<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
[AMENDMENT NO. 1]
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
PUROFLOW INCORPORATED
- ------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
5) Total fee paid:
-------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1) Amount previously paid:
----------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------
3) Filing Party:
--------------------------------------------------------
4) Date Filed:
----------------------------------------------------------
<PAGE>
PUROFLOW
INCORPORATED 16559 Saticoy Street, Van Nuys, CA 91406 (818) 756-1388
FAX (818) 779-3902
September 28, 1999
To Our Stockholders:
On behalf of your Company's Board of Directors, I cordially invite you
to attend the Annual Meeting of Stockholders to be held on Thursday, October
21, 1999, at 10:00 a.m., local time, at the offices of the Company at 16559
Saticoy Street, Van Nuys, California 91406.
The accompanying Notice of Meeting and Proxy Statement cover the details
of the matters to be presented. A copy of the Company's Annual Report on
Form 10-KSB for the fiscal year ended January 31, 1999 is included with this
mailing.
As you are aware, your Board of Directors was engaged in a proxy contest
with The Full Value Committee, a group formed by Steel Partners. On
September 16, 1999, the proxy contest and the pending lawsuits relating to
the proxy contest were settled and the Board appointed three representatives
of Steel Partners to an expanded seven member Board. The Board of Directors
has reduced the number of directors to serve on the Board following the
Annual Meeting from seven to five, and has proposed a new slate of five
director nominees, including two representatives of Steel Partners. Detailed
information concerning the settlement of the proxy contest is contained in
the enclosed Proxy Statement.
Regardless of whether you plan to attend the Annual Meeting, your vote
is important. I urge you to participate by promptly completing and returning
the enclosed proxy card as soon as possible. You may revoke your proxy and
vote in person if you decide to attend the Annual Meeting.
We appreciate your continued support.
Cordially,
PUROFLOW INCORPORATED
/s/ Michael H. Figoff
Michael H. Figoff
President and Chief Executive Officer
<PAGE>
PUROFLOW INCORPORATED
16559 SATICOY STREET
VAN NUYS, CALIFORNIA 91406
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 21, 1999
To the Stockholders of PUROFLOW INCORPORATED:
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders (the
"Annual Meeting") of Puroflow Incorporated, a Delaware corporation (the
"Company"), will be held at the offices of the Company, on October 21, 1999,
at 10:00 a.m., local time, or any adjournment or postponement thereof, for
the following purposes, all as more fully described in the attached Proxy
Statement:
1. To elect five directors to serve for a term of one year and until
their respective successors are duly elected and qualified.
2. To ratify the appointment by the Company's Board of Directors of
Rose, Snyder & Jacobs, certified public accountants, as independent auditors
of the Company for the fiscal year ending January 31, 2000, and to authorize
the Board of Directors to fix their remuneration.
3. To transact such other business as may properly come before the
Annual Meeting and any and all adjournments thereof.
Only stockholders of record at the close of business on August 30, 1999
shall be entitled to notice of and to vote at the Annual Meeting. A copy of
the Company's Annual Report for the fiscal year ended January 31, 1999 is
enclosed.
The Board of Directors appreciates and welcomes stockholder
participation in the Company's affairs. You are earnestly requested to
complete, sign, date and return the accompanying proxy card in the enclosed
envelope provided for that purpose (to which no postage need be affixed if
mailed in the United States), whether or not you expect to attend the Annual
Meeting in person. The proxy is revocable by you at any time prior to its
exercise and will not affect your right to vote in person in the event you
attend the Annual Meeting. The prompt return of the proxy card will be of
assistance in preparing for the Annual Meeting and your cooperation in this
respect will be greatly appreciated.
By Order of the Board of Directors
Sandy Yoshisato
Corporate Secretary
Van Nuys, California
September 28, 1999
- -------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT. TO VOTE YOUR SHARES,
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED
PROXY CARD AND MAIL IT PROMPTLY
IN THE ENCLOSED RETURN ENVELOPE.
- -------------------------------------------------------------------------------
<PAGE>
PUROFLOW INCORPORATED
16559 SATICOY STREET
VAN NUYS, CALIFORNIA 91406
------------------------------
PROXY STATEMENT
OF THE BOARD OF DIRECTORS
FOR THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 21, 1999
------------------------------
INTRODUCTION
This Proxy Statement and the accompanying proxy card are being furnished
to the stockholders of Puroflow Incorporated, a Delaware corporation (the
"Company"), in connection with the solicitation of proxies by the Board of
Directors of the Company for use in voting at the Annual Meeting of
Stockholders to be held at the offices of the Company, 16559 Saticoy Street,
Van Nuys, California 91406, on October 21, 1999 at 10:00 a.m., local time
(together with any and all adjournments or postponements thereof, the "Annual
Meeting"). This Notice of Annual Meeting and Proxy Statement, together with
the accompanying proxy card and Annual Report to Stockholders of the Company
for the fiscal year ended January 31, 1999 (including the financial
statements contained therein), are first being mailed or delivered to
stockholders of the Company on or about September 28, 1999.
SPECIAL NOTE CONCERNING SETTLEMENT
OF PROXY CONTEST WITH STEEL PARTNERS II, L.P.
This Proxy Statement and the accompanying proxy card are being furnished
to the stockholders of the Company by the Company and its Board of Directors
pursuant to the terms and conditions of a settlement agreement and release
dated September 16, 1999 (the "Settlement Agreement"), among the Company,
Reuben M. Siwek, Michael H. Figoff, Robert A. Smith and Dr. Tracy Kent
Pugmire and Steel Partners II, L.P. ("Steel Partners"), The Full Value
Committee, Warren G. Lichtenstein, Robert Frankfurt, James Benenson, Jr. and
Steven Wolosky (Steel Partners, The Full Value Committee and Messrs.
Lichtenstein, Frankfurt, Benenson and Wolosky, collectively, the "Steel
Parties"), pursuant to which the Steel Parties agreed to cease their
solicitation of proxies for their own proposed slate of directors at the
Annual Meeting in exchange for, among other things, Board representation.
For additional information regarding the Steel Parties and the Settlement
Agreement, see "Security Ownership of Certain Beneficial Owners and
Management," "Proposal 1: Election of Directors" and "Litigation--Settlement
of Proxy Contest and Lawsuits."
QUORUM AND VOTING
AGENDA FOR MEETING
At the Annual Meeting, the holders of outstanding shares of common
stock, par value $0.01 per share, of the Company (the "Common Stock") will be
asked to consider and vote upon: (i) the election of five directors to serve
for a term of one year and until their respective successors are duly elected
and qualified ("Proposal 1"); (ii) the appointment of Rose, Snyder & Jacobs,
certified public accountants, as independent auditors of the Company for the
fiscal year ending January 31, 2000 ("Proposal 2"); and (iii) such other
proposals as may properly be presented for the Annual Meeting.
RECORD DATE
The record date for the Annual Meeting is August 30, 1999. Only
stockholders of record as of the close of business on that date are entitled
to notice of and to vote at the Annual Meeting.
VOTING STOCK
The only class of stock entitled to be voted at the Annual Meeting is
the Company's Common Stock. At the close of business on the record date,
there were 8,100,321 shares of Common Stock outstanding and entitled to vote
at the Annual Meeting, and the holders of these shares will be entitled to
one vote per share.
<PAGE>
QUORUM
The By-laws of the Company provide that holders of more than 50% of the
shares outstanding and entitled to vote must be represented at the Annual
Meeting either in person or by proxy.
ADJOURNED MEETING
If a quorum is not present at the scheduled time of the Annual Meeting,
the stockholders who are represented may adjourn the Annual Meeting until a
quorum is present. The time and place of the adjourned Annual Meeting will
be announced at the time the adjournment is taken, and no other notice will
be given. An adjournment will have no effect on the business that may be
conducted at the Annual Meeting.
TABULATION OF VOTES
The votes will be tabulated and certified by an independent inspector of
election appointed by the Company.
RETURNING YOUR PROXY CARD
A proxy will not be valid unless the completed enclosed proxy card is
received by the Company, c/o MacKenzie Partners, Inc., 156 Fifth Avenue, New
York, New York, 10010, prior to commencement of the Annual Meeting. If the
enclosed proxy card is properly executed and returned to the Company, then
your shares will be voted in accordance with the instructions contained
therein.
Any stockholder who executes and returns a proxy may revoke it at any
time before it is voted at the Annual Meeting by: (i) delivering written
notice of such revocation to the Company (attention: Corporate Secretary)
prior to the commencement of the Annual Meeting; (ii) submitting a duly
executed proxy bearing a later date which relates to the same shares; or
(iii) attending and voting such shares at the Annual Meeting. Mere
attendance at the Annual Meeting will not, in and of itself, revoke an
otherwise valid proxy.
Whether or not you attend the Annual Meeting, your vote is important.
Accordingly, you are urged to sign and return the accompanying proxy card
regardless of the number of shares you own. Shares can be voted at the
Annual Meeting only if the holder is present or represented by proxy.
VOTE REQUIRED AND METHOD OF COUNTING VOTES
With respect to Proposal 1 (the election of directors), stockholders may
vote in favor of all nominees, withhold their votes as to all nominees, or
withhold their votes as to specific nominees. Checking the box on the proxy
card that withholds authority to vote for a nominee is the equivalent of
abstaining. The five nominees who receive the greatest number of votes cast
for the election of directors by shares entitled to vote and present in
person or by proxy at the Annual Meeting will be elected directors. In an
uncontested plurality election such as this, abstentions have no effect,
since approval by a percentage of the shares present or outstanding is not
required.
With respect to Proposal 2 (the ratification of independent auditors),
stockholders may vote in favor of the proposal, against the proposal, or
abstain from voting. The affirmative vote of the majority of shares present
in person or by proxy and entitled to vote at the Annual Meeting is required
for approval of Proposal 2. A stockholder who signs and submits a ballot or
proxy is "present," so an abstention will have the same effect as a vote
against Proposal 2.
Brokers who hold shares for the accounts of their clients may vote such
shares either as instructed by their clients or, if no instructions are
received, in their own discretion if permitted by the stock exchange or other
organization of which they are members. Members of the New York Stock
Exchange are permitted to vote a client's proxy in their own discretion as to
the election of directors and ratification of independent auditors (each, a
"discretionary proposal") if their client has not furnished them with voting
instructions prior to the Annual Meeting. When a broker is empowered by a
client to vote that client's shares on some but not all of the proposals at a
meeting, the missing votes are referred to as "broker non-votes." Those
shares will be included in determining the presence of a quorum at the Annual
Meeting. Broker non-votes will not, however, be considered "present" for
purposes of voting on any non-discretionary proposal, and they will therefore
have no impact on the outcome of such proposals.
If you sign the proxy card but do not make specific choices, the proxy
holder will vote your shares as recommended by the Board of Directors as
follows:
- "FOR" the election of all nominees for directors, and
- "FOR" ratification of the selection of independent auditors.
2
<PAGE>
If any other business properly comes before the stockholders for a vote at
the Annual Meeting, your shares will be voted in accordance with the
discretion of the holders of the proxy.
QUESTIONS CONCERNING YOUR PROXY
If you have any questions regarding your proxy, or need assistance in
voting your shares, please call MacKenzie Partners, Inc., who is assisting
the Company in this solicitation, at the address or telephone numbers set
forth below:
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, New York 10010
Call toll-free: (800) 332-2885 or (212) 929-5500
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of September 28,
1999 regarding the beneficial ownership of Common Stock by (A) each person
known by the Company to own beneficially more than five percent of the Common
Stock, (B) each director and director nominee of the Company, (C) each of the
"Named Executive Officers" (as defined in "Executive Compensation--Summary
Compensation Table"), and (D) all executive officers, directors and director
nominees of the Company as a group. Unless otherwise indicated, the address
of each person named in the table below is c/o Puroflow Incorporated, 16559
Saticoy Street, Van Nuys, California 91406.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE
BENEFICIALLY BENEFICIALLY
NAME OWNED(1) OWNED
- ---- -------- -----
<S> <C> <C>
Steel Partners II, L.P............................ 1,416,000(2) 17.4%
Warren G. Lichtenstein**.......................... 1,416,000(2) 17.4%
Reuben M. Siwek+.................................. 570,250(3) 7.0%
David S. Nagelberg................................ 459,350(4) 5.7%
Michael H. Figoff**............................... 355,000(5) 4.3%
George Solymar.................................... 334,650(6) 4.1%
Robert A. Smith**................................. 238,000(7) 2.9%
Dale Livingston................................... 211,800(8) 2.6%
Dr. Tracy Kent Pugmire**.......................... 40,000(9) *
Wayne Conner...................................... 32,000(10) *
Robert Frankfurt**................................ 0(2) 0
Steven Wolosky+................................... 0(2) 0
All directors, director nominees and executive
officers as a group (nine persons)................ 2,853,050 34.5%
</TABLE>
- ------------------
* Less than 1%.
** Denotes nominee for election as director at the Annual Meeting.
+ Denotes director who is not standing for re-election at the Annual Meeting.
(1) As used in this table, a beneficial owner of a security includes any
person who, directly or indirectly, through contract, arrangement,
understanding, relationship or otherwise has or shares (i) the power to
vote, or direct the voting of, such security or (ii) investment power
which includes the power to dispose, or to direct the disposition of,
such security. In addition, a person is deemed to be the beneficial
owner of a security if that person has the right to acquire beneficial
ownership of such security within 60 days of the date shown above.
(2) Based upon a Schedule 13D, and the amendments thereto, filed with the
Securities and Exchange Commission (the "Commission") by the Steel
Parties. The business address of Steel Partners and Messrs. Lichtenstein
and Frankfurt is 150 East 52nd Street, 21st Floor, New York, New York
10020. The business address of Mr. Wolosky is c/o Olshan Grundman Frome
Rosenzweig & Wolosky LLP, 505 Park Avenue, New York, New York 10022.
3
<PAGE>
(3) Includes (a) options to purchase 44,000 shares of Common Stock, all of
which are fully vested, and (b) 70,000 shares of Common Stock owned by
Mr. Siwek's spouse. Mr. Siwek disclaims beneficial ownership of the
shares owned by his spouse.
(4) Based upon a Schedule 13G filed with the Commission by Mr. Nagelberg.
Includes 99,250 shares owned by The Nagelberg Family Trust over which Mr.
Nagelberg and his spouse, as trustees, share voting and dispositive
power. The business address of Mr. Nagelberg is c/o M.H. Meyerson & Co.,
Inc., P.O. Box 2142, Rancho Santa Fe, California 92067-2142.
(5) Includes (a) options to purchase 44,000 shares of Common Stock, all of
which are fully vested, and (b) 8,000 shares of Common Stock owned by Mr.
Figoff's spouse. Mr. Figoff disclaims beneficial ownership of the shares
owned by his spouse.
(6) The business address of Mr. Solymar is 2203 Crescent Avenue, Montrose,
California 91020.
(7) Includes (a) options to purchase 28,000 shares of Common Stock, all of
which are fully vested, and (b) 10,000 shares of Common Stock owned
jointly by Mr. Smith and his spouse.
(8) Includes options to purchase 23,000 shares of Common Stock, all of which
are fully vested.
(9) Includes options to purchase 19,000 shares of Common Stock, all of which
are fully vested.
(10) Includes options to purchase 12,000 shares of Common Stock, all of which
are fully vested.
PROPOSAL 1: ELECTION OF DIRECTORS
Directors of the Company are elected annually at the annual meeting of
stockholders. Their respective terms of office continue until their
successors have been duly elected and qualified in accordance with the
Company's By-laws. There are no family relationships among any of the
directors or executive officers of the Company.
On September 16, 1999, pursuant to the terms of the Settlement Agreement
and the Company's By-laws, the then existing Board of Directors of the
Company increased the size of the Board from four to seven directors, and
filled the vacancies on the Board that were created by such expansion by
appointing three representatives of Steel Partners to the Board. Those
representatives were Warren G. Lichtenstein, Robert Frankfurt and Steven
Wolosky. In addition, pursuant to the terms of the Settlement Agreement and
the Company's By-laws, on September 16, 1999, the newly constituted seven
member Board of Directors agreed to decrease the number of persons to serve
on the Board after the Annual Meeting from seven to five. The Board then
nominated Michael H. Figoff, Robert A. Smith, Dr. Tracy Kent Pugmire, Warren
G. Lichtenstein and Robert Frankfurt for election to the Board at the Annual
Meeting. Reuben M. Siwek and Steven Wolosky have agreed not to stand for
re-election to the Board of Directors, although Mr. Siwek will serve as
Chairman-Emeritus of the Board following the Annual Meeting. At the Annual
Meeting, five directors are to be elected to serve for a term of one year and
until their respective successors are duly elected and qualified.
The designated representatives named in the enclosed proxy card intend
to vote for the election to the Board of Directors of each of the five
nominees named in the table below to serve until the 2000 Annual Meeting of
Stockholders and until their successors shall be duly elected and qualified,
unless the proxy card is marked to expressly indicate otherwise. Should any
of such nominees be unable or unwilling to accept such election (which the
Board of Directors does not anticipate), then the designated representatives
named in the enclosed proxy card will vote for the election of such other
persons as the Board of Directors may recommend, all in accordance with the
terms of the Settlement Agreement. Proxies cannot be voted for a greater
number of persons than the number of nominees named.
4
<PAGE>
INFORMATION CONCERNING DIRECTORS, DIRECTOR NOMINEES AND EXECUTIVE OFFICERS
The following table sets forth information regarding the directors, the
director nominees and the executive officers of the Company as of September
28, 1999. Reuben M. Siwek and Steven Wolosky, each currently a director of
the Company, will not stand for re-election.
<TABLE>
<CAPTION>
NAME AGE POSITIONS WITH THE COMPANY
---- --- --------------------------
<S> <C> <C>
Reuben M. Siwek(1)........... 79 Chairman of the Board of Directors
Michael H. Figoff(2)......... 56 Director, Chief Executive Officer and President
Robert A. Smith(2)........... 58 Director
Dr. Tracy Kent Pugmire(2).... 68 Director
Warren G. Lichtenstein(2).... 34 Director
Robert Frankfurt(2).......... 33 Director
Steven Wolosky(1)............ 43 Director
Wayne Conner................. 51 Vice President of Engineering
Dale Livingston.............. 60 Vice President of Operations
</TABLE>
- ------------------------
(1) Indicates current member of the Board of Directors not standing for
re-election at the Annual Meeting.
(2) Indicates current member of the Board of Directors standing for
re-election at the Annual Meeting.
The business experience of each of the persons listed above for at least
the last five years is as follows:
REUBEN M. SIWEK has served as Chairman of the Board of Directors of the
Company since January 1992, and as a member of the Board of Directors since
January 1982. Mr. Siwek is a self-employed attorney and has practiced law
for more than 48 years. Mr. Siwek has also been a certified public accountant
for more than 55 years.
MICHAEL H. FIGOFF has served as President and Chief Executive Officer
and Director of the Company since May 1995. Mr. Figoff joined the Company in
1988 and has previously served as its Executive Vice President and Director
of Marketing. Prior to joining the Company, Mr. Figoff served in various
capacities with Lockheed Martin, Textron, Fairchild and Ferranti
International.
ROBERT A. SMITH has served as a Director of the Company since July 1994.
Mr. Smith has been President of Microsource Inc., a subsidiary of
Giga-tronics, since October 1998. Previously, Mr. Smith served as President
of the Industrial Products Group of Haskel International Inc. from February
1995 to January 1998; President and Chief Executive Officer of Industrial
Tools Inc. from January 1994 to February 1995; President of Engineered
Filtration Company from October 1992 to January 1994; President of Puroflow
Corporation, a wholly-owned subsidiary of the Company, 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 as General Manager of the Filter Division of HR Textron Inc.
from 1964 to 1980.
DR. TRACY KENT PUGMIRE has served as a Director of the Company since
June 1991. Since April 1992, Dr. Pugmire has served as an independent
technical consultant. Dr. Pugmire currently provides consulting services to
Spincraft, a Division of Standex International, and is involved with the
design and fabrication of the X-33 and X-34 rocket vehicles. Previously, Dr.
Pugmire was Executive Vice President of ARDE Inc. and worked as a Program
Manager for several companies, including TRW Space Systems Division, Technion
Inc., AVCO Missile and Space Systems (now a division of Textron), General
Electric Space Sciences Laboratory, and Boeing Propulsion and Mechanical
Systems Department.
WARREN G. LICHTENSTEIN has served as a Director of the Company since
September 16, 1999. 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, since January 1, 1996. Prior to such
time, Mr. Lichtenstein was the Chairman and a director of Steel Partners,
Ltd. ("Steel Ltd."), the general partner of Steel Partners Associates, L.P.,
which was the general partner of Steel Partners from 1993 until prior to
January 1, 1996. 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., WebFinancial Corp., PLM International,
Inc., CPX Corp., Tech-Sym Corporation 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 in April
1999.
5
<PAGE>
In late 1995, Steel Partners commenced a proxy solicitation to replace
the incumbent directors of Medical Imaging Centers of America, Inc. ("MICA").
Thereafter, MICA initiated an action against Steel Partners, Warren
Lichtenstein and others in the United States District Court for the Southern
District of California, Medical Imaging Centers of America, Inc. v.
Lichtensein, 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, as amended (the "Exchange Act"). 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 Partners 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 Partners would assume
control of the Board of MICA. MICA was ultimately sold for $11.75 per share,
as contrasted with a price of $8.25 per share, which was the closing price
of MICA's common stock on the day prior to the initiation of Steel Partners'
proxy solicitation.
ROBERT FRANKFURT has served as a Director of the Company since September
16, 1999. Mr. Frankfurt joined Steel Ltd. in 1995 and became a non-managing
member of Steel LLC in 1996. Mr. Frankfurt concurrently served as President
of MDM Technologies during 1997 and 1998.
STEVEN WOLOSKY has served as a Director of the Company since September
16, 1999. 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 New York Stock
Exchange listed company and a director of CPX Corp.
WAYNE CONNER has over 30 years of filtration experience and has been the
Vice President of Engineering of the Company since July 1997. From 1990 to
1994, Mr. Conner served as Senior Project Engineer--New Product Development,
for the Hydraulic Filter Division of Parker Hannifin Corporation. Mr. Conner
has also served in various capacities with Purolator Technologies Inc.
DALE LIVINGSTON has been the Vice President of Operations of the Company
since February 1998. From August 1995 until February 1998, Mr. Livingston
served as Director of Operations of the Company, and from October 1989 until
August 1995, he served as Production Manager of the Company. Mr. Livingston
previously served in various capacities with Parker Hannifin Corporation,
Hydraulic Research/Textron, Talley Corporation, The Marquardt Company and
Teleflex Control Systems.
Each of the director 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.
VOTE REQUIRED
Approval of Proposal 1 to elect five directors requires the affirmative
vote of a plurality of the shares of Common Stock represented in person or by
proxy at the Annual Meeting. The five director nominees are Michael H.
Figoff, Robert A. Smith, Dr. Tracy Kent Pugmire, Warren G. Lichtenstein and
Robert Frankfurt. The Board of Directors recommends that stockholders vote
FOR each of these five director nominees.
INFORMATION CONCERNING MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES AND
DIRECTOR COMPENSATION
The business affairs of the Company are managed under the direction of
the Board of Directors. Members of the Board are informed about the
Company's affairs through presentations, reports and documents distributed to
them, through operating and financial reports routinely presented at meetings
of the Board of Directors and committee meetings, and through other means.
In addition, directors of the Company discharge their duties throughout the
year not only by attending meetings of the Board of Directors but also
through personal meetings and other communications, including telephone
contact with management and others regarding matters of interest and concern
to the Company.
During the fiscal year ended January 31, 1999, the Company's Board of
Directors held two meetings and acted by unanimous written consent six times.
Each director attended at least 75% of the Board meetings and committee
meetings held during the fiscal year ended January 31, 1999.
6
<PAGE>
BOARD COMMITTEES
The Board of Directors has a standing Audit Committee, which met once
during the fiscal year ended January 31, 1999, and a Compensation Committee,
which met one time during the fiscal year ended January 31, 1999. The Audit
and Compensation Committees do not meet on a regular basis, but only as
circumstances require. The members of the Audit and Compensation Committees
are appointed by the Board of Directors. The Company does not currently have
a nominating committee. Nominations to the Board of Directors are made by
the entire Board.
AUDIT COMMITTEE. The Audit Committee recommends to the Board of
Directors the firm to be selected each year as independent auditors of the
Company's financial statements and to perform services related to such audit.
The Audit Committee also has responsibility for (i) reviewing the scope and
results of the audit with the independent auditors, (ii) reviewing the
Company's financial condition and results of operations with management,
(iii) considering the adequacy of the internal accounting, bookkeeping and
control procedures of the Company, and (iv) reviewing any non-audit services
and special engagements to be performed by the independent auditors and
considering the effect of such performance on the auditors' independence.
The current members of the Audit Committee are Messrs. Smith and Siwek and
Dr. Pugmire. A new Audit Committee will be elected by the Board of Directors
after the Annual Meeting.
COMPENSATION COMMITTEE. The Compensation Committee recommends to the
Board of Directors compensation of the Company's executive officers and other
key personnel, reviews new or existing employee compensation programs and
periodically reviews management perquisites and other benefits. The current
members of the Compensation Committee are Messrs. Siwek and Smith. A new
Compensation Committee will be elected by the Board of Directors after the
Annual Meeting.
DIRECTOR COMPENSATION
Each outside director of the Company receives a $2,500 annual fee, plus
$300 for each formal meeting attended. Directors are also reimbursed for
reasonable expenses actually incurred in connection with attending each
formal meeting of the Board of Directors or any committee thereof. The
Company's outside directors are currently Messrs. Siwek, Smith, Lichtenstein,
Frankfurt and Wolosky and Dr. Pugmire. If all of the director nominees are
elected at the Annual Meeting, the Company's outside directors will be
Messrs. Smith, Lichtenstein and Frankfurt and Dr. Pugmire.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and persons who beneficially own more than 10% of the
Company's Common Stock (collectively, the "Reporting Persons") to file with
the Commission (and, if such security is listed on a national securities
exchange, with such exchange), various reports as to ownership of such Common
Stock. Such Reporting Persons are required by Commission regulations to
furnish the Company with copies of all Section 16(a) reports they file.
Based solely upon a review of copies of Section 16(a) reports and
representations received by the Company from Reporting Persons, and without
conducting any independent investigation of its own, the Company believes
that no Reporting Person failed to timely file Forms 3, 4 and 5 with the
Commission during the fiscal year ended January 31, 1999.
7
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following summary compensation table sets forth the aggregate
compensation paid to or earned by the President and Chief Executive Officer
of the Company and the four most highly compensated executive officers of the
Company (other than the President and Chief Executive Officer) whose total
annual salaries and bonuses exceeded $100,000 for the year ended January 31,
1999 (the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
------------------------------- SECURITIES
FISCAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS/SARS COMPENSATION $(1)
- --------------------------- ---- --------- -------- ------------ -----------------
<S> <C> <C> <C> <C> <C>
Michael H. Figoff 1999 160,875 -- -- 19,827
President and Chief 1998 158,125 -- -- 18,559
Executive Officer......... 1997 142,417 -- -- 15,975
Wayne Conner 1999 98,458 10,000 5,000 6,469
Vice President of 1998 91,245 10,000 10,000 5,880
Engineering............... 1997 86,000 -- -- --
Dale Livingston 1999 94,292 5,000 5,000 5,093
Vice President of 1998 89,083 16,000 10,000 3,000
Operations................ 1997 -- -- -- --
</TABLE>
- ----------------------------
(1) Represents Company-reimbursed automobile expenses of such executive and
life and disability insurance premiums paid by the Company.
OPTION/SAR GRANTS IN FISCAL YEAR
The following table sets forth certain information concerning individual
option grants during the fiscal year ended January 31, 1999 to each of the
Named Executive Officers.
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/SARS EMPLOYEES IN EXERCISE PRICE EXPIRATION
NAME GRANTED FISCAL YEAR PER SHARE DATE
- ---- ------- ----------- --------- ----
<S> <C> <C> <C> <C>
Michael H. Figoff........ 0 -- -- --
Wayne Conner............. 5,000 14.286 $0.81 7/9/03
Dale Livingston.......... 5,000 14.286 $0.81 7/9/03
</TABLE>
8
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table provides certain information regarding stock option
ownership and exercises by the Named Executive Officers, as well as the
number and assumed value of exercisable and unexercisable options held by
those persons at January 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF
SHARES NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN
ACQUIRED VALUE UNEXERCISED OPTIONS/SARS THE MONEY OPTIONS/SARS
NAME ON EXERCISE REALIZED($) AT 1/31/99 AT 1/31/99($)(1)
- ---- ----------- ----------- ------------------------------- ----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael H. Figoff......... 100,000 25,000 44,000 11,000 $39,864 $9,966
Wayne Conner.............. 0 -- 12,000 13,000 10,872 13,778
Dale Livingston........... 0 -- 9,800 13,200 8,879 11,959
</TABLE>
- ---------------------------
(1) Value of unexercised "in-the-money" options is equal to the difference
between the closing bid price per share of the Common Stock on the OTC
Bulletin Board at January 31, 1999 ($0.906) and the option exercise
price per share multiplied by the number of shares subject to options.
EMPLOYMENT AGREEMENTS
On March 1, 1993, the Company entered into an employment agreement with
Michael H. Figoff pursuant to which Mr. Figoff agreed to serve as the
Executive Vice President of the Company for a term of five years at an annual
base salary of $95,000. Effective February 14, 1994, Mr. Figoff's annual
base salary was increased to $104,500. Mr. Figoff was appointed President of
the Company in February 1995, and was appointed President and Chief Executive
Officer in May 1995. In April 1997, Mr. Figoff's annual base salary was
increased to $165,000. On June 9, 1998, the Company extended Mr. Figoff's
employment agreement for a term of five years at an annual base salary of
$165,000.
1991 INCENTIVE STOCK OPTION PLAN
In 1991, the Board of Directors adopted and the stockholders approved
the 1991 Incentive Stock Option Plan (the "1991 Option Plan"). Under the
1991 Option Plan, the maximum number of shares of Common Stock that may be
subject to options may not exceed an aggregate of 500,000 shares. The
maximum number of shares may be adjusted in certain events, such as a stock
split, reorganization or recapitalization. Employees (including officers and
directors who are employees) of the Company or its subsidiaries are eligible
for the grant of incentive options under the 1991 Option Plan. Directors who
are not employees or officers are not eligible to receive incentive stock
options, but may receive non-qualified options. Options may also be granted
to other persons, provided that such options shall be non-qualified options.
In the event of incentive options, the aggregate fair market value of the
Common Stock with respect to which such options become first exercisable by
the holder during any calendar year cannot exceed $100,000. This limit does
not apply to non-qualified options. To the extent an option that otherwise
would be an incentive option exceeds this $100,000 threshold, it will be
treated as a non-qualified option.
The Company will receive no monetary consideration for the grant of
options under the 1991 Option Plan. In the case of an incentive option, the
exercise price cannot be less than the fair market value (as defined in the
1991 Option Plan) of the Common Stock on the date the option is granted and,
if an optionee is a stockholder who beneficially owns 10% or more of the
outstanding Common Stock, the exercise price of incentive options may not be
less than 110% of the fair market value of the Common Stock. The term of an
option cannot exceed ten years and, in the case of an optionee who owns 10%
or more of the outstanding Common Stock, cannot exceed five years.
The 1991 Option Plan will terminate automatically and no options may be
granted more than ten years after the date the 1991 Option Plan was approved
by the Board of Directors. The 1991 Option Plan may be terminated at any
prior time by the Board of Directors. Termination of the 1991 Option Plan
will not affect options that were granted prior to the termination date.
As of August 30, 1999, options to purchase an aggregate of 257,500
shares of Common Stock were outstanding under the 1991 Option Plan. In
addition, as of August 30, 1999, non-plan options to purchase 119,000 shares
of Common Stock were also outstanding.
9
<PAGE>
RECENT BOARD ACTIONS
ADOPTION OF RIGHTS PLAN
On May 28, 1999, the Board of Directors of the Company adopted a
Stockholders Rights Plan (the "Rights Plan") because the Board of Directors
believed the Company was vulnerable to hostile takeover attempts which may
not be in the best interests of stockholders, including the unsolicited and
unwelcome attempt to gain control of the Company by Steel Partners, which
organized The Full Value Committee. The Plan is designed to protect the
Company and its stockholders from the coercive and unfair tactics often
employed in hostile takeover attempts, such as unsolicited offers to acquire
the Company, including offers that do not treat all stockholders equally, the
acquisition in the open market of shares constituting control without
offering fair value to all stockholders, and other coercive or unfair
takeover tactics that could impair the Board's ability to represent
stockholders' interests fully. The Plan seeks to ensure that any attempt to
acquire stock in the Company would take place under circumstances where the
Board of Directors could attempt to secure the best available price and
structure a transaction which would most benefit all of the Company's
stockholders.
The Plan provides for a dividend distribution of one right
(collectively, the "Rights") to stockholders of record on June 7, 1999 to
purchase shares of a new series of preferred stock (or, in certain
circumstances, common stock or other consideration) at a heavily discounted
rate.
The Rights become exercisable if, after May 28, 1999, a stockholder or
stockholder group becomes the beneficial owner of 20% (pursuant to the terms
of the Settlement Agreement, the beneficial ownership percentage threshold
has been increased from 17.5% to 20%, as more fully described below) or more
of the outstanding shares of Common Stock of the Company, or ten days after
the announcement of a tender offer intended to achieve beneficial ownership
totaling 20% or more of the Company, provided certain other conditions are
met. The Board of Directors had initially selected a beneficial ownership
threshold of 17.5% of the outstanding shares of Common Stock of the Company
as the triggering point for the Rights because it believed that 17.5% was
within the range of ownership percentages typically chosen by other companies
in similar rights plans. In addition, the Board of Directors adopted the
17.5% threshold, and not a lower threshold, because according to the
Company's records, Steel Partners at the time already owned 16.5% of the
Company's outstanding shares of Common Stock (Steel Partners currently owns
17.3% of the Common Stock), and the Board did not want the Plan to become
immediately triggered upon its adoption.
On September 16, 1999, pursuant to the terms of the Settlement
Agreement, the Company agreed, among other things, to amend the Rights Plan
to increase the beneficial ownership threshold that will trigger the Rights
from 17.5% to 20%. On September 16, 1999, the Company entered into Amendment
No. 1 to the Rights Plan with Continental Stock Transfer & Trust Company, as
rights agent, pursuant to which such beneficial ownership threshold was
changed from 17.5% to 20%. For more information regarding the Settlement
Agreement, see "Litigation--Settlement of Proxy Contest and Lawsuits."
The Rights are available to be exercised by all stockholders, except for
the directors of the Company and the stockholder or stockholder group
beneficially owning 20% or more of the Company's outstanding shares of Common
Stock.
The Rights may have certain negative effects, including a reduction in
the trading value of the Common Stock. In addition, the Rights have certain
anti-takeover effects but will not prevent a takeover of the Company. The
Rights may deter an attempt to acquire the Company in a manner or on terms
that the Board of Directors determines not to be in the best interests of the
stockholders, even if such terms include a premium for the Common Stock and
are favored by some or a majority of stockholders. The Rights should not
interfere with a negotiated merger or other business combination approved by
the Board of Directors since the Company may redeem the Rights for $0.001 per
Right, in whole but not in part, in certain circumstances. If the Rights do
not become exercisable or are not redeemed by the Board, they will expire on
May 28, 2001.
The complete text of the Rights Plan was filed as an exhibit to the
Company's Report on Form 8-K filed with the Commission on June 2, 1999, as
amended by the Company's Current Report on Form 8-K filed with the Commission
on September 22, 1999.
STRATEGIC OBJECTIVES
Simultaneously with its announcement of the adoption of the Rights Plan,
the Company also announced that it was consulting with an investment banking
firm to assist the Board of Directors in evaluating strategic alternatives
designed to increase profitability and enhance stockholder value. While the
Company has consulted with investment banks, it has thus far been
unsuccessful in retaining an investment bank to advise it either because the
Company is too small to interest an investment bank or because the Company
has been unable to agree on the terms of engagement offered by the investment
banks with which it has thus far spoken. Among the alternatives the Company
would consider are strategic acquisitions of businesses or product lines
which would complement the Company's existing business lines and create
economies of scale.
10
<PAGE>
The Company is also focusing on ways to expand its international business
operations. The Board of Directors does not currently contemplate a sale of
the Company and believes at the present time that a sale of the Company would
be premature. However, the Board would, consistent with its fiduciary
responsibilities, consider any transaction which it believes to be in the best
interests of stockholders. As of the date hereof, the Company has not entered
into any negotiations with potential acquisition or merger candidates.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On August 14, 1998, the Board of Directors adopted a stock purchase plan
pursuant to which directors, officers and employees of the Company were
given the opportunity to purchase up to an aggregate of 1,000,000 restricted
shares of Common Stock at a purchase price of $0.75 per share (the "Stock
Purchase Plan"). On August 19, 1998, each of Messrs. Siwek, Smith, Figoff
and Livingston (the "Purchasers") purchased 200,000 shares of Common Stock
pursuant to the Stock Purchase Plan. The purchase price paid by each of the
Purchasers was $150,000. Of the total purchase price paid by each of the
Purchasers, $30,000 was paid in cash and $120,000 was paid by the execution
and delivery of a three-year full recourse promissory note bearing interest
at the rate of 5% per annum, payable in quarterly installments. The shares
of stock purchased are pledged as collateral security for the full payment of
the promissory note portion of the purchase price.
Reuben M. Siwek, the Chairman of the Board of Directors of the Company,
renders legal services to the Company. The Company incurred expenses of
approximately $83,078, $66,250 and $62,033 during the fiscal years ended
January 31, 1999, 1998 and 1997, respectively, for legal services rendered by
Mr. Siwek.
PROPOSAL 2: RATIFICATION OF INDEPENDENT AUDITORS
Rose, Snyder & Jacobs has acted as the independent auditors of the
Company since November 1995, and has acted in such capacity in connection
with the preparation of the Company's audited consolidated financial
statements for the year ended January 31, 1999 and the report contained
therein, which is included in the Company's Annual Report to Stockholders
accompanying this Proxy Statement. As independent auditors for the Company,
Rose, Snyder & Jacobs is responsible for auditing the accounts of the Company
and providing other audit and accounting services to the Company in
connection with filings with the Commission.
In June 1999, the Board of Directors approved the appointment of Rose,
Snyder & Jacobs as the Company's independent auditors for the year ending
January 31, 2000. The stockholders are being asked to ratify the appointment
of Rose, Snyder & Jacobs as independent auditors for the year ending January
31, 2000, and to authorize the Board of Directors to fix their remuneration.
A representative of Rose, Snyder & Jacobs is expected to be present at the
Annual Meeting and available to respond to appropriate questions. Such
representative also will have the opportunity, if desired, to make a
statement to the stockholders.
REQUIRED AFFIRMATIVE VOTE
Ratification of the appointment of Rose, Snyder & Jacobs as independent
auditors of the Company for the year ending January 31, 1999 requires the
affirmative vote of holders of a majority of the shares of Common Stock
represented in person or by proxy at the Annual Meeting. The Board of
Directors unanimously recommends that the stockholders vote FOR Proposal 2.
LITIGATION
GENERAL
On May 3, 1999, Steel Partners commenced an action in the United States
District Court for the District of Delaware against the Company and each
member of its Board of Directors in which it was alleged that the Company had
filed false and misleading proxy materials for the purpose of soliciting
votes at a proposed annual meeting of the Company. Steel Partners' complaint
also alleged that the Company had sold shares of Common Stock to the
Purchasers in August 1998 at a discount to the then market price of the stock
for the sole purpose of entrenching the Board of Directors.
On June 4, 1999, the Company commenced an action in the Superior Court
of the State of California for the County of Los Angeles against the Steel
Parties in which the Company charged the Steel Parties with interfering with
the Company's current and prospective relationships and the economic benefits
arising therefrom by making false statements. These statements included a
statement allegedly made by the defendants, through Mr. Lichtenstein, to a
competitor of the Company that the defendants owned in excess of 55% of the
Company's outstanding Common Stock and that the Company was for sale. It was
alleged that these statements were intended to disrupt the Company's
relationships with its lenders, current and potential customers and
suppliers.
11
<PAGE>
SETTLEMENT OF PROXY CONTEST AND LAWSUITS
On September 16, 1999, the Company and Reuben M. Siwek, Michael H.
Figoff, Robert A. Smith and Dr. Tracy Kent Pugmire entered into the
Settlement Agreement with the Steel Parties pursuant to which the Steel
Parties agreed to cease their solicitation of proxies for their own proposed
slate of directors at the Annual Meeting in exchange for, among other things,
Board representation. Pursuant to the terms of the Settlement Agreement,
which by its terms will expire after the 2000 annual meeting of stockholders
(which will be called on or before July 31, 2000), and the Company's By-laws,
on September 16, 1999, the then existing Board of Directors of the Company
increased the size of the Board from four to seven directors, and filled the
vacancies on the Board that were created by such expansion by appointing
three representatives of Steel Partners to the Board. Those representatives
were Warren G. Lichtenstein, Robert Frankfurt and Steven Wolosky. In
addition, pursuant to the terms of the Settlement Agreement and the Company's
By-laws, on September 16, 1999, the newly constituted seven member Board of
Directors agreed to decrease the number of persons to serve on the Board
after the Annual Meeting from seven to five. The Board then nominated Michael
H. Figoff, Robert A. Smith, Dr. Tracy Kent Pugmire, Warren G. Lichtenstein
and Robert Frankfurt for election to the Board at the Annual Meeting. Reuben
M. Siwek and Steven Wolosky agreed not to stand for re-election to the Board
of Directors, although Mr. Siwek will serve as Chairman-Emeritus of the Board
following the Annual Meeting. The Board of Directors and Steel Partners each
agreed to vote their shares of the Company's Common Stock in favor of the new
five-person slate of nominees to be presented at the Annual Meeting. The
Company and Steel Partners also agreed to dismiss their respective lawsuits
against one another in California and Delaware, without prejudice. The
Company also amended the Rights Plan on September 16, 1999 to increase the
beneficial ownership threshold that will trigger the Rights from 17.5% to
20%. The Company further agreed to reimburse Steel Partners for actual
out-of-pocket expenses incurred by Steel Partners for outside services in
connection with its previous solicitation of proxies, the maintenance and
defense of the lawsuits in Delaware and California, respectively, and the
preparation of the Settlement Agreement, up to $50,000.
STOCKHOLDER PROPOSALS
Proposals submitted for consideration at any future meeting of
stockholders must comply with Rules 14a-8 and 14a-4(c) promulgated by the
Commission pursuant to the Exchange Act. Stockholder proposals requested to
be included in the Company's Proxy Statement for the 2000 Annual Meeting of
Stockholders must comply with Rule 14a-8 and must be received by the Company
at its principal executive offices, 16559 Saticoy Street, Van Nuys,
California 91406 (Attn: Corporate Secretary), no later than April 3, 2000 to
be included in the Company's Proxy Statement for the 2000 Annual Meeting of
Stockholders. The Company has chosen April 3, 2000 because it is 120 days
prior to July 31, 2000, the date the Company is obligated to call the 2000
Annual Meeting of Stockholders under the terms of the Settlement Agreement.
Rule 14a-4(c)(1) governs a company's use of its discretionary proxy
voting authority with respect to a stockholder proposal that is not addressed
in a company's proxy statement. Under this rule, if a proponent of a
proposal fails to notify a company at least 45 days prior to the month and
day of mailing of the prior year's proxy statement, or, if a company's annual
meeting date has changed by more than 30 days from the prior year, within
such other reasonable time frame (the "Notice Date"), the company will be
allowed to use its discretionary voting authority when the proposal is raised
at the meeting, even if that proposal is not discussed in the company's proxy
statement. If notice of a proposal is timely received by the company, then
under Rule 14a-4(c)(2), the company may exercise its discretionary proxy
voting authority on such proposal if the company includes a discussion of the
proposal in its proxy statement and discloses therein how it intends to vote
on the matter. Notwithstanding the previous sentence, a company may not
exercise its discretionary proxy voting authority if the proponent of such
proposal notifies the company of its intent to solicit proxies for such
proposal and in fact delivers a proxy statement to stockholders in connection
therewith.
The Company has established June 17, 2000 as the Notice Date for the
2000 Annual Meeting of Stockholders because it is 45 days prior to July 31,
2000, the date the Company is obligated to call the 2000 Annual Meeting of
Stockholders under the terms of the Settlement Agreement.
OTHER MATTERS
The Company had not received any notice of a stockholder proposal prior
to the mailing of this Proxy Statement, and the Board of Directors does not
know of any other matters that are to be presented for consideration at the
Annual Meeting. Should any other matters properly come before the Annual
Meeting, including any proposal made by a stockholder, the persons named in
the accompanying proxy card or their substitutes will vote such proxy on
behalf of the stockholders they represent in accordance with their best
judgment, as permitted by Rule 14a-4(c).
12
<PAGE>
SOLICITATION OF PROXIES
Proxies are being solicited by and on behalf of the Board of Directors.
The Company will bear the costs of preparing and mailing the proxy materials
to its stockholders in connection with the Annual Meeting. The Company will
solicit proxies by mail and the directors and certain officers and employees
of the Company may solicit proxies personally or by telephone, facsimile or
telegraph. These persons will receive no additional compensation for such
services but will be reimbursed by the Company for reasonable out-of-pocket
expenses. The Company also will request brokers, dealers, banks and their
nominees to solicit proxies from their clients, where appropriate, and will
reimburse them for reasonable out-of-pocket expenses related thereto. In
addition, the Company has retained MacKenzie Partners, Inc. as proxy
solicitor to assist it in the solicitation of proxies for a fee of $7,500
(plus reimbursement of reasonable out-of-pocket expenses).
ADDITIONAL INFORMATION
The Company will make available to any stockholder, without charge, upon
a written request therefor, copies of the Company's Annual Report on Form
10-KSB for the year ended January 31, 1999. Any such request should be
directed to Puroflow Incorporated, 16559 Saticoy Street, Van Nuys, California
91406, Attention: Corporate Secretary.
FOR THE BOARD OF DIRECTORS
SANDY YOSHISATO
CORPORATE SECRETARY
Van Nuys, California
September 28, 1999
13
<PAGE>
- -------------------------------------------------------------------------------
If you have any questions or need assistance in voting your shares or
changing your vote, please contact:
MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL FREE (800) 322-2885
- -------------------------------------------------------------------------------
<PAGE>
PROXY
PUROFLOW INCORPORATED
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 21, 1999
The undersigned, revoking all other proxies previously given, hereby appoints
Michael H. Figoff and Warren G. Lichtenstein, and each of them individually
(with full power to act without the other and with power to appoint his
substitute), as the undersigned's proxies to represent and to vote all of the
shares of Common Stock of PUROFLOW INCORPORATED, a Delaware corporation (the
"Company"), held of record by the undersigned on August 30, 1999, at the Annual
Meeting of Stockholders to be held on October 21, 1999 at 10:00 a.m., local
time, at the offices of the Company, 16559 Saticoy Street, Van Nuys, California
91406, and at any and all adjournments or postponements thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2. IF ANY OTHER MATTERS ARE PROPERLY BROUGHT BEFORE
THE ANNUAL MEETING, THE PROXIES WILL VOTE ON THESE MATTERS AS THE PROXIES NAMED
HEREIN MAY DETERMINE IN THEIR SOLE DISCRETION.
PROPOSAL 1. Election of Directors
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED BELOW.
/ / FOR all nominees (The
nominees are Michael H.
Figoff, Robert A. Smith,
Dr. Tracy Kent Pugmire,
Warren G. Lichtenstein and
Robert Frankfurt)
/ / WITHHOLD AUTHORITY to vote
for all nominees
/ / FOR all nominees except as
listed below
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the line set forth below.)
- --------------------------------------------------------------------------------
PROPOSAL 2. Proposal to ratify the appointment of Rose, Snyder & Jacobs as
independent auditors of the Company for the year ending January 31,
2000, and to authorize the Board of Directors to fix their
remuneration.
/ / FOR / / AGAINST / / ABSTAINING
- --------------------------------------------------------------------------------
If any amendments or variations to the matters referred to above or to any other
matters identified in the Notice of Annual Meeting are proposed at the Annual
Meeting or any adjournments thereof, or if any other matters which are not now
known to management should properly come before the Annual Meeting or any
adjournments thereof, this Proxy confers discretionary authority on the person
voting the proxy to vote on such amendments or variations or such other matters
in accordance with the best judgment of such person.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders dated September 28, 1999, the Proxy Statement of the Company, dated
September 28, 1999, the accompanying form of Proxy and the Company's Annual
Report to Stockholders for the year ended January 31, 1999, each of which is
enclosed herewith.
<PAGE>
The undersigned hereby revokes any proxy to vote shares of Common Stock of the
Company heretofore delivered by the undersigned in connection with the Annual
Meeting.
Dated _______________________________
_____________________________________
Signature
_____________________________________
Signature, if held jointly
_____________________________________
Title (if applicable)
Please date, sign exactly as your
name appears on this Proxy and
promptly return in the enclosed
envelope. In the case of joint
ownership, each joint owner must
sign. When signing as guardian,
executor, administrator, attorney,
trustee, custodian, or in any other
similar capacity, please give your
full title. In the case of a
corporation, sign in full corporate
name by president or other authorized
officer, giving title, and affix
corporate seal. If a partnership,
sign in partnership name by an
authorized person.
