SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 5)(1)
Puroflow Incorporated
- --------------------------------------------------------------------------------
(Name of issuer)
COMMON STOCK, $.01 PAR VALUE
- --------------------------------------------------------------------------------
(Title of class of securities)
746 375 104
- --------------------------------------------------------------------------------
(CUSIP number)
STEVEN WOLOSKY, ESQ.
OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP
505 Park Avenue
New York, New York 10022
(212) 753-7200
- --------------------------------------------------------------------------------
(Name, address and telephone number of person
authorized to receive notices and communications)
April 30, 1999
- --------------------------------------------------------------------------------
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box
/ /.
Note. six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
(Continued on following pages)
(Page 1 of 30 Pages)
Exhibit Index on Page 14
- --------
1 The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes).
<PAGE>
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CUSIP No. 746 375 104 13D Page 2 of 30 Pages
- ------------------------------------ ------------------------------
================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
STEEL PARTNERS II, L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OR ORGANIZATION
DELAWARE
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 1,336,100
OWNED BY
EACH ---------------------------------------------------------------
REPORTING
PERSON WITH
8 SHARED VOTING POWER
-0-
---------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,336,100
---------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,336,100
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.7%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 746 375 104 13D Page 3 of 30 Pages
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================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
WARREN LICHTENSTEIN
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OR ORGANIZATION
USA
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 1,336,100
OWNED BY
EACH --------------------------------------------------------------
REPORTING
PERSON WITH
8 SHARED VOTING POWER
- 0 -
---------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,336,100
---------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- 0 -
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,336,100
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.7%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 746 375 104 13D Page 4 of 30 Pages
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================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
ROBERT FRANKFURT
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OR ORGANIZATION
USA
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY -0-
OWNED BY
EACH -------------------------------------------------------------
REPORTING
PERSON WITH
8 SHARED VOTING POWER
- 0 -
--------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
-0-
---------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- 0 -
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
-0-
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
-0-
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 746 375 104 13D Page 5 of 30 Pages
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================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
JAMES BENENSON, JR.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OR ORGANIZATION
USA
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY -0-
OWNED BY
EACH --------------------------------------------------------------
REPORTING
PERSON WITH
8 SHARED VOTING POWER
-0-
--------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
-0-
---------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
-0-
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
-0-
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 746 375 104 13D Page 6 of 30 Pages
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================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
STEVEN WOLOSKY
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OR ORGANIZATION
USA
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY -0-
OWNED BY
EACH ---------------------------------------------------------------
REPORTING
PERSON WITH
8 SHARED VOTING POWER
-0-
---------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
-0-
---------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
-0-
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
-0-
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 746 375 104 13D Page 7 of 30 Pages
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================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
THE FULL VALUE COMMITTEE
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OR ORGANIZATION
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 1,336,100
OWNED BY ----------------------------------------------------------------
EACH
REPORTING
PERSON WITH
8 SHARED VOTING POWER
-0-
----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,336,100
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,336,100
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.7%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 746 375 104 13D Page 8 of 30 Pages
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The following constitutes Amendment No. 5 ("Amendment No. 5") to the
Schedule 13D filed by the undersigned. This Amendment No. 5 amends the Schedule
13D as specifically set forth.
Item 2 is hereby amended and restated in its entirety as follows:
Item 2. Identity and Background.
(a) This Statement is filed by Steel Partners II, L.P., a
Delaware limited partnership ("Steel Partners II"), Warren G. Lichtenstein,
Robert Frankfurt, James Benenson, Jr. and The Full Value Committee (the
"Committee").
Steel Partners, L.L.C., a Delaware limited liability company
("Partners LLC"), is the general partner of Steel Partners II. The sole
executive officer and managing member of Partners LLC is Warren G. Lichtenstein,
who is Chairman of the Board, Chief Executive Officer and Secretary. Robert
Frankfurt is an employee of Steel Partners II.
The Full Value Committee (the "Committee") is composed of
Warren G. Lichtenstein, Robert Frankfurt, James Benenson, Jr. and Steven
Wolosky. The Committee is not a business entity and has no place of
organization. The principal office of the Committee is 150 East 52nd Street,
21st Floor, New York, New York 10022.
Each of the foregoing are referred to as a "Reporting Person"
and collectively as the "Reporting Persons". The Reporting Persons are hereby
filing a joint Schedule 13D.
(b) The principal business address of Steel Partners, Warren
Lichtenstein and Robert Frankfurt is 150 East 52nd Street, 21st Floor, New York,
New York 10022.
Mr. Benenson is the Chairman of the Board of Vesper
Corporation and the Chairman of the Board of Arrowhead Holdings Corporation. The
principal business address of Mr. Benenson is c/o Vesper Corporation, 8223
Brecksville Road, Brecksville, OH 44141.
Mr. Wolosky is a partner in the law firm of Olshan Grundman
Frome Rosenzweig & Wolosky LLP. The principal business address of Mr. Wolosky is
505 Park Avenue, New York, New York 10022.
(c) The principal business of Steel Partners II is investing
in the securities of microcap companies. The principal occupation of Mr.
Lichtenstein is investing in the securities of microcap companies.
<PAGE>
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CUSIP No. 746 375 104 13D Page 9 of 30 Pages
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(d) No Reporting Person has, during the last five years, been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) No Reporting Person has, during the last five years, been
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
(f) Messrs. Lichtenstein, Frankfurt, Benenson and Wolosky are
citizens of the United States of America.
Item 3 is hereby amended and restated in its entirety as follows:
Item 3. Source and Amount of Funds.
The aggregate purchase price of the 1,336,100 Shares of Common Stock
owned by Steel Partners II is $1,252,594. The Shares of Common Stock owned by
Steel Partners II were acquired with partnership funds.
Item 4 is hereby amended and restated in its entirety as follows:
Item 4. Purpose of Transaction.
The Reporting Persons have concluded the most attractive opportunity
for increasing the value of the Issuer's shares, on a present value basis, is
through the sale of the Issuer. The Reporting Persons have concluded the
Issuer's attempts to enhance shareholder value are insufficient in the face of
continuing lack of performance in the Issuer's Common Stock. Accordingly, the
Reporting Persons have concluded that the best way to bring forth the sale of
the Issuer is through a proxy solicitation. In that connection, on April 30,
1999 the Reporting Persons formed the Committee. The Reporting Persons have
engaged the services of Innisfree M&A Incorporated, a proxy solicitation firm,
to assist in such a solicitation. The Committee was formed to solicit written
proxies to elect the slate of candidates set forth herein to the Issuer's Board
of Directors at the 1999 annual meeting.
On April 30, 1999, the Reporting Persons entered into a Joint Filing
Agreement, reflecting their agreement to form the Committee and to seek to elect
Warren G. Lichtenstein, Robert Frankfurt, James Benenson, Jr. and Steven Wolosky
to the Board of Directors of the Issuer. On May 3, 1999, the Committee filed a
Preliminary Proxy Statement with the Securities and Exchange Commission in order
to solicit proxies from the stockholders of the Issuer to effectuate such
actions. A copy of each of the Joint Filing Agreement and the Preliminary Proxy
Statement are filed as exhibits to this Schedule 13D and incorporated herein by
reference.
<PAGE>
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CUSIP No. 746 375 104 13D Page 10 of 30 Pages
- ------------------------------------ ------------------------------
Upon final approval from the Commission for its proxy materials, the
Committee intends to commence its solicitation of stockholders of the Issuer.
Item 5(a) is hereby amended to read as follows:
Item 5. Interest in Securities of the Issuer.
(a) The aggregate percentage of Shares of Common Stock
reported owned by each person named herein is based upon 8,000,321 Shares
outstanding, which is the total number of Shares of Common Stock outstanding as
reported in the Issuer's Definitive Proxy Statement on Schedule 14A filed April
26, 1999.
As of the close of business on April 30, 1999, Steel Partners
II beneficially owns 1,336,100 Shares of Common Stock, constituting
approximately 16.7% of the Shares outstanding. Mr. Lichtenstein beneficially
owns 1,336,100 Shares, representing approximately 16.7% of the Shares
outstanding. Mr. Lichtenstein has sole voting and dispositive power with respect
to the 1,336,100 Shares owned by Steel Partners II by virtue of his authority to
vote and dispose of such Shares. All of such Shares were acquired in open market
transactions.
Item 5(c) is hereby amended to read as follows:
(c) Schedule A annexed hereto lists all transactions in the
Issuer's Common Stock since the filing of Amendment No. 4 by the Reporting
Persons.
Item 6 is amended in its entirety to read as follows:
Item 6. Contracts, Arrangements, Understandings or Relationships
With Respect to Securities of the Issuer.
On April 30, 1999 the Reporting Persons entered into a Joint
Filing Agreement, reflecting their agreement to form The Full Value Committee
and to seek to elect Warren G. Lichtenstein, Robert Frankfurt, James Benenson,
Jr. and Steven Wolosky to the Board of Directors of the Issuer. The Committee
has filed a Preliminary Proxy Statement in order to solicit proxies from the
stockholders of the Issuer to effectuate such action. A copy of each of the
Joint Filing Agreement and the Preliminary Proxy Statement are filed as exhibits
to this Schedule 13D and incorporated herein by reference.
Other than as described herein, there are no contracts,
arrangements or understandings among the Reporting Persons, or between the
Reporting Persons and any other Person, with respect to the securities of the
Issuer.
<PAGE>
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CUSIP No. 746 375 104 13D Page 11 of 30 Pages
- ------------------------------------ ------------------------------
Item 7 is hereby amended in its entirety as follows:
Item 7. Material to be Filed as Exhibits.
1. Joint Filing Agreement between Steel Partners and
Warren G. Lichtenstein (previously filed).
2. Joint Filing Agreement between Steel Partners,
Warren Lichtenstein, Robert Frankfurt, James
Benenson, Jr. and Steven Wolosky.
3. Preliminary Proxy Statement
<PAGE>
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CUSIP No. 746 375 104 13D Page 12 of 30 Pages
- ------------------------------------ ------------------------------
SIGNATURES
After reasonable inquiry and to the best of his knowledge and
belief, each of the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: May 5, 1999 STEEL PARTNERS II, L.P.
By: Steel Partners, L.L.C.
General Partner
By: /s/ Warren G. Lichtenstein
------------------------------
Warren G. Lichtenstein
Chief Executive Officer
/s/ Warren G. Lichtenstein
-----------------------------------
WARREN G. LICHTENSTEIN
/s/ Robert Frankfurt
------------------------------------
ROBERT FRANKFURT
/s/ James Benenson, Jr.
------------------------------------
JAMES BENENSON, JR.
/s/ Steven Wolosky
-------------------------------------
STEVEN WOLOSKY
<PAGE>
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CUSIP No. 746 375 104 13D Page 13 of 30 Pages
- ------------------------------------ ------------------------------
SCHEDULE A
Transactions in the Shares
Since the Filing of Amendment No. 4
Shares of Common Price Per Date of
Stock Share Purchase/Sale
Purchased/(Sold)
STEEL PARTNERS II, L.P.
10,000 .89500 4/23/99
WARREN LICHTENSTEIN
None.
ROBERT FRANKFURT
None.
JAMES BENENSON, JR.
None.
STEVEN WOLOSKY
None.
<PAGE>
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CUSIP No. 746 375 104 13D Page 14 of 30 Pages
- ------------------------------------ ------------------------------
EXHIBIT INDEX
Exhibit Page
1. Joint Filing Agreement between Steel
Partners and Warren G. Lichtenstein
(previously filed)
2. Joint Filing Agreement between Steel 15
Partners, Warren Lichtenstein, Robert
Frankfurt, James Benenson, Jr. and
Steven Wolosky.
3. Preliminary Proxy Statement 18
<PAGE>
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CUSIP No. 746 375 104 13D Page 15 of 30 Pages
- ------------------------------------ ------------------------------
JOINT FILING AGREEMENT
WHEREAS, certain of the undersigned are stockholders, direct
or beneficial, of Puroflow Incorporated ("Puroflow"), a Delaware corporation;
WHEREAS, Warren Lichtenstein, Robert Frankfurt, James
Benenson, Jr. and Steven Wolosky wish to form a group (the "Group") in order to
nominate a slate of directors to the Board of Directors of Puroflow and may
solicit written consents or votes to obtain a change in the Board of Directors
of Puroflow;
NOW, IT IS AGREED, this 30th day of April 1999, by the parties
hereto:
3. In accordance with Rule 13d-1(f)(1)(iii) under the
Securities Exchange Act of 1934, as amended, the persons named below agree to
the joint filing on behalf of each of them of statements on Schedule 13D with
respect to the Common Stock of Puroflow.
4. So long as this agreement is in effect, each of the
undersigned shall provide written notice to Olshan Grundman Frome Rosenzweig &
Wolosky LLP of (i) any of their purchases or sales of the Common Stock of
Puroflow; or (ii) any shares over which they acquire or dispose of beneficial
ownership. Notice shall be given no later than 24 hours after each such
transaction.
5. Each of Warren Lichtenstein, Robert Frankfurt, James
Benenson, Jr. and Steven Wolosky agrees to serve as one of the Group's nominees
to the Board of Directors of Puroflow and to serve as a director if elected.
6. Steel Partners II, L.P. ("Steel") hereby agrees to bear all
expenses incurred in connection with the Group's nomination of persons to the
Board of Directors of Puroflow, including expenses incurred by any of the
nominees in a solicitation of written consents or votes by the Group.
Notwithstanding the foregoing, Steel shall not be required to reimburse any
nominee or party for (i) out-of-pocket expenses incurred by a nominee in the
aggregate in excess of $250 without Steel's
<PAGE>
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CUSIP No. 746 375 104 13D Page 16 of 30 Pages
- ------------------------------------ ------------------------------
prior written approval; (ii) the value of the time of any nominee or party;
(iii) legal fees incurred without Steel's prior written approval; or (iv) the
costs of any counsel, other than Steel's counsel, employed in connection with
any pending or threatened litigation.
7. The relationship of the parties hereto shall be limited to
carrying on the business of the Group in accordance with the terms of this
Agreement. Such relationship shall be construed and deemed to be for the sole
and limited purpose of carrying on such business as described herein. Nothing
herein shall be construed to authorize any party to act as an agent for any
other party, or to create a joint venture or partnership, or to constitute an
indemnification. Nothing herein shall restrict any party's right to purchase or
sell shares of Puroflow, as it deems appropriate, in its sole discretion. Nor
shall anything herein be construed to require any party to deliver a written
consent to the Group or to refrain from revoking any consent after it has been
given.
8. This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which, taken together, shall
constitute but one and the same instrument, which may be sufficiently evidenced
by one counterpart.
9. In the event of any dispute arising out of the provisions
of this Agreement, the parties hereto consent and submit to the exclusive
jurisdiction of the Federal and State Courts in the State of New York.
10. Any party hereto may terminate his obligations under this
agreement at any time on 24 hours written notice to all other parties, with a
copy by fax to Thomas J. Fleming at Olshan Grundman Frome Rosenzweig & Wolosky
LLP, Fax No. (212) 755-1467.
11. Each party acknowledges that Olshan Grundman Frome
Rosenzweig & Wolosky LLP shall act as counsel for both the Group and Steel.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above written.
<PAGE>
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CUSIP No. 746 375 104 13D Page 17 of 30 Pages
- ------------------------------------ ------------------------------
STEEL PARTNERS II, L.P.
150 East 52nd Street
New York, NY 10022
By: Steel Partners, L.L.C.
General Partner
By: /s/ Warren Lichtenstein
-------------------------------------
Warren Lichtenstein, Managing Member
/s/ Warren Lichtenstein
------------------------------------------
Warren G. Lichtenstein
/s/ Robert Frankfurt
-------------------------------------------
Robert Frankfurt
/s/ James Benenson, Jr.
--------------------------------------------
James Benenson, Jr.
/s/ Steven Wolosky
--------------------------------------------
Steven Wolosky
<PAGE>
- ------------------------------------ ------------------------------
CUSIP No. 746 375 104 13D Page 18 of 30 Pages
- ------------------------------------ ------------------------------
PROXY STATEMENT
OF
THE FULL VALUE COMMITTEE
------------------------------------
1999 ANNUAL MEETING OF STOCKHOLDERS
OF
PUROFLOW INCORPORATED
------------------------------------
PLEASE SIGN, DATE AND RETURN THE ENCLOSED GOLD PROXY CARD
This proxy statement (the "Proxy Statement") and the enclosed GOLD
proxy card are being furnished to stockholders of Puroflow Incorporated, a
Delaware corporation (the "Company") by The Full Value Committee, (the
"Committee") in connection with the solicitation of proxies from the Company's
stockholders to be used at the 1999 Annual Meeting of Stockholders of the
Company, including any adjournments or postponements thereof and any special
meeting which may be called in lieu thereof (the "Annual Meeting"), to elect the
Committee's nominees, Warren G. Lichtenstein, Robert Frankfurt, James Benenson,
Jr. and Steven Wolosky (the "Nominees") to the Company's Board of Directors (the
"Company Board") . As Nominees for director, Messrs. Lichtenstein, Frankfurt,
Benenson and Wolosky are also deemed to be participants in this proxy
solicitation. The principal executive offices of the Company are located at
16559 Saticoy Street, Van Nuys, California 91004. This Proxy Statement and the
GOLD proxy card are first being furnished to the Company's stockholders on or
about May __, 1999.
The Company has set the record date for determining stockholders
entitled to notice of and to vote at the Annual Meeting as April 30, 1999 (the
"Record Date") and has set June 29, 1999 as the date of the Annual Meeting.
Stockholders of record at the close of business on the Record Date will be
entitled to one vote at the Annual Meeting for each Share (as defined herein)
held on the Record Date. The Committee, along with all of the participants in
this solicitation, is the beneficial owner of an aggregate of 1,336,100 Shares
which represents approximately 16.7% of the Shares outstanding (based on
information publicly disclosed by the Company). The Committee intends to vote
such Shares for the election of the Nominees.
THIS SOLICITATION IS BEING MADE BY THE COMMITTEE AND NOT ON BEHALF OF
THE BOARD OF DIRECTORS OR MANAGEMENT OF THE COMPANY.
The Committee is soliciting proxies for the election of the Nominees to
the Company Board. According the Company's Definitive Proxy Statement on
Schedule 14A filed with the Securities and Exchange Commission on April 26, 1999
(the "Company Proxy Statement"), the Company is soliciting proxies with respect
to the appointment of its auditors for the fiscal year ended January 31, 2000.
The Committee expresses no opinion and makes no recommendation as to this
proposal. The Committee is not aware of any other proposals to be brought before
the Annual Meeting. However, should other proposals be brought before the Annual
Meeting, the persons named as proxies in the enclosed GOLD proxy card will vote
on such matters in their discretion.
IMPORTANT
Your vote is important, no matter how many or how few Shares you own.
The Committee urges you to sign, date, and return the enclosed GOLD proxy card
today to vote FOR the election of the Nominees.
The Nominees are committed, subject to their fiduciary duty to the
Company's stockholders, to giving all the Company's stockholders the opportunity
to receive the maximum value for their Shares. A vote FOR the Nominees will
enable you - as the owners of the Company - to send a message to the Company's
Board that you are committed to maximizing the value of your Shares.
o If your Shares are registered in your own name, please sign and date
the enclosed GOLD proxy card and return it to the Committee, c/o
Innisfree M&A Incorporated, in the enclosed envelope today.
<PAGE>
- ------------------------------------ ------------------------------
CUSIP No. 746 375 104 13D Page 19 of 30 Pages
- ------------------------------------ ------------------------------
o If any of your Shares are held in the name of a brokerage firm, bank,
bank nominee or other institution on the record date, only it can vote
such Shares and only upon receipt of your specific instructions.
Accordingly, please contact the person responsible for your account and
instruct that person to execute on your behalf the GOLD proxy card. The
Committee urges you to confirm your instructions in writing to the
person responsible for your account and to provide a copy of such
instructions to the committee, c/o Innisfree M&A Incorporated, who is
assisting in this solicitation, at the address and telephone numbers
set forth below, and on the back cover of this proxy statement, so that
we may be aware of all instructions and can attempt to ensure that such
instructions are followed.
If you have any questions regarding your proxy,
or need assistance in voting your Shares, please call:
INNISFREE M&A INCORPORATED
501 Madison Avenue, 20th Floor
New York, New York 10022
Call toll-free: (888) 750-5834
Bankers and Brokers Call Collect: (212) 750-5833
<PAGE>
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CUSIP No. 746 375 104 13D Page 20 of 30 Pages
- ------------------------------------ ------------------------------
THE PLANS OF THE FULL VALUE COMMITTEE
The Committee was formed to solicit proxies to elect a slate of
candidates to serve on the Company Board. Members of the Committee have
beneficially owned shares (the "Shares") of the Company's common stock, .01 par
value (the "Common Stock") since June 1998. In making their initial investment,
the members of the Committee believed there were unexploited opportunities for
management to increase the value of these Shares. The members of the Committee
now believe that the Company's current business strategy is not the best course
of action for all stockholders. For example, the Committee was dismayed by the
recent actions by the Company in offering certain directors, officers and
employees the opportunity to purchase 1,000,000 Shares at 75 cents per Share.
Such purchases represent approximately 12% of the outstanding Shares, and the
directors, officers and employees who participated were required to make an
initial payment of only 20% of the purchase price, with the balance being
financed by a non-recourse three-year note from the Company at a below-market
interest rate. In the Committee's view, this offer was a "sweetheart"
transaction, representing a breach of the Company Board's fiduciary duties at
the expense of all other stockholders and should have been made to all
stockholders of the Company.
In addition, the Committee believes that the market price of the Common
Stock does not reflect the underlying value of the Company and believes that the
sale of the Company would be in the best interests of the Company's
stockholders. The Company's stock price has been languishing at below $1.00 per
Share since early 1997, and has not come close to reaching its highest trading
price of approximately $2.00 per Share achieved in 1996.
For these and other reasons, the Committee has concluded that the most
attractive opportunity for increasing the value of the Company's Common Stock,
on a present value basis, is through the sale of the Company. We believe
stockholders should elect directors committed to pursuing the sale of the
Company in a manner which will give the Company's stockholders the greatest
return on their investment. In that regard, the Committee was formed to elect
Warren G. Lichtenstein, Robert Frankfurt, James Benenson, Jr. and Steven Wolosky
to the Company's Board. Upon the consummation of such actions, the Nominees will
take all necessary action to pursue the sale of the Company.
The Committee believes that the sale of the Company rather than the
continued operation of the Company by current management is in the best interest
of the Company's stockholders. No assurance can be given that a sale of the
Company can be accomplished or would produce more favorable financial results or
result in achieving full value for stockholders. The Committee has not solicited
any offers from any potential acquirors of the Company, nor has it conducted an
appraisal of the assets of the Company in order to determine a fair price for
such a sale.
WHY YOU SHOULD VOTE FOR THE NOMINEES
The Committee believes that the election of the Nominees represents the
best means for the Company's stockholders to maximize the value of their Shares.
As the largest stockholder of the Company, the Committee has a strong interest
in maximizing the value of your investment.
The Committee is committed to the prompt sale or restructuring of the
Company. If elected, the Nominees are expected to take all actions, subject to
their fiduciary duties to the Company's stockholders, to maximize stockholder
value, either through the sale of the Company to the highest bidder and on the
most favorable terms available to the Company or, alternatively, through a
restructuring or recapitalization designed to accomplish these objectives.
Neither the Committee (nor to its knowledge, any other person on the Committee's
behalf) has made or undertaken any analyses or reports as to whether stockholder
value will be maximized as a result of this solicitation or obtained reports
from consultants or other outside parties as to whether the proposals presented
herein would have an effect on stockholder value and no assurance can be given
that the Nominees will be able to implement their plan. The Committee could,
however, in the future, based upon an evaluation of the Company's operations and
future plans, decide to pursue another course of action. It is not currently
contemplated that any of the Nominees or any of their affiliates will
participate in any transaction with the Company other than in their capacity as
a stockholder.
If the Nominees are elected, they have no current plans to terminate
the employment of any of the Company's current officers. The Committee is not
aware of any employment agreement or material agreement to which the Company is
a party, the termination or terms of which would be adversely affected by the
election of the Nominee or a sale of the Company.
<PAGE>
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CUSIP No. 746 375 104 13D Page 21 of 30 Pages
- ------------------------------------ ------------------------------
THE FULL VALUE COMMITTEE AND ITS SLATE
The Full Value Committee is composed of Warren G. Lichtenstein, Robert
Frankfurt, James Benenson, Jr. and Steven Wolosky, and such persons shall
constitute the Nominees for election to the Company Board. Additional nominees
will be nominated (i) in the event that the Company purports to increase the
number of its directorships to more than four, and/or (ii) in the event any of
the Nominees are unable for any reason to serve as a Director. Biographical data
on the Nominees is set forth below. The Committee was formed on or about April
30, 1999 to undertake this solicitation. The Committee is an unincorporated
association with its office at 150 East 52nd Street, 21st Floor, New York, NY
10022. Its telephone number is (212) 813-1500. The Committee's officers are
Messrs. Lichtenstein, Frankfurt, Benenson and Wolosky.
Warren G. Lichtenstein (33) is one of the Committee's nominees for
director. Mr. Lichtenstein has been the Chairman of the Board, Secretary and the
Managing Member of Steel Partners, L.L.C. ("Steel LLC"), the general partner of
Steel Partners II, L.P. ("Steel") since January 1, 1996. Prior to such time, Mr.
Lichtenstein was the Chairman and a director of Steel Partners, Ltd. ("Former
General Partner"), the general partner of Steel Partners Associates, L.P.
("Associates"), which was the general partner of Steel since 1993 and prior to
January 1, 1996. For information regarding Steel and Steel LLC, see below under
"Participant Information". Mr. Lichtenstein was the acquisition/risk arbitrage
analyst at Ballantrae Partners, L.P., a private investment partnership formed to
invest in risk arbitrage, special situations and undervalued companies, from
1988 to 1990. Mr. Lichtenstein is a director of the following publicly held
companies: Gateway Industries, Inc., Rose's Holdings, Inc., PLM International,
Inc. and Saratoga Beverage Group, Inc. Mr. Lichtenstein also served as Chairman
of the Board of Aydin Corporation from October 5, 1998 until its sale to L-3
Communications Corporation ("L-3") in April 1999 at a price of $13.50 per share,
which represents a premium of approximately 39% over the reported closing price
of $9.69 per share the day preceding the announced transaction with L-3. As of
the Record Date, Mr. Lichtenstein beneficially owned 1,336,100 Shares of the
Common Stock of the Company, all of which were owned by Steel. The business
address of Mr. Lichtenstein is 150 E. 52nd Street, 21st Floor, New York, New
York 10022. For information regarding Mr. Lichtenstein's purchases and sales of
Shares of the Common Stock of the Company during the past two years, see
Schedule I.
In late 1995, Steel commenced a proxy solicitation to replace the
incumbent directors of Medical Imaging Centers of America, Inc. ("MICA").
Thereafter, MICA initiated an action against Steel, Warren Lichtenstein, and
others in the United States District Court for the Southern District of
California, Medical Imaging Centers of America, Inc. v. Lichtenstein, et al,
Case No. 96-0039B. On February 29, 1996, the Court issued an Order granting, in
part, MICA's motion for a preliminary injunction on the grounds that plaintiff
had demonstrated a probability of success on the merits of its assertion that
defendants had violated Section 13 of the Securities Exchange Act of 1934. Under
the Court's preliminary injunction, defendants in the action were enjoined from
voting certain of their shares at MICA's annual meeting of shareholders, except
pursuant to a formula under which they would be voted in the same proportion as
other votes cast at the meeting. The Court declined to adjourn the annual
meeting of shareholders. At the meeting, Steel received sufficient votes to
elect its nominees to the Board of MICA, after giving effect to the Court's
preliminary injunction. The parties thereafter settled their differences
pursuant to an agreement under which MICA agreed to initiate an auction process
which, if not concluded within a certain time period, would end and thereafter
the designees of Steel would assume control of the Board of MICA. MICA was
ultimately sold for $11.75 per share, as contrasted with the price of $8.25 per
share, representing the closing price on the day prior to the initiation of
Steel's proxy solicitation.
Robert Frankfurt (33) is one of the nominees for director. Mr.
Frankfurt joined the Former General Partner in 1995 and became a non-managing
member of Steel L.L.C. in 1996. Mr. Frankfurt concurrently served as President
of MDM Technologies during 1997 and 1998. As of the date hereof Mr. Frankfurt
does not beneficially own any Shares of the Common Stock of the Company. Mr.
Frankfurt has not purchased or sold any Shares of Common Stock of the Company in
the past two years. The business address of Mr. Frankfurt is 150 East 52nd
Street, 21st Floor, New York, NY 10022.
James Benenson, Jr. (63) is one of the nominees for director. Mr.
Benenson has been the Chairman of the Board of Vesper Corporation since 1979 and
Chairman of the Board of Arrowhead Holdings Corporation since 1983. Prior to
such time, Mr. Benenson served in various capacities with F. Eberstadt & Co.,
Walker, Hart & Co. and James Benenson & Co. As of the date hereof Mr. Benenson
does not beneficially own Shares of the Common Stock of the Company. Mr.
Benenson has not purchased or sold any Shares of Common Stock of the Company in
the past two years. The business address of Mr. Benenson is 8223 Brecksville
Road, Brecksville Ohio 44141.
Steven Wolosky (43) is one of the nominees for director. For more than
the past five years, Mr. Wolosky has been a partner of Olshan Grundman Frome
Rosenzweig & Wolosky LLP, counsel to Steel Partners. Mr. Wolosky is also
Assistant Secretary of WHX Corporation, a NYSE listed company and a director of
Uniflex, Inc., an AMEX listed company. As of the date hereof, Mr. Wolosky did
not beneficially own any Shares of the Common Stock of the Company. Mr. Wolosky
has not
<PAGE>
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CUSIP No. 746 375 104 13D Page 22 of 30 Pages
- ------------------------------------ ------------------------------
purchased or sold any Shares of the Common Stock of the Company in the past two
years. The business address of Mr. Wolosky is 505 Park Avenue, New York, New
York 10022.
For further information concerning the plans of the Full Value
Committee and the Nominees, see "The Plans of the Full Value Committee."
The Full Value Committee, together, beneficially owned 1,336,100 Shares
of Common Stock as of the Record Date, representing 16.7% of the issued and
outstanding Shares of Common Stock.
Each of the Nominees has consented to serve as a director and, if
elected, intends to discharge his duties as director of the Company in
compliance with all applicable legal requirements, including the general
fiduciary obligations imposed upon corporate directors. By executing a GOLD
proxy Card, each stockholder will revoke any prior consent and will not be
voting his or her Shares for the nominees of the Company.
The Nominees will not receive any compensation from the Committee for
their services as a Director of the Company. The Committee has agreed to
indemnify the Nominees against any costs, expenses and other liabilities
associated with their nomination and the election contest. The Nominees have
executed written consents agreeing to be a nominee for election as a Director of
the Company and to serve as a Director if so elected. None of the Nominees have
been convicted in any criminal proceedings (excluding traffic violations or
similar misdemeanors) over the past ten years. Directors who are not employees
of the Company or its subsidiary receive an annual retainer of $2,560, payable
in quarterly installments, and a fee of $300 for participation in meetings of
the Company Board held by means of conference telephone and for participation in
certain meetings of committees of the Company Board.
Except as provided for under "Legal Proceedings" herein, none of the
Nominees is adverse to the Company or any of its subsidiaries in any material
pending legal proceedings.
The Committee does not expect that the Nominees will be unable to stand
for election but, in the event that any of the Nominees are unable to do so, the
Shares represented by the enclosed GOLD proxy card will be voted for the
remaining Nominees. In addition, the Committee reserves the right to nominate
substitute or additional persons if the Company makes or announces any changes
to its Bylaws or takes or announces any other action that has, or if consummated
would have, the effect of disqualifying any of the Nominees. In any such case,
Shares represented by the enclosed GOLD proxy card will be voted for such
substitute or additional nominees.
YOU ARE URGED TO VOTE FOR THE ELECTION OF THE NOMINEES ON THE ENCLOSED
GOLD PROXY CARD.
VOTING AND PROXY PROCEDURES
Only stockholders of record on the Record Date will be entitled to
notice of and to vote at the Annual Meeting. Each Share is entitled to one vote.
Stockholders who sell Shares before the Record Date (or acquire them without
voting rights after the Record Date) may not vote such Shares. Stockholders of
record on the Record Date will retain their voting rights in connection with the
Annual Meeting even if they sell such Shares after the Record Date. Based on
publicly available information, the Committee believes that the only outstanding
class of securities of the Company entitled to vote at the Annual Meeting are
the Shares. According to publicly available information as of April 30, 1999,
there were 8,000,321 Shares issued and outstanding.
Shares represented by properly executed GOLD proxy cards will be voted
at the Annual Meeting as marked and, in the absence of specific instructions,
will be voted FOR the election of the Nominees to the Board, and in the
discretion of the persons named as proxies on all other matters as may properly
come before the Annual Meeting. Election of the Nominees requires the
affirmative vote of a plurality of the Shares represented and entitled to vote
at the Annual Meeting. Shares for which proxies are marked "abstain" will be
treated as Shares present for purposes of determining the presence of a quorum
on all matters. Proxies relating to "street name" Shares that are voted by
brokers only on some of the proposals will nevertheless be treated as present
for purposes of determining the presence of a quorum on all matters but will not
be entitled to vote on any proposal which the broker does not have discretionary
voting power and has not received instructions from the beneficial owner
("broker non- votes"). Directors are elected by a plurality and the nominees who
receive the most votes will be elected. Abstentions and broker non-votes will
not be taken into account in determining the outcome of the election.
<PAGE>
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CUSIP No. 746 375 104 13D Page 23 of 30 Pages
- ------------------------------------ ------------------------------
Stockholders of the Company may revoke their proxies at any time prior
to its exercise by attending the Annual Meeting and voting in person (although
attendance at the Annual Meeting will not in and of itself constitute revocation
of a proxy) or by delivering a written notice of revocation. The delivery of a
subsequently dated proxy which is properly completed will constitute a
revocation of any earlier proxy. The revocation may be delivered either to the
Committee in care of Innisfree M&A Incorporated at the address set forth on the
back cover of this Proxy Statement or to the Company at 16559 Saticoy Street,
Van Nuys, California 91406 or any other address provided by the Company.
Although a revocation is effective if delivered to the Company, the Committee
requests that either the original or photostatic copies of all revocations be
mailed to the Committee in care of Innisfree M&A Incorporated at the address set
forth on the back cover of this Proxy Statement so that Committee will be aware
of all revocations and can more accurately determine if and when proxies have
been received from the holders of record on the Record Date of a majority of the
outstanding Shares.
IF YOU WISH TO VOTE FOR THE ELECTION OF THE NOMINEES TO THE COMPANY
BOARD, PLEASE SIGN, DATE AND RETURN PROMPTLY THE ENCLOSED GOLD PROXY CARD IN THE
POSTAGE-PAID ENVELOPE PROVIDED.
SOLICITATION OF PROXIES
The solicitation of proxies pursuant to this Proxy Statement is being
made by the Committee. Proxies may be solicited by mail, facsimile, telephone,
telegraph, in person and by advertisements. Solicitations may be made by certain
officers, employees or affiliates of the Committee, none of whom will receive
additional compensation for such solicitation.
The Committee has retained Innisfree M&A Incorporated for solicitation
and advisory services in connection with this solicitation, for which Innisfree
M&A Incorporated will receive a fee not to exceed $25,000, together with
reimbursement for its reasonable out-of-pocket expenses, and will be indemnified
against certain liabilities and expenses, including certain liabilities under
the federal securities laws. Innisfree M&A Incorporated will solicit proxies
from individuals, brokers, banks, bank nominees and other institutional holders.
The Committee has requested banks, brokerage houses and other custodians,
nominees and fiduciaries to forward all solicitation materials to the beneficial
owners of the Shares they hold of record. The Committee will reimburse these
record holders for their reasonable out-of-pocket expenses in so doing. It is
anticipated that Innisfree M&A Incorporated will employ approximately 50 persons
to solicit the Company's stockholders for the Annual Meeting.
The entire expense of soliciting proxies is being borne by the
Committee. If the Nominees are elected to the Company Board, the Committee
intends to seek reimbursement of the costs of this solicitation from the
Company. Costs of this solicitation of proxies are currently estimated to be
approximately $100,000. The Committee estimates that through the date hereof,
its expenses in connection with this solicitation are approximately $15,000.
PARTICIPANT INFORMATION
Mr. Lichtenstein beneficially owns 1,336,100 Shares of Common Stock.
None of Messrs. Frankfurt, Benenson or Wolosky beneficially owns any Shares of
Common Stock. The Committee is deemed to beneficially own 1,336,100 Shares of
Common Stock representing 16.7% of the Shares outstanding. No participant owns
any securities other than Shares of Common Stock and no participant owns any
such Shares of record but not beneficially.
The general partner of Steel is Steel LLC, a Delaware limited liability
company. The principal business of Steel is investing in the securities of
micro-cap companies. The principal business address of Steel and Steel LLC is
150 East 52nd Street, 21st Floor, New York, New York 10022. Warren G.
Lichtenstein is Chairman of the Board, Secretary and the Managing Member of
Steel LLC. As of the Record Date, Steel was the beneficial owner of 1,336,100
Shares of the Common Stock of the Company. Steel LLC does not beneficially own
any Shares of the Common Stock of the Company on the Record Date, except by
virtue of their role in Steel. For information regarding Steel's purchases and
sales of Shares of the Common Stock of the Company during the past two years,
see Schedule I.
The Company Board has a single class of directors. At each annual
meeting of Stockholders, the directors are elected to a one-year term. The
Nominees proposed by the Committee, if elected, would serve as directors for the
term expiring in 2000 or until the due election and qualification of their
successors.
<PAGE>
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CUSIP No. 746 375 104 13D Page 24 of 30 Pages
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LEGAL PROCEEDINGS
On May 3, 1999, Steel Partners filed a complaint in the United States
District Court, District of Delaware, naming the Company, Michael H. Figoff,
Reuben M. Siwek, Tracy Kent Pugmire and Robert A. Smith as defendants. The
complaint alleges that the defendants have violated Sections 13(d) and 14(a) of
the Securities Exchange Act of 1934, as amended. The complaint states that the
defendants are using false and misleading material in the proxy statement filed
with the Securities and Exchange Commission and disseminated to stockholders of
the Company on or about April 26, 1999, in connection with the Company's
solicitation of proxies for its 1999 annual meeting. The complaint also states
that the individual defendants have formed an undisclosed group which
beneficially owns approximately 14% of the Shares of Common Stock but have
failed to file a Schedule 13D disclosing the formation of such group. In
addition, the complaint states that one million shares of the Company were
acquired by the individual defendants and those working with them pursuant to a
stock issuance which was without proper corporate purpose and designed to
entrench management. Steel Partners has requested, among other things, that a
declaration be made that the proxy statement of the Company is false and
misleading, that the individual defendants be directed to file a complete and
truthful Schedule 13D, and that the defendants be enjoined from voting proxies
received pursuant to their misleading solicitation and the one million shares
obtained through self-dealing.
CERTAIN TRANSACTIONS BETWEEN THE COMMITTEE AND THE COMPANY
Except as set forth in this Proxy Statement (including the Schedules
hereto), none of the Committee or any of the other participants in this
solicitation, or any of their respective associates: (i) directly or indirectly
beneficially owns any Shares or any securities of the Company; (ii) has had any
relationship with the Company in any capacity other than as a stockholder, or is
or has been a party to any transactions, or series of similar transactions,
since January 1, 1998 with respect to any Shares of the Company; or (iii) knows
of any transactions since January 1, 1998, currently proposed transaction, or
series of similar transactions, to which the Company or any of its subsidiaries
was or is to be a party, in which the amount involved exceeds $60,000 and in
which any of them or their respective affiliates had, or will have, a direct or
indirect material interest. In addition, other than as set forth herein, there
are no contracts, arrangements or understandings entered into by the Committee
or any other participant in this solicitation or any of their respective
associates within the past year with any person with respect to any of the
Company's securities, including, but not limited to, joint ventures, loan or
option arrangements, puts or calls, guarantees against loss or guarantees of
profit, division of losses or profits, or the giving or withholding of proxies.
Except as set forth in this Proxy Statement (including the Schedules
hereto), neither the Committee nor any of the other participants in this
solicitation, or any of their respective associates, has entered into any
agreement or understanding with any person with respect to (i) any future
employment by the Company or its affiliates or (ii) any future transactions to
which the Company or any of its affiliates will or may be a party.
OTHER MATTERS AND ADDITIONAL INFORMATION
According to the Company Proxy Statement, the Company is soliciting
proxies with respect to the appointment of the Company's auditors for the fiscal
year ended January 31, 2000. Please refer to the Company Proxy Statement for a
detailed description of this proposal. The Committee expresses no opinion and
makes no recommendation on this proposal. The accompanying GOLD proxy card will
be voted in accordance with your instructions on such card. You may vote for
approval of the proposal, vote against such proposal or abstain from voting on
such proposal by marking the proper box on the GOLD proxy card. If no marking is
made, you will be deemed to have given a direction to abstain from voting the
Shares represented by the GOLD proxy card with respect to the approval of this
proposal.
The Committee is unaware of any other matters to be considered at the
Annual Meeting. However, the Committee has notified the Company of its intention
to bring before the Annual Meeting such proposals as it believes to be
appropriate. Should other proposals be brought before the Annual Meeting, the
persons named as proxies on the enclosed GOLD proxy card will vote on such
matters in their discretion.
The information concerning the Company contained in this Proxy
Statement and the Schedules attached hereto has been taken from, or is based
upon, publicly available information. To date, the Committee has not had access
to the books and records of the Company.
<PAGE>
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CUSIP No. 746 375 104 13D Page 25 of 30 Pages
- ------------------------------------ ------------------------------
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
The Company's Definitive Proxy Statement set March 1, 2000 as the
deadline by which proposals of the Company's stockholders that are intended to
be presented by such stockholders at the Annual Meeting were to be received by
the Company in order to be considered for inclusion in the proxy statement and
form of proxy relating to the Annual Meeting.
THE FULL VALUE COMMITTEE
May__, 1999
<PAGE>
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CUSIP No. 746 375 104 13D Page 26 of 30 Pages
- ------------------------------------ ------------------------------
Transactions in the Shares for the Last Two Years
Shares of Common Stock Price Per Date of
Purchased Share Purchase
--------- ----- --------
STEEL PARTNERS II, L.P.
29,100 .75140 June 8, 1998
10,000 .75000 June 15, 1998
17,500 .77071 June 19, 1998
30,000 .80125 June 23, 1998
20,000 .80125 June 24, 1998
15,000 .80000 July 2, 1998
5,000 .80125 July 6, 1998
10,000 .83250 July 9, 1998
20,000 .82250 July 13, 1998
20,000 .82000 July 14, 1998
75,000 .83167 July 16, 1998
28,000 .83089 July 27, 1998
565,000 .86000 July 27, 1998
2,500 .70750 October 23, 1998
20,500 .75781 October 27, 1998
10,000 .77000 October 28, 1998
20,000 .77000 October 29, 1998
5,000 .77000 October 30, 1998
50,000 .77000 November 4, 1998
10,000 .77000 November 13, 1998
10,000 .80000 December 31, 1988
10,000 .80125 January 6, 1999
27,500 .81227 January 21, 1999
10,000 .80125 January 25, 1999
10,000 .85594 January 29, 1999
20,000 .83250 March 3, 1999
20,000 .84031 March 5, 1999
10,000 .83250 March 8, 1999
10,000 .83250 March 10, 1999
<PAGE>
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CUSIP No. 746 375 104 13D Page 27 of 30 Pages
- ------------------------------------ ------------------------------
Shares of Common Stock Price Per Date of
Purchased Share Purchase
--------- ------- --------
25,000 .83250 March 16, 1999
25,000 .89500 March 25, 1999
12,000 .89500 April 7, 1999
44,500 .89720 April 8, 1999
129,500 .90592 April 22, 1999
10,000 .89500 April 23, 1999
WARREN G. LICHTENSTEIN
NONE(2)
ROBERT FRANKFURT
NONE
JAMES BENENSON, JR.
NONE
STEVEN WOLOSKY
NONE
- --------
2 By virtue of his position with Steel Partners II, L.P., Mr.
Lichtenstein has the power to vote and dispose of the Company's Shares
owned by Steel Partners II, L.P. Accordingly, Mr. Lichtenstein is
considered the beneficial owner of the Shares of the Company owned by
Steel Partners II, L.P.
<PAGE>
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CUSIP No. 746 375 104 13D Page 28 of 30 Pages
- ------------------------------------ ------------------------------
IMPORTANT
Tell your Board what you think! Your vote is important. No matter how
many Shares you own, please give the Committee your proxy FOR the election of
the Nominees by taking three steps:
1. SIGNING the enclosed GOLD proxy card,
2. DATING the enclosed GOLD proxy card, and
3. MAILING the enclosed GOLD proxy card TODAY in the envelope
provided (no postage is required if mailed in the United
States).
If any of your Shares are held in the name of a brokerage firm, bank,
bank nominee or other institution, only it can vote such Shares and only upon
receipt of your specific instructions. Accordingly, please contact the person
responsible for your account and instruct that person to execute the GOLD proxy
card representing your Shares. The Committee urges you to confirm in writing
your instructions to the Committee in care of at the address provided below so
that the Committee will be aware of all instructions given and can attempt to
ensure that such instructions are followed.
If you have any questions or require any additional information
concerning this Proxy Statement, please contact, Innisfree M&A Incorporated at
the address set forth below.
INNISFREE M&A INCORPORATED
501 MADISON AVENUE, 20TH FLOOR
NEW YORK, NEW YORK 10022
CALL TOLL FREE (888) 750-5834
OR
BANKS AND BROKERS CALL (212) 750-5833 (COLLECT)
<PAGE>
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CUSIP No. 746 375 104 13D Page 29 of 30 Pages
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PUROFLOW INCORPORATED 1999 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE FULL VALUE COMMITTEE
The undersigned appoints Warren G. Lichenstein and Robert Frankfurt and each of
them, attorneys and agents with full power of substitution to vote all shares of
common stock of Puroflow Incorporated (the "Company") which the undersigned
would be entitled to vote if personally present at the 1999 Annual Meeting of
Stockholders of the Company, and including at any adjournments or postponements
thereof and at any special meeting called in lieu thereof, as follows:
THE FULL VALUE COMMITTEE RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES
NAMED BELOW. THE COMMITTEE MAKES NO RECOMMENDATION AS TO THE PROPOSAL SET FORTH
IN ITEM 2.
1. ELECTION OF DIRECTORS: To elect the Nominees, Warren G.
Lichtenstein, Robert Frankfurt, James Benenson, Jr. and Steven
Wolosky, to the Board of Directors of the Company (the "Board");
FOR [ ] WITHHOLD AUTHORITY [ ]
INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominees name in the space provided below.
I withhold authority to vote for the following nominee(s):_____________
2. To vote for the appointment of the Auditors for the fiscal year
ended January 31, 2000, subject to consummation of a contract
satisfactory to the Board of Directors of the Company.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. In their discretion with respect to any other matters as may
properly come before the Annual Meeting.
The undersigned hereby revokes any other proxy or proxies heretofore
given to vote or act with respect to the shares of common stock of the Company
held by the undersigned, and hereby ratifies and confirms all action the herein
named attorneys and proxies, their substitutes, or any of them may lawfully take
by virtue hereof. If properly executed, this proxy will be voted as directed
above. If no direction is indicated with respect to the above proposals, this
proxy will be voted FOR the election of the Nominees and in the manner set forth
in Item 3 above. If no direction is made with respect to proposal 2, this proxy
will be treated as a direction to abstain from voting with respect to such
proposal.
This proxy will be valid until the sooner of one year from the date
indicated below and the completion of the Annual Meeting.
DATED: _________________________________, 1999.
PLEASE SIGN EXACTLY AS NAME APPEARS ON THIS PROXY.
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(Signature)
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(Signature, if held jointly)
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(Title)
<PAGE>
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CUSIP No. 746 375 104 13D Page 30 of 30 Pages
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WHEN SHARES ARE HELD JOINTLY, JOINT OWNERS SHOULD EACH SIGN. EXECUTORS,
ADMINISTRATORS, TRUSTEES, ETC., SHOULD INDICATE THE CAPACITY IN WHICH SIGNING.
IMPORTANT:PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE!
IF YOU NEED ASSISTANCE WITH THIS PROXY CARD, PLEASE CALL
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