executed proxy bearing a later date.
This Proxy Statement and the accompanying form of proxy are
first being sent or given to stockholders on or about April 23,
2001.
PROPOSAL I
ELECTION OF DIRECTORS
The Certificate of Incorporation of the Company provides that
the Board of Directors shall consist of not less than three nor
more than fifteen Directors who shall be divided into three
classes, with the term of one class expiring each year. The
Board of Directors is presently comprised of six members: Brian
J. Lipke, Arthur A. Russ, Jr. and William P. Montague, Class I
Directors whose terms expire in 2002; Neil E. Lipke and Gerald S.
Lippes, Class II Directors whose terms expire in 2001; and David
N. Campbell, Class III Director whose term expires in 2003. At
the Annual Meeting of Stockholders in 2001, two Class II
Directors shall be elected to hold office for a term expiring in
2004. Neil E. Lipke and Gerald S. Lippes have been nominated by
the Board of Directors for election as such Class II Directors.
Unless instructions to the contrary are received, it is
intended that the shares represented by proxies will be voted for
the election of Neil E. Lipke and Gerald S. Lippes as Directors.
Both Messrs. Lipke and Lippes have been Directors of the Company
since the consummation of the Company's initial public offering
in November 1993 and have been previously elected by the
Company's stockholders. If either Messrs. Lipke or Lippes should
become unavailable for election for any reason, it is intended
that the shares represented by the proxies solicited herewith
will be voted for such other person as the Board of Directors
shall designate. The Board of Directors has no reason to believe
that either of Messrs. Lipke or Lippes will be unable or
unwilling to serve if elected to office.
The following information is provided concerning the Directors
and the nominees for election as Class II Directors:
Brian J. Lipke has been Chairman of the Board and Chief
Executive Officer and a Director of the Company since its
formation. He has been Chief Executive Officer of Gibraltar
Steel Corporation of New York ("Gibraltar New York"), a
predecessor and current subsidiary of the Company, since 1987,
and has been in charge of the Company's other subsidiaries since
their formation. He also served as President of both the Company
and Gibraltar New York through 1999. From 1972 to 1987, Mr.
Lipke held various positions with Gibraltar New York in
production, purchasing and divisional management. He is also a
director of Merchants Mutual Insurance Company, Greater Buffalo
Savings Bank and Daemen College and is a member of the Chase
Manhattan Bank Regional Advisory Board.
Neil E. Lipke has been Executive Vice President and a Director
of the Company since its formation and Senior Executive Vice
President and Secretary of the Company since June 1999. He has
been Executive Vice President of Gibraltar New York since 1988
and has been employed by Gibraltar New York since 1973 in various
production, sales and marketing capacities.
Gerald S. Lippes has served as a Director of the Company since
its formation. He has been engaged in the private practice of
law since 1965 and is a partner of the firm of Lippes,
Silverstein, Mathias & Wexler LLP, Buffalo, New York. Mr. Lippes
is also a director of several private companies.
Arthur A. Russ, Jr. has served as a Director of the Company
since its formation. He has been engaged in the private practice
of law since 1969 and is a partner of the firm of Phillips,
Lytle, Hitchcock, Blaine & Huber, LLP, Buffalo, New York.
David N. Campbell has served as a Director of the Company since
the consummation of the Company's initial public offering. Mr.
Campbell served as President and Chief Executive Officer of
Xpedior, Inc. from September 1999 through November 2000. Prior
thereto, from July 1995 to September 1999, he was President of
BBN Systems & Technologies and its successor, GTE Laboratories
and Technologies. Mr. Campbell also is the former Chairman of the
Board and Chief Executive Officer of Computer Task Group,
Incorporated and the former Chairman of the Board of Dunlop Tire
Corporation. Mr. Campbell also serves as a director of Tektronix
Corporation.
William P. Montague has served as a Director of the Company
since the consummation of the Company's initial public offering.
He served as Executive Vice President and Chief Financial Officer
of Mark IV Industries, Inc. from 1986 to February 1996 and, since
March 1, 1996, as President of said company. He is also a
director of IIMAK (International Imaging Materials, Inc.).
THE BOARD OF DIRECTORS AND ITS COMMITTEES
During the fiscal year ended December 31, 2000, the Board of
Directors held six meetings. Each Director attended at least 75%
of the aggregate number of meetings of the Board of Directors and
meetings held by all committees of the Board of Directors on
which he served.
Audit Committee
The Board of Directors has a standing Audit Committee
comprised of Messrs. Lippes, Russ and Campbell. The Audit
Committee assists the Board of Directors in its oversight of
matters relating to the financial reporting process, the system
of internal accounting control and management of financial risks,
the audit process and compliance with laws and regulations and
the Company's code of business conduct. The Audit Committee held
eight meetings in 2000.
Compensation Committee
The Compensation Committee, which consists of Messrs. Lippes
and Montague, held one meeting in 2000. The Compensation
Committee makes recommendations concerning salaries and incentive
compensation for employees of and consultants to the Company.
Other Committees
The Board of Directors does not have a standing executive or
nominating committee, the functions of which are handled by the
entire Board.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Directors and Executive Officers
The following table sets forth certain information regarding
the Directors and executive officers of the Company:
Name Age Position(s) Held
Brian J. Lipke (1) 49 Chairman of the Board and
Chief Executive Officer
Walter T. Erazmus 53 President
Neil E. Lipke(1) 44 Senior Executive Vice
President, Secretary and
Director
Joseph A. Rosenecker 56 Executive Vice President
Carl P. Spezio 55 Executive Vice President
Eric R. Lipke(1) 41 Vice President
Andrew S. Tsakos 55 Vice President
John E. Flint 54 Vice President and Chief
Financial Officer
Richard A. Pytak Jr. 38 Treasurer
Gerald S. Lippes 61 Director
David N. Campbell 59 Director
William P. Montague 54 Director
Arthur A. Russ, Jr. 58 Director
____________________________________
(1) Brian J. Lipke, Neil E. Lipke and Eric R. Lipke are brothers.
Recent business experience of the Directors is set forth above
under "Election of Director." Recent business experience of the
executive officers who are not also Directors is as follows:
Walter T. Erazmus has been President of the Company since June,
1999. Prior thereto, he served as Executive Vice President
Finance of the Company and Chief Financial Officer of the Company
since November 1994 and of Gibraltar New York since 1977. He was
Vice President - Finance of the Company and Chief Financial
Officer of the Company from its formation until November 1994.
Joseph A. Rosenecker has been Executive Vice President of the
Company since November 1994. He served as Vice President - Sales
of the Company from its formation until November 1994 and has
been the director of Gibraltar New York's cold-rolled strip
operations since 1989. He was President of Gibraltar New York's
strip and strapping divisions from 1978 to 1989.
Carl P. Spezio has been Executive Vice President since November
1994. Prior thereto, he was Vice President - Manufacturing and
Quality Control of the Company since its formation. He has been
the director of Gibraltar New York's metal processing operations
since 1989. He was President of the Gibraltar Metals Division of
Gibraltar New York from 1977 to 1989.
Eric R. Lipke has been Vice President of the Company since its
formation. Mr. Lipke has held various positions with Gibraltar
New York since 1976 primarily in the areas of administration and
executive support.
Andrew S. Tsakos has been a Vice President of the Company since
May 1998. Mr. Tsakos has held various positions with Gibraltar
New York since 1970 primarily in the areas of sales, sales
management, purchasing and distribution services.
John E. Flint was named Vice President and Chief Financial
Officer of the Company in 1999. He was Vice President of
Accounting of the Company since its incorporation and of
Gibraltar New York since 1985, and prior thereto served as
Corporate Controller of Gibraltar New York. Mr. Flint began his
career with the Company as Controller of the Gibraltar Metals
Division of Gibraltar New York in 1977.
Richard A. Pytak Jr. was named Treasurer of the Company in 1999
and has been with the Company since June 1998. Prior thereto Mr.
Pytak was a Senior Manager at PricewaterhouseCoopers LLP with
fourteen years of experience providing public accounting and
business advisory services.
COMPENSATION OF EXECUTIVE OFFICERS
The following summary compensation table sets forth all
compensation earned by the Company's Chief Executive Officer, and
each of the Company's other four most highly compensated
executive officers, for the Company's fiscal years ended December
31, 1998, 1999 and 2000.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation Awards
Securities
Other Underlying
Name and Fiscal Annual Restricted Options/ All Other
Principal Position Year Salary Bonus Compensation Stock Awards(1) SARs(2) Compensation(3)
Brian J. Lipke, 2000 $ 362,058 $ 191,422 $ --- $ --- 12,500 $ 4,710
Chairman of the 1999 352,308 316,000 --- --- --- 13,303
Board and Chief 1998 306,538 253,860 --- 464,800 50,000 1,529
Executive Officer
Walter T. Erazmus, 2000 275,197 163,566 --- --- 12,500 7,729
President 1999 239,258 256,000 --- --- --- 17,687
1998 188,558 241,042 --- 116,200 17,500 11,587
Neil E. Lipke, 2000 285,394 168,566 --- --- 12,500 6,393
Senior Executive 1999 292,213 261,000 --- --- --- 16,489
Vice President, 1998 253,365 191,046 --- 232,400 22,500 4,789
Secretary and
Director
Joseph A. Rosenecker, 2000 242,312 182,352 --- --- 10,000 9,047
Executive Vice 1999 240,577 244,000 --- --- --- 18,829
President 1998 245,769 227,504 --- 116,200 15,000 12,609
Carl P. Spezio, 2000 187,128 133,390 --- --- 10,000 7,450
Executive Vice 1999 176,157 222,370 --- --- --- 17,356
President 1998 166,769 230,594 --- 116,200 15,000 11,070
_______________________________
(1) Represents the market value of restricted stock awards
granted pursuant to the Gibraltar Steel Corporation Restricted
Stock Plan (the "Restricted Stock Plan") (less the consideration
paid) as of the date of grant. Dividends on shares of Common
Stock are paid to holders of restricted shares. At December 31,
2000, the cumulative number of restricted shares of Common Stock,
and the related market value, held by Messrs. Brian J. Lipke,
Erazmus, Neil E. Lipke, Rosenecker and Spezio were 20,000 shares
- - $351,200; 3,000 shares - $52,680; 10,000 shares - $175,600;
3,000 shares - $52,680; and 3,000 shares - $52,680, respectively.
The restrictions on the restricted shares of Common Stock granted
to Messrs. Rosenecker, Erazmus and Spezio began to lapse at the
rate of 20% per year on April 1, 1999. The restrictions on the
restricted shares of Common Stock granted to Messrs. Brian J.
Lipke and Neil E. Lipke lapse at the rate of 20% per year
beginning April 1, 2003.
(2) Represents options granted pursuant to the Gibraltar Steel
Corporation Incentive Stock Option Plan (the "Incentive Plan")
(3) Composed of: (a) the matching contributions made by the
Company in 2000 pursuant to the Gibraltar Steel Corporation of
New York 401(k) Retirement Savings Plan in the amount of $1,663
to the account of Brian J. Lipke and $4,250 to the accounts of
each of Messrs. Erazmus, Neil E. Lipke, Rosenecker and Spezio;
(b) the payment in 2000 of premiums paid with respect to term
life insurance policies provided for Messrs. Brian J. Lipke,
Erazmus, Neil E. Lipke, Rosenecker and Spezio in the amounts of
$2,254, $2,686, $1,350, $4,004 and $2,407, respectively; and (c)
the payment in 2000 of premiums paid in the amount of $793 with
respect to travel/accident life insurance policies provided for
each of Messrs. Brian J. Lipke, Erazmus, Neil E. Lipke,
Rosenecker and Spezio.
Options Granted in Last Fiscal Year
The following table contains information concerning the grant
of stock options to the named executives in 2000. The exercise
price of all such options is equal to the market value of Common
Stock on the date of the grant.
Potential Realizable
Percentage of Value at Assumed
Total Options Annual Rates of Stock
Name and Granted to Exercise Price Appreciation
Principal Option Employees in Price Per Expiration For Option Term
Position Grant (1) Fiscal Year Share Date 5% (2) 10%(3)
Brian J. Lipke,
Chairman of the
Board and Chief
Executive Officer 12,500 4.63% $ 14.07 7/17/10 $110,607 $ 280,299
Walter T. Erazmus,
President 12,500 4.63% 14.07 7/17/10 110,607 280,299
Neil E. Lipke,
Senior Executive
Vice President and
Director 12,500 4.63% 14.07 7/17/10 110,607 280,299
Joseph A. Rosenecker,
Executive Vice
President 10,000 3.90% 14.07 7/17/10 88,485 224,240
Carl P. Spezio
Executive Vice
President 10,000 3.90% 14.07 7/17/10 88,485 224,240
________________________________
(1) Options granted pursuant to the Incentive Plan
become exercisable in cumulative annual increments of 25%
beginning one year from the date of grant; however, in the
event of certain extraordinary transactions, including a
change of control of the Company, the vesting of such options
would automatically accelerate. The grant of stock options in
2000 is contingent upon approval of Proposal 2, the
ratification of the proposed Fifth Amendment and Restatement of
the Gibraltar Steel Corporation Incentive Stock Option Plan, as
described in this Proxy Statement.
(2) Represents the potential appreciation of the options,
determined by assuming an annual compounded rate of
appreciation of 5% per year over the ten-year term of the
grants, as prescribed by the rules. The amount set forth above
is not intended to forecast future appreciation, if any, of the
stock price. There can be no assurance that the appreciation
reflected in this table will be achieved.
(3) Represents the potential appreciation of the options,
determined by assuming an annual compounded rate of
appreciation of 10% per year over the ten-year term of the
grants, as prescribed by the rules. The amounts set forth
above are not intended to forecast future appreciation, if any,
of the stock price. There can be no assurance that the
appreciation reflected in this table will be achieved.
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year End Option Values
The following table sets forth information with respect to the
named executives concerning the exercise of options during 2000
and unexercised options held at the end of 2000.
Value of Unexercised
Number of Unexercised in the Money Options
Options At Fiscal Year End(1) At Fiscal Year End(2)
Shares
Acquired Value
On Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
Brian J. Lipke,
Chairman of the
Board and Chief
Executive Officer --- --- 58,750 43,750 $ 113,400 $ 43,625
Walter T. Erazmus,
President --- --- 49,750 25,000 128,385 58,100
Neil E. Lipke,
Senior Executive
Vice President and
Director --- --- 36,250 28,750 75,600 43,625
Joseph A. Rosenecker,
Executive Vice
President --- --- 46,625 20,625 125,973 46,963
Carl P. Spezio
Executive Vice
President --- --- 46,625 20,625 125,973 46,963
________________________________
(1) Options granted become exercisable in cumulative annual
increments of 25% beginning one year from the date of grant;
however, in the event of certain extraordinary transactions,
including a change in control of the Company, the vesting of
such options would automatically accelerate.
(2) Represents the difference between $17.56, the closing market
value of Common Stock as of December 31, 2000, and the exercise
price of such options.
EMPLOYMENT AGREEMENT
In July 1998, the Company entered into a new Employment
Agreement with Brian J. Lipke (the "Employment Agreement").
Pursuant to the Employment Agreement, Mr. Lipke serves as
Chairman of the Board and Chief Executive Officer of the Company
at an annual base salary of $300,000, subject to annual
adjustment as determined by the Compensation Committee in its
discretion. In April 1999, the Compensation Committee increased
Mr. Lipke's base salary to $335,000, effective January 1, 1999.
In addition to his base salary, Mr. Lipke is eligible to
participate in the Company's Executive Incentive Bonus Plan and
other employee benefit plans available to the Company's executive
officers. The Employment Agreement has an initial term of five
years, which automatically is extended for an additional one-year
period on each anniversary date, unless either party gives notice
of intent to terminate.
The Employment Agreement provides that if the Company
terminates Mr. Lipke without cause, he shall be entitled to
receive a lump sum benefit equal to 2 1/2 times his total cash
compensation for the 12-month period immediately proceeding the
date of his termination. In addition, upon a termination of Mr.
Lipke's employment other than by the Company for "cause" (as
defined in the Employment Agreement) and other than voluntarily
by Mr. Lipke, if he becomes entitled to receive benefits under
any of the Company's tax-qualified retirement plans (the
"Plans"), he will be entitled to receive from the general assets
of the Company an additional benefit computed as if the Plans
were not subject to any applicable limits imposed on such plans
by the Internal Revenue Code of 1986 as amended (the "Code"), or
the Employee Retirement Income Security Act of 1974, as amended.
If Mr. Lipke dies during the term of the Employment Agreement,
in addition to any death benefits payable under life insurance
maintained by the Company and any death benefits payable under
the Company's employee benefit plans, the Company will pay to the
estate of Mr. Lipke a death benefit equal to 50% of his annual
base salary plus an amount equal to all bonuses he would have
received through the end of the then current fiscal year. If he
becomes permanently disabled, Mr. Lipke will be entitled to
receive from the Company annual benefits equal to his base
salary, subject to a cap of $200,000 (adjusted for cost of living
increases), less amounts received under any pension, profit
sharing or disability plan or insurance policy.
In the event Mr. Lipke's employment with the Company is
terminated other than for cause, the Company will continue to
provide medical, disability and life insurance benefits to Mr.
Lipke and his family for life.
Mr. Lipke has agreed in the Employment Agreement that, in the
event he terminates his employment other than following a change
in control, he will not, for a period of one year after the date
of termination, participate in any "competitive operation," as
defined in the Employment Agreement.
In 2000, none of the executive officers of the Company served
on the compensation committee or on any other committee of the
board of directors performing similar functions of any other
entity, any of whose officers or directors served on the
Company's Board of Directors or Compensation Committee.
CHANGE IN CONTROL AGREEMENTS
The Company has entered into change in control agreements (the
"Change in Control Agreements") with each of the named executive
officers and certain other executive officers. Generally, each
executive officer (other than Brian J. Lipke) is entitled to
receive, upon termination of employment within two years of a
"Change in Control" (unless such termination is because of death
or disability, by the Company for "Cause" as defined in the
Change in Control Agreements), a lump sum severance payment equal
to 225% times the sum of (i) his current annual salary and (ii)
the average of the annual bonuses paid to him during the three
years immediately preceding the year in which the change in
control occurs. The Stay Agreements (as discussed below) amended
the Change in Control Agreements to provide that the amount of
any payment an executive officer (other than Brian J. Lipke)is
entitled to receive under the Change in Control Agreements will
be reduced by an amount equal to the second half of the payments
such Executive Officer is entitled to receive pursuant to his
Stay Agreement. In the case of Brian J. Lipke, upon the
occurrence of a Change in Control, whether or not such Change in
Control results in a termination of his employment, he is
entitled to receive a lump sum severance payment equal to 350%
times the sum of (i) his current annual salary and (ii) the
highest annual bonus paid to him during the three years
immediately preceding the year in which the change in control
occurs. The Change in Control Agreements define such total cash
compensation to include amounts deferred at the option of the
executive. The payments and benefits payable in the event of
a Change in Control are not subject to any limitations that
would prevent them from being considered "excess
parachute payments" subject to excise tax payments or corporate
deduction disallowance under the Code. Therefore, such lump sum
severance payments could require excise tax payments on the part
of the executive, and result in a deduction disallowance on the
part of the Company. In such instance, the impact of the excise
tax payments on the executive would be reimbursed to the
executive by the Company, including taxes the executive would
incur on the reimbursement itself. The events that trigger a
Change in Control under the Change in Control Agreements include
(i) the acquisition of 30% or more of the Company's outstanding
Common Stock by certain persons, (ii) certain changes in the
membership of the Company's Board of Directors, (iii) certain
mergers or consolidations, (iv) certain sales or transfers of
substantially all of the Company's assets and (v) the approval of
the shareholders of the Company of a plan of dissolution or
liquidation.
STAY AGREEMENTS
In connection with its decision to examine various alternatives
to enhance shareholder value, the Company entered into stay
agreements (the "Stay Agreements") with Messrs. Erazmus, Neil E.
Lipke, Rosenecker and Spezio and with certain other executive
officers of the Company (excluding Brian J. Lipke). The Stay
Agreements provide for the maintenance of September 1, 2000
salary and benefit levels for a period of six months after a
"Sale" (as defined in the Stay Agreements). In addition, each
named executive officer is entitled to receive a bonus in the
amount of $1,000,000, $750,000, $500,000 and $500,000 for Messrs.
Erazmus, Neil E. Lipke, Rosenecker and Spezio, respectively.
Bonus amounts payable under the Stay Agreements will be increased
if the consideration to be received in connection with the Sale
exceeds certain limits. Payments under the Stay Agreements are
contingent upon the continued employment of the executive
officers through the closing date of a Sale and are payable one
half on such closing date and one-half on the six month
anniversary of such closing; provided, however, that if the
employment of the executive officer is terminated by such six
month anniversary date, he will not be entitled to receive the
second payment due on such anniversary date. No payment under
the Stay Agreements will be due and payable if a Sale does not
occur by December 3l, 2001, or by March 31, 2002 provided that
negotiations regarding a possible Sale to an identified purchaser
with requisite financing are taking place by December 31, 2001.
For purposes of the Stay Agreements, a "Sale" is deemed to occur
upon (a) the sale of 90% or more of the Company's outstanding
common stock, or (b) the sale of all or substantially all of the
Company's assets.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Report of the Compensation Committee on Executive Compensation
This report of the Compensation Committee of the Board of
Directors provides an overview of the Company's compensation
philosophy and executive compensation programs. It discusses
compensation-related decisions in general for executive officers,
and specifically those relating to the Company's Chief Executive
Officer, for the fiscal year ending December 31, 2000.
Executive Compensation Program's Overall Objectives
The Company's Executive Compensation Program is designed to
attract and retain top-quality executives and to provide them
with both an incentive and a reward for superior performance. The
program includes three principal components - base salary, annual
financial performance-based bonus opportunities and longterm
incentives. The program is administered by the Compensation
Committee of the Board of Directors. Members of the Compensation
Committee are outside Directors who are not employees of the
Company.
Compensation Philosophy
The primary philosophy of the Company's Executive Compensation
Program is to align the financial interests of its executive
officers with those of the Company and its stockholders by basing
a significant portion of each executive officer's compensation
upon his individual performance and the Company's financial
performance and by encouraging executive officers to own Company
stock through participation in various stock-based and other
plans.
The Compensation Committee is responsible for annually
reviewing base salaries of executive officers, determining the
design of the Company's Executive Incentive Bonus Plan and
eligibility to participate therein, and making grants to eligible
participants, including executive officers under the Company's
stock-based long-term incentive plans.
Base Salaries
Base salary ranges are established annually, at competitive
levels, for all executive officers. Base salaries are
periodically adjusted to reflect each individual executive's
performance, contribution to the overall financial results of the
Company, and changes in competitive salary levels.
The annual base salary of Brian J. Lipke for 2000 was
established pursuant to the Employment Agreement described above.
Executive Incentive Bonus Plan
To further support the Company's goal of enhancing shareholder
value, an Executive Incentive Bonus Plan was adopted in 1998.
Financial performance targets are established annually for the
Company as a whole, and for certain individual subsidiaries.
Bonuses paid under the Executive Incentive Bonus Plan for 2000
reflect, for corporate executives, the financial results of the
total Company versus targets. For certain executives of
individual subsidiaries, bonuses paid were based on a combination
of the Company's and the individual subsidiaries' financial
performance versus targets.
Long-Term Incentive Plans
The Compensation Committee administers the Company's Incentive
Plan, the Gibraltar Steel Corporation Non-Qualified Plan (the Non
Qualified Plan) and Restricted Stock Plan. The Compensation
Committee periodically grants options under the Incentive Plan to
the Company's executive officers and other employees. All of the
options granted have an exercise price of not less than 100% of
the fair market value of the underlying stock on the date of
grant. The value of the options granted is wholly dependent on
the increase in value of the Company's common stock, which serves
as an incentive to the executive officers to maximize their
efforts to promote the economic performance of the Company. All
of the options granted are exercisable over a four-year period at
the rate of 25% per year commencing one year from the date of
grant. Accordingly, an executive officer must remain with the
Company for at least four years in order to enjoy the full
potential economic benefit of the options awarded. The number of
options awarded to a particular executive officer is directly
related to his responsibilities and individual performance.
The Compensation Committee periodically grants restricted stock
to the Company's executive officers. These restricted stock
grants are at a nominal cost per share to the executive officers
and recognize the special contributions of the executive officers
for their long service to date, together with their expected
future contributions. Restrictions on stock granted under the
Restricted Stock Plan lapse over periods established by the
Compensation Committee at the time of each restricted stock
award.
Accordingly, an executive officer must remain with the Company
throughout the full term established by the Compensation
Committee in order to enjoy the full potential economic benefit
of the restricted stock awarded.
In 2000, the Compensation Committee granted options to key
management employees of the Company, including executive
officers, under the Incentive Plan. Grants were not provided
under the Non-Qualified Plan or under the Restricted Stock Plan.
Compensation For the Chief Executive Officer
Mr. Lipke participates in the same compensation programs
provided to the Company's other executive officers. The
Compensation Committee annually reviews Mr. Lipke's base salary,
as covered in his employment agreement. A competitive salary
range for the CEO is established with the assistance of an
independent consultant. In determining salary adjustments within
the set salary range, various factors are taken into account
including individual performance, changes in competitive salaries
and Company performance.
In 2000, Mr. Lipke participated in the Executive Incentive
Bonus Plan (the "Executive Plan") applicable to all executive
officers. Since the Company's fiscal 2000 performance did not
meet its target, Mr. Lipke and the other named executives were
paid bonuses below the target levels in accordance with the terms
of the Executive Plan.
Section 162(m) of Internal Revenue Code
Section 162(m) of the Internal Revenue Code generally disallows
a tax deduction to public companies for compensation in excess of
$l,000,000 paid to a company's chief executive officer and any
one of the four other most highly paid executive officers during
its taxable year. Qualifying performance-based compensation is
not subject to the deduction limit if certain requirements are
met. Based upon the compensation paid to Mr. Lipke and the
Company's other executive officers in 2000, it does not appear
that the Section l62 (m) limitation will have an impact on the
Company in the near term. However, the Compensation Committee
plans to review this matter periodically and to take such actions
as are appropriate to minimize the impact of this statute, to the
extent that there is no adverse effect on the Company's ability
to provide incentive compensation based on Company financial
performance.
COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS OF GIBRALTAR
STEEL CORPORATION
Gerald S. Lippes
William P. Montague
AUDIT COMMITTEE REPORT
The Audit Committee currently consists of three directors, two
of whom are not independent as defined in the listing standards
of the National Association of Securities Dealers (NASD). The
Audit Committee will comply with the NASD independence standards
before the June 2001 required implementation date. A brief
description of the responsibilities of the Audit Committee is set
forth above under the caption "The Board of Directors and its
Committees", and a copy of the Audit Committee Charter is
attached hereto as Appendix B.
The Audit Committee has reviewed and discussed the Company's
audited financial statements for the year ended December 31, 2000
with management of the Company. The Committee has discussed with
PricewaterhouseCoopers LLP, the Company's independent auditors,
the matters required to be discussed by Statement on Auditing
Standards No. 61 Communication with Audit Committees, which
relates to the conduct of the audit, including the auditor's
judgment about the quality of the accounting principles applied
in the Company's 2000 audited financial statements. The
Committee also has reviewed the written disclosures and the
letter from PricewaterhouseCoopers LLP required by Independence
Standards Board No. 1 Independence Discussions with Audit
Committees, and has discussed with PricewaterhouseCoopers LLP its
independence.
Based on the review and the discussions referred to above, the
Audit Committee recommended to the Board of Directors that the
Company's audited financial statements be included in the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000 for filing with the Securities and Exchange
Commission.
AUDIT COMMITTEE OF THE
BOARD OF DIRECTORS OF
GIBRALTAR STEEL CORPORATION
David N. Campbell
Gerald S. Lippes
Arthur A. Russ, Jr.
PERFORMANCE GRAPH
The Performance Graph shown below compares the cumulative total
shareholder return on Common Stock, based on the market price of
the Common Stock, with the total return of the S&P MidCap 400
Index and the S&P Iron & Steel Index for the five-year period
ended December 31, 2000. The comparison of total return assumes
that a fixed investment of $100 was invested on December 31, 1995
in Common Stock and in each of the foregoing indices and further
assumes the reinvestment of dividends. The stock price
performance shown on the graph is not necessarily indicative of
future price performance.
12/95 12/96 12/97 12/98 12/99 12/00
Gibraltar Steel Corporation 100 216 163 188 194 147
S&P Midcap 400 100 119 158 188 215 253
S&P Iron & Steel 100 89 91 79 87 54
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is composed of Gerald S. Lippes and
William P. Montague. Neither Mr. Lippes nor Mr. Montague was,
during 2000 or prior thereto, an officer or employee of the
Company or any of its subsidiaries. In 2000, none of the
executive officers of the Company or members of the Compensation
Committee served on the compensation committee or on any other
committee of the board of directors performing similar functions
of any other entity, any of whose officers or directors served on
the Company's Board of Directors or Compensation Committee.
COMPENSATION OF DIRECTORS
All Directors other than Directors who are employees of the
Company receive a retainer of $16,000 per year. In addition,
each such Director also receives a fee of $1,000 for each Board
of Directors or committee meeting attended and is reimbursed for
any reasonable expenses incurred in attending such meetings.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Company's Directors and executive officers,
and any persons who own more than 10% of a registered class of
the Company's equity securities, to file equity securities of the
Company and other reports of initial ownership of Common Stock
and subsequent changes in that ownership with the Securities and
Exchange Commission and to furnish the Company with copies of all
forms they file pursuant to Section 16(a).
To the Company's knowledge, based solely upon a review of the
copies of such reports furnished to the Company and written
representations that no other reports were required, the Company
believes that during the year ended December 31, 2000, all
Section 16(a) filing requirements applicable to its officers,
Directors and greater than 10% beneficial owners were complied
with.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of February 28,
2001 (except as otherwise noted) with respect to all stockholders
known by the Company to be the beneficial owners of more than 5%
of its outstanding Common Stock, each Director, each executive
officer named in the Summary Compensation table above and all
executive officers and Directors as a group.
Name Number of Shares(1) Percent of Class
Brian J. Lipke(2)(3) 1,332,756 10.59%
Neil E. Lipke(2)(4) 1,286,612 10.23%
Eric R. Lipke(2)(5) 1,240,709 9.86%
Meredith A. Lipke(2)(6) 1,225,525 9.74%
Curtis W. Lipke(2)(7) 1,072,424 8.53%
Gerald S. Lippes(8) 100,705 *
700 Guaranty Building
28 Church Street
Buffalo, New York 14202-3950
William P. Montague(9) 65,705 *
501 John James Audubon Parkway
PO Box 810
Amherst, New York 14226-0810
Arthur A. Russ, Jr.(10) 55,750 *
3400 HSBC Center
Buffalo, New York 14203
David N. Campbell(11) 31,250 *
389 River Road
Carlisle, Massachusetts 01741
Walter T. Erazmus(2)(12) 76,213 *
Carl P. Spezio(2)(13) 67,920 *
Joseph A. Rosenecker(2)(14) 67,404 *
All Directors and Executive
Officers as a Group
(13 persons) (15) 4,374,442 34.78%
Liberty Wanger Asset
Management, L.P.(17) 1,125,000 8.94%
Franklin Resources, Inc.(16) 1,074,700 8.54%
T. Rowe Price
Associates, Inc.(18) 830,200 6.60%
Merrill Lynch & Co., Inc.(19) 811,973 6.45%
_________________________________
*Less than 1%.
(1) Unless otherwise indicated in the footnotes, each of the
stockholders named in this table has sole voting and investment
power with respect to the shares shown as beneficially owned by
him or her, except to the extent that authority is shared by
spouses under applicable law.
(2) The address of each of the executive officers listed in the
Summary Compensation Table, Meredith A. Lipke, Curtis W. Lipke
and Eric R. Lipke is 3556 Lake Shore Road, PO Box 2028, Buffalo,
New York 14219-0228.
(3) Includes (i) 1,058,882 shares of Common Stock held by two
trusts for the benefit of Brian J. Lipke, (ii) 11,945 shares of
Common Stock held by trusts for the benefit of the daughters of
Brian J. Lipke, (iii) 3,480 shares of Common Stock held in a
custodial account for the benefit of a daughter of Brian J.
Lipke, (iv) 33,750 shares of Common Stock issuable under
currently exercisable options pursuant to the Non-Qualified Plan,
(v) 37,500 shares of Common Stock issuable under currently
exercisable options granted to Brian J. Lipke pursuant to the
Incentive Plan, (vi) 3,271 shares of Common Sock allocated to
Brian J. Lipke's self-directed account under the Company's 40l(k)
Retirement Savings Plan and (vii) 150,463 shares of Common Stock,
representing Brian J. Lipke's pecuniary interest in Rush Creek
Investment Co., L.P. ("RCLP"). RCLP owns 758,000 shares of
Common Stock as to which Brian J. Lipke disclaims beneficial
ownership, except to the extent of his pecuniary interest.
Excludes 6,250 shares of Common Stock issuable under options
granted to Brian J. Lipke pursuant to the Non-Qualified Plan that
are not exercisable within sixty days and 25,000 shares of Common
Stock under options granted to Brian J. Lipke pursuant to the
Incentive Plan that are not exercisable within sixty days. Also
excludes (i) 61,085 shares of Common Stock held by the Trust U/W
of Kenneth E. Lipke f/b/o Patricia K. Lipke (the "Kenneth E.
Lipke Trust"), as to which Brian J. Lipke serves as one of three
trustees and shares voting and investment power and as to which
he disclaims beneficial ownership, (ii) 3,830,915 shares of
Common Stock held by trusts for the benefit of each of Neil E.
Lipke, Curtis W. Lipke, Eric R. Lipke and Meredith A. Lipke, as
to each of which Brian J. Lipke serves as one of three trustees
and shares voting and investment power and as to which he
disclaims beneficial ownership, (iii) 30,000 shares of Common
Stock held by a trust for the benefit of Meredith A. Lipke, as to
which Brian J. Lipke serves as one of five trustees and shares
voting and investment power and as to which he disclaims
beneficial ownership, (iv) 5,605 shares of Common Stock held by a
trust for the benefit of the daughter of Meredith A. Lipke, as to
which Brian J. Lipke serves as one of four trustees and shares
voting and investment power and as to which he disclaims
beneficial ownership, and (v) 11,500 shares of Common Stock held
by trusts for the benefit of the children of Eric R. Lipke, as to
which Brian J. Lipke serves as one of three trustees and shares
voting and investment power and as to which he disclaims
beneficial ownership.
(4) Includes (i) 1,011,502 shares of Common Stock held by a trust
for the benefit of Neil E. Lipke and (ii) 25,000 shares of Common
Stock issuable under currently exercisable options granted to
Neil E. Lipke pursuant to the Non-Qualified Plan, (iii) 16,875
shares of Common Stock issuable under currently exercisable
options granted to Neil E. Lipke pursuant to the Incentive Plan,
(iv) 1,267 shares of Common Stock allocated to Neil E. Lipke's
self-directed account under the Company's 401(k) Retirement
Savings Plan and (v) 150,463 shares of Common Stock, representing
Neil E. Lipke's pecuniary interest in RCLP. RCLP owns 758,000
shares of Common Stock as to which Neil E. Lipke disclaims
beneficial ownership, except to the extent of his pecuniary
interest. Excludes 5,000 shares of Common Stock issuable under
options granted to Neil E. Lipke pursuant to the Non-Qualified
Plan that are not exercisable within sixty days and 18,125 shares
of Common Stock under options granted to Neil E. Lipke pursuant
to the Incentive Plan that are not exercisable within sixty days.
Also excludes (i) 60,880 shares of Common Stock held by a trust
for the benefit of Brian J. Lipke and 30,000 shares of Common
Stock held by a trust for the benefit of Meredith A. Lipke, as to
each of which Neil E. Lipke serves as one of five trustees and
shares voting and investment power and as to which he disclaims
beneficial ownership, (ii) 11,945 shares of Common Stock held by
trusts for the benefit of the daughters of Brian J. Lipke, as to
which Neil E. Lipke serves as one of three trustees and shares
voting and investment power and as to which he disclaims
beneficial ownership and (iii) 11,500 shares of Common Stock held
by trusts for the benefit of the children of Eric R. Lipke, as to
which Neil E. Lipke serves as one of three trustees and shares
voting and investment power and as to which he disclaims
beneficial ownership.
(5) Includes (i) 975,501 shares of Common Stock held by a trust
for the benefit of Eric R. Lipke, (ii) 11,500 shares of Common
Stock held by trusts for the benefit of the children of Eric R.
Lipke, (iii) 17,500 shares of Common Stock issuable under
currently exercisable options granted to Eric R. Lipke pursuant
to the Non-Qualified Plan, (iv) 8,125 shares of Common Stock
issuable under currently exercisable options granted to Eric R.
Lipke pursuant to the Incentive Plan, (v) 3,360 shares of Common
Stock held in custodial accounts for the benefit of the children
of Eric R. Lipke, (vi) 1,065 shares of Common Stock allocated to
Eric R. Lipke's self-directed account under the Company's 401(k)
Retirement Savings Plan and (vii) 150,463 shares of Common Stock,
representing Eric R. Lipke's pecuniary interest in RCLP. RCLP
owns 758,000 shares of Common Stock as to which Eric R. Lipke
disclaims beneficial ownership, except to the extent of his
pecuniary interest. Excludes 2,500 shares of Common Stock
issuable under options granted to Eric R. Lipke pursuant to the
Non-Qualified Plan that are not exercisable within sixty days and
16,875 shares of Common Stock issuable under options granted to
Eric R. Lipke pursuant to the Incentive Plan that are not
exercisable within sixty days. Also excludes (i) 998,002 shares
of Common Stock held by a trust for the benefit of Brian J.
Lipke, as to which Eric R. Lipke serves as one of three trustees
and shares voting and investment power and as to which Eric R.
Lipke disclaims beneficial ownership, (ii) 60,880 shares of Common
Stock held by a trust for the benefit of Brian J. Lipke and
30,000 shares of Common Stock held by a trust for the benefit of
Meredith A. Lipke, as to each of which Eric R. Lipke serves as
one of five trustees and shares voting and investment power and
as to which he disclaims beneficial ownership and (iii) 11,945
shares of Common Stock held by trusts for the benefit of the
children of Brian J. Lipke, as to which Eric R. Lipke serves as
one of three trustees and shares voting and investment power and
as to which he disclaims beneficial ownership.
(6) Includes (i) 1,053,536 shares of Common Stock held by three
trusts for the benefit of Meredith A. Lipke, (ii) 1,875 shares of
Common Stock issuable under currently exercisable options granted
to Meredith A. Lipke pursuant to the Non-Qualified Plan, (iii)
1,250 shares of Common Stock issuable under currently exercisable
options granted to Meredith A. Lipke pursuant to the Incentive
Plan, (iv) 5,075 shares of Common Stock held in a custodial
account for the benefit of the daughter of Meredith A. Lipke
pursuant to the New York Uniform Gift to Minors Act, (v) 5,605
shares of Common Stock held by a trust for the benefit of the
daughter of Meredith A. Lipke, (vi) 616 shares of Common Stock
allocated to Meredith A. Lipke's self-directed account under the
Company's 401(k) Retirement Savings Plan and (vi) 150,463 shares
of Common Stock, representing Meredith A. Lipke's pecuniary
interest in RCLP. RCLP owns 758,000 shares of Common Stock as to
which Meredith A. Lipke disclaims beneficial ownership, except to
the extent of her pecuniary interest. Excludes (i) 625 shares of
Common Stock issuable under options granted to Meredith A. Lipke
pursuant to the Non-Qualified Plan that are not exercisable
within sixty days and 3,750 shares of Common Stock issuable under
options granted to Meredith A. Lipke pursuant to the Incentive
Plan that are not exercisable within sixty days and (ii) 60,880
shares of Common Stock held by a trust for the benefit of Brian
J. Lipke, as to which Meredith A. Lipke serves as one of five
trustees and shares voting and investment power and as to which
she disclaims beneficial ownership.
(7) Includes (i) 849,456 shares of Common Stock held by a trust
for the benefit of Curtis W. Lipke and (ii) 150,463 shares of
Common Stock, representing Curtis W. Lipke's pecuniary interest
in RCLP. RCLP owns 758,000 shares of Common Stock as to which
Curtis W. Lipke disclaims beneficial ownership, except to the
extent of his pecuniary interest. Excludes (i) 60,880 shares of
Common Stock held by a trust for the benefit of Brian J. Lipke
and 30,000 shares of Common Stock held by a trust for the benefit
of Meredith A. Lipke, as to each of which Curtis W. Lipke serves
as one of five trustees and shares voting and investment power
and as to which he disclaims beneficial ownership, (ii) 5,605
shares of Common Stock held by a trust for the benefit of the
daughter of Meredith A. Lipke, as to which Curtis W. Lipke serves
as one of four trustees and shares voting and investment power
and as to which he disclaims beneficial ownership, (iii) 11,945
shares of Common Stock held by trusts for the benefit of the
children of Brian J. Lipke, as to which Curtis W. Lipke serves as
one of three trustees and shares voting and investment power and
as to which he disclaims beneficial ownership and (iv) 11,500
shares of Common Stock held by trusts for the benefit of the
children of Eric R. Lipke, as to which Curtis W. Lipke serves as
one of three trustees and shares voting and investment power and
as to which he disclaims beneficial ownership.
(8) Includes 51,250 shares of Common Stock issuable under
currently exercisable options granted to Mr. Lippes pursuant to
the Non-Qualified Plan.
(9) Includes 26,250 shares of Common Stock issuable under
currently exercisable options granted to Mr. Montague pursuant to
the Non-Qualified Plan.
(10) Includes (i) 51,250 shares of Common Stock issuable under
currently exercisable options granted to Mr. Russ pursuant to the
Non-Qualified Plan and (ii) an aggregate of 1,500 shares of
Common Stock held by three trusts for the benefit of the Russ'
children as to each of which Mr. Russ serves as a trustee.
Excludes an aggregate of (i) 4,828,917 shares of Common Stock
owned by trusts for the benefit of each Brian J. Lipke, Neil E.
Lipke, Curtis W. Lipke, Eric R. Lipke and Meredith A. Lipke, as
to each of which Mr. Russ serves as one of three trustees and
shares voting and investment power and as to which he disclaims
beneficial ownership, (ii) 61,085 shares of Common Stock held by
the Kenneth E. Lipke Trust, as to which Mr. Russ serves as one of
three trustees and shares voting and investment power and as to
which he disclaims beneficial ownership and (iii) 758,000 shares
of Common Stock held by RCLP as to which Mr. Russ serves as
trustee of the sole limited partner and as to which he disclaims
beneficial ownership.
(11) Includes (i) 26,250 shares of Common Stock issuable under
currently exercisable options granted to Mr. Campbell pursuant to
the Non-Qualified Plan, (ii) 2,500 shares of Common Stock held by
an Individual Retirement Account for the benefit of Mr. Campbell
and (iii) 1,500 shares of Common Stock held by the Campbell
Foundation of which Mr. Campbell serves as a trustee.
(12) Includes (i) 50,375 shares of Common Stock issuable under
currently exercisable options granted to Mr. Erazmus under the
Incentive Plan, (ii) 800 shares of Common Stock held by an
Individual Retirement Account for the benefit of Mr. Erazmus,
(iii) 500 shares of Common Stock held by an Individual Retirement
Account for the benefit of the spouse of Mr. Erazmus and (iv)
5,538 shares of Common Stock allocated to Mr. Erazmus's self
directed account under the Company's 401(k) Retirement Savings
Plan. Excludes 24,375 shares of Common Stock issuable under
options granted to Mr. Erazmus pursuant to the Incentive Plan
that are not exercisable within sixty days.
(13) Includes (i) 47,250 shares of Common Stock issuable under
currently exercisable options granted to Mr. Spezio under the
Incentive Plan and (ii) 3,643 shares of Common Stock allocated to
Mr. Spezio's self-directed account under the Company's 401(k)
Retirement Savings Plan. Excludes 20,000 shares of Common Stock
issuable under options granted to Mr. Spezio pursuant to the
Incentive Plan that are not exercisable within sixty days.
(14) Includes 47,250 shares of Common Stock issuable under
currently exercisable options granted to Mr. Rosenecker under the
Incentive Plan and (ii) 3,654 shares of Common Stock allocated to
Mr. Rosenecker's self-directed account under the Company's 401(k)
Retirement Savings Plan. Excludes 20,000 shares of Common Stock
issuable under options granted to Mr. Rosenecker pursuant to the
Incentive Plan that are not exercisable within sixty days.
(15) Includes options to purchase an aggregate of 247,375 shares
of Common Stock issuable to certain executive officers under the
Incentive Plan and an aggregate of 231,250 shares of Common Stock
issuable to certain executive officers and Directors under the
Non-Qualified Plan, all of which are exercisable within sixty
days. Excludes options to purchase an aggregate of 149,875
shares of Common Stock issued to certain executive officers
under the Incentive Plan and an aggregate of 13,750 shares of
Common Stock issued to certain executive officers and
Directors under the Non-Qualified Plan, none of which are
exercisable within sixty days.
(16) Based on information set forth in a statement on Schedule
13G/A filed with the Securities and Exchange Commission in
January 2000 by Franklin Resources, Inc. on behalf of itself and
its affiliates, Charles B. Johnson, Rupert H. Johnson, Jr. and
Franklin Advisors, Inc. The stated business address of Franklin
Resources, Inc., Messrs. Charles B. Johnson and Rupert H.
Johnson, Jr. and Franklin Advisors, Inc. is 777 Mariners Island
Boulevard, San Mateo, California 94403.
(17) Based on information set forth in a statement on Schedule
13G/A filed with the Securities and Exchange Commission in
February 2001 by Liberty Wanger Asset Management, L.P. on behalf
of itself, its affiliate, WAM Acquisition GP, Inc. and Liberty
Acorn Trust. The stated business address of Liberty Wanger Asset
Management, L.P., WAM Acquisition GP, Inc. and Liberty Acorn
Trust is 227 West Monroe Street, Suite 3000, Chicago, Illinois
60606.
(18) Based on information set forth in a statement on Schedule
13G/A filed with the Securities and Exchange Commission in
February 2001 by T. Rowe Price Associates, Inc. The stated
business address for T. Rowe Price Associates, Inc. is 100 E.
Pratt Street, Baltimore, Maryland 21202.
(19) Based on information set forth in a statement on Schedule
13G/A filed with the Securities and Exchange Commission in
February 2001 by Merrill Lynch & Co., Inc. on behalf of Merrill
Lynch Investment Managers. The stated business address for
Merrill Lynch & Co., Inc. and Merrill Lynch Investment Managers
is World Trade Center, North Tower, 250 Vesey Street, New York,
New York 10381.
Vote Required. The affirmative vote of a plurality of the
shares of Common Stock present, in person or by proxy, is
required for the election of each Director, assuming a quorum is
present or represented at the meeting.
The Board of Directors recommends a vote "FOR" the nominees for
Class II Directors.
PROPOSAL 2
AMENDMENT AND RESTATEMENT OF THE GIBRALTAR STEEL CORPORATION
INCENTIVE STOCK OPTION PLAN
On July 17, 2000, the Board of Directors approved the Fifth
Amendment and Restatement of the Incentive Plan (the "Incentive
Plan Restatement"), providing: (i) for an increase in the number
of shares of Common Stock reserved for issuance under the
Incentive Plan from 850,000 to 1,475,000 shares; and (ii) to
eliminate the provisions of the Incentive Plan providing for the
forfeiture of the right to exercise options that have otherwise
become exercisable if the option holder's employment with the
Company or any of its subsidiaries is terminated within two years
following the issuance to the option holder of any such options.
Pursuant to the terms of the Incentive Plan, the Board of
Directors is seeking stockholder approval of the Incentive Plan
Restatement.
Information concerning the number of options granted to certain
executive officers under the Incentive Plan during the last year
is set forth above under the heading "Executive Compensation."
The following is a summary of the material features of the
Incentive Plan Restatement and does not purport to be complete.
The summary is subject in all respects and is qualified in its
entirety by reference to the Incentive Plan Restatement, the full
text of which is set forth as Appendix A of this Proxy Statement.
Purpose. The Incentive Plan is intended to provide officers
and other key employees of the Company and its subsidiaries with
an additional incentive for them to promote the business of the
Company, to increase their propriety interest in the success of
the Company and to encourage them to remain in the employ of the
Company.
Administration. The Incentive Plan is administered by a
committee appointed by the Board of Directors and consisting of
not less than two Directors (the "Incentive Committee"). The
Incentive Committee has the sole authority to grant options under
the Incentive Plan, and all actions taken by the Incentive
Committee in administering the Incentive Plan are final.
Reservation of Common Stock. The Company has reserved 850,000
shares of Common Stock for issuance under the Incentive Plan. In
the event the Incentive Plan Restatement is approved, there will
be 1,475,000 shares of Common Stock reserved. Any options issued
under the Incentive Plan that are forfeited or terminated will be
available for reissuance under the Incentive Plan. If the
Company's outstanding shares of Common Stock are increased or
decreased as a result of stock dividends, stock splits,
recapitalizations or other means having the same effect, or if
the Company's Common Stock is converted into other shares or
securities of the Company as a result of a reorganization, the
number of shares of Common Stock available for issuance under the
Incentive Plan and the number of shares of Common Stock issuable
under outstanding options under the Incentive Plan shall be
proportionately adjusted by the Incentive Committee.
Participants. The Incentive Committee shall determine from
among the officers and key employees of the Company and its
subsidiaries those individuals to whom options under the
Incentive Plan shall be granted, the terms and provisions of the
options granted (which terms need not be identical), the time or
times at which options shall be granted and the number of shares
of Common Stock for which options are granted. As of December
31, 2000, approximately 160 employees had received options under
the Incentive Plan.
Option Price. The exercise price of each option granted under
the Incentive Plan shall be determined by the Incentive Committee
at the time the option is granted, but in no event shall such
exercise price be less than 100% of the fair market value of the
Common Stock on the date of the grant. Notwithstanding the
foregoing, if any options are granted to individuals holding 10%
or more of the combined voting power of all classes of the
Company's outstanding capital stock, in no event shall the
exercise price of the options granted to any such individuals be
less than 110% of the fair market value of the Common Stock on
the date of the grant.
Option Exercise Periods. Any option granted under the
Incentive Plan may be exercised not earlier than one year nor
later than ten years from the date such option is granted,
provided that, options granted to individuals holding 10% or more
of the combined voting power of all classes of the Company's
outstanding capital stock may not be exercised later than five
years from the date any such options are granted. In addition,
with respect to all options granted under the Incentive Plan,
unless the Incentive Committee shall specify otherwise, the right
of a recipient to exercise his option shall accrue, on a
cumulative basis, at the rate of 25% per year. Upon a "change in
control" of the Company (as defined in the Incentive Plan) or
upon the retirement, death or disability of a recipient, all
outstanding unexercised options granted to such recipient under
the Incentive Plan become immediately exercisable. In the event
that the Incentive Plan Restatement is approved, option holders
whose employment with the Company or any of its subsidiaries is
terminated may exercise options that have otherwise become
exercisable at the date of termination within three months of
that date.
Federal Tax Consequences. The Code limits to $100,000 the
value of employer stock subject to incentive stock options that
first become exercisable in any one year, based on the fair
market value of the stock at the date of grant. Upon exercise,
an optionee will not realize federally taxable income (except
that the alternative minimum tax may apply) and the Company will
not be entitled to any deduction. If the optionee sells the
shares more than two years after the grant date and more than one
year after exercise, the entire gain, if any, realized upon the
sale will be federally taxable to the optionee as long-term
capital gain and the Company will not be entitled to a
corresponding deduction. If the optionee does not satisfy the
holding period requirements, the optionee will realize ordinary
income, in most cases equal to the difference between the option
price of the shares and the lesser of the fair market value of
the shares on the exercise date or the amount realized on a sale
or exchange of the shares, and the Company will be entitled to a
corresponding deduction.
Transferability. Generally, options granted under the
Incentive Plan are not transferable by a recipient during his
lifetime. However, to the extent that an executive officer of
the Company has received options that first become exercisable in
any one year, which options have fair market value (based on the
fair market value of the Common Stock at the date of the option
grant) which exceeds $100,000, such executive officers may
transfer to their immediate family members, options to purchase
common stock of the Company having an aggregate value equal to
the amount by which the aggregate value of all options which
first become exercisable in such year exceeds $100,000.
Amendments. The Board of Directors may suspend, amend or
terminate the Incentive Plan, provided that, in the absence of
stockholder approval, no such amendment shall (i) increase the
maximum number of shares as to which options may be issued under
the Incentive Plan (ii) materially increase the benefits accruing
to participants under the Incentive Plan or (iii) materially
modify the requirements as to eligibility or participation in the
Incentive Plan.
Effective Date. The Incentive Plan was approved initially by
the stockholders of the Company on September 21, 1993. The First
Amendment was adopted by the Company effective August 9, 1994;
the Second Amendment as adopted effective February 15, 1996; the
Third Amendment was adopted effective May 20, 1997; and the
Fourth Amendment as adopted effective February 9, 1999.
Vote Required. The Affirmative vote of the holders of a
majority of the shares of Common Stock present, in person or by
proxy, and entitled to vote at the Meeting is required to approve
the Incentive Plan Restatement. If the stockholders do not
approve the Incentive Plan Restatement, the Incentive Plan in its
current form will remain in effect.
The Board of Directors recommends a vote "FOR" Proposal 2.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The firm of Lippes, Silverstein, Mathias & Wexler LLP, of which
Mr. Lippes, a Director of the Company, is a partner, serves as
counsel to the Company. During 2000, such firm received
approximately $363,000 for legal services rendered to the
Company. The firm of Phillips, Lytle, Hitchcock, Blaine & Huber,
LLP, of which Mr. Russ, a Director of the Company, is a partner,
also provided legal services to the Company in 2000.
OTHER MATTERS
The Company's management does not presently know of any matters
to be presented for consideration at the Annual Meeting other
than the matters described in the Notice of Annual Meeting.
However, if other matters are presented, the accompanying proxy
confers upon the person or persons entitled to vote the shares
represented by the proxy, discretionary authority to vote such
shares in respect of any such other matter in accordance with
their best judgment.
OTHER INFORMATION
PricewaterhouseCoopers LLP has been selected as the independent
auditors for the Company's current fiscal year and has been the
Company's independent auditors for its most recent year ended
December 31, 2000.
Representatives of PricewaterhouseCoopers LLP are expected to
be present at the 2000 Annual Meeting of Stockholders and will
have the opportunity to make a statement, if they so desire, and
will be available to respond to appropriate questions.
The fees for services rendered to the Company in 2000 by
PricewaterhouseCoopers LLP were as follows:
Audit Fees - For the audit of the Company's financial
statements for the year ended December 31, 2000 and for reviews
of the interim financial information included in the Company's
Quarterly Reports on Form 10-Q for 2000: $132,500.
Financial Information Systems Design and Implementation Fees
For financial information system design and implementation for
the year ended December 31, 2000: $0.
All Other Fees - For services rendered to the Company, other
than the services described above, for the year ended December
31, 2000: $97,850. These fees related primarily to tax services
and also to due diligence matters in connection with the
Company's acquisition activities.
The Audit Committee believes that the provision of the services
described under "All Other Fees" above was compatible with
maintaining PricewaterhouseCoopers LLP's independence from the
Company.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON WHOSE
PROXY IS SOLICITED, ON THE WRITTEN REQUEST OF SUCH PERSON, A COPY
OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, FOR THE FISCAL YEAR
ENDED DECEMBER 31, 2000, FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, INCLUDING THE FINANCIAL STATEMENTS AND THE SCHEDULES
THERETO. Such written request should be directed to Gibraltar
Steel Corporation, 3556 Lake Shore Road, PO Box 2028, Buffalo,
New York 14219-0228, Attention: Neil E. Lipke. Each such
request must set forth a good faith representation that, as of
March 19, 2001, the person making the request was a beneficial
owner of securities entitled to vote at the Annual Meeting of
Stockholders.
STOCKHOLDERS' PROPOSALS
Proposals of stockholders intended to be presented at the 2002
Annual Meeting must be received by the Company by December 5,
2001 to be considered for inclusion in the Company's Proxy
Statement and form of proxy relating to that meeting.
The accompanying Notice and this Proxy Statement are sent by
order of the Board of Directors.
NEIL E. LIPKE
Secretary
Dated: April 23, 2001
_________________________________________________________________
STOCKHOLDERS ARE URGED TO EXECUTE THE ACCOMPANYING PROXY AND
RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE, WHETHER OR NOT
THEY EXPECT TO ATTEND THE MEETING. A STOCKHOLDER MAY
NEVERTHELESS VOTE IN PERSON IF HE OR SHE DOES ATTEND.
PROXY
GIBRALTAR STEEL CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
MAY 15, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints BRIAN J. LIPKE, WALTER T.
ERAZMUS and NEIL E. LIPKE and each or any of them, attorneys and
proxies, with full power of substitution, to vote at the Annual
Meeting of Stockholders of GIBRALTAR STEEL CORPORATION (the
"Company") to be held at the Company's offices at 3556 Lake Shore
Road, Buffalo, New York, on May 15, 2001 at 10:00 a.m., local
time, and any adjournment(s) thereof revoking all previous
proxies, with all powers the undersigned would possess if
present, to act upon the following matter and upon such other
business as may properly come before the meeting or any
adjournment(s) thereof.
1. ELECTION OF DIRECTORS
For Class II Director - Neil E. Lipke
FOR WITHHOLD AUTHORITY
For Class II Director - Gerald S. Lippes
FOR WITHHOLD AUTHORITY
2. PROPOSAL TO APPROVE THE PROPOSED FIFTH AMENDMENT AND
RESTATEMENT OF THE GIBRALTAR STEEL CORPORATION INCENTIVE
STOCK OPTION PLAN
FOR AGAINST ABSTAIN
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN. IF NO DIRECTION IS MADE REGARDING PROPOSAL 1,
THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED ABOVE. IF NO
DIRECTION IS MADE REGARDING PROPOSAL 2, THIS PROXY WILL BE VOTED
FOR THE APPROVAL OF THE AMENDMENT.
Dated: ________, 2001
______________________________________________
Signature
______________________________________________
Signature if held jointly
Please sign exactly as name appears.
When shares are held by joint
tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If
a corporation, please sign in full
corporate name by President or
other authorized officer. If a
partnership, please sign a
partnership name by authorized
person. PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
APPENDIX A
GIBRALTAR STEEL CORPORATION INCENTIVE
STOCK OPTION PLAN
Fifth Amendment and Restatement
__________________________
WHEREAS, Gibraltar Steel Corporation, a Delaware corporation
with offices at 3556 Lake Shore Road, Buffalo, New York 14219
(the "Company") adopted an incentive stock option plan known as
the "Gibraltar Steel Corporation Incentive Stock Option Plan (the
"Plan") on September 21, 1993 to enable the Company to attract
and retain highly qualified individuals as officers and key
employees of the Company by providing such officers and key
employees an equity based form of incentive compensation; and
WHEREAS, the Company amended the Plan effective August 9,
1994 to allow members of the Committee of Directors that
administers the Plan to be eligible to receive options under the
terms of other plans which, from time to time, are adopted and
maintained by the Company including, but not limited to, the
Gibraltar Steel Corporation Non-Qualified Stock Option Plan; and
WHEREAS, the Company amended the Plan effective February 15,
1996 to increase the total number of shares of common stock,
par value $.01 per share of the Company (hereinafter the
"Common Stock") which may be issued in connection with
options granted pursuant to the terms of the Plan by Two
Hundred Thousand (200,000) shares; and
WHEREAS, the Company amended the Plan effective as of May
20, 1997 to permit the Executive Officers of the Company to
transfer options which they have been granted or may be granted
in the future to the extent that such options are not "qualified"
options and to increase the number of shares of Common Stock
which may be issued in connection with options granted pursuant
to the terms of the Plan by Two Hundred Fifty Thousand (250,000)
shares and to make certain other technical amendments to the
terms of the Plan; and
WHEREAS, the Company amended the Plan effective February 9,
1999 to clarify the definition of the term "Retirement Date" and
to make certain other technical changes to the terms of the Plan;
and
WHEREAS, the Company now desires to amend the Plan,
effective as of January 1, 2000, to eliminate the provisions of
the Plan providing for a forfeiture of the right to exercise
options which have otherwise become exercisable if the optionee's
employment with the Company or any of its subsidiaries is
terminated within two years following the issuance to the
optionee of any such options and to make certain technical
changes; and
WHEREAS, the Company now desires to further amend the Plan
effective as of July 17, 2000, to increase the number of shares
of Common Stock which may be issued in connection with options
granted pursuant to the terms of the Plan by Six Hundred Twenty
Five Thousand (625,000) shares;
NOW, THEREFORE, in consideration of the foregoing, the
Company hereby adopts the following as the Fifth Amendment and
Restatement of the Gibraltar Steel Corporation Incentive Stock
Option Plan effective as of January 1, 2000:
1. Purpose of Plan. The Gibraltar Steel Corporation
Incentive Stock Option Plan (the "Plan") is intended to provide
officers and other key employees of the Company and officers and
other key employees of any subsidiaries of the Company as that
term is defined in Section 3 below (hereinafter individually
referred to as a "Subsidiary" and collectively as "Subsidiaries")
with an additional incentive for them to promote the success of
the business, to increase their proprietary interest in the
success of the Company and its Subsidiaries, and to encourage
them to remain in the employ of the Company or its Subsidiaries.
The above aims will be effectuated through the granting of
certain stock options, as herein provided, which are intended to
qualify as Incentive Stock Options ("ISOs") under Section 422 of
the Internal Revenue Code of 1986, as the same has been and shall
be amended ("Code").
2. Administration. The Plan shall be administered by a
Committee (the "Committee") composed of not less than two (2)
Directors of the Company who shall be appointed by and serve at
the pleasure of the Board of Directors of the Company. If the
Committee is composed of two (2) Directors, both members of the
Committee must approve any action to be taken by the Committee in
order for such action to be deemed to be an action of the
Committee pursuant to the provisions of this Plan. If the
Committee is composed of more than two (2) Directors, a majority
of the Committee shall constitute a quorum for the conduct of its
business, and (a) the action of a majority of the Committee
members present at any meeting at which a quorum is present, or
(b) action taken without a meeting by the approval in writing of
a majority of the Committee members, shall be deemed to be action
by the Committee pursuant to the provisions of the Plan. The
Committee is authorized to adopt such rules and regulations for
the administration of the Plan and the conduct of its business as
it may deem necessary or proper.
Any action taken or interpretation made by the
Committee under any provision of the Plan or any option granted
hereunder shall be in accordance with the provisions of the Code,
and the regulations and rulings issued thereunder as such may be
amended, promulgated, issued, renumbered or continued from time
to time hereafter in order that, to the greatest extent possible,
the options granted hereunder shall constitute "incentive stock
options" within the meaning of the Code. All action taken
pursuant to this Plan shall be lawful and with a view to
obtaining for the Company and the option holder the maximum
advantages under the law as then obtaining, and in the event that
any dispute shall arise as to any action taken or interpretation
made by the Committee under any provision of the Plan, then all
doubts shall be resolved in favor of such having been done in
accordance with the said Code and such revenue laws, amendments,
regulations, rulings and provisions as may then be applicable.
Any action taken or interpretation made by the Committee under
any provision of the Plan shall be final. No member of the Board
of Directors or the Committee shall be liable for any action,
determination or interpretation taken or made under any provision
of the Plan or otherwise if done in good faith.
3. Participation. The Committee shall determine from
among the officers and key employees of the Company and its
Subsidiaries (as such term is defined in Section 424 of the Code)
those individuals to whom options shall be granted (sometimes
hereinafter referred to as "Optionees"), the terms and provisions
of the options granted (which need not be identical), the time or
times at which options shall be granted and the number of shares
of Common Stock, (or such number of shares of stock in which the
Common Stock may at any time hereafter be constituted), for which
options are granted.
In selecting Optionees and in determining the number of
shares for which options are granted, the Committee may weigh and
consider the following factors: the office or position of the
Optionee and his degree of responsibility for the growth and
success of the Company and its Subsidiaries, length of service,
remuneration, promotions, age and potential. The foregoing
factors shall not be considered to be exclusive or obligatory
upon the Committee, and the Committee may properly consider any
other factors which to it seems appropriate. The terms and
conditions of any option granted by the Committee under this Plan
shall be contained in a written statement which shall be
delivered by the Committee to the Optionee as soon as practicable
following the Committee's establishment of the terms and
conditions of such option.
An Optionee who has been granted an option under the
Plan may be granted additional options under the Plan if the
Committee shall so determine.
Notwithstanding the foregoing, if at the time an option
is granted to an individual under this Plan, the individual owns
stock of the Company possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the
Company or any of its Subsidiaries, (or if such individual would
be deemed to own such percentage of such stock under Section
424(d) of the Code) such option shall continue to be valid and
binding upon the Company according to its terms but shall not be
deemed to be an "incentive stock option" as defined in Section
422(b) of the Code unless: (a) the price per share at which
common stock of the Company may be acquired in connection with
the exercise of such options is not less than one hundred ten
percent (110%) of the fair market value of such common stock,
determined as of the date of the grant of such options; and (b)
the period of time within which such options must be exercised
does not exceed five (5) years from the date on which such
options are granted. In addition, in no event shall any options
be granted under this Plan at any time after the termination date
set forth at the end of this Plan.
4. Shares Subject to the Plan. The Company is authorized
to issue options under this Plan for the purchase of the number
of shares of Common Stock described in the following provisions
of this Section 4. On September 21, 1993 (the date on which this
Plan became effective), the aggregate number of shares of Common
Stock which were reserved for issuance pursuant to options which
were permitted to be granted hereunder was Four Hundred Thousand
(400,000) shares (subject to the anti-dilutive adjustments
provided for by Section 5 hereof). Effective February 15, 1996,
in addition to the number of shares of Common Stock reserved for
issuance pursuant to options which were permitted to be granted
as of February 14, 1996, an additional Two Hundred Thousand
(200,000) shares of Common Stock were reserved for issuance
pursuant to options which may be granted hereunder. Effective
May 20, 1997, in addition to the number of shares of Common Stock
reserved for issuance pursuant to options which were permitted to
be granted as of May 19, 1997, an additional Two Hundred Fifty
Thousand (250,000) shares of Common Stock shall be reserved for
issuance pursuant to options which may be granted hereunder.
Effective July 17, 2000, in addition to the number of shares of
Common Stock reserved for issuance pursuant to options which were
permitted to be granted as of July 16, 2000, an additional Six
Hundred Twenty Five Thousand (625,000) shares of Common Stock
shall be reserved for issuance pursuant to options which may be
granted hereunder. Accordingly, the total number of shares of
Common Stock which may be issued pursuant to the exercise of
options which may be granted under the terms of this Plan shall
be equal to the sum of: (a) Four Hundred Thousand (400,000)
shares (subject to anti-dilutive adjustments made at any time
after September 21, 1993 pursuant to Section 5 hereof); (b) Two
Hundred Thousand (200,000) shares (subject to anti-dilutive
adjustments made at any time after February 15, 1996 pursuant to
Section 5 hereof); (c) Two Hundred Fifty Thousand (250,000)
shares (subject to anti-dilutive adjustments made at any time
after May 20, 1997 pursuant to Section 5 hereof); and (d) Six
Hundred Twenty Five Thousand (625,000) shares (subject to anti
dilutive adjustments made at any time after July 17, 2000
pursuant to Section 5 hereof).
Notwithstanding the foregoing, if this amendment and
restatement of the Plan is not approved by the stockholders of
the Company prior to July 16, 2001, and if any options are issued
pursuant to the terms of this Plan at any time after: (x) the
total number of shares of Common Stock which may be acquired upon
the exercise of all previously issued options equals: (y) the sum
of : (i) Four Hundred Thousand (400,000) shares (subject to anti
dilutive adjustments made at any time after September 21, 1993
pursuant to Section 5 hereof); (ii) Two Hundred Thousand
(200,000) shares (subject to anti-dilutive adjustments made at
any time after February 15, 1996 pursuant to Section 5 hereof);
and (iii) Two Hundred Fifty Thousand (250,000) shares (subject to
anti-dilutive adjustments made at any time after May 20, 1997
pursuant to Section 5 hereof), any options issued after such time
shall continue to be binding upon the Company pursuant to its
terms but shall not be deemed to be an "incentive stock option"
as defined in section 422(b) of the Code.
With respect to shares which may be acquired pursuant
to options which expire or terminate pursuant to the provisions
of this Plan without having been exercised in full, such shares
shall be considered to be available again for placement under
options granted thereafter under the Plan. Shares issued
pursuant to the exercise of incentive stock options granted under
the Plan shall be fully paid and non-assessable.
5. Anti-Dilution Provisions. The aggregate number of
shares of Common Stock and the class of such shares as to which
options may be granted under the Plan, the number and class of
such shares subject to each outstanding option, the price per
share thereof (but not the total price), and the number of such
shares as to which an option may be exercised at any one time,
shall all be adjusted proportionately in the event of any change,
increase or decrease in the outstanding shares of Common Stock of
the Company or any change in classification of its Common Stock
without receipt of consideration by the Company which results
either from a split-up, reverse split or consolidation of shares,
payment of a stock dividend, recapitalization, reclassification
or other like capital adjustment so that upon exercise of the
option, the Optionee shall receive the number and class of shares
that he would have received had he been the holder of the number
of shares of Common Stock for which the option is being exercised
immediately preceding such change, increase or decrease in the
outstanding shares of Common Stock. Any such adjustment made by
the Committee shall be final and binding upon all Optionees, the
Company, and all other interested persons. Any adjustment of an
incentive stock option under this paragraph shall be made in such
manner as not to constitute a "modification" within the meaning
of Section 424(h)(3) of the Code.
Anything in this Section 5 to the contrary
notwithstanding, no fractional shares or scrip representative of
fractional shares shall be issued upon the exercise of any
option. Any fractional share interest resulting from any change,
increase or decrease in the outstanding shares of Common Stock or
resulting from any reorganization, merger, or consolidation for
which adjustment is provided in this Section 5 shall disappear
and be absorbed into the next lowest number of whole shares, and
the Company shall not be liable for any payment for such
fractional share interest to the Optionee upon his exercise of
the option.
6. Option Price. The purchase price for each share of
Common Stock which may be acquired upon the exercise of each
option issued under the Plan shall be determined by the Committee
at the time the option is granted, but in no event shall such
purchase price be less than one hundred percent (100%) of the
fair market value of the Common Stock on the date of the grant.
Notwithstanding the foregoing, in the case of an individual that
owns stock of the Company possessing more than ten percent (10%)
of the total combined voting power of all classes of stock of the
Company or any of its Subsidiaries (or if such individual would
be deemed to own such percentage of such stock under Section
424(d) of the Code), (any such individual being hereinafter
referred to as a "Ten Percent Shareholder") in no event shall the
purchase price for each share of Common Stock which may be
acquired upon the exercise of each option issued to such Ten
Percent Shareholder be less than one hundred ten percent (110%)
of the fair market value of the Common Stock on the date of the
grant. If the Common Stock is listed upon an established stock
exchange or exchanges on the day the option is granted, such fair
market value shall be deemed to be the highest closing price of
the Common Stock on such stock exchange or exchanges on the day
the option is granted, or if no sale of the Company's Common
Stock shall have been made on any stock exchange on that day, on
the next preceding day on which there was a sale of such stock.
If the Common Stock is listed in the NASDAQ National
Market System, the fair market value of the Common Stock shall be
the closing sale price as reported by the NASDAQ National Market
System on the day the option is granted, or if no sale of the
Common Stock shall have been made on the NASDAQ National Market
System on that day, on the next preceding day on which there was
a sale of such stock.
7. Option Exercise Periods. The time within which any
option granted hereunder may be exercised shall be, by its terms,
not earlier than one (1) year from the date such option is
granted and not later than ten (10) years from the date such
option is granted; provided that, in the case of any options
granted to a Ten Percent Shareholder, the time within which any
option granted to such Ten Percent Shareholder may be exercised
shall be, by its terms, not earlier than one (1) year from the
date such option is granted and not later than five (5) years
from the date such option is granted. Subject to the provisions
of Section 10 hereof, the Optionee must remain in the continuous
employment of the Company or any of its Subsidiaries from the
date of the grant of the option to and including the date of
exercise of option in order to be entitled to exercise his
option. Options granted hereunder shall be exercisable in such
installments and at such dates as the Committee may specify. In
addition, with respect to all options granted under this Plan,
unless the Committee shall specify otherwise, the right of each
Optionee to exercise his option shall accrue, on a cumulative
basis, as follows:
(a) one-fourth (1/4) of the total number of shares of
Common Stock which could be purchased (subject to adjustment as
provided in Section 5 hereof) (such number being hereinafter
referred to as the "Option Shares") shall become available for
purchase pursuant to the option at the end of the one (1) year
period beginning on the date of the option grant;
(b) one-fourth (1/4) of the Option Shares shall become
available for purchase pursuant to the option at the end of the
two (2) year period beginning on the date of the option grant;
(c) one-fourth (1/4) of the Option Shares shall become
available for purchase pursuant to the option at the end of the
three (3) year period beginning on the date of the option grant;
and
(d) one-fourth (1/4) of the Option Shares shall become
available for purchase pursuant to the option at the end of the
four (4) year period beginning on the date of the option grant.
Continuous employment shall not be deemed to be
interrupted by transfers between the Subsidiaries or between the
Company and any Subsidiary, whether or not elected by termination
from any Subsidiary of the Company and re-employment by any other
Subsidiary or the Company. Time of employment with the Company
shall be considered to be one employment for the purposes of this
Plan, provided there is no intervening employment by a third
party or no interval between employments which, in the opinion of
the Committee, is deemed to break continuity of service. The
Committee shall, at its discretion, determine the effect of
approved leaves of absence and all other matters having to do
with "continuous employment". Where an Optionee dies while
employed by the Company or any of its Subsidiaries, his options
may be exercised following his death in accordance with the
provisions of Section 10 below.
Notwithstanding the foregoing provisions of this
Section 7, in the event the Company or the stockholders of the
Company enter into an agreement to dispose of all or
substantially all of the assets or stock of the Company by means
of a sale, merger, consolidation, reorganization, liquidation, or
otherwise, or in the event a Change of Control (as hereinafter
defined) shall occur, an option shall become immediately
exercisable with respect to the full number of shares subject to
that option during the period commencing as of the date of
execution of such agreement and ending as of the earlier of: (i)
ten (10) years from the date such option was granted; or (ii)
ninety (90) days following the date on which a Change in Control
occurs or the disposition of assets or stock contemplated by the
agreement is consummated. Ninety (90) days following the
consummation of any such disposition of assets or stock, or
Change in Control, this Plan and any unexercised options issued
hereunder (or any unexercised portion thereof) shall terminate
and cease to be effective, unless provision is made in connection
with such transaction for assumption of options previously
granted or the substitution for such options of new options
covering the securities of a successor corporation or an
affiliate thereof, with appropriate adjustments as to the number
and kind of securities and prices.
For purposes of this Plan, a "Change in Control" shall
be deemed to have occurred if:
(a) any "person" or "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act) of more
than thirty percent (30%) of the then outstanding voting stock of
the Company; or
(b) during any period of two consecutive years,
individuals who at the beginning of such period constitute the
Board of Directors of the Company (and any new director whose
election to the Board of Directors or whose nomination for
election by the Company's stockholders was approved by a vote of
at least two thirds of the directors then still in office who
either were directors at the beginning of such period or whose
election or nomination for election was previously so approved)
(the "Continuing Directors") cease for any reason to constitute a
majority thereof; or
(c) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other
than a merger or consolidation which would result in the voting
securities of the Company immediately prior thereto or, if
earlier, immediately prior to the adoption by the Board of
Directors of the Company of a resolution approving a plan and
agreement of merger or consolidation which results in the merger
or consolidation referred to above, continuing to represent
(either by remaining outstanding or being converted into voting
securities of the surviving entity) at least 80% of the combined
voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation (provided, however, that if prior to the merger or
consolidation, the Board of Directors of the Company adopts a
resolution that is approved by a majority of the Continuing
Directors providing that such merger or consolidation shall not
constitute a "Change in Control" for purposes of the Plan, then
such a merger or consolidation shall not constitute a "Change in
Control"); or
(d) the stockholders of the Company approve an
agreement for the sale or disposition by the Company of all or
substantially all the assets of the Company.
Any change or adjustment made pursuant to the terms of
this paragraph shall be made in such a manner so as not to
constitute a "modification" as defined in Section 424 of the
Code, and so as not to cause any incentive stock option issued
under this Plan to fail to continue to qualify as an incentive
stock option as defined in Section 422(b) of the Code.
Notwithstanding the foregoing, in the event that any agreement
providing for the sale or other disposition of all or
substantially all the stock or assets of the Company shall be
terminated without consummating the disposition of said stock or
assets, any unexercised unaccrued installments that had become
exercisable solely by reason of the provisions of this paragraph
shall again become unaccrued and unexercisable as of said
termination of such agreement; subject, however, to such
installments accruing pursuant to the normal accrual schedule
provided in the terms under which such option was granted. Any
exercise of an installment prior to said termination of said
agreement shall remain effective despite the fact that such
installment became exercisable solely by reason of the Company or
its stockholders entering into said agreement to dispose of the
stock or assets of the Company.
8. Exercise of Option. Options shall be exercised as
follows:
(a) Notice and Payment. Each option, or any
installment thereof, shall be exercised, whether in whole or in
part, by giving written notice to the Company at its principal
office, specifying the options being exercised (by reference to
the date of the grant of the option), the number of shares to be
purchased and the purchase price being paid, and shall be
accompanied by the payment of all or such part of the purchase
price as shall be required to be paid in connection with the
exercise of such option as specified in the written notice of
exercise of the option, by cash, certified or bank check payable
to the order of the Company. Each such notice shall contain
representations on behalf of the Optionee that he acknowledges
that the Company is selling the shares being acquired by him
under a claim of exemption from registration under the Securities
Act of 1933 as amended (the "Act"), as a transaction not
involving any public offering; that he represents and warrants
that he is acquiring such shares with a view to "investment" and
not with a view to distribution or resale; and that he agrees not
to transfer, encumber or dispose of the shares unless: (i) a
registration statement with respect to the shares shall be
effective under the Act, together with proof satisfactory to the
Company that there has been compliance with applicable state law;
or (ii) the Company shall have received an opinion of counsel in
form and content satisfactory to the Company to the effect that
the transfer qualifies under Rule 144 or some other disclosure
exemption from registration and that no violation of the Act or
applicable state laws will be involved in such transfer, and/or
such other documentation in connection therewith as the Company's
counsel may in its sole discretion require.
(b) Issuance of Certificates. Certificates
representing the shares purchased by the Optionee shall be issued
as soon as practicable after the Optionee has complied with the
provisions of Section 8(a) hereof.
(c) Rights as a Stockholder. The Optionee shall have
no rights as a stockholder with respect to the shares of Common
Stock purchased until the date of the issuance to him of a
certificate representing such shares.
9. Assignment of Option. (a) Subject to the provisions of
Sections 9(b) and 10(c) hereof, options granted under this Plan
may not be assigned voluntarily or involuntarily or by operation
of law and any attempt to transfer, assign, pledge, hypothecate
or otherwise dispose of, or to subject to execution, attachment
or similar process, any incentive stock option, or any right
thereunder, contrary to the provisions hereof shall be void and
ineffective, shall give no right to the purported transferee, and
shall, at the sole discretion of the Committee, result in
forfeiture of the option with respect to the shares involved in
such attempt.
(b) Notwithstanding anything to the contrary contained
in the terms of the Plan as in effect at any time prior to the
date hereof and notwithstanding anything to the contrary
contained in the terms of any statement, letter or other document
or agreement setting forth the terms and conditions of any
options previously issued pursuant to the terms of this Plan, any
and all Non-Qualified Options (as defined in Section 13 hereof)
previously issued to any officer of the Company (as defined in
Rule 16A-1(f) issued under the Securities and Exchange Act of
1934 (hereinafter an "Executive Officer")) pursuant to the terms
of the Plan and, subject to the approval of the Committee, any
Non-Qualified Options which may be granted or issued to any
Executive Officer of the Company at any time in the future
pursuant to the terms of the Plan shall be transferable by the
Executive Officer to whom such Non-Qualified Options have been or
are granted to: (i) the spouse, children or grandchildren of the
Executive Officer (hereinafter "Immediate Family Members"); (ii)
a trust or trusts for the exclusive benefit of such Immediate
Family Members; (iii) a partnership or limited liability company
in which such Immediate Family Members are the only partners or
members; or (iv) a private foundation established by the
Executive Officer; provided that: (x) there may be no
consideration for any such transfer; (y) in the case of Non
Qualified Options which may be granted in the future, the
statement, letter or other document or agreement setting forth
the terms and conditions of any such Non-Qualified Options must
expressly provide for and limit the transferability of such Non
Qualified Options to transfers which are permitted by the
foregoing provisions of this Section 9(b); and (z) any subsequent
transfer of transferred Non-Qualified Options shall, except for
transfers occurring as a result of the death of the transferee as
contemplated by Section 10(e), be prohibited. Following the
transfer of any Non-Qualified Options as permitted by the
foregoing provisions of this Section 9(b), any such transferred
Non-Qualified Options shall continue to be subject to the same
terms and conditions applicable to such Non-Qualified Options
immediately prior to the transfer; provided that, for purposes of
this Plan, the term "Optionee" shall be deemed to refer to the
transferee. Notwithstanding the foregoing, the events of
termination of employment of Section 10 hereof shall continue to
be applied with respect to the original Optionee for the purpose
of determining whether or not the Non-Qualified Options shall be
exercisable by the transferee and, upon termination of the
original Optionee's employment, the Non-Qualified Options shall
be exercisable by the transferee only to the extent and for the
periods that the original Optionee (or his estate) would have
been entitled to exercise such options as specified in Section 10
below.
10. Effect of Termination of Employment, Death or
Disability. (a) In the event of the termination of employment of
an Optionee (otherwise than by reason of death or retirement of
the Optionee at his Retirement Date) by the Company or by any of
the Subsidiaries employing the Optionee at such time, any option
or options granted to him under the Plan to the extent not
theretofore exercised shall be deemed cancelled and terminated
forthwith, except that, such Optionee may exercise any options
theretofore granted to him, which have not then expired and which
are otherwise exercisable within the provisions of Section 7
hereof, within three (3) months after such termination. If the
employment of an Optionee shall be terminated by reason of the
Optionee's retirement at his Retirement Date by the Company or by
any of the Subsidiaries employing the Optionee at such time, the
Optionee shall have the right to exercise such option or options
held by him to the extent that such options have not expired, at
any time within three (3) months after such retirement. The
provisions of Section 7 to the contrary notwithstanding, upon
retirement, all options held by an Optionee shall be immediately
exercisable in full. The transfer of an Optionee from the employ
of the Company to a Subsidiary of the Company or vice versa, or
from one Subsidiary of the Company to another, shall not be
deemed to constitute a termination of employment for purposes of
this Plan.
(b) In the event that an Optionee shall die while
employed by the Company or by any of the Subsidiaries or shall
die within three (3) months after retirement on his Retirement
Date (from the Company or any Subsidiary), any option or options
granted to him under this Plan and not theretofore exercised by
him or expired shall be exercisable by the estate of the Optionee
or by any person who acquired such option by bequest or
inheritance from the Optionee in full, notwithstanding the
provisions of Section 7 hereof, at any time within one (1) year
after the death of the Optionee. References herein above to the
Optionee shall be deemed to include any person entitled to
exercise the option after the death of the Optionee under the
terms of this Section.
(c) In the event of the termination of employment of an
Optionee by reason of the Optionees' disability, the Optionee
shall have the right, notwithstanding the provisions of Section 7
hereof, to exercise all options held by him, in full, to the
extent that such options have not previously expired or been
exercised, at any time within one (1) year after such
termination. The term "disability" shall, for the purposes of
this Plan, be defined in the same manner as such term is defined
in Section 22(e)(3) of the Internal Revenue Code of 1986.
(d) For the purposes of this Plan, the "Retirement
Date" of an Optionee shall mean the date on which the Optionee's
employment with the Company, or, if applicable, the Subsidiary by
whom the Optionee is employed, is terminated; provided that, such
termination occurs after: (i) the Optionee has either: (A) been
continuously employed by the Company or, if applicable, a
Subsidiary for a period of a least five (5) years and attained at
least age sixty (60); or (B) attained at least age sixty-five
(65); and (ii) the Optionee has given at least thirty (30) days
advance written notice to the Company or, if applicable, the
Subsidiary by whom the Optionee is employed, that the Optionee
will retire from his employment with the Company or the
Subsidiary by whom he is employed on such date. For purposes of
the foregoing, the period of an Optionee's employment with the
Company or any Subsidiary shall be considered to be one
continuous employment for purposes of determining whether the
Optionee has been continuously employed for at least five (5)
years provided that there is no intervening employment by a third
party or no interval between employments which, in the sole
opinion of the Committee, is deemed to break the continuity of
the Optionee's employment. Continuous employment shall not be
deemed to be interrupted by transfers between the Subsidiaries or
between the Company and any Subsidiary, whether or not elected by
the Optionee. The Committee shall, in its sole discretion,
determine the effect of approved leaves of absence and all other
matters having to do with continuous employment.
11. Amendment and Termination of the Plan. The Board of
Directors of the Company may at any time suspend, amend or
terminate the Plan; provided, however, that except as permitted
in Section 13 hereof, no amendment or modification of the Plan
which would:
(a) increase the maximum aggregate number of shares as
to which options may be granted hereunder (except as contemplated
in Section 5); or
(b) reduce the option price or change the method of
determining the option price; or
(c) increase the time for exercise of options to be
granted or those which are outstanding beyond a term of ten (10)
years; or
(d) change the designation of the employees or class of
employees eligible to receive options under this Plan,
may be adopted unless with the approval of the holders
of a majority of the outstanding shares of Common Stock
represented at a stockholders' meeting of the Company, or with
the written consent of the holders of a majority of the
outstanding shares of Common Stock. No amendment, suspension or
termination of the Plan may, without the consent of the holder of
the option, terminate his option or adversely affect his rights
in any material respect.
12. Incentive Stock Options; Power to Establish Other
Provisions. It is intended that the Plan shall conform to and
(except as otherwise expressly set forth herein) each option
shall qualify and be subject to exercise only to the extent that
it does qualify as an "incentive stock option" as defined in
Section 422 of the Code and as such section may be amended from
time to time or be accorded similar tax treatment to that
accorded to an incentive stock option by virtue of any new
revenue laws of the United States. The Board of Directors may
make any amendment to the Plan which shall be required so to
conform the Plan. Subject to the provisions of the Code, the
Committee shall have the power to include such other terms and
provisions in options granted under this Plan as the Committee
shall deem advisable. The grant of any options pursuant to the
terms of this Plan which do not qualify as "incentive stock
options" as defined in Section 422 of the Code is hereby approved
provided that the maximum number of shares of Common Stock of the
Company which can be issued pursuant to the terms of this Plan
(as provided for in Section 4 hereof but subject to anti-dilutive
adjustments made pursuant to Section 5 hereof) is not exceeded by
the grant of any such options and, to the extent that any options
previously granted pursuant to the terms of this Plan were not
"incentive stock options" within the meaning of Section 422 of
the Code, the grant of such options is hereby ratified, approved
and confirmed.
13. Maximum Annual Value of Options Exercisable.
Notwithstanding any provisions of this Plan to the contrary if:
(a) the sum of: (i) the fair market value (determined as of the
date of the grant) of all options granted to an Optionee under
the terms of this Plan which become exercisable for the first
time in any one calendar year; and (ii) the fair market value
(determined as of the date of the grant) of all options
previously granted to such Optionee under the terms of this Plan
or any other incentive stock option plan of the Company or its
subsidiaries which also become exercisable for the first time in
such calendar year; exceeds (b) $100,000; then, (c) those options
shall continue to be binding upon the Company in accordance with
their terms but, to the extent that the aggregate fair market of
all such options which become exercisable for the first time in
any one calendar year (determined as of the date of the grant)
exceeds $100,000, such options (referred to, for purposes of this
Plan, as "Non-Qualified Options") shall not be deemed to be
incentive stock options as defined in Section 422(b) of the Code.
For purposes of the foregoing, the determination of which options
shall be recharacterized as not being incentive stock options
issued under the terms of this Plan shall be made in inverse
order of their grant dates and, accordingly, the last options
received by the Optionee shall be the first options to be
recharacterized as not being incentive stock options granted
pursuant to the terms of the Plan.
14. General Provisions (a) No incentive stock option shall
be construed as limiting any right which the Company or any
parent or subsidiary of the Company may have to terminate at any
time, with or without cause, the employment of an Optionee.
(b) The Section headings used in this Plan are intended
solely for convenience of reference and shall not in any manner
amplify, limit, modify or otherwise be used in the construction
or interpretation of any of the provisions hereof.
(c) The masculine, feminine or neuter gender and the
singular or plural number shall be deemed to include the other
whenever the content so indicates or requires.
(d) No options shall be granted under the Plan after
ten (10) years from the date the Plan is adopted by the Board of
Directors of the Company or approved by the stockholders of the
Company, whichever is earlier.
15. Effective Date and Duration of the Plan. The Plan
became effective on September 21, 1993, the date the adoption of
the Plan was approved by the Board of Directors of the Company.
On November 5, 1993, as required by Section 422 of the Code, the
Plan was approved by the Stockholders of the Company. The Plan
will terminate on September 20, 2003; provided however, that the
termination of the Plan shall not be deemed to modify, amend or
otherwise affect the terms of any options outstanding on the date
the Plan terminates.
IN WITNESS WHEREOF, the undersigned has executed this Plan
by and on behalf of the Company on and as of the 17th day of
July, 2000.
GIBRALTAR STEEL CORPORATION
By: /s/ Neil Lipke
Neil Lipke
Secretary
DATE ADOPTED BY BOARD OF DIRECTORS: September 21, 1993 DATE
APPROVED BY STOCKHOLDERS: November 5, 1993 TERMINATION DATE:
September 21, 2003
APPENDIX B
GIBRALTAR STEEL CORPORATION
AUDIT COMMITTEE CHARTER
ARTICLE 1
OVERALL PURPOSE/OBJECTIVES
The Audit Committee will assist the Board of Directors of
the Company (the "Board") in fulfilling its oversight
responsibilities. The Audit Committee will review the financial
reporting process, the system of internal control and management
of financial risks, the audit process, and the Company's process
for monitoring compliance with laws and regulations and its own
code of business conduct. In performing its duties, the Audit
Committee will maintain effective working relationships with the
Board, Management and the external auditors. To perform his or
her role effectively, each Audit Committee member will obtain an
understanding of the detailed responsibilities of the Audit
Committee membership as well as the Company's business,
operations and risks. While the Audit Committee has the
responsibilities and powers set forth in this Charter, it is not
the duty of the Audit Committee to plan or conduct audits or to
determine that the Company's financial statements are complete
and accurate and are in accordance with generally accepted
accounting principles. This is the responsibility of Management
and the independent auditor. Nor is it the duty of the Audit
Committee to conduct investigations, to resolve disagreements, if
any, between Management and the independent auditor or to assure
compliance with laws and regulations.
ARTICLE 2
AUTHORITY
The Board of Directors (the "Board") authorizes the Audit
Committee, within the scope of its responsibilities, to:
(a) Seek any information it requires from
(i) any employee of the Company (and all employees
are directed to co-operate with any request made
by the Audit Committee) and (ii) external parties;
and
(b) Obtain outside legal or other professional advice.
ARTICLE 3
ORGANIZATION
Membership
3.1 The Audit Committee will be comprised of three (3) members,
at least one (1) of whom has past employment experience in
finance or accounting, requisite professional certification in
accounting or comparable experience or background resulting in
his or her financial sophistication.
3.2 Each member of the Audit Committee should be
capable of making a valuable contribution to the
committee and must be capable to read and understand
fundamental financial statements.
3.3 All members should be independent of the Company's
management ("Management").
3.4 The chairman of the Audit Committee will be
nominated by the Board from time to time.
3.5 Members will be appointed by the Board and serve
until their successors are appointed.
3.6 A quorum for any meeting will be two (2) members.
3.7 The secretary of the Audit Committee will be the
secretary of the Company, or such other person as
nominated by the Audit Committee.
Attendance at Meetings
3.8 The Audit Committee may invite such other persons
to its meetings, as it deems necessary.
3.9 The external auditors and members of the Company's
financial Management should be invited to make
presentations to the Audit Committee as appropriate.
3.10 Meetings shall be held not less than two (2) times
a year. Special meetings may be convened as required.
The external auditors may convene a meeting if they
consider that it is necessary.
3.11 The proceedings of all meetings will be minuted.
ARTICLE 4
ROLES AND RESPONSIBILITIES
The Audit Committee will:
Internal Control
4.1. Evaluate whether Management is setting the
appropriate "control culture" by communicating the
importance of internal control and the management of
risk and ensuring that all employees have an
understanding of their roles and responsibilities.
4.2 Consider how Management is held to account for the
security of computer systems and applications, and the
contingency plans for processing financial information
in the event of a systems breakdown.
4.3 Gain an understanding of whether internal control
recommendations made by external auditors have been
implemented by Management.
Financial Reporting
A. General
4.4 Gain an understanding of the current areas of
greatest financial risk and how Management is managing
these effectively.
4.5 Consider with the external auditors any fraud,
illegal acts, deficiencies in internal control or other
similar issues.
4.6 Review significant accounting and reporting
issues, including recent professional and regulatory
pronouncements, and understand their impact on the
financial statements.
4.7 Ask Management and external auditors about
significant risks and exposures and the plans to
minimize such risks.
4.8 Review any legal matters which could significantly
impact the financial statements.
B. Annual Financial Statements
4.9 Review the Company's annual financial statements
and determine whether they are complete and consistent
with the Company's information known to Audit Committee
members and assess whether such financial statements
reflect appropriate accounting principles.
4.10 Pay particular attention to complex and/or unusual
transactions such as restructuring charges and
derivative disclosures.
4.11 Focus on judgmental areas, for example those
involving valuation of assets and liabilities;
warranty, product or environmental liability;
litigation reserves; and other commitments and
contingencies.
4.12 Meet with Management and the external auditors
to review the Company's financial statements and the
results of the audit.
4.13 Review the other sections of the Company's annual
report to stockholders before its release and consider
whether the information is understandable and
consistent with the Audit Committee members' knowledge
about the Company and its operations.
C. Preliminary Announcements, Interim Financial Statements and
Analysts' Briefings
4.14 Be briefed on how Management develops preliminary
announcements, interim financial information and
analysts' briefings and the extent to which the
external auditors review such information.
4.15 Assess the fairness of the Company's preliminary
and interim statements and disclosures, and obtain
explanations from Management and external auditors on
whether:
a. Actual financial results for the interim
period varied significantly from budgeted or
projected results.
b. Changes in financial ratios and
relationships in the interim financial statements
are consistent with changes in the Company's
operations and financing practices.
c. Generally accepted accounting principles
have been consistently applied.
d. There are any actual or proposed changes
in accounting or financial reporting practices.
e. There are any significant or unusual
events or transactions.
f. The Company's financial and operating
controls are functioning effectively.
g. The preliminary announcements and
interim financial statements contain adequate and
appropriate disclosures.
External Audit
4.16 Review the Company's external auditors' proposed
audit scope and approach and ensure no unjustified
restrictions or limitations have been placed on the
scope.
4.17 Review the performance of the Company's external
auditors.
4.18 Consider the independence of the Company's
external auditors, including reviewing the range of
services provided in the context of all consulting
services bought by the Company.
4.19 Make recommendations to the Board regarding the
reappointment of the Company's external auditors.
4.20 Meet separately with the Company's external
auditors to discuss any matters that the Audit
Committee or auditors believe should be discussed
privately.
4.21 Ensure the significant findings and
recommendations made by the Company's external auditors
are received and discussed on a timely basis.
4.22 Ensure that Management responds to recommendations
by the Company's external auditors.
Compliance with Laws and Regulations
4.23 Review the effectiveness of the Company's system
for monitoring compliance with laws and regulations and
the results of Management's investigation and follow-up
(including disciplinary action) of any fraudulent acts
or non-compliance.
4.24 Obtain regular updates from Management and the
Company's legal counsel regarding compliance matters.
4.25 Be satisfied that all regulatory compliance
matters have been considered in the preparation of the
financial statements.
4.26 Review the findings of any examinations by
regulatory agencies.
Reporting Responsibilities
4.27 Regularly update the Board about Audit Committee
activities and make appropriate recommendations.
4.28 Ensure the Board is aware of matters which may
significantly impact the financial condition or affairs
of the business.
Other Responsibilities
4.29 Perform other oversight functions as requested by
the Board.
4.30 If necessary, institute special investigations
and, if appropriate, hire special counsel or experts to
assist.
4.31 Review and update the Company's certificate of
incorporation and bylaws; receive approval of changes
from the Board.
4.32 Evaluate the Audit Committee's own performance on
a regular basis.
