<PAGE>
CONSOLIDATED STAINLESS, INC.
1601 EAST AMELIA STREET
ORLANDO, FLORIDA 32803
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 5, 1996
------------------------
To the Shareholders of
CONSOLIDATED STAINLESS, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting (the "Annual Meeting") of
Shareholders of Consolidated Stainless, Inc. (the "Company" or the
"Corporation") will be held at the manufacturing facility of the Company, 95
Bennett Street, Auburndale, Florida on Thursday, September 5, 1996, at 10:00
a.m. local time for the following purposes:
i. To elect five (5) directors to hold office until the next Annual
Meeting;
ii. To ratify the selection of BDO Seidman, LLP as auditors of the Company
for the Fiscal Year ending December 31, 1996;
iii. To authorize an amendment to the Company's Certificate of Incorporation
to increase the Company's authorized capital by increasing from
1,000,000 to 2,000,000 shares the Company's authorized Preferred Stock;
and
iv. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
The Board of Directors has fixed July 15, 1996 as the record date for the
determination of shareholders entitled to notice of and to vote at the meeting
or any adjournment thereof. The stock transfer books of the Company will not be
closed, but only shareholders of record at the close of business on July 15,
1996 will be entitled to vote at the meeting or any adjournment or adjournments
thereof.
By Order of the Board of Directors
Harvey B. Adams
CHAIRMAN OF THE BOARD
- - - --------------------------------------------------------------------------------
WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE COMPLETE, SIGN AND RETURN YOUR PROXY
CARD PROMPTLY IN THE ENCLOSED STAMPED ENVELOPE PROVIDED FOR YOUR USE.
- - - --------------------------------------------------------------------------------
<PAGE>
CONSOLIDATED STAINLESS, INC.
1601 EAST AMELIA STREET
ORLANDO, FLORIDA 32803
------------------------
PROXY STATEMENT
------------------------
GENERAL INFORMATION CONCERNING SOLICITATION
This proxy statement is furnished in connection with the solicitation of
proxies by and on behalf of the Board of Directors of Consolidated Stainless,
Inc. (hereinafter referred to as the "Company" or the "Corporation"), for its
Annual Meeting of Shareholders (the "Meeting") to be held at 10:00 A.M. on
Thursday, September 5, 1996, or any adjournments thereof, at the main
manufacturing facility of the Company, 95 Bennett Street, Auburndale, Florida.
Shares cannot be voted at the meeting unless their owner is present in person or
represented by proxy. Copies of this proxy statement and the accompanying form
of proxy shall be mailed to the shareholders of the Company on or about August
1, 1996, accompanied by a copy of the Annual Report of the Company containing
financial statements as of and for the Fiscal Years ended December 31, 1995 and
1994, together with other information respecting the Company.
If a proxy is properly executed and returned, the shares represented thereby
will be voted in accordance with the specifications made, or if no specification
is made the shares will be voted to approve each proposition and to elect each
nominee for director identified on the proxy. Any shareholder giving a proxy has
the power to revoke it at any time before it is voted by filing with the
Secretary of the Company a notice in writing revoking it. A proxy may also be
revoked by any shareholder present at the Meeting who expresses a desire in
writing to revoke a previously delivered proxy and to vote his or her shares in
person. The mere presence at the Meeting of the person appointing a proxy does
not revoke the appointment. In order to revoke a properly executed and returned
proxy, the Company must receive a duly executed written revocation of that proxy
before it is voted. A proxy received after a vote is taken at the Meeting will
not revoke a proxy received prior to the Meeting; and a subsequently dated proxy
received prior to the vote will revoke a previously dated proxy.
All expenses in connection with the solicitation of proxies, including the
cost of preparing, handling, printing and mailing the Notice of Annual Meeting,
Proxies and Proxy Statements will be borne by the Company. Directors, officers
and regular employees of the Company, who will receive no additional
compensation therefor, may solicit proxies by telephone or personal call, the
cost of which will be nominal and will be borne by the Company. In addition, the
Company will reimburse brokerage houses and other institutions and fiduciaries
for their expenses in forwarding proxies and proxy soliciting material to their
principals.
As of July 15, 1996, the following shareholders holding 1,890,375 of the
votes represented by shares of the voting stock of the Company, in the aggregate
constituting approximately 43% of the total votes represented by shares entitled
to vote at the Meeting, have indicated their intention to vote in person or by
proxy in favor of all nominees for director and all other matters to be
submitted for consideration at the Meeting: Harvey B. Adams (1,560,800 shares),
Ronald J. Adams (289,200 shares), Michael A. Sigmon (29,125 shares), Burton R.
Chasnov (9,250 shares) and Robert J. Gamson (2,000 shares).
1
<PAGE>
DIRECTORS, NOMINEES FOR DIRECTOR,
EXECUTIVE OFFICERS AND KEY EMPLOYEES OF THE COMPANY
The executive officers, directors, nominee for director and key employees of
the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- - - ----------------------- --- --------------------------------------------------------------
<S> <C> <C>
Harvey B. Adams 49 Chairman of the Board of Directors, Nominee for Director and
Chief Executive Officer
Ronald J. Adams 47 President, Director, Nominee for Director and Chief Operating
Officer
Burton R. Chasnov 48 Executive Vice President and Chief Financial Officer
Michael A. Sigmon 47 Vice President
James Read Boles 42 Chief Operating Officer and General Manager -- Flow Components
division
Christopher B. Cole 48 Executive Vice President
Robert J. Gamson 60 Director and Nominee for Director
David M. Barnes 53 Director and Nominee for Director
Stephen A. Weiss 55 Director and Nominee for Director
</TABLE>
HARVEY B. ADAMS. Mr. Adams is the founder of the Company which he started
in 1973. For approximately six years prior thereto he was employed in chemical
sales by Drew Chemical, Tampa, Florida and started a ship's chandler business.
Harvey Adams is a 1970 graduate of the United States Merchant Marine Academy and
holds a Bachelor of Science degree in Marine Engineering. He is the brother of
Ronald J. Adams, the President of the Company.
RONALD J. ADAMS. Mr. Adams is a principal shareholder of, and has been
continuously employed in senior executive capacities with the Company since
1978. For approximately five years prior thereto he held sales positions with
small privately-owned corporations. Mr. Ronald Adams is a 1971 graduate of the
United States Merchant Marine Academy and holds a Bachelor of Science degree in
Marine Engineering. He is the brother of Harvey B. Adams, the Chief Executive
Officer of the Company.
CHRISTOPHER B. COLE, has been an Executive Vice President of the Company
since October 1, 1994. In 1982, Mr. Cole co-founded the CBC Group, Inc., a used
machinery dealer and consultant for the wire and tube industry. Mr. Cole served
as President of such company from its inception until October 1994. Mr. Cole has
served as Chairman of the Board of Fabricators and Manufacturers Association
International and as Chairman of the Board of the American Tube Association.
Prior to founding CBC Group, Inc., Mr. Cole served as General Manager of
Inter-Magnetics General Corporation, a producer of superconducting wire for the
high energy physics group. Mr. Cole is a mechanical engineer having received his
B.S. degree from Newark College of Engineering.
BURTON R. CHASNOV, as of July 1, 1996, became an Executive Vice President
and the Chief Financial Officer of the Company. Mr. Chasnov had been the
Company's and its predecessors' tax accountant and outside consultant for the
past 15 years and has operated his own public accounting practice since 1978.
Concurrently during the period 1978 through 1987, Mr. Chasnov served as the Vice
President of Finance for Ploss Hotels Corporation, a hotel management company.
Prior to that time, Mr. Chasnov worked in several public accounting firms
including Arthur Andersen & Co., Clarence Rainess & Co. and Laventhol and
Horwath, CPAs.
MICHAEL A. SIGMON. Mr. Sigmon, together with his wife, started Alloy Piping
Supply, Inc. in Jacksonville, Florida in August 1974 as a distributor of
stainless steel welded pipe and related products; which corporation was merged
with the Company as of May 1992. From 1970 to 1974,
2
<PAGE>
Mr. Sigmon was a sales representative for Camalloy, Inc., a stainless steel
distributor in Pennsylvania. For approximately five years prior thereto he was
in the sales department for Bristol Metal Products, Inc., a subsidiary of
Synalloy Corporation.
JAMES READ BOLES. Mr. Boles joined the Company as the Chief Operating
Officer and General Manager of the Flow Components division in January 1996,
when the Company acquired Flow Components, Inc. From 1991 to January 1996, Mr.
Boles served as President and a principal stockholder of Flow Components, Inc.,
a manufacturer and distributor of stainless steel flanges. Prior to his
acquisition of Flow Components, Mr. Boles was a principal in the acquisition and
operation of certain privately-owned businesses.
ROBERT J. GAMSON. From 1968 to 1991, Mr. Gamson was the founder, President
and principal stockholder of Aaron Scrap Metals, Inc., a dealer in ferrous and
non-ferrous metals purchased primarily from industrial plants and government
agencies. Such commodities were resold in both the domestic and foreign metals
markets. In 1991, Mr. Gamson sold Aaron Scrap Metals, Inc. to Commercial Metals
Co. located in Dallas, Texas. Mr. Gamson presently serves as President of
Surplus Steel and Supply, Inc. located in Orlando, Florida.
DAVID M. BARNES has been a Director of the Company since June 21, 1994. Mr.
Barnes has been Chief Financial Officer of American United Global, Inc., a
Nasdaq/NMS listed company, since May 15, 1996. From April 1990 until July 1990,
Mr. Barnes also served as an officer and director of Intelcom Data Systems,
Inc., which engages in the design and development of software for the foreign
currency exchange and banking industries. From October 1987 until May 1989, Mr.
Barnes was Vice President of Finance at U.S. Home Care Corp., a home health care
provider. From April 1983 until September 1987, Mr. Barnes was Vice President of
Finance and Administration of Lifetime Corporation. From 1975 to 1983, Mr.
Barnes was Executive Vice President of Beefsteak Charlies, Inc. Mr. Barnes has
served as a Director of Universal Self Care, Inc., a distributor and retailer of
products and services principally for diabetics, since May 1991 and he is a
director, President and a minority stockholder of American Complex Care,
Incorporated, a public company formerly engaged in providing on-site health care
services, including intra-dermal infusion therapies. In April 1995, American
Complex Care, Incorporated's operating subsidiaries made assignments of their
assets for the benefit of creditors without resort to bankruptcy proceedings.
STEPHEN A. WEISS. Mr. Weiss has been a director of the Company since June
21, 1994. Mr. Weiss is a stockholder of Greenberg, Traurig, Hoffman, Lipoff,
Rosen & Quentel, counsel to the Company, and has been a lawyer in private
practice in New York, New York for more than 25 years. Mr. Weiss is a director
of Lanxide Corporation, a developer of patented materials technology related to
the fabrication of ceramic-reinforced composite products.
The Company has Audit and Compensation Committees, and it is the Board's
Compensation Committee which administers the Company's Stock Option Plan. The
responsibilities of the Audit Committee include recommending to the Board of
Directors the firm of independent accountants to be retained by the Company,
reviewing with the Company's independent accountants the scope and results of
their audits, and reviewing with the independent accountants and Management the
Company's accounting and reporting principles, policies and practices, as well
as the Company's accounting, financial and operating controls and staff. The
Compensation Committee will have responsibility for establishing and reviewing
employee compensation plans. The Compensation Committee administers the
Company's stock option plan.
Non-management directors of the Company will receive directors' fees of $500
per meeting for attendance at Board of Directors meetings, and are reimbursed
for actual expenses incurred in respect of such attendance. The Company does not
intend to separately compensate employees for serving as directors.
3
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
To the knowledge of the Company, no officers, directors, beneficial owners
of more than 10 percent of any class of equity securities of the Company
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or any other person subject to Section 16 of the
Exchange Act with respect to the Company, failed to file on a timely basis
reports required by Section 16(a) of the Exchange Act during the most recent
fiscal year, which ended December 31, 1995.
EXECUTIVE COMPENSATION
The following table sets forth the amount of all compensation paid by the
Company for services rendered during each of 1993, 1994 and 1995 to the person
serving as the Company's Chief Executive Officer at any time during such periods
and to each of the Company's executive officers whose total salary and bonus
compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------------------
ANNUAL COMPENSATION (1) AWARDS PAYOUTS
------------------------------- --------------------------------------
(2) RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
FISCAL SALARY BONUS COMPENSATION AWARDS OPTIONS/ SARS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
- - - ------------------------------ ------ ------- ------- ------------- ----------- ------------- -------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Harvey B. Adams .............. 1993 312,500 0 26,882 0 0 0 5,000
Chairman of the Board and 1994 312,500 0 30,617 0 45,000 0 0
Chief Executive Officer 1995 312,500 360,000 32,855 0 180,000 0 0
Ronald J. Adams .............. 1993 187,500 0 30,224 0 0 0 0
President and Chief Operating 1994 187,500 0 35,085 0 45,000 0 0
Officer 1995 187,500 240,000 47,161 0 180,000 0 0
Christopher B. Cole .......... 1993 0 0 0 0 0 0 0
Executive V.P. 1994 26,842 0 0 0 0 0 0
1995 125,000 0 7,318 0 0 0 0
Michael Beam ................. 1993 0 0 0 0 0 0 0
General Manager (3) 1994 825 0 0 0 0 0 0
1995 201,500 0 5,817 0 0 0 0
Michael A. Sigmon ............ 1993 140,000 0 13,328 0 0 0 0
Vice President 1994 140,000 0 11,467 0 7,500 0 0
1995 160,000 24,000 8,736 0 5,000 0 0
</TABLE>
- - - ------------------------------
(1) Does not include an aggregate of $665,893 in S Corporation distributions
paid to Harvey Adams in respect of prior period earnings in 1993. Also does
not include an aggregate of $93,238, $33,072, and $55,108 paid in respect
of the 1995 fiscal year, $94,138, $33,072 and $54,954 paid in respect of
the 1994 fiscal year, and $93,304, $33,139 and $54,954 paid in respect of
the 1993 fiscal year, in rent to Harvey Adams, Ronald Adams and Michael and
Barbara Sigmon, respectively, for warehouse and office facilities leased by
the Company from such persons.
(2) Represents the cost of additional employee benefits to the particular
executive officer (e.g., health insurance, automobile) other than cash
compensation.
(3) Mr. Beam resigned from the Company effective February 16, 1996, but
continued to be compensated at his 1995 level pursuant to a severance
arrangement, until the Company had a registration statement declared
effective registering his 200,800 shares of Company Common Stock, which
occurred on May 16, 1996.
4
<PAGE>
STOCK OPTION GRANTS
The Company has granted an aggregate of 738,450 stock options under its 1993
stock option plan, as amended, of which 56,050 stock options have been
exercised. The following table sets forth information concerning the granting of
stock options during fiscal 1995 to each of the executive officers named in the
Summary Compensation Table.
<TABLE>
<CAPTION>
POTENTIAL REALIZED VALUE
AT ASSUMED ANNUAL RATES
% OF TOTAL OF STOCK PRICE
OPTIONS/SARS APPRECIATION FOR OPTION
GRANTED TO EXERCISE OR TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ------------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- - - ---------------------------------------- ------------- ------------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Harvey B. Adams......................... 30,000 6.4 5.67 2/1/00 217,095 273,948
150,000 32.2 8.25 11/20/00 1,579,398 1,993,006
Ronald J. Adams......................... 30,000 6.4 5.67 2/1/00 217,095 273,948
150,000 32.2 10.25 8/31/00 1,962,283 2,476,159
Christopher B. Cole..................... 15,000 3.2 11.875 8/31/00 227,338 286,872
Michael A. Sigmon....................... 5,000 1.1 10.25 8/31/00 65,409 82,539
</TABLE>
The following table sets forth information concerning the number of
unexercised options, and the value of such unexercised options, for each of the
executive officers named in the Summary Compensation Table.
AGGREGATED OPTIONS/SARS EXERCISED IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
SHARES ACQUIRED AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)
ON VALUE -------------------------- ----------------------------
NAME (A) EXERCISE (#) (B) REALIZED ($) (C) EXERCISABLE/UNEXERCISABLE (D) EXERCISABLE/UNEXERCISABLE (E)
- - - ----------------------------- --------------- -------------- -------------------------- ----------------------------
<S> <C> <C> <C> <C>
Harvey B. Adams.............. -0- -0- 225,000 (exercisable) $2,025,000 (exercisable)
Ronald J. Adams.............. -0- -0- 225,000 (exercisable) $2,025,000 (exercisable)
Christopher B. Cole.......... 15,000 $ 111,075 15,000 (exercisable) $135,000 (exercisable)
Michael A. Sigmon............ -0- -0- 12,500 (exercisable) $112,500 (exercisable)
</TABLE>
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with Harvey B. Adams,
effective as of January 1, 1993 and expiring on December 31, 1997, pursuant to
which he serves as Chairman of the Board and Chief Executive Officer of the
Company and provides the Company with his full-time business and professional
services, for which he receives a base annual salary of $312,500.
The Company also entered into an employment agreement with Ronald J. Adams,
effective as of January 1, 1993 and expiring on December 31, 1997, pursuant to
which he serves as President and Chief Operating Officer of the Company and
provide the Company with his full-time services, for which he will receive a
base annual salary of $187,500.
Under the terms of an Employment Agreement dated April 15, 1996, effective
July 1, 1996 and expiring June 30, 2001, Burton Chasnov will serve as Executive
Vice President and Chief Financial Officer of the Company. Mr. Chasnov's base
salary is $187,500 for the annual period ending June 30, 1997; $195,000 for the
annual period ending June 30, 1998; $205,000 for the annual period ending June
30, 1999; $215,000 for the annual period ending June 30, 2000; and $225,000 for
the annual period ending June 30, 2001. Additionally, Mr. Chasnov operated under
the terms of a written consulting agreement with the Company during the period
April 15, 1996 through June 30, 1996 in consideration for the grant of options
to acquire 50,000 shares of Company Common Stock at $11.00 per share (fair
market at April 15, 1996) during a five year period.
5
<PAGE>
Michael A. Sigmon entered into an employment agreement with the Company,
effective as of May 1, 1993 and expiring on December 31, 1995. Under such
agreement, Mr. Sigmon serves as Vice President of the Company and is in charge
of the Jacksonville, Florida distribution center. On January 15, 1995, the
Company increased Mr. Sigmon's base annual salary to $160,000. In January 1996,
the Company increased Mr. Sigmon's base salary to $196,000 per annum, and
extended the term of his employment agreement to December 31, 1997. These
arrangements have not yet been memorialized in writing.
Michael Beam entered into an employment agreement with the Company,
effective as of September 1, 1994 and expiring on August 31, 1999. Under such
agreement, Mr. Beam served as General Manager of the Company's Performance
Metals subsidiary. The Company was to pay Mr. Beam a base annual salary of
$201,500 for the first 18 months of his agreement, not less than $101,500 for
the next 18 months of the agreement and $114,000 for the remainder of the
agreement. Effective February 16, 1996, Mr. Beam resigned from the Company, but
continued to be compensated on a month to month basis pursuant to a severance
arrangement at his 1995 level. Such payments were terminated on May 16, 1996
when a registration statement with respect to Mr. Beam's public distribution of
200,800 shares of Company Common Stock was declared effective by the Securities
and Exchange Commission.
Christopher B. Cole entered into an employment agreement with the Company,
effective as of October 1, 1994 and expiring on September 30, 1996. Under such
agreement, Mr. Cole serves as Executive Vice President of the Company and was in
charge of the initial phase of the Company's relocation to the Auburndale
Facility. Since completion of such relocation he has been responsible for the
management and review of the manufacturing operations of the Auburndale
Facility. The Company pays Mr. Cole a base salary of $125,000 per annum. In
March 1996, the Company negotiated a 5-year extension of Mr. Cole's employment
agreement at a base salary of $150,000 per annum.
James Read Boles entered into an employment agreement with Flow Components
and the Company expiring on December 31, 1998. Under such agreement, Mr. Boles
serves as Chief Operating Officer and General Manager of the Company's Flow
Components division. The Company currently pays Mr. Boles a base salary of
$125,000 per annum, which is subject to annual cost-of-living increases and
annual review by the Company's Board of Directors. Additionally, the Company
granted to Mr. Boles options to purchase 50,000 shares of Company Common Stock
under the Company's Stock Option Plan at an exercise price of $8.50 per share
(i.e. equal to the last sale price of the Company's Common Stock, as reported on
Nasdaq on the effective date of the consummation of the Flow Components
acquisition).
On October 25, 1995, the Company entered into an employment agreement with
Robert Rachwal expiring on November 30, 2000, who has been hired to head the
Company's ornamental and structural tube division. Under such agreement, Mr.
Rachwal receives a base salary of $120,000 per annum, plus monthly incentive
bonuses calculated based on (i) a fraction (not to exceed 0.004) of monthly
shipments of pounds of ornamental and structural stainless steel tubing and (ii)
the monthly adjusted pre-tax income (as defined) of such division, up to a
maximum monthly bonus of $8,000.
Each of the employment agreements with Messrs. Harvey B. Adams, Ronald J.
Adams, Burton R. Chasnov, Michael A. Sigmon, Michael Beam, Christopher B. Cole,
Burton R. Chasnov, James Read Boles and Robert Rachwal, contain covenants
restricting the employee from engaging in any activities competitive with the
business of the Company during the term of their respective employment
agreements.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Board of Directors has an Audit Committee and a Compensation
Committee. The Compensation Committee also administers the Company's Stock
Option Plan. The responsibilities of the Audit Committee include recommending to
the Board of Directors the firm of independent accountants to be retained by the
Company, reviewing with the Company's independent accountants
6
<PAGE>
the scope and results of their audits, and reviewing with the independent
accountants and management of the Company's accounting and reporting principles,
policies and practices, as well as the Company's accounting, financial and
operating controls and staff. The Compensation Committee has responsibility for
establishing and reviewing employee compensation plans, including the grant of
options under the Company's stock option plan.
Non-management directors of the Company will receive directors' fees of $500
per meeting for attendance at Board of Directors meetings, and are reimbursed
for actual expenses incurred in respect of such attendance. The Company does not
intend to separately compensate employees for serving as directors.
EXECUTIVE OFFICER BONUS PLAN
In order to provide certain of its senior executive officers with additional
incentives for enhanced performance, the Company adopted an Executive Officer
Bonus Plan (the "Bonus Plan") for the benefit of the Company's senior executive
officers from time to time. This Bonus Plan is administered by the Compensation
Committee of the Board of Directors of the Company (the "Committee"), which has
full and final authority to make all calculations of bonuses under the Bonus
Plan, the amount of advances available under the Bonus Plan to such officers,
and all other matters relating to the administration of the Bonus Plan and the
payment of any and all bonuses thereunder.
Only the President and the Chief Executive Officer of the Company (the
"Participants") during the subject fiscal years shall be eligible to participate
in and receive bonuses under the Bonus Plan. Any bonuses paid out under this
plan shall be allocated 60% of the Aggregate Bonus (as defined herein) to the
Chief Executive Officer and 40% of the Aggregate Bonus to the President. The
Aggregate Bonus (as defined in the below table) shall be deemed earned under the
Bonus Plan provided that the Company has achieved EBITD (as hereinafter defined)
equal to or in excess of the following income levels:
<TABLE>
<CAPTION>
AGGREGATE
EBITD BONUS
- - - ----------------------------------------------------------------------- -----------
<S> <C>
$2,000,001 - $2,500,000................................................ $ 200,000
$2,500,001 - $3,000,000................................................ $ 350,000
$3,000,001 - $3,500,000................................................ $ 500,000
$3,500,001 or more..................................................... $ 600,000
</TABLE>
The term "EBITD" means, with respect to the any full fiscal year subject to
the terms of the Bonus Plan, the net income of the Company for such fiscal year
(after all expenses, EXCLUDING the executive officer bonus, and before provision
for taxes based on income) calculated in accordance with generally accepted
accounting principles consistently applied, with the amount of any depreciation
to be added back to increase the net income (provided that, in such calculation,
there shall be excluded, and no effect shall be given to, (A) any net gains or
losses realized or incurred by reason of any extraordinary or non-recurring
transactions not in the ordinary course of business, and (B) any net gain
arising from the collection of the proceeds of any insurance policy or
policies). Calculations of EBITD for any applicable fiscal year shall be based
upon the Company's annual audited financial statements for such fiscal year, as
prepared by the independent public accountants regularly engaged by the Company.
All bonuses earned under the Bonus Plan shall be paid to the Eligible Employees
no later than March 31 of the year following the fiscal year in which such bonus
was earned. Aggregate Bonuses equal to $600,000 were earned by Messrs. Harvey
and Ronald Adams for 1995.
The Bonus Plan shall remain in effect for the Company's fiscal year
beginning January 1, 1995 and ending December 31, 1997, without prejudice to the
Company's right to extend the Bonus Plan or its ability to provide compensation
to the Company's executive officers under other plans or in other ways. Advances
may be paid quarterly to eligible employees in anticipation of future bonus
compensation.
7
<PAGE>
The Compensation Committee of the Board of Directors established in June
1994 consists of Robert J. Gamson, Stephen A. Weiss and David M. Barnes. The
Audit Committee consists of Ronald J. Adams and Messrs. Weiss and Barnes. Such
persons were members of the Board of Directors of the Company for the entire
fiscal year ended December 31, 1995.
For a description of certain transactions involving the Company and its
officers and directors, see "Certain Transactions" below.
LIMITATION OF DIRECTORS' AND OFFICERS' LIABILITY AND INDEMNIFICATION
The Company has included in its Certificate of Incorporation and/or By-laws
provisions to (i) eliminate the personal liability of its directors and officers
for monetary damages resulting from breaches of their fiduciary duty (provided
that such provisions do not eliminate liability for breaches of the duty of
loyalty, acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, violations under Section 174 of the
Delaware Law, or for any transaction from which the director and/or officer
derived an improper personal benefit), and (ii) indemnify its directors and
officers to the fullest extent permitted by the Delaware Law, including
circumstances in which indemnification is otherwise discretionary. The Company
believes that these provisions are necessary to attract and retain qualified
persons as directors and officers.
The Company has entered into separate but identical indemnity agreements
(the "Indemnity Agreements") with each director and executive officer of the
Company (the "Indemnitees"). The Indemnity Agreements provide that the Company
will indemnify each Indemnitee against any amounts that he becomes legally
obligated to pay in connection with any claim against him based upon any act,
omission, neglect or breach of duty that he may commit, omit or suffer while
acting in his capacity as a director and/or officer of the Company; provided,
that such claim: (i) is not based upon the Indemnitee's gaining any personal
profit or advantage; (ii) is not for an accounting of profits made from the
purchase or sale by the Indemnitee of securities of the Company within the
meaning of Section 16(b) of the Exchange Act or similar provisions of any state
law; and (iii) is not based upon the Indemnitee's knowingly fraudulent,
deliberately dishonest or willful misconduct. The Indemnity Agreements also
provide that all costs and expenses incurred by the Indemnitee in defending or
investigating such claim shall be paid by the Company in advance of the final
disposition thereof, unless the Company's disinterested directors, independent
legal counsel, the stockholders of the Company or a court of competent
jurisdiction determines that: (x) the Indemnitee did not act in good faith and
in a manner that he reasonably believed to be in or not opposed to the best
interests of the Company; or (y) in the case of any criminal action or
proceeding, the Indemnitee had reasonable cause to believe his conduct was
unlawful. Each Indemnitee has undertaken to repay the Company for any costs or
expenses so advanced if it shall ultimately be determined by a court of
competent jurisdiction in a final, nonappealable adjudication that he is not
entitled to indemnification under an Indemnity Agreement.
8
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table identifies each person or entity known to the Company to
be the beneficial owner of more than five percent of the Company's Common Stock
on July 15, 1996, each director of the Company and all the directors and
executive officers of the Company as a group, and sets forth the number of
shares of the Company's Common Stock beneficially owned by each such person and
such group and the percentage of the shares of the Company's outstanding Common
Stock owned by each such person and such group. In all cases, the named person
has sole voting power and sole investment power of the securities.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE
OF COMMON STOCK OF OUTSTANDING
OF THE COMPANY COMMON STOCK
NAME AND ADDRESS OF BENEFICIAL OWNER (1) BENEFICIALLY OWNED (2) OWNED
- - - -------------------------------------------------------- --------------------------- -----------------
<S> <C> <C>
Harvey B. Adams......................................... 1,785,800(3)(5) 38.3%
Ronald J. Adams......................................... 514,200(4) 11.0%
Burton R. Chasnov....................................... 68,750(6) 1.5%
Christopher B. Cole..................................... 15,000(7) *
Michael A. Sigmon ...................................... 41,625(8) *
8035 Pebble Creek Lane West
Ponte Vedra, FL 32082
Stephen A. Weiss ....................................... 2,000(9) *
11 The Mews
Westport, CT 06880
Robert J. Gamson ....................................... 6,750(10) *
1501 The Oaks Drive
Maitland, FL 32751
David M. Barnes ........................................ 1,000(11) *
3680 Inverrary Drive
Lauderhill, FL 33319
All executive officers and directors as a group (8
persons)............................................... 2,435,125(3)(4)(5)(6)(7) 48.7%
(8)(9)(10)(11)
</TABLE>
- - - ------------------------
* Less than 1%.
(1)The addresses of each of Harvey B. Adams, Ronald J. Adams, Burton R. Chasnov
and Christopher B. Cole is c/o Consolidated Stainless, Inc., 1601 East
Amelia Street, Orlando, Florida 32803. Harvey B. Adams and Ronald J. Adams
are brothers.
(2)As used herein, the term beneficial ownership with respect to a security is
defined by Rule 13d-3 under the Securities Exchange Act of 1934 as
consisting of sole or shared voting power (including the power to vote or
direct the vote) and/or sole or shared investment power (including the power
to dispose or direct the disposition of) with respect to the security
through any contract, arrangement, understanding, relationship or otherwise,
including a right to acquire such power(s) during the next 60 days. Unless
otherwise noted, beneficial ownership consists of sole ownership, voting and
investment rights.
(3)Includes non-qualified options to purchase 45,000 shares of the Company's
common stock at $4.42 per share, non-qualified options to purchase 30,000
shares of the Company's common stock at $5.67 per share and non-qualified
options to purchase 150,000 shares of the Company's common stock at $8.25
per share granted under the Company's 1993 Stock Option Plan. Also includes
3,000 shares held for the benefit of Mr. Adams' children.
9
<PAGE>
(4)Includes 16,500 shares held by a trust for the benefit of Mr. Adams' two
nieces and which Mr. Adams serves as trustee, incentive options to purchase
45,000 shares of the Company's common stock at $4.42 per share,
non-qualified options to purchase 30,000 shares of the Company's common
stock at $5.67 per share and non-qualified options to purchase 150,000
shares of the Company's common stock at $10.25 per share.
(5)Under a Stipulation and Property Settlement Agreement dated February 8,
1993, as amended (the "Marital Settlement Agreement"), as security for the
payment by Harvey B. Adams of a lump sum alimony payment to Candice V.
Adams, his former wife ("Ms. Adams"), of $2,000,000, plus accrued interest
at 6% per annum (the "Alimony Amount"), Mr. Adams agreed (i) to assign to
Ms. Adams, all proceeds payable by the Company to Mr. Adams under the terms
of a stock redemption agreement, dated April 30, 1993 (the "Redemption
Agreement"), (ii) to deliver into escrow with counsel to the Company stock
certificates evidencing all but 387,000 shares of Company Common Stock owned
by Mr. Adams, and (iii) to pledge to Ms. Adams 180,000 shares out of such
387,000 shares of Company Common Stock to secure accrued interest on the
Alimony Amount. Under the terms of this escrow arrangement, Mr. Adams
retains the sole right to vote all shares held in escrow, and to sell all or
any portions of such shares provided that 50% of the net proceeds of each
sale are paid to Ms. Adams as a reduction of the Alimony Amount. The shares
held in escrow will be released and redelivered to Mr. Adams upon full
payment of the Alimony Amount. However, if any balance of the Alimony Amount
is outstanding on January 1, 2000, and the Company fails to repurchase
shares of Company Common Stock in accordance with the terms of the
Redemption Agreement, Ms. Adams will be delivered out of escrow such number
of shares as to which the then market value equals the Alimony Amount
balance. The Company has granted to Ms. Adams "piggyback" registration
rights with respect to any shares so transferred to her out of escrow (see
"Certain Transactions").
(6)Includes 3,500 shares indirectly owned through Burton R. Chasnov, CPA,
Profit Sharing Plan and 2,250 shares of Company Common Stock indirectly
owned through Burton R. Chasnov, CPA, Money Purchase Pension Plan. Includes
non-qualified options to purchase (i) 7,500 shares of Company Common Stock
at $4.42 per share (ii) 2,000 shares of Company Common Stock at $10.25 per
share and (iii) 50,000 shares of Company Common Stock at $11.00 per share.
(7) Consists of 15,000 incentive stock options exercisable at $11.875 per
share.
(8) Includes incentive options to purchase (i) 7,500 shares of the Company's
common stock at $4.42 per share and (ii) 5,000 shares of the Company's
common stock at $10.25 per share granted under the Company's 1993 Stock
Option Plan. Does not include (i) 28,125 shares of the Company's common
stock held by the wife of Mr. Sigmon, Vice President of the Company, or (ii)
150 shares of the Company's common stock held for the benefit of Mr.
Sigmon's child.
(9) Includes non-qualified options to purchase 2,000 shares of the Company's
common stock at $10.25 per share granted under the Company's 1993 Stock
Option Plan.
(10) Includes non-qualified options to purchase (i) 3,750 shares of the
Company's common stock at $4.42 per share and (ii) 1,000 shares of the
Company's common stock at $10.25 per share granted under the Company's 1993
Stock Option Plan.
(11) Includes non-qualified options to purchase 1,000 shares of the Company's
common stock at $12.00 per share granted under the Company's 1993 Stock
Option Plan.
10
<PAGE>
CERTAIN TRANSACTIONS
The Company leases two warehouses and office facilities located in Apopka,
Florida under a lease which commenced in May 1992 and expires April 1997 from R
& H Partners, a partnership consisting of Harvey and Ronald Adams. Annual net
rental under the Apopka lease is $62,400. The Company also leases from Harvey B.
Adams a second warehouse/storage facility in Mulberry, Florida under a lease
which commenced in May 1992 and expires in April 1997. Annual net rental on this
5,000 square foot facility is $56,760.
The Company leases a 27,500 square foot warehouse and office facility
located in Jacksonville, Florida under a lease which commenced in May 1992 and
expires April 1997 from Michael and Barbara Sigmon. Mr. Sigmon is a Vice
President and a minority stockholder of the Company. Annual net rental under the
Jacksonville lease is $51,600.
In 1993, Messrs. Harvey B. Adams and Ronald J. Adams borrowed an aggregate
of $390,000 from the Company. As of December 31, 1994, the principal balance on
such loans, together with interest at 7% per annum, was paid in full. At
December 31, 1995, Messrs. Harvey B. Adams and Ronald J. Adams were also
indebted to the Company in the aggregate amount of $169,782, including $112,730
borrowed prior to 1993, inclusive of accrued interest at the rate of 10% per
annum. All such indebtedness is payable on demand.
To assist him in paying a $2,000,000 obligation incurred in connection with
a marital settlement, the Company entered into a stock redemption agreement with
Harvey B. Adams in 1993 (the "Redemption Agreement"), pursuant to which the
Company agreed under certain conditions to redeem and repurchase from Mr. Adams,
upon his request, shares having a then market value equal to up to $2,500,000 at
any time during the three month period commencing January 1, 2000 and ending
March 31, 2000. The Company may satisfy its obligations to repurchase shares
from Mr. Adams by registering such shares for resale on behalf of Mr. Adams at
the Company's expense. To the extent that Mr. Adams has received proceeds from
sales of, or has otherwise transferred, Company Common Stock on or prior to such
repurchase or registration, the Company's obligations under the Redemption
Agreement will be reduced proportionately. See "Principal Stockholders."
Net proceeds of the Company's 1993 initial public offering in the amount of
$1,100,000 were distributed to Harvey B. Adams and other stockholders prior to
such public offering to enable them to pay their respective federal income tax
obligations on earnings of the Company taxable to such stockholders but not
distributed in cash to them under its former S Corporation election. Of such
amount, over $1,000,000 in the aggregate was distributed to Harvey B. Adams,
Ronald J. Adams and Michael A. Sigmon. The Company, Harvey B. Adams, Ronald J.
Adams, Michael A. Sigmon and certain other stockholders also entered into a tax
indemnity agreement under which such stockholders agreed to indemnify the
Company from any tax liabilities on any undistributed S corporation earnings
prior to such initial public offering. The Company agreed to indemnify Harvey B.
Adams and the other stockholders in the event that Harvey B. Adams and the other
stockholders are required to pay additional federal income taxes on certain
undistributed income of the Company for periods prior to 1993, to the extent
that such taxes result from a change by the Company in the method of reporting
inventory for income tax purposes.
Harvey B. Adams included on his personal federal income tax return filed for
1992 amounts that were includable in the income of the Company for the year
ended January 31, 1990 relating to the change in the Company's method of
reporting inventory for income tax purposes. In December 1993 the Company
reimbursed Mr. Adams by offsetting the $390,000 against the then aggregate
balance of Messrs. Harvey and Ronald Adams's promissory notes payable to the
Company (aggregating $346,255 principal), with the remainder ($43,775) being
applied against other amounts owed to the Company by Harvey B. Adams. Harvey B.
Adams has indemnified the Company for the full amount of such offsets
($390,000), and to the extent of any additional taxes on income earned during
the fiscal year ended
11
<PAGE>
January 31, 1990, in the event that the Company's manner of filing its tax
returns as concerns such method of reporting inventory is not accepted and the
Company incurs a federal income tax liability with respect thereto.
In October 1986, Michael A. Sigmon, a Vice President of the Company, and his
wife, Barbara, loaned $500,000 to Alloy Piping Supply, Inc. (a corporation they
owned prior to its merger into the Company in May 1992). The Company agreed to
repay this loan at the time of its acquisition of Alloy Piping Supply. The loan
was evidenced by a promissory note maturing in 1995, bearing interest at 7.18%
per annum, and amortized at the rate of $1,500 per week. Such note was paid in
full by the Company in the first quarter of fiscal 1995.
From 1987 to June 1995, Harvey B. Adams was Chairman of the Board, and a
minority stockholder of Ta Chen Stainless Pipe Co., Ltd. ("Ta Chen"), a pipe
manufacturing company located in Taiwan. In 1992, 1993 and 1994, the Company
purchased $145,000, $8,000 and $65,000, respectively, of stainless steel
products from Ta Chen, but made no purchases from such corporation during 1995.
In June 1995, Harvey B. Adams sold his equity in Ta Chen and resigned his
position as a director of Ta Chen in connection with such transaction. Through
March 1994, Harvey B. Adams owned a minority interest in the stock of American
Fittings, Inc., a manufacturer of stainless steel fittings and related products
located in South Carolina. In 1992 and 1993, the Company purchased $156,000 and
$236,000, respectively, of fittings and flanges from American Fittings, Inc. Mr.
Adams sold his interest in American Fittings, Inc. in March 1994.
ACTION TO BE TAKEN UNDER THE PROXY
Unless otherwise directed by the grantor of the proxy, the persons acting
under the accompanying proxy will vote the shares represented thereby: (a) for
the election of the persons named in the next succeeding table as nominees for
directors of the Company; (b) for the proposal to ratify the appointment of BDO
Seidman, LLP as the Company's auditors for the current fiscal year ending
December 31, 1996; (c) for the proposal to amend the Corporation's Certificate
of Incorporation to increase the number of the Corporation's authorized shares
by 1,000,000 shares of Preferred Stock; and (d) in connection with the
transaction of such other business that may be brought before the Annual
Meeting, in accordance with the judgment of the person or persons voting the
proxy.
I. ELECTION OF DIRECTORS
NOMINEES
At the Annual Meeting five directors are to be elected, each to hold office
until the next Annual Meeting of Stockholders or until his or her successor
shall be elected and shall qualify. The names of the nominees for election as
directors, all of whom are now serving as director of the Company, and certain
information furnished to the Company by such nominees with respect to them, as
of July 15, 1996, are set forth below. Unless authority to vote for one or more
nominees is withheld, it is intended that shares represented by proxies in the
accompanying form will be voted for the election of all of the following
nominees. With respect to any such nominee who may become unable or unwilling to
accept
12
<PAGE>
nomination or election, it is intended that the proxies will be voted for the
election in his stead of such person as the Board of Directors may recommend,
but the Board does not know of any reason why any nominee will be unable or
unwilling to serve if elected.
<TABLE>
<CAPTION>
PRINCIPAL
OCCUPATION
DIRECTOR DURING LAST
NAME AGE SINCE FIVE YEARS
- - - ---------------------------------------- --- ---------- -----------
<S> <C> <C> <C>
Harvey B. Adams......................... 49 1976(1) *
Ronald J. Adams......................... 47 1992(1) *
Robert J. Gamson........................ 60 1993 *
David M. Barnes......................... 53 1994 *
Stephen A. Weiss........................ 55 1994 *
</TABLE>
- - - ------------------------
(1) Includes time served as a director of Gulf Flange & Fitting Corporation, the
predecessor to the Company.
* See "DIRECTORS, NOMINEES FOR DIRECTOR AND EXECUTIVE OFFICERS OF THE COMPANY"
on pages 3 through 5.
COMMITTEES AND MEETINGS OF THE BOARD
At present the Board of Directors has two committees, the Audit and
Compensation Committees, which consist of the following individuals,
respectively: Messrs. Ronald Adams, Barnes and Weiss (Audit); and Messrs.
Gamson, Barnes and Weiss (Compensation). The function of the Audit Committee
includes responsibility for review of the financial control procedures put into
place by the Company and periodic review of the Company's preliminary results of
operations. The function of the Compensation Committee includes responsibility
for reviewing the compensation for all of the Corporation's employees, including
the granting of options granted under all of the Company's stock option plans
that may exist and be in effect from time to time. During the fiscal year ended
December 31, 1995, the Board of Directors met 21 times, including 16 actions
taken by unanimous written consent of the directors; the Audit Committee did not
meet, but rather conducted its operations through meetings of the full Board of
Directors; and the Compensation Committee did not meet, but rather conducted its
operations through meetings of the full Board of Directors. All of the nominated
directors who served as directors during the fiscal year ended December 31, 1995
attended more than 75% of all of the meetings of the Board held during period of
their tenure during such year. See "EXECUTIVE COMPENSATION" at page 10 above for
information concerning fees payable to directors.
II. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS FOR THE FISCAL YEAR
ENDING DECEMBER 31, 1996
At the Annual Meeting a vote will be taken on a proposal to ratify the
appointment by the Board of Directors of BDO Seidman, LLP independent certified
public accountants, as the independent auditors of the Company for the fiscal
year ending December 31, 1996. BDO Seidman, LLP was the Company's independent
auditor for the Company's 1995 fiscal year, and it has no interest in or any
relationship with the Company except as its auditors.
If stockholders do not approve such selection or if prior to the 1996 Annual
Meeting BDO Seidman, LLP shall decline to act or otherwise become incapable of
acting, or if their engagement shall be otherwise discontinued by the Board of
Directors, pursuant to the recommendation of the Audit Committee, the Board of
Directors shall select other independent certified public accountants whose
selection for any period subsequent to the fiscal year ending December 31, 1995
will be subject to approval by stockholders at the 1996 Annual Meeting.
MANAGEMENT BELIEVES THE APPOINTMENT TO BE IN THE BEST INTEREST OF THE
COMPANY AND RECOMMENDS THAT IT BE RATIFIED.
13
<PAGE>
A representative of BDO Seidman, LLP will be present at the Annual Meeting
and will be given an opportunity to make a statement to the stockholders if he
so desires. The representative will be available to respond to questions from
stockholders.
III. TO AMEND THE CORPORATION'S CERTIFICATE OF INCORPORATION TO INCREASE THE
NUMBER OF THE CORPORATION'S AUTHORIZED SHARES BY 1,000,000 SHARES OF
PREFERRED STOCK
At the Annual Meeting a vote will be taken on a proposal to authorize the
amendment of the Company's Certificate of Incorporation to increase the number
of shares authorized for issuance thereunder from 1,000,000 authorized shares of
Preferred Stock, to a total of 2,000,000 shares of Preferred Stock. The purpose
of such amendment is to increase the Company's flexibility in raising additional
working capital funds and in making potential acquisitions. The Company has no
immediate definitive plans to issue a substantial amount of its shares of common
or preferred stock in connection with any acquisitions or to issue additional
shares of common or preferred shares in a secondary public offering, although it
is foreseeable that the Company will once again enter the securities market to
raise working capital. An unintended effect of the increase in the Company's
authorized stock will be to strengthen the Board's ability to fight off hostile
takeovers. The Company is not aware of any existing hostile takeover proposals
nor is it the intention of the Company's management to shore up the Company's
defenses against a potential hostile takeover. Stockholders must be aware that
in the event that all or a substantial number of the additional shares are
issued, existing stockholders would suffer immediate and substantial dilution of
their interests in the Company and a potential decrease in the valuation of
their stock.
The terms of the Preferred Stock to be authorized by the amended Certificate
of Incorporation of the Company may be issued in one or more series and may
contain such rights, privileges and limitations, including voting rights,
dividend rates, conversion privileges, redemption rights and terms, redemption
prices and liquidation privileges, as the Board of Directors of the Company may,
from time to time, determine. No shares of Preferred stock have ever been
issued, and shares of the Preferred Stock may be issued without further
authorization by the Company's stockholders.
MANAGEMENT BELIEVES APPROVAL OF THE AMENDMENT OF THE COMPANY'S CERTIFICATE
OF INCORPORATION IS IN THE BEST INTEREST OF THE COMPANY AND RECOMMENDS THAT IT
BE AUTHORIZED AND RATIFIED.
IV. OTHER BUSINESS
While management of the Company does not know of any matters which may be
brought before the Annual Meeting other than as set forth in the Notice of
Annual Meeting, the proxy confers discretionary authority with respect to the
transaction of any other business. It is expected that the proxies will be voted
in support of management on any question which may properly be submitted to the
meeting.
INCLUSION OF STOCKHOLDER PROPOSALS IN THE COMPANY'S PROXY STATEMENT
If any stockholder desires to put forth a proposal to be voted on at the
1997 Annual Meeting of Stockholders and wishes that proposal to be included in
the Company's Proxy Statement to be delivered to stockholders in connection with
such meeting, that stockholder must cause such proposal to be received by the
Company at its principal executive office no later than April 2, 1997. The
Company intends to hold its 1997 Annual Meeting of Stockholders on or before
August 1, 1997. Any request for such a proposal, should be accompanied by a
written representation that the person making the request is a record or
beneficial owner of the lesser of at least 1% of the outstanding shares of the
Company's Common Stock or $1,000 in market value of the Company's common shares
and has held such shares for at least one year as required by the Proxy Rules of
the Securities and Exchange Commission.
14
<PAGE>
AVAILABILITY OF FORM 10-KSB
THE COMPANY WILL PROVIDE, WITHOUT CHARGE, TO ANY STOCKHOLDER, UPON WRITTEN
REQUEST OF SUCH STOCKHOLDER, A COPY OF THE ANNUAL REPORT ON FORM 10-KSB FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1995 AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, INCLUDING ALL FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
REQUIRED TO BE FILED THEREWITH.
Any request for a copy of the Form 10-KSB should include a representation
that the person making the request was the beneficial owner, as of the record
date, of securities entitled to vote at the Annual Meeting of Stockholders. Such
request should be addressed to: Consolidated Stainless, Inc., 1601 East Amelia
Street, Orlando, Florida 32803 Attention: Daniel Rashy, Secretary.
- - - --------------------------------------------------------------------------------
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY
IN THE ENVELOPE PROVIDED FOR SUCH PURPOSE
- - - --------------------------------------------------------------------------------
15
<PAGE>
CONSOLIDATED STAINLESS, INC.
PROXY-ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 5, 1996
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS IN CONNECTION WITH THE
ANNUAL MEETING OF SHAREHOLDERS OF CONSOLIDATED STAINLESS, INC. TO BE HELD ON
SEPTEMBER 5, 1996. THE SHAREHOLDER HAS THE RIGHT TO APPOINT AS HIS PROXY A
PERSON (WHO NEED NOT BE A SHAREHOLDER) OTHER THAN ANY PERSON DESIGNATED BELOW,
BY INSERTING THE NAME OF SUCH OTHER PERSON IN ANOTHER PROPER FORM OF PROXY.
The undersigned, a shareholder of Consolidated Stainless, Inc. (the
"Corporation"), hereby revoking any proxy hereinbefore given, does hereby
appoint Harvey B. Adams and Ronald J. Adams, or either of them, as his proxy
with full power of substitution, for and in the name of the undersigned to
attend the Annual Meeting of the Shareholders to be held on September 5, 1996 at
95 Bennett Street, Auburndale, Florida, at 10:00 a.m., local time, and at any
adjournments thereof, and to vote upon all matters specified in the notice of
said meeting, as set forth herein, and upon such other business as may properly
come before the meeting, all shares of stock of said Corporation which the
undersigned would be entitled to vote if personally present at the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, SUCH SHARES
WILL BE VOTED FOR ALL NOMINEES FOR DIRECTOR IDENTIFIED BELOW AND FOR ALL
PROPOSALS.
1. The Election of Directors
Election of the following proposed directors to hold office until the next
Annual Meeting of Shareholders or until their successors shall be elected
and shall qualify: Harvey B. Adams, Ronald J. Adams, Robert J. Gamson, David
M. Barnes and Stephen A. Weiss.
FOR ALL NOMINEES (EXCEPT AS MARKED TO THE CONTRARY) WITHHOLD ALL NOMINEES
/ / / /
AUTHORITY TO WITHHOLD A VOTE FOR ANY OF THE ABOVE NAMED INDIVIDUALS SHOULD BE
INDICATED BY LINING THROUGH OR OTHERWISE STRIKING OUT THE NAME OF THE NOMINEE.
2. Ratify the Appointment of BDO Seidman, LLP as independent auditors for the
Corporation for the fiscal year ending December 31, 1996.
/ / FOR / / AGAINST / / ABSTAIN
3. To authorize an amendment to the Corporation's Certificate of Incorporation
to increase the Company's authorized capital by increasing to 2,000,000
shares the Company's authorized Preferred Stock.
/ / FOR / / AGAINST / / ABSTAIN
<PAGE>
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
/ / FOR / / AGAINST / / ABSTAIN
Dated: __________________________________, 1996
___________________________________
Signature
__________________________________
Print Name
__________________________________
Signature, if Jointly Held
__________________________________
Print Name
PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS HEREIN, if signing as
attorney, executor, administrator,
trustee or guardian, indicate such
capacity. All joint tenants must
sign. If a corporation, please
sign in full corporate name by
president or other authorized
officer. If a partnership, please
sign in partnership name by
authorized person.
The Board of Directors requests
that you fill in the date and sign
the Proxy and return it in the
enclosed envelope.
IF THE PROXY IS NOT DATED IN THE
ABOVE SPACE, IT IS DEEMED TO BE
DATED ON THE DAY ON WHICH IT WAS
MAILED BY THE CORPORATION.
