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
|X| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
IMPERIAL INDUSTRIES, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
(1) Titles of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
IMPERIAL INDUSTRIES, INC.
1259 Northwest 21st Street
Pompano Beach, Florida 33069
--------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 19, 2002
TO THE STOCKHOLDERS OF IMPERIAL INDUSTRIES, INC.
NOTICE is hereby given that the Annual Meeting of Stockholders of
Imperial Industries, Inc., a Delaware corporation (the "Company") will be held
at the Hyatt Regency Hotel, 400 S. E. 2nd Avenue, Miami, Florida, on Friday,
July 19, 2002 at 10:00 A.M., for the following purposes:
1. To elect one (1) Class I director for a term of three (3)
years.
2. To approve a proposal to amend the Company's Certificate of
Incorporation to effect a one for five reverse stock split
of the Company's common stock
3. To transact such other business as may properly come before
the Annual Meeting or any adjournment thereof.
These items are fully discussed in the proxy statement that is
attached to and made a part of this Notice of Annual Meeting. Only stockholders
of record at the close of business on May 24, 2002 shall be entitled to receive
notice of, and to vote at, the Annual Meeting, or any postponements or
adjournments thereof. A complete list of the stockholders entitled to vote at
the Annual Meeting will be available for inspection at the offices of the
Company for ten (10) days prior to the Annual Meeting.
The Company requests that you vote your shares as promptly as
possible. Whether or not you expect to attend the Annual Meeting, please vote,
date, sign, and return the enclosed proxy as promptly as possible to assure
representation of your shares at the meeting. You may revoke your proxy at any
time prior to its exercise by written notice to the Company prior to the Annual
Meeting, or by attending the Annual Meeting in person and voting.
By Order of the Board of Directors
Howard L. Ehler, Jr.
Secretary
Pompano Beach, Florida
June 5, 2002
YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE ASKED TO COMPLETE, SIGN, DATE AND
RETURN THE ACCOMPANYING PROXY CARD IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES.
IMPERIAL INDUSTRIES, INC.
1259 Northwest 21st Street
Pompano Beach, Florida 33069
--------------------
PROXY STATEMENT
--------------------
ANNUAL MEETING OF STOCKHOLDERS
JULY 19, 2002
This Proxy Statement relates to the Annual Meeting of the stockholders
(the "Annual Meeting") of Imperial Industries, Inc., a Delaware corporation (the
"Company") to be held at 10:00 A.M., local time, on July 19, 2002 at the Hyatt
Regency Hotel, 400 S. E. 2nd Avenue, Miami, Florida, and at any and all
postponements or adjournments thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting.
We will begin sending this Proxy Statement, the attached Notice of
Annual Meeting and the accompanying Proxy Card to our stockholders who are
entitled to vote at the Annual Meeting on or about June 7, 2002. Our common
stock is the only class of voting stock that we have issued and outstanding.
Stockholders who owned common stock as of the close of business on May 24, 2002
will be entitled to vote at the Annual Meeting.
Why This Proxy Statement is Being Sent
This Proxy Statement and the enclosed Proxy Card are being sent to you
because the Company's Board of Directors is soliciting proxies from stockholders
to vote at the Annual Meeting. This Proxy Statement summarizes the information
you need to know to vote at the Annual Meeting. If you do not wish to attend the
Annual Meeting to vote your shares, you may instead complete, date, sign and
return the enclosed Proxy Card to vote.
What is Being Voted on at the Annual Meeting
The Company's Board of Directors is asking stockholders to vote on and
to approve two matters:
- The election of one Class I director for a term of three
years; and
- A proposal to effect a one for five reverse split of the
Company's common stock.
The Company does not currently know of any other matter that will be acted upon
at the Annual Meeting.
Who May Vote
Stockholders who owned common stock at the close of business on May
24, 2002 are entitled to vote at the Annual Meeting (the Record Date"). On the
Record Date, we had issued and outstanding 9,220,434 shares of common stock.
Common stock is the only issued and outstanding class of voting stock. You do
not have cumulative voting rights. You have one vote for each share of common
stock that you own.
Votes Needed for a Quorum
A majority of the shares of common stock that is issued and
outstanding on the Record Date must be present or voted by proxy for a quorum at
the Annual Meeting. If you return your Proxy Card or attend the Annual Meeting
in person, your common stock will be counted for the purpose of determining
whether a quorum exists, even if you wish to abstain from voting on any or all
of the matters presented at the Annual Meeting. In determining whether a quorum
exists at the Annual Meeting, all votes "for" or "against," as well as
abstentions
will be counted. Broker non-votes will also be counted as present or represented
for the purpose of determining whether a quorum is present for the transaction
of business. If you hold your common stock through a broker, bank or other
nominee, generally the nominee may only vote the common stock which it holds for
you in accordance with your instructions. We do not count abstentions or broker
non-votes as for or against any proposal.
If a quorum is not present at the Annual Meeting, no official business
can be conducted. However, if a quorum is not present or represented at the
Annual Meeting, the stockholders who do attend the Annual Meeting in person or
who are represented by proxy, may adjourn the Annual Meeting until a quorum is
present or represented. At any adjournment where there is a quorum, any business
may be transacted that might have been transacted at the original meeting.
How You May Vote by Proxy
A proxy is a person you appoint to vote on your behalf. Because many
of our stockholders are unable to attend the Annual Meeting in person, the Board
of Directors solicits proxies by mail to give each stockholder an opportunity to
vote on all matters that will come before the Annual Meeting. In order to ensure
that your vote will be recorded, you are urged to:
- Read this Proxy Statement carefully;
- Specify your choice on each matter by marking the
appropriate box on the enclosed Proxy Card; and
- Sign, date and return the Proxy Card in the enclosed
envelope.
By signing the Proxy Card, you will be designating S. Daniel Ponce and
Howard L. Ehler, Jr. as your proxies. They may act together or individually on
your behalf and will have the authority to appoint a substitute to act as proxy.
They will vote your shares in accordance with your directions. However, if you
sign and return the Proxy Card without instructions marked on it, it will be
voted FOR the nominee for Class I director listed on the Proxy Card and FOR the
proposal to effect a one for five reverse split of the Company's common stock.
If any other matter is validly presented at the Annual Meeting, your proxies
will vote in accordance with their best judgement. We do not currently know of
any other matter that will be acted on at the Annual Meeting.
How You Can Revoke Your Proxy
You may revoke your proxy at any time prior to the Annual Meeting by
doing any of the following:
- giving written notice of its revocation to the Company,
- by submission of another duly executed proxy dated after the
Proxy Card to be revoked, or
- by attending the Annual Meeting and voting in person.
Your mere presence at the Annual Meeting will not revoke the prior
appointment.
Vote Required on Proposals
Each stockholder is entitled to one vote for each share of common
stock registered in his name on the Record Date for each matter brought before
the stockholders at the Annual Meeting. The nominee for director for Class I
receiving the highest number of votes will be elected for the term of such
directorship. An affirmative vote of the holders of a majority of the
outstanding common stock entitled to vote at the Annual Meeting is required to
adopt the reverse stock split. Accordingly, abstentions and broker non-votes
could have a significant effect on the outcome of this proposal as they will be
counted .
- 2 -
Voting is Confidential
Proxy Cards, ballots and tabulations that identify individual
stockholders are confidential. Only the inspectors of election and certain of
our employees associated with processing Proxy Cards and counting votes have
access to your Proxy Card. Additionally, all comments directed to the Company
(whether written on the Proxy Card or elsewhere) remain confidential, unless you
ask that your name be disclosed.
The Company Pays the Cost of Solicitation of Proxies
The Company will pay all expenses associated with this proxy
solicitation. Such costs include preparing, printing, assembling and mailing the
Notice of Annual Meeting, the Proxy Statement and the Proxy Card, as well as all
costs of soliciting proxies. We will primarily solicit proxies by mail. However,
our officers, directors and regular employees may solicit by telephone,
facsimile transmission, e-mail or in person. Such officers, directors and
employees would not receive additional compensation. We will also request
brokerage firms, nominees, custodians and fiduciaries to forward proxy materials
to the beneficial owners of shares held of record by such persons and we will
reimburse such persons, including our transfer agent, for their reasonable
out-of-pocket expenses in forwarding such materials. We may retain the services
of a proxy solicitation firm to solicit proxies and will pay all reasonable
costs associated with such firm.
ELECTION OF DIRECTORS
The Board of Directors is currently divided into three classes, having
three year terms that expire in successive years. Directors hold office until
the expiration of their respective terms and until their successors are elected
or until death, resignation or removal.
The Class I Director's term expires with the 2002 Annual Meeting.
Accordingly, one Class I Director will be elected at the Annual Meeting. The
Class I Director will serve until the 2005 Annual Meeting or until his successor
is elected.
The Board of Directors propose that the nominee described below, be
elected as the Class I Director for the term specified above and until his
successor is duly elected and qualified, except in the event of his earlier
death, resignation or removal. The nominee has consented to serve for the term
of such Class. We have no reason to believe that the nominee will be unable or
unwilling to serve, if elected. If such nominee should become unavailable prior
to the election, the accompanying Proxy Card will be voted for the election, in
his or her stead, of such other person as the Board of Directors may recommend.
Nominee for Class I Director
Information regarding the Board's nominee for election as Class I
Director is set forth below.
Howard L. Ehler, Jr.
Director since 2000
Age 58
Mr. Ehler has been Principal Executive Officer of the Company since
March 1990 and Executive Vice President, Chief Financial Officer and Secretary
of the Company since April 1988. Prior thereto, he was Vice President, Chief
Financial Officer and Assistant Secretary of the Company for over five years
Directors Continuing in Office
Class II Directors. The following Class II directors have terms ending
at the 2003 Annual Meeting:
Milton J. Wallace.
Director since 1999
Age 66
- 3 -
Mr. Wallace has been a practicing attorney in Miami for over
thirty-five (35) years and is currently a shareholder in the law firm of
Wallace, Bauman, Legon, Fodiman, Ponce & Shannon, P.A. He was a co- founder and
Chairman of the Board of Renex Corp, a provider of dialysis services, from 1993
through February 2000, when Renex Corp. was acquired by National Nephrology
Associates, Inc. Mr. Wallace was Chairman of the Board of Med/Waste, Inc.,a
provider of medical waste management services until February 13, 2002 when such
company filed for bankruptcy under Chapter 7 of the federal Bankruptcy Code. He
is a director of several private companies.
Morton L. Weinberger, CPA.
Director since 1988
Age 72
Mr. Weinberger has been a director of the Company since 1988. Mr.
Weinberger, a certified public accountant, has been self-employed as a
consultant to various professional organizations for the past fifteen (15)
years. He provides consulting services for the Company. For the previous
twenty-five years, he was engaged in the practice of public accounting. During
such period, he was a partner with Peat Marwick Mitchell & Co., now known as
KPMG Peat Marwick, and thereafter BDO Seidman, both public accounting firms.
Class III Directors. The following Class III directors have terms
ending at the 2004 Annual Meeting: Lisa M. Brock Director since 1988 Age 43
Mrs. Brock was employed by the Company and its subsidiaries,
Premix-Marbletite Manufacturing Co. and Acrocrete, Inc., as Vice President for
over five (5) years until December 1994, when she retired. Mrs. Brock continues
to serve as a consultant to the Company.
S. Daniel Ponce
Director since 1988
Age 53
Mr. Ponce has been Chairman of the Board of the Company since 1988.
Mr. Ponce has been engaged in the practice of law for over twenty five (25)
years and is currently a shareholder in the law firm of Wallace, Bauman, Legon,
Fodiman, Ponce & Shannon, P.A. Since March 1, 2002, Mr. Ponce is serving as
special counsel to United States Senator Bob Graham. Mr. Ponce is a member of
the Board of Directors of the University of Florida Foundation, Inc. and serves
as Chairman of its audit committee. He is also a non- practicing certified
public accountant.
Directors' Remuneration; Attendance
Directors' Compensation: Directors who are officers or employees of
the Company receive no additional compensation for their service as members of
the Board of Directors. During the year ended December 31, 2001, each
non-employee director received an annual retainer of $6,000, payable in
quarterly installments. Directors are also reimbursed for expenses which may be
incurred by them in connection with the business and affairs of the Company.
Non-employee directors are eligible to receive grants of options under the
Directors Stock Option Plan ("Directors Plan").
Effective June 1, 1994, January 1, 1995 and January 1, 2001, the
Company entered into separate consulting agreements with Mr. Weinberger, Ms.
Brock and Mr. Wallace, respectively, to provide various management consulting
services to the Company. Mr. Wallace and Ms. Brock receive monthly fees of $833.
In connection with the Company's acquisition program adopted in 1999, Mr.
Weinberger was requested to expend additional time in consulting with the
Company's management on acquisition possibilities, including performing due
diligence, administrative, accounting and other services. As a result of the
increased time and effort spent by Mr. Weinberger, Mr. Weinberger's consulting
fee for 2000 and 2001 was $3,500 per month.
- 4 -
Effective January 1, 2002 the fee was reduced to $2,500 per month. Each
consulting agreement is terminable on sixty (60) days notice by either party.
On November 14, 2001, each director was granted stock options to
purchase 20,000 shares of the Company's common stock at an exercise price of
$.20 per share until November 14, 2006.
Since September 1994, Mr. Ponce has been provided the use of a Company
car at a current cost of approximately $775 per month.
Board Attendance. The Board of Directors met four (4) times in fiscal
2001. Each director attended all of the Board of Directors meetings in 2001.
Committees of the Board
The Board has established a number of standing committees to assist it
in the discharge of its responsibilities. The Board has standing Compensation
and Stock Option and Audit Committees. The principal responsibilities of each
standing committee are described below. Any action taken by a committee of the
Board is reported to the Board of Directors, usually at the next Board meeting.
Compensation and Stock Option Committee: The Compensation and Stock
Option Committee, composed of Ms. Brock , as Chairman, and Messrs. Ponce and
Weinberger, met three (3) times in fiscal 2001. Each member attended all of the
meetings. The Compensation and Stock Option Committee reviews the Company's
general compensation policies and procedures; establishes salaries and benefit
programs for the Chief Executive Officer and other executive officers of the
Company and its subsidiaries; reviews, approves and establishes performance
targets and awards under incentive compensation plans for its executive
officers; and reviews and approves employment agreements. The Compensation and
Stock Option Committee also administers the Company's Employee Stock Option Plan
and has the authority to determine, among other things, to whom to grant
options, the amount of options, the terms of options and the exercise prices
thereof.
Audit Committee: The Audit Committee is presently composed of Mr.
Weinberger, as Chairman and Messrs. Ponce and Wallace. The Audit Committee met
two (2) times during 2001. Every member attended both meetings. The Audit
Committee assists the Board of Directors in its general oversight of the
Company's financial reporting, internal controls and audit functions. For
further information regarding the Audit Committee, see " Report of the Audit
Committee" on Page 6.
Compensation Committee Interlocks and Insider Participation: During
the year ended December 31, 2001, the Compensation and Stock Option Committee
consisted of Ms. Brock and Messrs. Ponce and Weinberger. None of these directors
has been an officer or employee of the Company or its subsidiaries during the
last ten years, except Ms. Brock, who was formerly Vice President of
Premix-Marbletite Manufacturing Co. and Acrocrete, Inc. until December 31, 1994.
There are no other relationships required to be disclosed pursuant to applicable
Securities and Exchange Commission rules and regulations.
Management Matters
The are no current arrangements nor understandings known to the
Company between any of the directors, nominees for director or the executive
officers of the Company and any other person pursuant to which any such person
was elected as a director or appointed as an executive officer. Except as
otherwise stated herein, there are no family relationships between any
directors, nominees for director, or executive officers of the Company. S.
Daniel Ponce and Lisa M. Brock are cousins.
Section 16(a) Beneficial Ownership Reporting Requirements
The Company's officers and directors are required to file Forms 3, 4
and 5 with the Securities and Exchange Commission in accordance with Section
16(a) of the Securities and Exchange Act of 1934, as amended and the rules and
regulations promulgated thereunder. Based solely on a review of such reports
- 5 -
furnished to the Company as required by Rule 16(a)-3, no director or executive
officer, other than Mr. Wallace, failed to timely file such reports in 2001. Mr.
Wallace filed Form 4's for the months of October 2000 and April 2001 untimely.
The Board of Directors recommends that the Company's stockholders vote
"for" the election of the Class I nominee.
The nominee for Class I Director receiving the greatest number of
affirmative votes of the shares of Common Stock represented at the Annual
Meeting will be elected as a Director. Stockholders are not entitled to cumulate
their votes for the election of the Class I director.
REPORT OF THE AUDIT COMMITTEE
The Securities and Exchange Commission rules now require the Company
to include in its proxy statement a Report of the Audit Committee. The Report
concerns the Audit Committee's activities regarding oversight of the Company's
financial reporting and auditing process. The Report of the Audit Committee does
not constitute soliciting material and should not be deemed filed or
incorporated by reference into any other Company filing under the Securities Act
of 1933 or the Securities Exchange Act of 1934, except to the extent the Company
specifically incorporates this Report by reference therein.
The Company's Audit Committee is comprised of three non-employee
members of the Company's Board of Directors and operates under a written charter
adopted by the Audit Committee and approved by the Board of Directors. The
complete text of the Audit Committee Charter was most recently published in the
Company's proxy statement for its 2001 Annual Meeting of Stockholders. The
composition of the Audit Committee, the attributes of its members and the
responsibilities of the Audit Committee, are as reflected in the Audit Committee
Charter.
All three current members of the Audit Committee are independent as
defined by the listing standards of the NASDAQ Stock Market, promulgated by the
National Association of Securities Dealers, Inc.
As set forth in more detail in the Audit Charter, the Audit
Committee's primary responsibilities fall into three broad categories:
- Financial Reporting Oversight. The Audit Committee is charged
with monitoring the preparation of quarterly and annual
financial statements by the Company's management, including
discussions with management and the Company's independent
auditors about draft annual financial statements and other
accounting and reporting matters.
- Independent Auditor Relationship. The Audit Committee is
responsible for matters concerning the relationship between
the Company and its independent auditors, including
recommending their appointment or removal; reviewing the scope
of their audit services and related fees, as well as other
services being provided to the Company; and determining
whether such auditors are independent; and
- Internal Controls Oversight. The Audit Committee oversees
management's implementation of effective systems of internal
controls, including review of policies relating to regulatory
compliance, ethics and conflicts of interest.
During the year ended December 31, 2001, the Audit Committee met two
(2) times. The meetings were designed to facilitate and encourage private
communications between the members of the Audit Committee, management and the
Company's independent auditors, PricewaterhouseCoopers, LLP. The Audit Committee
reports on its activities to the full Board of Directors, usually at the next
Board meeting.
- 6 -
The Company's management is responsible for the preparation,
presentation and integrity of the Company's financial statements, accounting and
financial reporting principles and internal controls. PricewaterhouseCoopers,
LLP. is responsible for performing an independent audit of the consolidated
financial statements in accordance with generally accepted auditing standards.
The functions of the Audit Committee are not intended to duplicate, or
to certify, the activities of management and the independent auditors. The Audit
Committee provides a Board-level oversight role, in which it provides advice,
counsel and direction to management and the auditors on the basis of the
information it receives, discussions with management and the auditors, and the
experience of the Audit Committee's members in business, financial and
accounting matters.
In overseeing the preparation of the Company's consolidated financial
statements, the Audit Committee met with both management and representatives of
PricewaterhouseCoopers, LLP. to review and discuss all financial statements
prior to their issuance and to discuss significant accounting issues. Management
advised the Audit Committee that all financial statements were prepared in
accordance with generally accepting accounting principles and the Audit
Committee discussed the financial statements with both management and the
independent auditors. The Audit Committee's review included discussion with the
independent auditors of matters required to be discussed pursuant to Statement
on Auditing Standards No. 61, "Communication with Audit Committees."
PricewaterhouseCoopers, LLP., also provided the Audit Committee with
the written disclosures required by Independence Standards Board Standard No. 1,
"Independence Discussions with Audit Committees." The Audit Committee discussed
the independence of PricewaterhouseCoopers, LLP., including the compatibility of
non-audit services provided by such firm with its independence to the Company.
Following the Audit Committee's discussions with management and
PricewaterhouseCoopers, LLP., the Audit Committee recommended that the Board of
Directors include the audited financial statements in the Company's Annual
Report on Form 10-K for the year ended December 31, 2001. The Audit Committee
has not yet made a recommendation as to the independent auditors for the
Company's financial statements for the fiscal year ending December 31, 2002.
Respectfully Submitted,
Audit Committee
Morton L. Weinberger, Chairman
S. Daniel Ponce
Milton J. Wallace
- 7 -
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report of the Compensation Committee, and the Stock
Performance Graph included elsewhere in this Proxy Statement do not constitute
soliciting material and should not be deemed filed or incorporated by reference
into any other Company filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent the Company specifically incorporates
this Report in the Stock Performance Graph by reference therein.
The Company's executive compensation program is administered by the
Compensation and Stock Option Committee (the "Compensation Committee") of the
Company's Board of Directors. The Compensation Committee is comprised entirely
of outside, non-employee directors, whose role is to review and approve salaries
and other compensation of the executive officers of the Company. The
Compensation Committee also reviews and approves various other Company
compensation policies and matters and administers each of the Company's stock
option plans, including the review and approval of stock option grants to the
executive officers of the Company.
Compensation Policies Applicable to Executive Officers
The primary goal of the Compensation Committee is to establish a
relationship between executive compensation and the creation of shareholder
value, while motivating and retaining key employees. The Company's compensation
program for executives consists of two key components:
- Cash compensation, consisting of (a) a base salary and (b)
performance-based annual cash bonuses related to corporate
profitability and individual accountability; and
- Long-term incentive compensation through the periodic grant
of stock options and restricted stock awards.
The Company believes that this approach best serves the interests of
the Company and its stockholders. The base salary enables the Company to meet
the requirements of the highly competitive industry environment, while ensuring
that executive officers are compensated in a way that advances both the short
and long term interests of stockholders. Cash bonuses are intended to reward
executive officers for meeting or exceeding corporate performance goals, as
measured by financial results and other quantitative events. Stock options and
restricted stock awards relate a significant portion of long-term remuneration
directly to stock price appreciation realized by all of the Company's
shareholders.
Base Salary
The Compensation Committee is responsible for establishing base
salaries for the Company's executive officers, as well as changes in such
salaries (other than as required by contracts). The Compensation Committee
considers such factors as competitive industry salaries; a subjective assessment
of the nature of the position; the contributions and experience of such officer
and the length of the officers' service with the Company.
The Compensation Committee annually establishes an executive's base
salary, subject to any long term contractual obligations, based upon an
evaluation of the executive's level of responsibility and individual
performance, considered in light of competitive pay practices.
Performance-Based Cash Compensation
The Compensation Committee believes that a significant portion of the
total cash compensation for its executive officers should be based upon the
Company's achievement of specific performance criteria and the Compensation
Committee's subjective evaluation of each executive's perceived responsibility
for the Company's performance. Cash bonuses are strictly discretionary on the
part of the Compensation Committee. However, the Compensation Committee
recognizes that the purpose of cash bonuses is to motivate and reward eligible
- 8 -
employees for good performance by making a portion of their cash compensation
dependent on overall corporate profitability.
At the beginning of each fiscal year, the Board of Directors
establishes a business plan and budget for the Company which contains specific
performance goals. At the end of each fiscal year, the Compensation Committee
determines the propriety of awarding cash bonuses. Such determination takes into
account the Company's performance and the operating results for the year,
industry trends, the impact of strategic planning and the achievement of
personal performance goals of each executive. The Compensation Committee also
takes into account each executive's efforts in positioning the Company for
future growth, even if initial efforts do not immediately result in a positive
impact on the Company's financial condition.
Stock Options and Restricted Stock Awards
Stock options and restricted stock awards are granted by the Company
to aid in the hiring or retention of employees and to align the interests of the
employees with those of the shareholders. Stock options and stock ownership
directly link a portion of an employee's compensation to the interests of
shareholders by providing an incentive to maximize shareholder value. Stock
options have value only if the price of the Company's stock increases above the
fair market value on the grant date and the employee remains in the Company's
employ until the stock options become exercisable.
The Company has an Employee Stock Option Plan (the "Employee Plan")
for executive officers and other employees. The Employee Plan is generally used
for making grants to executive officers and other employees as part of the
Company's performance review. Stock option grants may be made to executive
officers upon initial employment, upon promotion to a new, higher level position
that entails increased responsibility, in connection with the execution of a new
employment agreement or as further incentive to such executive officers. Annual
stock option grants for executives are a key element of a market competitive
total compensation package. In determining the number of stock options to be
granted, the Compensation Committee receives recommendations from management and
then reviews the current option holdings of the executive officers; their
positions and length of service with the Company and subjective criteria on
performance. It then determines the number of options to be granted based upon
the principle of rewarding performance and providing continuing incentives to
contribute to stockholder value. Using these guidelines, the Compensation
Committee granted options in 2001 to its executive officers and certain
supervisory employees in varying amounts. Stock options under the Employee Plan
are granted at a price equal to the fair market value of the common stock on the
date of grant.
Chief Executive Officer Compensation
The Company does not have a designated Chief Executive Officer.
However, the similar functions have been designated the responsibility of Howard
L. Ehler, Jr., who serves as Executive Vice President, Principal Executive
Officer, Chief Operating Officer and Chief Financial Officer. The Compensation
Committee's basis for compensation of Mr. Ehler is based on the philosophy
discussed above. In recognition of his service and commitment to the past and
future success of the Company and to secure his services for the future, the
Company entered into an employment agreement in 1993, which automatically renews
each year unless either party gives written non-renewal within a specified time
set forth in the employment agreement. Mr. Ehler's base salary for calendar year
2001 was $150,000 and has been increased to $155,000 for fiscal year 2002. The
employment agreement provides for minimum annual increases reflecting changes in
the cost of living. However, the Compensation Committee has the flexibility to
increase base salary in excess of the minimum amount stated in the employment
agreement, if warranted.
In establishing Mr. Ehler's base salary for 2001, the Compensation
Committee reviewed salaries of chief executive officers of comparable companies
within its industry, as well as other industries, and Mr. Ehler's
responsibilities within the Company. Factors taken into consideration included a
subjective evaluation of Mr. Ehler's performance, changes in the cost of living,
competitors' size and performance and the Company's achievements.
- 9 -
Mr. Ehler's employment agreement provides for the right to earn annual
cash bonuses determined in the sole discretion of the Company's Board of
Directors. Such bonus awards are based upon incentive bonus criteria established
by the Compensation Committee in each fiscal year in its discretion. Mr. Ehler
received a cash bonus for 2001 in the amount of $30,000.
In 2001, the Compensation Committee awarded Mr. Ehler options to
purchase 20,000 shares of common stock pursuant to the Employee Plan. These
options vested 100% at the end of six months and are fully exercisable for the
balance of their term. The exercise price of the options was the fair market
value of the underlying common stock on November 14, 2001, the date of grant.
All such options expire at the end of five (5) years following the date of
grant, if not exercised.
Executive Severance Packages
In response to the increase in merger and acquisition activities in
recent years within the industry and to provide the Company's principal
executive officer with further incentive to remain with the Company, the
Compensation Committee in 1993 granted Mr. Ehler an executive severance package
protecting him in the event of change of control of the Company. The severance
package is contained in Mr. Ehler's employment agreement. The severance package
for Mr. Ehler is described in "Summary Compensation" below. the severance
package is reviewed annually to determine if it is in the best interest of the
Company to make any modifications. The Compensation Committee determined the
severance package is fair to the Company and Mr. Ehler.
Impact of Section 162(m) of the Internal Revenue Code
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to publicly-held corporations for compensation in excess of $1,000,000
paid for any fiscal year to the Company's Chief Executive Officer and the four
(4) other most highly compensated officers. However, the statute exempts
qualifying performance-based compensation from the deduction limit if certain
requirements are met. The policy of the Compensation Committee is to structure
the compensation of the Company's executive officers to avoid the loss of the
deductibility of any compensation, even though Section 162(m) does not preclude
the payment of compensation in excess of $1,000,000. Notwithstanding, the
Compensation Committee reserves the authority to award non-deductible
compensation in circumstances as it deems appropriate. The Company believes that
Section 162(m) will not have any effect on the deductibility of the compensation
of any executive officer for 2002.
Respectfully submitted,
Compensation Committee
Lisa M. Brock, Chairman
S. Daniel Ponce
Morton L. Weinberger
- 10 -
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes the compensation earned by, and paid
to, the Company's Chief Executive Officer and each other executive officer for
the three fiscal years in the period ended December 31, 2001 whose total annual
salary and bonus was in excess of $100,000 for any such periods (the "Named
Executive Officers").
Long-Term
Compensation
--------------------------------
Securities
Other Annual Restricted Underlying
Name and Principal Compensation Stock Options(#)
Position Year Salary(1) Bonus(2) (3) Awards(4) (5)
-------------------------------- --------- ------------- ------------- ------------------ -------------- --------------
Howard L. Ehler, Jr. 2001 $150,000 $30,000 --- --- 20,000
Executive Vice President, 2000 140,000 30,000 --- $60,000 10,000
Principal Executive Officer 1999 130,000 30,000 --- 2,000 20,000
and CFO
Gary Hasbach 2001 140,000 20,000 15,000 --- 20,000
President of Premix, 2000 130,000 30,000 --- --- 10,000
Acrocrete and Just-Rite 1999 110,000 47,000 --- --- 10,000
-------------------
(1) None of the named individuals above have received personal benefits or
perquisites that exceed the lesser of $50,000 or 10% of the total annual
salary and bonus reported for the named executive officer in the above
table.
(2) Bonuses shown were earned in the year indicated even though actually paid
in a subsequent year.
(3) Mr. Hasbach's Other Annual Compensation represents relocation expenses
provided by the Company.
(4) Mr. Ehler's Restricted Stock Awards in 2000 and 1999 represents the market
value at date of issuance of 100,000 and 7,863 shares of common stock,
respectively. Although 100,000 shares of common stock were issued in
calendar year 2000, the Compensation Committee awarded such shares for
performance of services rendered over the previous several years.
(5) Stock options are granted under the terms and provisions of the 1999
Employee Stock Option Plan. For a description of the stock options, see
"Options Granted in Last Fiscal Year" below
- 11 -
Options Granted in Last Fiscal Year
The following table sets forth information concerning grants of stock
options to each of the Named Executive Officers for the year ended December 31,
2001:
% of Total
Number of Options Potential Realizable
Securities Granted to Value at Assumed
Underlying Employees Exercise Annual Rate of Stock
Options in Fiscal Price Expiration Price Appreciation
Name Granted(#)(1) Year(3) ($/Share)(2) Date for Option Term($)(3)
-------------------------- ------------------- --------------- ------------- --------------- --------------------------
5% 10%
------------ -----------
Howard L. Ehler, Jr. 20,000 10.8% $ .20 11/14/06 $1,108 $2,444
Gary J. Hasbach 20,000 10.8% $ .20 11/14/06 $1,108 $2,444
-------------------
(1) Options were granted pursuant to the terms and conditions of the Company's
1999 Employee Stock Option Plan ("Employee Plan").
(2) The exercise price per share was equal to the fair market value of the
Company's common stock at the date of grant.
(3) The amounts disclosed in the columns which notes appreciation of the
common stock at the 5% and 10% rates dictated by the Securities and
Exchange Commission, are not intended to be a forecast of the actual value
of the common stock price and are not necessarily indicative of the actual
value which my be realized by the Named Executive Officers or any
stockholders. These assumed rates of 5% and 10% would result in the Common
Stock price increasing from $.20 per share to approximately $.26 per share
and $.32 per share, respectively. As of December 31, 2001, the market
price of the common stock was $.18 per share..
Aggregated Option Exercises in Fiscal 2001 and Fiscal Year End Option Values
The following table sets forth certain aggregated option information
for each Named Executive Officer in the Summary Compensation Table for the year
ended December 31, 2001:
Number of Securities Underlying Value of Unexercised
Name Unexercised Options(#) In-The-Money Options(1)
------------------------- --------------------------------------------- -----------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
--------------------- --------------------- ----------------------- ---------------------
Howard L. Ehler, Jr. 50,000 ---- ---- ----
Gary Hasbach 40,000 ---- ---- ----
--------------------
No options were exercised by the Named Executive Officers during the
year ended December 31, 2001.
(1) The option exercise prices range from $.20 to $.57 per share. At December
31, 2001, the fair market value of the Company's common stock was $.18 per
share, the average of the closing bid and asked price of the common stock
as reported on the OTC Bulletin Board.
- 12 -
Employment Agreements
The Company is a party to a one year renewable employment agreement
with Howard L. Ehler, Jr. Mr. Ehler serves as the Company's Executive Vice
President, Principal Executive Officer, Chief Operating Officer and Chief
Financial Officer at a current base salary of $150,000. Mr. Ehler's employment
agreement provides for automatic renewal for additional one year periods on July
1st of each year, unless the Company or Mr. Ehler notifies the other party of
such party's intent not to renew at least 90 days prior to each June 30 of the
initial term and any extended term thereafter. Mr. Ehler receives a car
allowance, as well as certain other benefits, such as health and disability
insurance. Mr. Ehler is also entitled to receive incentive compensation based
upon targets formulated by the Compensation Committee.
Prior to a Change in Control (as defined in Mr. Ehler's employment
agreement), the Company has the right to terminate the employment agreement,
without cause, at any time upon thirty days written notice, provided the Company
pays to Mr. Ehler a severance payment equivalent to 50% of his then current
annual base salary. Mr. Ehler has agreed not to disclose information and not to
compete with the Company during his term of employment and, in certain cases,
for a two (2) year period following his termination.
In the event of a Change in Control, the employment agreement is
automatically extended to a three year period. Thereafter, Mr. Ehler would be
entitled to terminate his employment with the Company for any reason at any
time. In the event Mr. Ehler so terminates employment, Mr. Ehler would be
entitled to receive the lesser of (i) a lump sum equal to the base salary
payments and all other compensation and benefits Mr. Ehler would have received
had the employment agreement continued for the full term; or (ii) three times
Mr. Ehler's base salary then in effect on the effective date of termination. Mr.
Ehler would also be entitled to such severance in the event the Company
terminates the Executive without cause after a Change of Control.
Stock Option Plans
The Company has two stock option plans, the Director's Stock Option
Plan and the 1999 Employee Stock Option Plan (collectively, the "1999 Plans").
The 1999 Plans provide for options to be granted at generally no less than the
fair market value of the Company's stock at the grant date. The 1999 Plans are
administered by the Company's Compensation and Stock Option Committee. Options
granted under the 1999 Plans have a term up to 10 years and are exercisable six
months from the grant date provided however, no options under the Director's
Plan will be exercisable until the Company's stockholders approve the Director's
Plan. A total of 600,000 and 200,000 shares are reserved for issuance under the
Employee and Director Plans. As of December 31, 2001, there were outstanding
options to purchase 240,000 and 160,000 shares under the Employee and Director
Plans, respectively. The exercise prices for the outstanding options range from
$.20 to $.57 per share. All options expire five (5) years from the date of grant
and are fully vested.
- 13 -
STOCK OWNERSHIP
The following table sets forth certain information as of May 15, 2002
with respect to the beneficial ownership of the Company's common stock by (i)
each director of the Company, (ii) each Named Executive Officer, (iii) each
person known to the Company to own more than 5% of such shares, and (iv) all
executive officers and directors as a group. (Except as otherwise provided
herein, the information below is supplied by the holder):
Number of Shares
Beneficially Percent of Shares
Name and Address of Beneficial Owner(1) Owned(2) Beneficially Owned
--------------------------------------------------- --------------------------- -------------------------
Maureen P. Ferri 656,981 7.1%
120 Simmons Road
Statesboro, GA. 30458
Lisa M. Brock 309,006(3) 3.3%
Howard L. Ehler, Jr. 466,108(4) 5.0%
Gary J. Hasbach 290,400(5) 3.1%
S. Daniel Ponce 611,966(6) 6.6%
Milton J. Wallace 183,000(7) 2.0%
Morton L. Weinberger 249,210(8) 2.7%
All directors and officers 2,135,808(9) 22.5%
as a group (8 persons)
------------------
(1) Except as set forth herein, all securities are directly owned and the sole
investment and voting power are held by the person named. Unless otherwise
indicated, the address for each beneficial owner is the same as the
Company.
(2) The percent of class for common stockholders is based upon 9,220,434
shares of common stock outstanding and such shares of common stock such
individual has the right to acquire within 60 days upon exercise of
options or warrants that are held by such person (but not those held by
any other person).
(3) Includes 40,000 shares of common stock issuable upon exercise of stock
options.
(4) Includes 50,000 shares of common stock issuable upon exercise of stock
options.
(5) Includes 40,000 shares of common stock issuable upon exercise of stock
options.
(6) Includes 40,000 shares of common stock issuable upon exercise of stock
options.
(7) Includes 40,000 shares of common stock issuable upon exercise of stock
options.
(8) Includes 40,000 shares of common stock issuable upon exercise of stock
options.
(9) Includes 270,000 shares of common stock issuable upon exercise of stock
options.
- 14 -
PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION TO EFFECT A ONE FOR FIVE REVERSE STOCK SPLIT
OF THE COMPANY'S COMMON STOCK
General
The Company's Board of Directors has adopted a proposal declaring
advisable an amendment to the Certificate of Incorporation of the Company to
effect a one for five reverse stock split of all of the authorized and
outstanding common stock of the Company (the "Reverse Stock Split") . The
approval of the Reverse Stock Split, and the filing of the amendment as
described herein and attached hereto as Exhibit "A", will not alter the number
of currently authorized shares of the Company's capital stock, which will remain
at 45,000,000, consisting of 40,000,000 shares of common stock, $.01 and
5,000,000 shares of preferred stock, par value $.01 per share. There are no
shares of preferred stock currently issued and outstanding. However, adoption of
the Reverse Stock Split will reduce the number of outstanding shares of common
stock of the Company as of the Record Date from 9,220,434 to approximately
1,844,086 shares. As the Reverse Stock Split will effect a reduction in the
number of shares of Common Stock outstanding without a commensurate increase in
the par value of the common stock, it will result in a reduction in the
Company's stated capital.
The Reverse Split will not materially affect the proportionate equity
interest in the Company of any holder of existing common or the relative rights,
preferences, privileges or priorities of any such stockholder (with the limited
exception of shareholders who will only own fractional shares of common stock
after the Reverse Stock Split). The common stock issued pursuant to the Reverse
Stock Split will be fully paid and non-assessable. All shares of common stock
will have the same par value, voting rights and other rights as existing shares
of common stock. In addition, pursuant to the terms of the Company's stock
option plans, and the terms of any issued and outstanding warrants, the number
of shares issuable upon exercise of such outstanding options and warrants, and
the exercise price per share, will be proportionately adjusted, and neither the
par value, nor the number of shares which the Company is authorized to issue,
will change.
If the Reverse Stock Split is approved and effected, the Reverse Stock
Split will result in some stockholders owning "odd-lots" of less that 100 shares
of common stock. Brokerage commissions and other costs of transactions in
odd-lots are generally somewhat higher that the costs of transactions in
"round-lots" of even multiples of 100 shares.
It is expected that if the shareholders authorize this amendment, that
the filing of a Certificate of Amendment (the "Reverse Stock Split Amendment")
will occur as soon as practical after the date of the Annual Meeting. The
proposed reverse stock split will become effective on the effective date of that
filing (the "Effective Date"). Commencing on the Effective Date, each currently
outstanding certificate will be deemed for all corporate purposes to evidence
ownership of the reduced number of shares resulting from the proposed reverse
stock split. New stock certificates reflecting the number of shares resulting
from the stock split will be issued only as currently outstanding certificates
are transferred. However, the Company will provide shareholders with
instructions as to how to exchange their certificates and encourage them to do
so.
Reasons for the Reverse Stock Split
The Company's Board of Directors believe that the decrease in the
number of shares of common stock outstanding as a consequence of the proposed
reverse stock split should increase the per share price of the common stock,
which may encourage greater interest in the common stock and possibly promote
greater liquidity for the Company's shareholders. No assurance can be given,
however, that the market price of the common stock will rise in proportion to
the reduction in the number of outstanding shares resulting from the Reverse
Stock Split. Additionally, the Company believes that a decrease in the number of
outstanding shares of the Company's common stock will result in an increase in
the number of shares available for issuance, allowing the Company greater
flexibility to conduct financings through the issuance of additional equity.
- 15 -
There can be no assurance that the Reverse Stock Split will not
adversely impact the market price of the common stock, that the marketability of
the common stock will improve as a result of the Reverse Stock Split, or that
the Reverse Stock Split will otherwise have any of the effects described herein.
Federal Income Tax Consequences
The following is a summary of the material federal income tax
consequences of the proposed reverse stock split. This summary does not purport
to be complete and does not address the tax consequences to holders that are
subject to special tax rules, such as banks, insurance companies, regulated
investment companies, personal holding companies, foreign entities, nonresident
alien individuals, broker-dealers and tax-exempt entities. This summary is based
on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
regulations and proposed regulations, court decisions and current administrative
rulings and pronouncements of the Internal Revenue Service ("IRS"), all of which
are subject to change, possibly with retroactive effect, and assumes that the
post-split common stock will be held as a "capital asset" (generally, property
held for investment) as defined in the Code. Holders of common stock are advised
to consult their own tax advisers regarding the federal income tax consequences
of the proposed reverse stock split in light of their personal circumstances and
the consequences under state, local and foreign tax laws.
- The proposed reverse stock split will qualify as a
recapitalization described in Section 368(a)(1)(E) of the
Code.
- No gain or loss will be recognized by the Company in
connection with the proposed reverse stock split.
- No gain or loss will be recognized by a shareholder who
exchanges all of his shares of common stock solely for
shares of post-split common stock.
- The aggregate basis of the shares of post-split common stock
to be received in the proposed reverse stock split will be
the same as the aggregate basis of the shares of common
stock surrendered in exchange therefor.
- The holding period of the shares of post-split common stock
to be received in the proposed reverse stock split will
include the holding period of the shares of common stock
surrendered in exchange therefor.
Stock Certificates and Fractional Shares
The Reverse Stock Split will occur on the Effective Date without any
further action on the part of the Company's stockholders and without regard to
the date or dates on which certificates representing shares of common stock are
actually surrendered by each holder thereof for certificates representing the
number of shares of the common stock which each such stockholder is entitled to
receive as a consequence of the Reverse Stock Split. After the Effective Date of
the Reverse Stock Split, the certificates representing shares of Existing Common
will be deemed to represent one-fifth the number of shares of common stock.
Certificates representing shares of common stock will be issued in due course as
old certificates are tendered for exchange or transfer to Continental Stock
Transfer and Trust Company, 17 Battery Place, New York, NY 10004 (the "Exchange
Agent" or "Transfer Agent"), telephone number: (212) 509-4000.
No fractional shares of common stock will be issued and, in lieu
thereof, stockholders holding a number of shares of common stock prior to the
Effective Date Split not evenly divisible by five, and stockholders holding less
than five shares of common stock prior to the Effective Date, upon surrender of
their old certificates, will receive cash in lieu of fractional shares of common
stock. Such cash payment will not be made until a stockholder's certificates of
common stock are presented to the Exchange Agent. The price payable by the
Company for those shares of common stock which are not divisible by five will be
equal to the product of (a) the number of such shares which cannot be exchanged
for a whole number of shares of common stock and (b) the average of the high bid
and low asked prices of one share of Existing Common, as reported on the NASD
- 16 -
OTC Bulletin Board for the ten business days immediately preceding the Effective
Date of the Reverse Stock Split for which transactions in the common stock are
reported.
Source of Funds
The funds required to purchase the fractional shares are available and
will be paid from the current cash reserves of the Company. The Company's
stockholder list indicates that a portion of the common stock outstanding is
registered in the names of clearing agencies and broker nominees. It is,
therefore, not possible to predict with certainty the number of fractional
shares or the total amount that the Company will be required to pay for
fractional share interests. However, it is not anticipated that the funds
necessary to effect the cancellation of fractional shares will be material.
Number of Holders
As of the Record Date, there were approximately 1,875 holders of record
of common stock. The Company does not anticipate that as a result of the Reverse
Stock Split, the number of holders of record or beneficial owners of common
stock will change significantly.
No Change in Company's Status
The Company does not currently intend to seek, either before or after
the Reverse Stock Split, any change whatsoever in the Company's status as a
reporting company for federal securities law purposes.
Appraisal Rights
No appraisal rights are available under the Delaware General Corporate
law or under the Company's Certificate of incorporation or By-laws to any
shareholder in connection with the Reverse Stock Split.
Board of Directors Reservation of Rights.
The Board of Directors reserves the right, notwithstanding stockholder
approval and without further action by the stockholders, to elect not to proceed
with the Reverse Stock Split Amendment, if at any time prior to filing such
Reverse Stock Split Amendment with the Department of State of Delaware, the
Board of Directors, in its sole discretion, determines that it is no longer in
the best interests of the Company and its stockholders. In addition, the Board
of Directors reserves the right to delay of the Reverse Stock Split Amendment
for up to twelve months following stockholder approval thereof at the Annual
Meeting. However, at the present time, the Board of Directors intends to proceed
with the Reverse Stock Split Amendment as presented herein without delay.
Shareholder Vote Required
An affirmative vote of the holders of a majority of the outstanding
common stock entitled to vote at the Annual Meeting is required to adopt the
proposal to effect the one for five reverse stock split. Accordingly,
abstentions and broker non-votes could have a significant effect on the outcome
of this proposal. Proxies solicited by the Board of Directors will be voted in
favor of the adoption of the proposal to effect the one for five reverse stock
split unless otherwise indicated thereon.
The Board of Directors has unanimously approved and recommends that
the Company's stockholders approve the one for five reverse stock split, which
is designated as Proposal 2 on the enclosed Proxy Card.
- 17 -
CERTAIN TRANSACTIONS
The law firm of Wallace, Bauman, Legon, Fodiman, Ponce & Shannon, P.A.
of which Mr. Ponce, the Company's Chairman of the Board, and Mr. Wallace, a
Director, are stockholders, served as general counsel to the Company. The law
firm received $275,000 in 2001 for legal services rendered to the Company and
its subsidiaries.
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return of
the Company's common stock from January 1, 1997 to December 31, 2001 with (a)
the Russell 2000 Stock Index; and (b) a Peer Group Index. The graph assumes that
$100 was invested on January 1, 1997 in the Company's common stock, the Russell
2000 Stock Index and the Peer Group Index and that all dividends were
reinvested. The Peer Group Index on the graph includes the common stock of
fifty-two (52) publicly traded companies in the building materials industry.
[GRAPH OMITTED]
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----
Imperial Industries 100.00 420.00 400.00 620.00 380.00 180.00
Peer Index 100.00 109.76 125.32 107.22 109.45 119.67
Russell 2000 Index 100.00 122.34 118.91 142.21 136.07 137.46
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The firm of PricewaterhouseCoopers, LLP has served as the Company's
independent auditors for the years ended December 31, 1999, 2000 and 2001.
Although the Board of Directors has not yet selected a firm to serve as auditors
for the year ended December 31, 2002, it is expected that
PricewaterhouseCoopers, LLP will be retained by the Company for such audit.
Representatives of PricewaterhouseCoopers, LLP are expected to be present at the
Annual Meeting and will be afforded the opportunity to make a statement, if they
desire, and to respond to appropriate questions.
Audit Fees
PricewaterhouseCoopers, LLP billed the Company an aggregate of $74,250
for professional services and related expenses rendered in connection with the
audit of the Company's financial statements for the fiscal year ended December
31, 2001 and the reviews of the financial statements included in the Company's
Forms 10-Q for each quarter within such fiscal year.
Information Systems Design and Implementation Fees
The Company did not engage PricewaterhouseCoopers, LLP for financial
information system design and implementation for the fiscal year ended December
31, 2001.The services, which include designing or implementing systems that
aggregate source data underlying financial statements or generate information
that is significant to such financial statements are provided internally or by
other service providers.
- 18 -
All Other Fees
The Company paid an aggregate of $14,170 in fees and expenses to
PricewaterhouseCoopers, LLP during the fiscal year ended December 31, 2001 for
all other services. Such services consisted of accounting consultation, federal,
state and tax planning and services and services related to filings made with
the Securities and Exchange Commission. The Audit Committee reviewed audit and
non-audit services performed by PricewaterhouseCoopers, LLP, as well as fees
charged by PricewaterhouseCoopers, LLP for such services. In its review of
non-audit service fees, the Audit Committee considered, among other things, the
possible effect of the performance of such services on the auditor's
independence. Additional information concerning the Audit Committee and its
activities with PricewaterhouseCoopers, LLP. can be found in the sections of the
proxy statement: "Board Committees and Meetings," "Report of the Audit
Committee" and the appendix.
OTHER MATTERS
Management is not aware of any other matters which may come before the
Annual Meeting and which require the vote of stockholders in addition to those
matters indicated in the notice of meeting and this Proxy Statement. If any
other matter calling for stockholder action should properly come before the
Annual Meeting or any adjournment thereof, those persons named as proxies in the
enclosed proxy will vote in accordance with their best judgment.
STOCKHOLDER PROPOSALS
Stockholders who wish a proposal to be included in the Company's proxy
statement and form of proxy relating to the 2003 annual meeting must be received
by the Company no later than March 20, 2003 for inclusion in the Company's proxy
statement related to the 2002 annual meeting. Such notice must include (i) a
brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting, (ii)
the name and record address of such stockholder, (iii) the number of shares of
common stock of the Company which are owned beneficially of record by such
stockholder, (iv) a description of all arrangements or understandings between
such stockholder and any other person or persons (including their names) in
connection with the proposal of such business by such stockholder and any
material interest of such stockholder in such business and (v) a representation
that such stockholder intends to appear in person or by proxy at the annual
meeting to bring valid business before the meeting.
ANNUAL REPORT
A copy of the Company's 2001 Annual Report, including audited
financial statements as of December 31, 1999, 2000 and 2001 and for each of the
three (3) years in the period ending December 31, 2001 are being mailed to all
stockholders. Copies of the Annual Report on Form 10-K for the Fiscal Year ended
December 31, 2001 as filed with the Securities and Exchange Commission may be
obtained by writing to Corporate Secretary, 1259 Northwest 21st Street, Pompano
Beach, Florida 33069.
- 19 -
Exhibit "A"
PROPOSED AMENDMENT TO CERTIFICATE OF INCORPORATION
Article FOURTH of the Company's Certificate of Incorporation is proposed
to be amended as follows:
FOURTH: (a) The aggregate number of shares of stock which the
Corporation shall have authority to issue is Forty-Five Million
(45,000,000) shares, consisting of (i) Forty Million (40,000,000)
shares with a par value of one cent ($.01) per share, which are
designated as Common Stock; and (ii) Five Million (5,000,000) shares
with a par value of one cent ($.01) per share, which are designated as
Preferred Stock.
(b) The designations, preferences, privileges and powers of
the shares of the Common Stock and of the Preferred Stock and the
restrictions and qualifications thereof shall be the same in all
respects as though shares of one class of stock, except that the Board
of Directors is hereby vested with the authority to provide for the
issuance of the Preferred Stock, at any time and from time to time, in
one or more series, each of such series to have such powers,
designations, preferences and relative, participating or option or
other special rights and such qualifications, limitations or
restrictions thereon as expressly provided in the resolution or
resolutions, duly adopted by the Board of Directors providing for the
issuance of such shares. The authority which is hereby vested in the
Board of Directors shall include, but not be limited to, the authority
to provide for the following matters relating to each series of the
Preferred Stock:
(i) the number of shares to constitute such series,
and the designations thereof;
(ii) the voting power of holders of shares of such
series, if any, and the Board of Directors may, without limitation
determine the vote or fraction of vote to which the holder may be
entitled, the events upon the occurrence of which such holder maybe
entitled to vote, and the Board of Directors may determine to restrict
or eliminate entirely the right of such holder to vote;
(iii) the rate of dividends, if any, and the extent
of further participation in divideni distributions, if any, and whether
dividends shall be cumulative or non-cumulative;
(iv) whether or not such series shall be redeemable,
and if so, the terms and conditions upon which shares of such series
shall be redeemable;
(v) the extent, if any, to which such series shall
have the benefit of any sinking fund provision for the redemption or
purchase of shares;
(vi) the rights, if any, of such series, in the event
of the dissolution of the corporation, or upon any distribution of the
assets of the corporation;
(vii) whether or not the shares of such series shall
be convertible, and if so, the terms and conditions on which shares of
such series shall be convertible; and
(viii) such other powers, designations, preferences
and the relative, participating or optional or other special rights,
and such qualifications, limitations or restrictions thereon, as and to
the extent permitted by law.
(c) No holder of Common Stock or Preferred Stock of the
corporation shall be entitled as of right to purchase or subscribe for
any part of any unissued stock of the corporation or any additional
capital stock of the corporation of any class, or any bonds,
certificates of indebtedness, debentures or other securities
convertible into stock of the
A-1
corporation, but any such unissued stock or such additional authorized
issue of new stock or other securities convertible into stock, may be
issued and disposed of, pursuant to resolution of the Board of
Directors, to such persons, firms corporations or associations and upon
such terms, as may be deemed advisable by the Board of Directors in the
exercise of their discretion.
(d) On or about July 19, 2002, (the "Effective Date"), all
outstanding shares of Common Stock of the Corporation shall be
automatically combined at the rate of one for five (the "Reverse
Split") without the necessity of further action on the part of the
holders thereof or the Corporation; provided however, that the
Corporation shall, through its transfer agent, exchange certificates
representing Common Stock outstanding immediately prior to the
Effective Date of the Reverse Split (the "Existing Common") into new
certificates ("New Certificates") representing the appropriate number
of shares of Common Stock resulting from the combination ("New
Common"). No fractional shares, but only whole shares of New Common
shall be issued to any holder of less than five (5) shares or any
number of shares which, when divided by five (5), does not result in a
whole number. In lieu of fractional shares, the Corporation has
arranged for its transfer agent (the "Exchange Agent") to remit payment
therefor on the following terms and conditions.
The price payable by the Corporation for fractional shares of
Existing Common, certificates for which are surrendered to the Exchange
Agent in connection with the Reverse Split, shall be equal to the
product of (i) the number of such shares which cannot be exchanged for
a whole share of New Common and (ii) the average of the high bid and
low asked prices of one share of Existing Common, as reported on the
NASD OTC Bulletin Board for the ten business days immediately preceding
the Effective Date of the Reverse Stock Split for which transactions in
the Existing Common are reported.
The par value and the number of authorized shares of Common
Stock shall remain as otherwise provided above in Article Fourth of
this Certificate of Incorporation and shall not be modified in any way
as the result of this Reverse Split. From and after the Effective Date,
certificates representing shares of Existing Common shall represent
only the right of the holders thereof to receive New Common and payment
as provided herein for fractional shares of Existing Common.
From and after the Effective Date, the term "New Common" as
used in this subparagraph (d) of Article FOURTH shall mean Common Stock
as provided in this Certificate of Incorporation.
A-2
IMPERIAL INDUSTRIES, INC.
PROXY
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JULY 19, 2002
The undersigned hereby appoints S. Daniel Ponce and Howard L. Ehler,
Jr., or either of them, as proxies, with full individual power of substitution
to represent the undersigned and to vote all shares of Common Stock of the
Company which the undersigned is entitled to vote at the Annual Meeting of
Stockholders of the Company to be held at the at the Hyatt Regency Hotel, 400 S.
E. 2nd Avenue, Miami, Florida, at 10:00 A.M., local time, on July 19, 2002, and
any and all adjournments thereof, in the manner specified below:
1. Election of Class I Director
Nominee:
-------
Howard L. Ehler, Jr.
|_| For the nominee listed above |_| Withhold authority to vote for the nominee
2 Proposal to Amend the Certificate of Incorporation to effect a one for
five reverse stock split of the Company's common stock
|_| For |_| Against |_| Abstain
(continued on other side)
THIS PROXY, WHEN PROPERLY EXECUTED, SHALL BE VOTED AS DIRECTED. IF NO DIRECTION
IS INDICATED, THIS PROXY WILL BE VOTED FOR THE NOMINEE FOR DIRECTOR AND FOR
APPROVAL OF THE REVERSE STOCK SPLIT. Should any other matter requiring a vote of
the stockholders arise, the persons named in the Proxy or their substitutes
shall vote in accordance with their best judgment in the interest of the
Company. The Board of Directors are not aware of any matter which is to be
presented for action at the meeting other than the matters set forth herein.
Dated: ____________________, 2002
---------------------------------
Signature
---------------------------------
Signature
Please sign the Proxy exactly as name appears. When shares are held by joint
tenants, both should sign. Executors, administrators, trustees or otherwise
signing in a representative capacity should indicate the capacity in which
signed.
PLEASE VOTE, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.