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.
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(Name of Registrant as Specified in Its Charter)
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(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
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 14, 2001
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 Wednesday,
November 14, 2001 at 10:00 A.M., for the following purposes:
1. To elect two (2) Class III directors, each for a term of three
(3) years.
2. To act upon a proposal to amend the Company's Certificate of
Incorporation in order to increase the number of authorized
shares of 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 September 17, 2001 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
September 18, 2001
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
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 14, 2001
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 November 14, 2001 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 September 19, 2001. Common
stock is the only class of voting stock that is issued and outstanding.
Stockholders who owned common stock as of the close of business on September 17,
2001 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 the following matters:
- The election of two Class III directors for a term of three
years each;
- An amendment to the Company's Certificate of Incorporation in
order to increase the number of authorized shares of Common
Stock.
WHO MAY VOTE
Stockholders who owned common stock at the close of business on
September 17, 2001 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 nominees for Class III director listed on the Proxy Card and FOR
the amendment to our Certificate of Incorporation increasing the authorized
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 TO APPROVE A PROPOSAL
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 two nominees for directors for Class III
receiving the highest number of votes will be elected for the term of such
directorship. The adoption of the amendment to the Certificate of Incorporation
will require the affirmative vote of not less than a majority of the issued and
outstanding shares of common stock as of the Record Date.
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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.
Class III Directors' terms expire with the 2001 Annual Meeting.
Accordingly, Class III Directors will be elected at the Annual Meeting. Class
III directors will serve until the 2004 Annual Meeting or until their successors
are elected.
The Board of Directors propose that the nominees described below, be
elected as Class III Directors for the term specified above and until their
respective successors are duly elected and qualified, except in the event of
their earlier death, resignation or removal. Each of the nominees has consented
to serve for the term of such Class. We have no reason to believe that any of
the nominees will be unable or unwilling to serve, if elected. If any 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.
NOMINEES FOR CLASS III DIRECTOR
Information regarding the Board's nominees for election as Class III
Directors is set forth below.
S. DANIEL PONCE
DIRECTOR SINCE 1988
AGE 52
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 stockholder in the law firm of Wallace, Bauman, Legon,
Fodiman, Ponce & Shannon, P.A. 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.
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LISA M. BROCK
DIRECTOR SINCE 1988
AGE 42
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.
DIRECTORS CONTINUING IN OFFICE
CLASS I DIRECTOR. The following Class I directors have terms ending at
the 2002 Annual Meeting:
HOWARD L. EHLER, JR.
DIRECTOR SINCE 2000
AGE 57
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
CLASS II DIRECTORS. The following Class II directors have terms ending
at the 2003 Annual Meeting:
MILTON J. WALLACE.
DIRECTOR SINCE 1999
AGE 66
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 is Chairman of the Board of Med/Waste, Inc., a
provider of medical waste management services. He is a director of several
private companies.
MORTON L. WEINBERGER, CPA.
DIRECTOR SINCE 1988
AGE 71
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 fourteen (14)
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, and thereafter BDO Seidman, both public accounting firms.
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, 2000, each non-employee
director, other than Mr. Ponce, received an annual retainer of $6,000, payable
in quarterly installments. In lieu of an annual retainer, Mr. Ponce is provided
the use of a company car, including payment of related operating expenses for
such car. 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"). However, no director was granted options during
the fiscal year ended December 31, 2000.
The Company is party to separate consulting agreements with Mr.
Weinberger and Ms. Brock, respectively, who provide various management
consulting services to the Company. Each consulting agreement initially provided
for monthly fees of $833 and may be terminated upon 60 days notice by either
party. In connection with the Company's recent acquisition activities, Mr.
Weinberger was requested to
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expend additional time in consulting with the Company's management on
acquisition candidates, including performing due diligence, administrative,
accounting and other services. As a result of the increased time and effort
spent by Mr. Weinberger, his consulting fee has been increased to $3,500 per
month. Effective January 1, 2001, Mr. Wallace is a party to a consulting
agreement with the Company whereby he receives a consulting fee equal to $10,000
per year.
BOARD ATTENDANCE. The Board of Directors met four (4) times in fiscal
2000. Each director attended all of the Board of Directors meetings in 2000.
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 2000. 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 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 2000. Each 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. The Audit
Committee's Charter is attached to this Proxy Statement as Appendix "B." 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, 2000, 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.
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
furnished to the Company as required by Rule 16(a)-3, no director or executive
officer failed to timely file such reports in 2000.
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THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS VOTE
"FOR" THE ELECTION OF ALL THE CLASS III NOMINEES.
The two nominees for Class III Directors receiving the greatest number
of affirmative votes of the shares of Common Stock represented at the Annual
Meeting will be elected as Directors. Stockholders are not entitled to cumulate
their votes for the election of Class III directors.
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 which reflects standards set forth
in new Securities and Exchange Commission rules, is reproduced in Appendix "B"
to this Proxy Statement. 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, 2000, 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.
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.
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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, 2000. 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, 2001.
Respectfully Submitted,
AUDIT COMMITTEE
Morton L. Weinberger, Chairman
S. Daniel Ponce
Milton J. Wallace
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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 the 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 shareholders. 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 shareholders. 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
employees for good performance by making a portion of their cash compensation
dependent on overall corporate profitability.
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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 2000 to all 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
2000 was $140,000 and has been increased to $150,000 for fiscal year 2001.
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 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 2000 in the amount of $30,000.
In 2000, the Compensation Committee awarded Mr. Ehler options to
purchase 10,000 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 September 27, 2000, the date the
Employee Plan was approved by the Company's shareholders All such options expire
at the end of five (5) years following the date of grant, if not exercised. In
addition, the Company issued to Mr. Ehler an aggregate of 100,000 shares of
common stock during 2000 in recognition of his service to the Company over the
past several years.
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" above. 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 2001.
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, 2000 whose total annual
salary and bonus was in excess of $100,000 for any such periods (the "Named
Executive Officers").
LONG-TERM COMPENSATION
--------------------------------------
RESTRICTED SECURITIES
NAME AND PRINCIPAL STOCK UNDERLYING
POSITION YEAR SALARY(1) BONUS(2) AWARDS(3) OPTIONS(#)(4)
-------------------------------- -------- -------------- ------------ -------------- --------------------
Howard L. Ehler, Jr. 2000 $140,000 $30,000 $60,000 10,000
Executive Vice President, 1999 130,000 30,000 2,000 20,000
Principal Executive Officer 1998 120,000 35,000 --- ---
and CFO
Fred H. Hansen(5) 2000 160,000 30,000 --- 10,000
President/Premix and 1999 138,000 40,000 --- 20,000
Acrocrete 1998 150,000 75,000 --- ---
Gary Hasbach 2000 130,000 30,000 --- ---
President/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 $50,000 or 10% of the total annual
salary and bonus reported for the named executive officer in the above
table.
(2) Bonuses shown were earned in the year indicated even though actually paid
in a subsequent year.
(3) Mr. Ehler's Restricted Stock Awards in 2000 and 1999 represents the market
value at date of issuance of 100,000 and 7,863 shares of common stock,
respectively. Although 100,000 shares of common stock were issued in
calendar year 2000, the Compensation Committee awarded such shares for
performance of services rendered over the previous several years.
(4) Stock options are granted under the terms and provisions of the 1999
Employee Stock Option Plan. For a description of the stock options, see
"Options Granted in Last Fiscal Year" below
(5) Mr. Hansen retired effective December 31, 2000 and is now a consultant to
the Company.
- 11 -
OPTIONS GRANTED IN LAST FISCAL YEAR
The following table sets forth information concerning grants of stock
options to each of the Named Executive Officers for the year ended December 31,
2000:
POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATE OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTION TERM($)(3)
OPTIONS IN FISCAL PRICE EXPIRATION -------------------------
NAME GRANTED(#)(1) YEAR(3) ($/SHARE)(2) DATE 5% 10%
----------------------- ------------------- ---------------- -------------- --------------- ------------ ---------
Howard L. Ehler, Jr. 10,000 33.3% $ .57 4/24/05 $1,575 $3,480
Fred H. Hansen 10,000 33.3% $ .57 4/24/05 $1,575 $3,480
Gary J. Hasbach 10,000 33.3% $ .57 4/24/05 $1,575 $3,480
-------------------
(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 of $.57 per share was equal to the fair market value of
the common stock at September 27, 2000, the date the Employee Plan was
approved by the Company's stockholders.
(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 $.57 per share to approximately $.73 per share
and $.92 per share, respectively. As of December 31, 2000, the market
price of the common stock was $.38 per share..
AGGREGATED OPTION EXERCISES IN FISCAL 2000 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, 2000:
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS(#) IN-THE-MONEY OPTIONS(1)
--------------------------------------------- -----------------------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------------- --------------------- --------------------- ----------------------- ---------------------
Howard L. Ehler, Jr. 30,000 ---- ---- ----
Fred H. Hansen 30,000 ---- ---- ----
Gary Hasbach 20,000 ---- ---- ----
--------------------
No options were exercised by the Named Executive Officers during the
year ended December 31, 2000.
(1) The options are exercisable at $.57 per share. At December 31, 2000, the
fair market value of the Company's common stock was $.38 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, 2000, there were outstanding
options to purchase 135,000 and 80,000 shares under the Employee and Director
Plans, respectively. The exercise price for all options is $.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 August 15,
2001 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 PERCENT OF SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER(1) BENEFICIALLY OWNED(2) BENEFICIALLY OWNED
---------------------------------------- --------------------------- -------------------------
Maureen P. Ferri 656,981 7.1%
120 Simmons Road
Statesboro, GA. 30458
Lisa M. Brock 289,006(3) 3.1%
Howard L. Ehler, Jr. 406,108(4) 4.4%
Fred H. Hansen -- --
Gary J. Hasbach 270,400(5) 2.9%
S. Daniel Ponce 591,966(6) 6.4%
Milton J. Wallace 128,000(7) 1.4%
Morton L. Weinberger 229,210(8) 2.5%
All directors and officers 1,930,808(9) 20.6%
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 20,000 shares of common stock issuable upon exercise of stock
options.
(4) Includes 30,000 shares of common stock issuable upon exercise of stock
options.
(5) Includes 20,000 shares of common stock issuable upon exercise of stock
options.
(6) Includes 20,000 shares of common stock issuable upon exercise of stock
options.
(7) Includes 20,000 shares of common stock issuable upon exercise of stock
options.
(8) Includes 20,000 shares of common stock issuable upon exercise of stock
options.
(9) Includes 140,000 shares of common stock issuable upon exercise of stock
options.
- 14 -
PROPOSAL TO AMEND CERTIFICATE OF INCORPORATION
TO INCREASE THE AUTHORIZED CAPITAL STOCK
GENERAL. The Board of Directors has determined that it would be
advisable to amend Paragraph FOURTH of the Company's Certificate of
Incorporation to increase the authorized capital stock of the Company such that
the aggregate number of shares which the Company shall have authority to issue
shall be increased from 25,000,000 shares to 45,000,000 shares, of which
40,000,000 shares shall be designated "Common Stock" and 5,000,000 shares shall
be designated as "Preferred Stock" (the "Capital Stock Amendment").
The Board of Directors has unanimously adopted and declared it
advisable and unanimously recommends to the Company's stockholders that
Paragraph FOURTH of the Company's Certificate of Incorporation be amended as
described herein. A copy of Paragraph FOURTH of the Company's Certificate of
Incorporation, as proposed to be amended, is attached as Appendix "A" to the
Proxy Statement.
INCREASE IN NUMBER OF AUTHORIZED SHARES OF COMMON STOCK. The Board of
Directors has approved, subject to stockholder approval at the Annual Meeting,
an increase in the number of authorized shares of Common Stock from 20,000,000
to 40,000,000. As of the Record Date, 9,220,434 shares of Common Stock were
outstanding and 365,000 shares reserved for issuance in relation to outstanding
options and warrants. Accordingly, there are only 10,414,566 authorized shares
of Common Stock presently unissued and not reserved for future issuance. No
change in the authorized shares of Preferred Stock is being requested,
REASONS FOR APPROVAL OF CAPITAL STOCK AMENDMENT. The Board of Directors
considers the proposed authorization of an additional 20,000,000 shares of
Common Stock desirable because it would provide the Company with the ability to
take advantage of future opportunities for the issuance of equity securities in
connection with financings, possible future acquisitions, other programs to
facilitate expansion and growth and for other general corporate purposes,
including stock dividends, stock splits and employee benefit plans, without the
delay and expense incident to the holding of a special meeting of stockholders
to consider any specific issuance. Such additional shares of Common Stock could
be issued in public or private offerings in order to raise capital for various
purposes. Authorized, but unissued shares, may be issued at such time or times,
to such person or persons and for such consideration as the Board of Directors
determines to be in the best interest of the Company, without further
authorization from the Stockholders, subject to the listing rules of any
principal securities exchange or automated quotation system that the Company's
Common Stock may be subject at any time in the future..
The authorization of additional shares of Common will not, by
themselves, have any effect on the right of holders of existing shares of Common
Stock. Any new shares of Common Stock, when issued, would have the same rights
and privileges as the shares of Common Stock presently outstanding.
To the extent that any shares of Common Stock may be issued on other
than a pro rata basis to current stockholders, the present ownership position of
current stockholders may be diluted. Such shares may also be issued to dilute
the stock ownership of persons seeking to obtain control of the Company, and
thereby defeat a possible takeover attempt which (if stockholders were offered a
premium over the market value of their shares) might be viewed as being
beneficial to stockholders of the Company. Management of the Company is not
aware of any possible takeover attempt at this time.
Currently, the Company does not have any specific plans, commitments,
agreements or understandings relating to the issuance of any shares of Common
Stock. The timing of the actual issuance of Common Stock will depend on market
conditions, the specific purpose for issuance and other similar factors.
POSSIBLE ANTI-TAKEOVER EFFECTS OF CAPITAL STOCK AMENDMENT. The primary
purpose of the Capital Stock Amendment is to provide the Company with the
flexibility to raise additional capital from the sale of Common Stock and to
take advantage of possible future opportunities for which the issuance of such
shares may be deemed advisable without the delay and expense incident to calling
a special meeting of the Company's stockholders in any case in which such a
meeting would not be otherwise required.
- 15 -
The issuance of additional shares of Common Stock, or shares of a
series of Preferred Stock, may be deemed to have an anti-takeover effect since
such shares may be used, under certain circumstances, to create voting
impediments to frustrate persons seeking to effect a takeover or otherwise gain
control of the Company. The increase in authorized capital stock may also be
viewed as having the effect of discouraging an attempt by another person or
entity, through the acquisition of a substantial number of shares of Common
Stock, to acquire control of the Company, since the issuance of additional
shares of Common Stock may be used to dilute such person's ownership of shares
of Company's voting stock.
The Capital Stock Amendment has not been proposed as an anti-takeover
measure, nor is the Board of Directors aware of any offers to acquire control of
the Company. It should be noted that any action taken by the Company to
discourage an attempt to acquire control of the Company may result in
stockholders not being able to participate in any possible premiums which may
otherwise be obtained in the absence of anti- takeover measures. Any transaction
which may be so discouraged or avoided could be a transaction that the Company's
stockholders might consider to be in their best interests. However, the Board of
Directors has a fiduciary duty to act in the best interest of the Company at all
times.
VOTE REQUIRED AND BOARD RECOMMENDATIONS. The adoption of the Capital
Stock Amendment requires the affirmative vote of not less than a majority of the
votes entitled to be cast by all shares of Common Stock issued and outstanding
on the Record Date. If the proposed Capital Stock Amendment is approved by the
Stockholders, it will become effective upon filing and recording of a
Certificate of Amendment as required by the Delaware General Corporation Law. If
the Capital Stock Amendment is not approved, the Company's authorized capital
stock will not change. The effect on an abstention or a broker non-vote is the
same as that of a vote against the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS
VOTE FOR THE APPROVAL OF THE PROPOSED INCREASE IN THE NUMBER OF SHARES OF
AUTHORIZED COMMON STOCK OF THE COMPANY.
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 $237,726 in 2000 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, 1996 to December 31, 2000 with (a)
the Russell 2000 Stock Index; and (b) a Peer Group Index. The graph assumes that
$100 was invested on January 1, 1996 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-five (55) publicly traded companies in the building materials industry.
[GRAPH TO BE INSERTED HERE]
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
Imperial Industries 100.00 125.00 525.00 500.00 775.00 475.00
Peer Index 100.00 120.14 131.87 150.56 128.82 131.49
Russell 2000 Index 100.00 116.61 142.66 138.66 165.82 158.66
- 16 -
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The firm of PricewaterhouseCoopers, LLP has served as the Company's
independent auditors for the years ended December 31, 1998, 1999 and 2000.
Although the Board of Directors has not yet selected a firm to serve as auditors
for the year ended December 31, 2001, 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 $67,500
for professional services rendered in connection with the audit of the Company's
financial statements for the fiscal year ended December 31, 2000 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
PricewaterhouseCoopers, LLP did not bill the Company for any
professional services described in Paragraph (c)(4)(ii) of Rule 2.01 of
Regulation S-X for the fiscal year ended December 31, 2000
ALL OTHER FEES
The Company paid an aggregate of $20,500 in fees to
PricewaterhouseCoopers, LLP during the fiscal year ended December 31, 2000 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 2002 annual meeting must be received
by the Company no later than May 22, 2002 for inclusion
- 17 -
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 2000 Annual Report, including audited financial
statements as of December 31, 1998, 1999 and 2000 and for each of the three (3)
years in the period ending December 31, 2000 are being mailed to all
stockholders. Copies of the Annual Report on Form 10-K for the Fiscal Year ended
December 31, 2000 as filed with the Securities and Exchange Commission may be
obtained by writing to Corporate Secretary, 1259 Northwest 21st Street, Pompano
Beach, Florida 33069.
- 18 -
APPENDIX A
AMENDMENT TO CERTIFICATE OF INCORPORATION
Article FOURTH of the Company's Certificate of Incorporation is
proposed to be amended to read as follows:
FOURTH: The aggregate number if 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.
1. 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:
(a) the number of shares to constitute such series, and the
designations thereof;
(b) 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;
(c) the rate of dividends, if any, and the extent of further
participation in dividend distributions, if any, and whether dividends
shall be cumulative or non-cumulative;
(d) whether or not such series shall be redeemable, and if so,
the terms and conditions upon which shares of such series shall be
redeemable;
(e) the extent, if any, to which such series shall have the
benefit of any sinking fund provision for the redemption or purchase of
shares;
(f) 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;
(g) 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
(h) 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.
2. 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 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.
A-1
APPENDIX B
IMPERIAL INDUSTRIES, INC.
AUDIT COMMITTEE CHARTER
The IMPERIAL INDUSTRIES, INC. (the "Company") Audit Committee (the
"Audit Committee") shall be comprised of at least two members of the Company's
Board of Directors. A majority of the members of the Audit Committee shall be
independent directors as that term is defined by the rules and regulations of
the National Association of Securities Dealers, Inc. (the "NASD"). An
independent director may not be an officer of the Company and must be otherwise
free of any relationship that could influence his or her judgment as an Audit
Committee member in the reasonable judgement of the Board of Directors. Further,
an independent director should not be associated with a major vendor to, or
customer of, the Company if, in the opinion of the Board of Directors, such
association would impair independence. When there is some doubt about
independence, as when a member of the Audit Committee has a short-term
consulting contract with a major customer, the Audit Committee member should
recuse himself or herself from any decisions that might be influenced by that
relationship.
The principal duties of the Audit Committee are to monitor the
preparation of quarterly and annual financial reports and statements; to
recommend the appointment of independent auditors; meet with the Company's
independent auditors to review the arrangements for, and scope of, the audit by
the independent auditors and the fees related to such work; review the
independence of the independent auditors; consider the adequacy of the Company's
system of internal accounting controls; review and monitor the Company's
policies regarding conflicts of interest; and provide a report to be included in
the Company's proxy statement for the annual meeting of shareholders regarding
the responsibilities of the Audit Committee.
In addition, the Audit Committee may review and evaluate equity and
debt financings of the Company and address its findings and recommendations to
the full Board of Directors or such committee of the Board of Directors as may
be warranted.
AUTHORITY OF THE AUDIT COMMITTEE
The Company's management bears primary responsibility for the Company's
financial and other reporting, for establishing the system of internal controls
and for ensuring compliance with laws, regulations and Company policies. The
Audit Committee's responsibilities and related key processes are described in
this charter. The Audit Committee generally has the authority and is charged
with the following:
1. To provide open avenues of communication between the Board of
Directors and the independent accounting firm selected to audit the Company's
financial statements.
2. To conduct or authorize investigations into matters within the Audit
Committee's scope of responsibilities. The Audit Committee is authorized to
retain independent counsel, accountants, or others it needs to assist in an
investigation.
3. To meet as frequently as necessary in the reasonable judgement of
the Audit Committee Chairman. The Audit Committee Chairman has the power to call
an Audit Committee meeting whenever he or she thinks there is a need. Audit
Committee members may attend meetings by teleconference. The Audit Committee may
ask members of management or others to attend meetings and is authorized to
receive all pertinent information from management.
RESPONSIBILITIES FOR ENGAGING INDEPENDENT ACCOUNTANTS
The independent accounting firm engaged to handle the audit of the
Company's financial statements are responsible primarily to the Board and the
Audit Committee. In carrying out the Audit Committee's responsibilities, the
Audit Committee shall:
1. Recommend the appointment or removal of independent accountants for
Company audits. The Audit Committee's recommendation is subject to approval by
the full Board of Directors and shareholders of the Company, if necessary.
B-1
2. Review and set any fees paid to the independent accountants.
3. Consider, in consultation with the independent accountants, the
audit scope and procedural plans made by such independent accountants.
4. Review issues with management and the independent accountants if
either thinks there might be a need to engage additional auditors. The Audit
Committee will decide whether to engage an additional firm, and if so, which
one.
5. Review the independence of the independent accountants, including
review of the formal written statement to be provided annually from such
independent accountants delineating all relationships between the Company and
the independent accountants consistent with Independence Standards Board
Standard No. 1.
6. Review with the independent accountants the extent of non-audit
services provided by such firm and related fees that may impact such independent
accountants' independence from the Company.
RESPONSIBILITIES FOR FINANCIAL REPORTING
The Audit Committee shall monitor the preparation by management of the
Company's quarterly and annual external financial reports. In carrying out such
responsibilities, the Audit Committee shall:
1. Review with management and/or the independent accountant significant
risks and exposures brought to its attention and will assess management's steps
to minimize them.
2. Review the accounting and reporting treatment of significant
transactions outside the Company's normal operations.
3. Review with management and the independent accountants significant
changes to the Company's accounting principles or their application as reflected
in the financial reports.
4. Review the following with management and the independent
accountants:
(a) Drafts of the Company's annual financial statements and
related footnotes.
(b) The independent accountants' audit report on the financial
statements.
(c) The independent accountants' qualitative judgments of
accounting principles and financial disclosures.
(d) Any serious difficulties or disputes with management
encountered during the course of the audit.
5. Review the Company's quarterly financial results and discuss their
appropriateness with management and the Company's independent accountants, as
necessary.
The Audit Committee may ask the Chief Financial Officer or other
members of management to be absent during selected discussions.
INTERNAL CONTROLS
The Audit Committee shall have responsibility for overseeing that
management has implemented an effective system of internal controls that helps
promote the reliability of financial and operating information and compliance
with applicable laws, regulations and policies, including those related to
ethics and conflicts of interest. In carrying out these responsibilities, the
Audit Committee shall:
1. Inquire of management, management auditors and the Company's
independent accountants, concerning any deficiencies in the Company's policies
and procedures that could adversely
B-2
affect the adequacy of internal controls and the financial reporting process and
review the timeliness and reasonableness of proposed corrective action.
2. Review significant findings and recommendations by the independent
accountants contained in such accounting firm's annual letter to management.
3. Review management's responses to the independent accountants'
management letter.
4. Review the Company's policies and practices related to compliance
with laws, ethical conduct and conflicts of interest.
5. Review significant cases of conflicts of interest, misconduct and
fraud.
6. Review, as appropriate, material litigation involving the Company.
PERIODIC RESPONSIBILITIES
In addition to the responsibilities outlined above, the Company shall:
1. Prepare the Audit Committee's annual report for inclusion in the
Company's proxy statement.
2. Review and update the Audit Committee's charter when appropriate.
3. Review the annual budget prepared by management and make
recommendations as indicated to management and the Board of Directors.
4. Review legal and regulatory matters that may have a material effect
on the Company's financial statements.
5. Meet with the independent accountants and management in separate
executive sessions to discuss any matters the Audit Committee or these groups
believe should be discussed privately with the Audit Committee.
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IMPERIAL INDUSTRIES, INC.
PROXY
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON NOVEMBER 14, 2001
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 November 14, 2001,
and any and all adjournments thereof, in the manner specified below:
1. ELECTION OF CLASS III DIRECTORS
Nominees:
--------
S. Daniel Ponce
Lisa M. Brock
|_| For all nominees listed above
|_| Withhold authority to vote for the following:
-----------------------------------------------------------------------------
|_| Withhold authority to vote for all nominees
2 PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION
|_| 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 EACH DIRECTOR AND FOR APPROVAL OF THE
AMENDMENT TO CERTIFICATE OF INCORPORATION. 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: , 2001
---------------------
---------------------------------
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.