<PAGE>
[LETTERHEAD]
May 15, 1996
Dear Stockholder:
We take pleasure to invite you to the Annual Meeting of Stockholders of
Puroflow Incorporated, to be held at 2:00 p.m., Pacific Time, on Thursday,
July 11, 1996, at the Airtel Plaza Hotel & Conference Center, 7277 Valjean
Avenue, Van Nuys, California, 91406. We enclose the Notice of Meeting and
Proxy Statement which describes the matters to be acted upon at the meeting.
Your shares should be represented at this meeting, whether or not you attend
the meeting in person and regardless of the number of shares you own. Please
look over the Proxy Statement carefully before voting, then complete, sign
and return the enclosed proxy card promptly in the envelope provided.
Thank you for your support of Puroflow Incorporated. We look forward to
seeing you at the meeting.
Sincerely,
PUROFLOW INCORPORATED
Reuben M. Siwek
Chairman of the Board
<PAGE>
PUROFLOW INCORPORATED
16559 Saticoy Street
Van Nuys, California 91406
Telephone: (818) 756-1388 Fax: (818) 779-3900
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JULY 11, 1996
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TO OUR STOCKHOLDERS:
We are pleased to invite you to attend the Annual Meeting of Stockholders of
Puroflow Incorporated, which will be held on Thursday, July 11, 1996 at 2:00
p.m., Pacific Time, at the Airtel Plaza Hotel & Conference Center, 7277
Valjean Avenue, Van Nuys, California, 91406, for the following purposes:
(1) Election of a Board of Directors of Five (5) Directors for one (1) year or
until their successors are elected and qualified.
(2) To vote for the appointment of Auditors for the fiscal year ended January
31, 1997, subject to consummation of a contract satisfactory to the Board
of Directors.
(3) To transact such other business as may properly come before the meeting or
any adjournments thereof.
In accordance with the provisions of the By-Laws, the Board of Directors has
fixed the close of business on May 6, 1996 as the record date for the
determination of Holders of Common Stock of the Corporation entitled to
notice of and to vote at said Annual Meeting.
A copy of the Corporation's Annual Report to Stockholders for the fiscal year
ended January 31, 1996 is enclosed for your review.
By Order of the Board of Directors,
Sandy Yoshisato
Corporate Secretary
Van Nuys, California
May 15, 1996
IT IS IMPORTANT THAT ALL STOCKHOLDERS BE REPRESENTED AT THE ANNUAL MEETING.
STOCKHOLDERS WHO ARE UNABLE TO ATTEND THE MEETING IN PERSON SHOULD MARK,
SIGN, DATE, AND RETURN THE ENCLOSED FORM OF PROXY WHICH WILL BE USED AT THE
ANNUAL MEETING. A PREPAID ENVELOPE IS ENCLOSED FOR THAT PURPOSE.
<PAGE>
PUROFLOW INCORPORATED
16559 Saticoy Street
Van Nuys, California 91406
Telephone: (818) 756-1388 Fax: (818) 779-3900
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PROXY STATEMENT
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SOLICITATION AND REVOCATION OF PROXY
The Annual Meeting of Stockholders of the Corporation will be held on
Thursday, July 11, 1996 at 2:00 p.m., Pacific Time, or at any adjourned date
thereafter, at the Airtel Plaza Hotel & Conference Center, 7277 Valjean
Avenue, Van Nuys, California, 91406. The Corporation expects this Proxy
Statement and the enclosed Proxy will first be mailed to Stockholders on or
about June 3, 1996.
The accompanying Proxy is solicited on behalf of the Board of Directors of
Puroflow Incorporated (hereinafter called "Corporation"), and the Corporation
will bear the cost of such solicitation estimated at approximately $2,500.00.
Proxies are being solicited by mail and in addition, may be made by
Directors, Officers, and regular employees of the Corporation, personally, by
telephone or by telegraph, who will receive no special compensation therefor.
The person giving the Proxy has the power to revoke it at any time before it
is exercised. In the event the Stockholders giving the Proxy attends the
Annual Meeting, the Proxy will not be used if such Stockholder so requests.
It is the intention of the person named in the Proxy to vote the shares
represented by the Proxy in accordance with the instructions made by a
Stockholder and, if no instructions are made, to vote for the election of
nominees listed below and for the approval of the selection of independent
certified public accountants and in their best judgment with respect to such
other business, if any, as may properly come before the meeting.
Shareholders representing more than 50% of the Company's common stock
outstanding and entitled to vote must be present or represented by proxy in
order to constitute a quorum to conduct business at the meeting.
OTHER MATTERS
The Management is not aware, at the date hereof, of any other matters to be
presented at this meeting, other than that referred to in the accompanying
notice. If any other matters are presented, it is intended that the persons
in attendance will vote thereon according to their best judgement. Security
Holders may submit proposals for consideration by Stockholders at the next
Annual Meeting. The proposals must be received by the Corporation no later
than March 1, 1997 for inclusion in the next Proxy Statement.
SHARES ENTITLED TO VOTE
On May 6, 1996, the record date for determination of Stockholders entitled to
vote at the meeting, there were outstanding 4,578,521 shares of Common Stock,
par value $0.01 per share. Each share entitles the registered holder thereof
to one vote; no cumulative voting rights are authorized, and appraisal rights
for dissenting shareholders are not applicable to the matters being proposed.
The Stock Transfer Books will not be closed.
Mr. George Solymar, former Chief Executive Officer and former President,
whose mailing address is 2203 Crescent Avenue, Montrose, California 91020
owns 10.1% of the outstanding shares of the Corporation. The Company has no
knowledge of any other person holding 5% or more, beneficially or otherwise,
except Cede & Co., approximately 76%.
1
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
At the Annual Meeting, five (5) Directors are to be elected, each to serve
for a term of one (1) year, or until their successors are elected and
qualified. Management intends to vote for the five nominees listed below and
it has no reason to believe that any nominees will be unavailable.
MICHAEL H. FIGOFF, REUBEN M. SIWEK, DR. TRACY KENT PUGMIRE,
ROBERT A. SMITH, AND LEO S. UNGER
Unless authority to do so is withheld, the proxies will vote the shares
represented for the election of the persons named above. In case any of the
nominees shall become unavailable for election to the Board of Directors,
which is not anticipated, the proxies shall have full discretion and
authority to vote or refrain from voting for any other nominees in accordance
with their judgement.
The following table contains biographical information with respect to the
Directors and nominees:
INFORMATION CONCERNING NOMINEES FOR DIRECTORS
<TABLE>
<CAPTION>
OWNER OF RECORD PERCENT
NAME OF NOMINEE PRINCIPAL DIRECTOR BENEFICIALLY AS OF
(AGE) OCCUPATION SINCE OF MAY 15, 1996 CLASS
============================================================================================================
<S> <C> <C> <C> <C>
MICHAEL H. FIGOFF Chief Executive Officer 1993 157,000 (1) 3.4%
(52) and President
REUBEN M. SIWEK Chairman of the Board 1982 143,750 (2)(3) 3.1%
(76) of Directors, and
General Counsel
DR. TRACY KENT PUGMIRE Aerospace Consultant 1991 43,555 (4) *
(65) Member of Audit
Committee
ROBERT A. SMITH Vice Chairman of the 1994 34,000 (5) *
(56) Board of Directors
LEO S. UNGER Retired Executive 1995 126,000 (6) 2.7%
(78)
* Less than 1% 11%
All Directors and Officers as a group (5 persons) 504,305
============================================================================================================
</TABLE>
(1) Mr. Figoff was elevated to the position of President/CEO in May 1995
from his previous position of Executive Vice President. Mr. Figoff joined
Puroflow in November 1988 as the Director of Marketing, leaving his previous
position as Director of Marketing for a division of Ferranti International.
Mr. Figoff has more than 30 years of experience in the marketing and
manufacture of aerospace and defense related products. Mr. Figoff holds
degrees in Business Administration and Marketing Management. The total
shares owned of record include options to purchase 155,000 shares.
(2) Reuben M. Siwek, Esq. was elected to the Board of Directors at the
Annual Stockholders' meeting in March 1982. Mr. Siwek is a practicing
attorney in the State of New York for more than 46 years. The total shares
owned of record include options to purchase 50,000 shares.
2
<PAGE>
(3) Mr. Siwek's spouse owns 60,000 shares for which beneficial ownership is
disclaimed.
(4) Dr. Tracy Kent Pugmire, Ph.D. in Chemistry, was formerly employed by
ARDE Inc., from 1985 through April 1991 as an Executive Vice President and
Program Manager for the development of auxiliary and emergency gas supply
systems for Space Station Freedom. Dr. Pugmire was employed as a Program
Manager by Technion Inc. from 1981 to 1985, and prior thereto spent thirteen
years with AVCO with responsibility in all areas of propulsion engines and
system development, vehicle integration and flight operation. Dr. Pugmire's
formal education was in the fields of Engineering Physics and Physical
Chemistry. The total shares owned of record include an option to purchase
30,000 shares.
(5) Robert A. Smith received his BS Degree in Mechanical Engineering from
Polytechnic Institute of Brooklyn (1964) and a Masters in Business
Administration from UCLA (1978). His continuing education included Harvard's
Advanced Management Program and UCLA's Executive Program. He is currently
President of Haskel International Inc. Prior positions included President of
Engineered Filtration Company from October 1992 to January 1994, President of
Puroflow Corporation from February 1991 to October 1992, and President of RTS
Systems Incorporated from May 1988 to February 1991 when the Company was
acquired by Telex Communications Inc. Mr. Smith served as President of
Purolator Technologies Inc. From 1980 to 1988, and served HR Textron Inc.
from 1964 to 1980 where he was General Manager of the Filter Division. He
started his career with Pall Corporation (1960) as a design and applications
engineer and was there until 1964. Mr. Smith is a Certified Professional
Manager with extensive engineering, marketing and general management
experience in the filter industry. The total shares owned of record include
an option to purchase 30,000 shares.
(6) Leo S. Unger received his BA Degree in Math and Chemistry in 1940 from
Drake University in Iowa. Mr. Unger served with distinction in the United
States Marine Corps from 1940 to 1958, retiring with the rank of Lt. Colonel.
Mr. Unger established his executive and marketing abilities in 1953 as a
Manufacturers Representative when he created Leo Unger & Associates and
various wholly owned subsidiaries engaged in the importation of fishing
tackle and small screw machine parts for distribution through wholesale
distributors in the United States. He served as President from 1953 through
1985 when he retired. Mr. Unger will add his executive organized marketing
skills to the Board and its new Management team. The total shares owned of
record include an option to purchase 15,000 shares.
All of the Nominees were previously elected at the Annual Meeting of
Stockholders. THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE ELECTION OF EACH OF THE NOMINEES DESCRIBED ABOVE.
3
<PAGE>
STOCK OPTIONS
During the fiscal year ended January 31, 1996, Non-Statutory Stock Options
aggregating 15,000 shares were terminated, and 75,000 shares were outstanding.
The essential features of the 1991 Incentive Stock Plan for key employees are
described below:
The Board of Directors adopted at its meeting February 14, 1991, approved by
Stockholders at their annual meeting July 30, 1991, a 1991 INCENTIVE STOCK
OPTION PLAN FOR KEY EMPLOYEES ("The Plan") , the purpose of which is intended
as an incentive, and to encourage ownership of Common Stock by the Holders of
the Options in order to increase their proprietary interests in the Company's
success and induce qualified personnel to enter the employment of the Company
or its Subsidiaries, or encourage them to remain in the employ of the Company
or its Subsidiaries.
In July 1995, the Board adopted an amendment to the 1991 Plan approving an
increase in the number of shares authorized under the Plan from 200,000 to
500,000 which was approved at the Stockholders meeting of September 1995. All
other terms and conditions of the 1991 Option Plan remain in full force and
effect.
The Plan is administered by a Stock Option Plan Committee appointed by the
Board of Directors from among its members, or by a committee designated by
the Board who shall be eligible to be participants, and shall consist of not
less than three such members.
The aggregate maximum number of shares of Common Stock available for awards
under the plan is 500,000 shares (subject to adjustments to reflect changes
in the Company's capitalization). Awards under The Plan may be made to Key
Employees recommended by the Committee and approved as participants by the
Board of Directors. No option shall be granted to replace an option that is
surrendered for the sole purpose of obtaining a substitute option.
The exercise price of the option will be at least 100% of the fair market
value of the shares of common stock on the date the option is granted, or not
less than 110% of the fair market value to those employees owning more than
ten (10) percent of the voting power, or value of all classes of stock of the
Company at the time of the grant. No option period shall exceed ten (10)
years except those employees owning more than 10% of the voting power where
the option period shall be limited to five (5) years. No option shall be
granted after February 14, 2001. The Plan contains provisions for the
termination of unexercised options upon resignation of the employee, right to
exercise option by personal representative of the deceased employee, right to
exercise at the rate of 20% per annum for date of grant option, and
provisions for adjustment resulting from stock dividends, stock splits,
recapitalization combination or exchange of shares, merger, consolidation
acquisitions or property or stock, reorganization or liquidation.
Options have been granted for 284,100 shares as of January 31, 1996 of which
100 shares were exercised, 284,000 options outstanding, and 141,000 options
available for future grants to Key Employees.
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF AUDITORS
Rose, Snyder & Jacobs, certified public accountants, performed the
examination of the Corporation's books and records for the fiscal year ended
January 31, 1996 and issued their report in connection therewith. The Board
of Directors requests Stockholders' approval for the appointment of Rose,
Snyder & Jacobs, certified public accountants, for the fiscal year ended
January 31, 1997 based upon proposals submitted to Management of the Company.
There is no direct or indirect relationship between the Auditors and the
Corporation. The Corporation has an Audit Committee composed of two outside
Directors.
An affirmative vote of the majority of the outstanding shares of Common Stock
is required to approve this proposal. THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
4
<PAGE>
MEETING OF THE BOARD AND COMMITTEES
The Board of Directors held five meetings during the fiscal year ended
January 31, 1996. No nominee who was a Director during the fiscal year
attended less than 75% of the meetings for the Board of Directors. The Board
of Directors has an audit committee consisting of three Directors, Robert A.
Smith, Reuben M. Siwek, and Dr. Tracy Kent Pugmire. The primary functions of
the audit committee are to review the Corporation's independent auditors, and
to review the overall scope of the audit. The audit committee held one
meeting in fiscal 1996. The Board of Directors does not have a standing
nominating committee. Nominees are made by the entire Board of Directors.
The Board of Directors has a compensation committee consisting of three
Directors, Reuben M. Siwek, Robert A. Smith and Leo Unger.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Officers and Directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file certain reports
of ownership with the Securities and Exchange Commission (the "SEC"). Such
Officers, Directors, and Shareholders are also required by SEC rules to
furnish the Company with copies of all Section 16(a) forms that they file.
Based solely on its review of the copies of such forms received by it or
written representations from certain reporting persons, the Company believes
that, between February 1, 1995 and January 31, 1996 all Section 16(a) filing
requirements applicable to its Officers, Directors and ten-percent
Shareholders were complied with.
The Company believes that each of the items set forth in the foregoing
reporting disclosure is technical in nature, and that none of the transactions
not reported on a timely basis involves violation of the trading prohibitions
set forth in Section 16(b) of the Securities Exchange Act of 1934.
EMPLOYMENT AGREEMENT
The Company entered into an employment contract with Michael H. Figoff,
Executive Vice President, dated March 1, 1993 for a term of five years at
$95,000.00 per annum increased to $104,500.00 effective February 14, 1994.
Mr. Figoff was elected President on February 1, 1995, and was elected to
President and Chief Executive Officer in May 1995. Mr. Figoff's employment
compensation was increased to $150,000 per annum, effective April 1, 1996.
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The Executive Officers and Directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Michael H. Figoff 52 Chief Executive Officer, President and Director
Sandy Yoshisato 32 Corporate Secretary and Director of Human Resources
Reuben M. Siwek 76 Chairman of the Board of Directors
Robert A. Smith 56 Vice Chairman of the Board of Directors
Dr. Tracy K. Pugmire 65 Director
Leo S. Unger 78 Director
</TABLE>
5
<PAGE>
EXECUTIVE COMPENSATION
The compensation of each of the five (5) most highly compensated Executive
Officers of the Company and its subsidiaries, and of all Executive Officers
as a group, for services rendered to the Company in all capacities during the
twelve month period ended January 31, 1996 was as follows:
<TABLE>
<CAPTION>
ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR COMPENSATION OPTIONS COMPENSATION
- --------------------------- ---- ------------ ------- ------------
<S> <C> <C> <C> <C>
Michael H. Figoff 1996 $ 105,213 100,000 $ 16,748
Chief Executive Officer and 1995 105,213 55,000 16,748
President 1994 92,695 13,493
Joseph B. Jasso 1996 -0-
Former Chief Executive Officer and 1995 96,596 17,420
President 1994 98,604 15,707
Sandy Yoshisato 1996 48,854 8,000 2,975
Corporate Secretary and 1995 37,266 2,000 94
Director of Human Resources 1994 33,512
TOTAL 1996 $ 154,067 108,000 $ 19,723 (1)
</TABLE>
(1) Includes auto allowance, life insurance and disability premiums
RELATED PARTY TRANSACTIONS
The Company incurred expenses of approximately $42,284, $80,625, and $77,750
during 1996, 1995, and 1994, respectively, for legal services rendered by a
member of a law firm who is a Chairman of the Company.
The Company incurred expenses of approximately $68,155, $150,000, and
$233,000 during 1996, 1995, and 1994, respectively, for rental of the
principal manufacturing and corporate offices of the Company from a company
owned by a former member of the Board of Directors.
The Receiver terminated all payments subsequent to his appointment and is now
litigating all payments under an alleged capital lease.
FINANCIAL STATEMENTS
A copy of the Annual Report of the Corporation for the fiscal year ended
January 31, 1996 is enclosed herein for your review. Any Shareholder may
obtain, without charge, a copy of the Corporation's Report on Form 10-K as
filed with the Securities and Exchange Commission by sending a written
request to the Corporate Secretary of the Corporation, 16559 Saticoy Street,
Van Nuys, California, 91406.
6
<PAGE>
PROXY
PUROFLOW INCORPORATED
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, JULY 11, 1996
The undersigned stockholder of PUROFLOW INCORPORATED appoints Reuben M.
Siwek and Michael H. Figoff, or any one of them, with full powers of
substitution to be the attorneys and Proxies to vote all shares of Stock of said
Corporation which the undersigned is entitled to vote, with all of the powers
which the undersigned would possess if personally present at the Annual Meeting
of the Stockholders to be held at the Airtel Plaza Hotel and Conference Center,
7277 Valjean Avenue, Van Nuys, California, 91406, at 2:00 p.m., Pacific Time, on
Thursday, July 11, 1996 or any adjournment thereof, upon the following matters:
(1) FOR / / or VOTE WITHHELD with respect to / / the election of MICHAEL H.
FIGOFF, REUBEN M. SIWEK, ROBERT A. SMITH, DR. TRACY KENT PUGMIRE, and LEO
S. UNGER as Directors of the Corporation. YOU MAY DELETE ANY NAMED NOMINEE
BY LINING THROUGH THE NAME OF THE ORIGINAL NOMINEE.
(2) To vote for the appointment of Auditors for the fiscal year ended January
31, 1997, subject to consummation of a contract satisfactory to the Board
of Directors.
/ / FOR / / AGAINST / / ABSTAIN
(3) To transact such other business as may properly come before the meeting or
any adjournments thereof.
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
________________________________________________________________________________
(CONTINUED FROM OTHER SIDE)
The shares presented hereby will be voted in accordance with the
instructions herein, but where instructions are not indicated, the Proxy will be
voted FOR the election of Directors and FOR proposal #2 above, all in accordance
with the Proxy Statement of the Corporation, receipt of which is hereby
acknowledged.
The undersigned also confers discretionary authority upon the Proxies named
herein to vote such other matters as may properly come before the said meeting,
or any adjournment thereof. Management is not aware of any such matters. The
undersigned hereby acknowledges the receipt of Notice of said Annual Meeting of
the Stockholders, with Proxy Statement attached and Annual Report for fiscal
year ended January 31, 1996.
Number of Shares____________________ DATED:_____________________________
PLEASE PRINT NAME:_________________
SIGNATURE:_________________________
___________________________________
SIGNATURE(S) MUST CORRESPOND
EXACTLY WITH NAMES AS IMPRINTED
HEREON. When signing as attorney,
executor or administrator, trustee
or guardian, please give the full
title as such, and if the signer is
a Corporation, please sign with the
full Corporate name by duly
authorized Officer. If stock is
held in the name of more than one
person, all named holders must sign
the Proxy.
NOTICE: THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
CORPORATION. PLEASE DATE, FILL IN, SIGN AND RETURN IN THE ENCLOSED PREPAID
ENVELOPE.
