<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 specified
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
TOROTEL, INC.
-------------
(Name of Registrant as Specified in Its Charter)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/ / 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 transactions
applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/X/ Fee paid.
/ / 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>
TOROTEL, INC.
13402 SOUTH 71 HIGHWAY
GRANDVIEW, MISSOURI 64030
August 17, 2000
Dear Shareholder:
You are cordially invited to attend the annual meeting of the
shareholders of Torotel, Inc., a Missouri corporation (the "Corporation"), to be
held at 4:30 p.m. local time on Monday, September 18, 2000, at the Corporation's
offices in Grandview, Missouri, to transact business as set forth in the formal
notice that follows.
YOUR VOTE IS IMPORTANT. Whether or not you expect to attend the annual
meeting, please sign and date the accompanying Proxy and return it promptly in
the enclosed postage paid envelope. If you decide to attend the annual meeting,
you may revoke your Proxy and vote your shares in person.
As always, we appreciate your loyalty and support as a shareholder of
the Corporation.
Sincerely,
/s/ Dale H. Sizemore, Jr.
Dale H. Sizemore, Jr.
Chairman and Chief Executive Officer
<PAGE>
TOROTEL, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MONDAY, SEPTEMBER 18, 2000
TO THE SHAREHOLDERS OF TOROTEL, INC.:
NOTICE is hereby given that the annual meeting (the "Meeting") of the
shareholders of Torotel, Inc., a Missouri corporation (the "Corporation"), will
be held at 4:30 p.m. local time on Monday, September 18, 2000, at the
Corporation's offices in Grandview, Missouri, for the following purposes:
1. To elect three members to serve on the Board of
Directors of the Corporation until the next annual
meeting of shareholders and until their successors
have been duly elected and qualified, unless they
shall sooner die, resign or be removed;
2. To transact such other business as may properly come
before the Meeting or any postponement or adjournment
thereof.
Shareholders of record at the close of business on August 4, 2000, will
be entitled to receive notice of and to vote at the Meeting. The accompanying
Proxy is solicited by the Board of Directors. All of the above matters are more
fully described in the accompanying Proxy Statement, into which this Notice is
incorporated by reference.
Shareholders are cordially invited to attend the Meeting in person.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND DATE THE
ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
IF YOU DECIDE TO ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR
SHARES IN PERSON.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ H. James Serrone
H. James Serrone
Secretary of Torotel, Inc.
August 17, 2000
<PAGE>
TOROTEL, INC.
13402 SOUTH 71 HIGHWAY
GRANDVIEW, MISSOURI 64030
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MONDAY, SEPTEMBER 18, 2000
GENERAL INFORMATION
SECURITY HOLDERS ENTITLED TO VOTE
Holders of shares of common stock, par value $.50 per share (the
"Common Stock"), of Torotel, Inc., a Missouri corporation (the "Corporation"),
of record at the close of business on August 4, 2000 (the "Shareholders"), will
be entitled to vote at the annual meeting of the Shareholders to be held at 4:30
p.m. local time on Monday, September 18, 2000, at the Corporation's principal
executive offices in Grandview, Missouri, and at any subsequent time which may
be necessary by the postponement or adjournment thereof (the "Meeting"). The
Corporation's principal executive offices are located at 13402 South 71 Highway,
Grandview, Missouri 64030, and its telephone number is (816) 761-6314.
This Proxy Statement, together with the Notice of Annual Meeting, the
enclosed Proxy, and the accompanying 2000 Annual Report to Shareholders, were
initially distributed to the Shareholders on or about August 17, 2000.
If the enclosed Proxy is properly executed and returned prior to voting
at the Meeting, the shares represented thereby will be voted in accordance with
any specifications made therein. In the absence of instructions, the shares will
be voted "FOR" the nominees to the Board of Directors of the Corporation (the
"Directors," or the "Board of Directors") in the election of Directors, as more
fully described in the section herein entitled "Proposal One".
QUORUM
A majority of the outstanding shares of Common Stock entitled to be
voted as of the Record Date (as defined herein) at the Meeting, represented in
person or by Proxy, is necessary to constitute a quorum to transact business at
the Meeting. If a quorum is present, the three nominees for Director receiving
the greatest number of votes at the Meeting will be elected to the Board of
Directors.
ABSTENTIONS AND BROKER NON-VOTES
Abstentions and broker non-votes (which occur if a broker or other
nominee does not have discretionary authority and has not received voting
instructions from the beneficial owner with respect to a particular item) are
counted for purposes of determining the presence or absence of a quorum for the
transaction of business. Abstentions are counted in tabulations of the votes
cast on proposals presented to the Shareholders and have the same legal effect
as a vote against a particular proposal. Broker non-votes are not counted for
purposes of determining whether a proposal has been approved by the requisite
Shareholder vote. The Shareholders will not have dissenters' rights of appraisal
with respect to any of the actions to be taken at the Meeting.
REVOCABILITY OF PROXIES
Shareholders who execute Proxies retain the right to revoke them at any time
before they are voted by notifying the Secretary of the Corporation in writing,
by delivering a duly authorized Proxy bearing a later date, or by attending the
Meeting and voting in person.
1
<PAGE>
SOLICITATION
The accompanying Proxy is being solicited by and on behalf of the Board
of Directors. Solicitation will be by mail. Proxy cards and materials will be
distributed to beneficial owners through brokers, custodians, nominees and
similar parties. The Corporation estimates that the total amount to be spent in
solicitation of the Proxies will be approximately $2,500. The entire cost of
this solicitation, including the expenses of printing and mailing this proxy
statement to the Shareholders, the accompanying Notice of Annual Meeting of
Shareholders, proxy form, and Annual Report for fiscal year ended April 30,
2000, will be paid by the Corporation. In addition, the Corporation may
reimburse brokerage firms and others for their expenses in forwarding
solicitation materials regarding the Meeting to beneficial owners. In addition
to solicitation by mail, officers and regular employees of the Corporation may
solicit proxies from Shareholders by telephone, telegram, or personal interview.
Such persons will receive no additional compensation for such services.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The securities entitled to be voted at the Meeting consist of shares of
Common Stock of the Corporation. Each Shareholder is entitled one vote per each
share of Common Stock, except in the election of directors where Shareholders
have cumulative voting rights as described below under "Cumulative Voting."
There were 2,811,590 shares of Common Stock issued and outstanding (exclusive of
treasury shares) at the close of business on the record date of the Meeting.
The close of business on August 4, 2000 has been fixed by the Board of
Directors as the record date (the "Record Date") for determining the
Shareholders who will be entitled to vote at the Meeting.
The following persons beneficially own more than 5% of the outstanding
Common Stock of Torotel, Inc.:
<TABLE>
<CAPTION>
Name and Address Amount Beneficially Percent
of Beneficial Owner Owned of Class
------------------- ------------------------- --------
<S> <C> <C> <C>
Richard A. Sizemore 214,868 (a) 7.6%
Linda V. Sizemore
8356 Hallet
Lenexa, KS 66215
Gregory M. Sizemore 203,852 (b) 7.3%
Julie Sizemore
12735 Mohawk Circle
Leawood, KS 66209
Dale H. Sizemore 179,003 (c) 6.4%
Carol J. Sizemore
2705 W. 121st Terrace
Leawood, KS 66209
Paulette A. Durso 124,625 (d) 4.4%
James T. Durso
3917 N.E. 59th St.
Kansas City, MO 64119
Sizemore Enterprises 200,506 (e) 7.1%
2705 W. 121st Terrace
Leawood, KS 66209
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Name and Address Amount Beneficially Percent
of Beneficial Owner Owned of Class
------------------- ------------------------- --------
<S> <C> <C> <C>
Caloyeras Family Partnership, L.P. 207,900 (f) 7.4%
2041 W. 139th Street
Gardena, CA 90249
Thomas E. Foster 142,100 5.1%
5506 Brite Drive
Bethesda, MD 20817
</TABLE>
(a) Richard A. Sizemore and Linda V. Sizemore are husband and wife. Mr. and
Mrs. Sizemore's individual direct ownership are 140,226 and 15,666
shares, respectively. Mr. Sizemore's indirect ownership includes 58,976
shares which are owned by Mr. Sizemore as trustee for his children.
(b) Gregory M. Sizemore and Julie Sizemore are husband and wife. Mr. and
Mrs. Sizemore's individual direct ownership are 137,654 and 15,666
shares, respectively. Mr. Sizemore's indirect ownership includes 50,532
shares which are owned by Mr. Sizemore as trustee for his children.
(c) Dale H. Sizemore, Jr. and Carol J. Sizemore are husband and wife. Mr.
and Mrs. Sizemore's individual direct ownership are 130,964 and 14,351
shares, respectively. Mr. Sizemore's indirect ownership includes 33,688
shares which are owned by Mr. Sizemore as trustee for his children.
(d) James T. Durso and Paulette A. Durso are husband and wife. Mr. and Mrs.
Durso's individual direct ownership are 9,000 and 103,149 shares,
respectively. Mrs. Durso's indirect ownership includes 12,476 shares
which are owned by Ms. Durso as trustee for her children.
(e) Sizemore Enterprises is a general partnership. The general partners,
who are brothers and sister, are Dale H Sizemore, Jr., Paulette Durso,
Gregory M. Sizemore and Richard A. Sizemore.
(f) The Caloyeras Family Partnership L.P., is a limited partnership in
which PBC, Inc., a California corporation, is the sole general partner.
Peter B. Caloyeras is the sole shareholder, sole director and president
of PBC, Inc. The limited partners of the Caloyeras Family Partnership
include the sons and daughter of Peter B. Caloyeras. The number of
shares indicated as owned by the Caloyeras Family Partnership L.P. also
includes 3,000 shares owned individually by each of the sons and
daughter of Peter B. Caloyeras.
INFORMATION REGARDING THE CORPORATION
ANNUAL REPORT
This Proxy Statement is accompanied by the Annual Report to
Shareholders for the fiscal year ended April 30, 2000 (the "Annual Report").
GOING CONCERN
The Report of the Independent Certified Public Accountants of the
Corporation, dated June 9, 2000, noted that the Corporation has uncertainties
surrounding the outstanding liabilities with a terminated merger in 1999, the
trade debt of a discontinued subsidiary, and the note and interest payable to a
former officer. Because of these factors, the accountants stated there are
doubts about the Corporation's ability to continue as a going concern.
3
<PAGE>
PROPOSAL ONE
THE ELECTION OF THE BOARD OF THE DIRECTORS
DIRECTORS AND COMMITTEES
The Board of Directors of the Corporation currently consists of three
(3) individuals, all of whom will be nominated at the Meeting for election as
members of the Board of Directors, to serve until the next annual meeting of
Shareholders, and until their successors have been elected and qualified, unless
they should sooner die, resign or be removed. The Corporation's Articles of
Incorporation authorize seven directors; however, there is no immediate plan to
fill the vacancies. The three nominees to be elected at the Meeting are as
follows: H. James Serrone, Dale H. Sizemore, Jr., and Richard A. Sizemore.
BIOGRAPHICAL INFORMATION
Biographical summaries concerning the three nominees, the Corporation's
executive officers and significant employees, and information with respect to
the number of shares of Common Stock beneficially owned by each as of July 10,
2000, are shown below. The number of shares beneficially owned includes shares,
if any, held in the name of the spouse, minor children, or other relatives of
the individual living in his or her home, as well as shares, if any, held in the
name of another person under an arrangement whereby the individual enjoys the
right to vote such shares or to use of the income from such shares, or whereby
the individual can vest or re-vest title in himself or herself immediately or at
some future time. Dale H. Sizemore, Jr., both a Director and an officer, and
Richard A. Sizemore, a Director, are brothers.
<TABLE>
<CAPTION>
Biographical Summaries of Shares of Common Stock
Nominees, Executive Officers, and Beneficially Owned Percent
Significant Employees At July 10, 2000 of Class
----------------------------------------------------- --------------------------------- --------
<S><C>
Dale H. Sizemore, Jr., age 48 229,130 (a) 8.1%
Chairman of the Board, President and
Chief Executive Officer of the Corporation
13402 South 71 Highway
Grandview, MO 64030
Mr. Sizemore became a Director of the Corporation in 1984. He has served as
Chairman and Chief Executive Officer since 1995 (except for a short period
during February and March 1999, when Mr. Peter Caloyeras served as Chief
Executive Officer). Mr. Sizemore has served as President from 1995 to 1996, and
since April 1999. He was President of Kansas Communications, Inc., located in
Lenexa, Kansas, from 1983 to 1995, and was Chairman of the Board and Treasurer
from 1995 to 1998. Mr. Sizemore is currently self-employed.
Richard A. Sizemore, age 40 264,995 (b) 9.4%
Director of the Corporation
13402 South 71 Highway
Grandview, MO 64030
Mr. Sizemore became a Director of the Corporation in 1995. He has been owner and
President of Interactive Design, Inc., located in Lenexa, Kansas, since 1987. He
holds a B.S. degree in electrical engineering and an M.B.A. from the University
of Kansas.
H. James Serrone, age 45 10,273 (c) 0.4%
Director, Vice President of Finance
and Chief Financial Officer of the Corporation
13402 South 71 Highway
Grandview, MO 64030
</TABLE>
Mr. Serrone became a Director of the Corporation in 1999. He joined Torotel in
1979, became Controller in 1982, and was named Vice President in 1993. Mr.
Serrone has served as Vice President of Torotel Products since 1992. He has been
General Manager of Torotel Products since 1996.
4
<PAGE>
<TABLE>
<CAPTION>
Biographical Summaries of Shares of Common Stock
Nominees, Executive Officers, and Beneficially Owned Percent
Significant Employees At July 10, 2000 of Class
----------------------------------------------------- --------------------------------- --------
<S> <C> <C>
All Directors and Executive Officers
as a Group (3 persons) 504,398 (d) 17.9%
</TABLE>
(a) Dale H. Sizemore, Jr.'s beneficial ownership includes 50,127 shares
which is equivalent to 25% of the 200,506 shares owned by Sizemore
Enterprises, a General Partnership in which Mr. Sizemore is a general
partner. See the text and footnotes regarding Mr. Sizemore's beneficial
ownership discussed above in the section entitled "Voting Securities
and Principal Holders Thereof."
(b) Richard A. Sizemore's beneficial ownership includes 50,127 shares which
is equivalent to 25% of the 200,506 shares owned by Sizemore
Enterprises, a General Partnership in which Mr. Sizemore is a general
partner. See the text and footnotes regarding Mr. Sizemore's beneficial
ownership discussed above in the section entitled "Voting Securities
and Principal Holders Thereof."
(c) H. James Serrone's beneficial ownership includes 3,357 shares which are
acquirable within 60 days pursuant to the exercise of outstanding stock
options.
(d) The beneficial ownership of all directors and executive officers as a
group includes 3,357 shares which are acquirable within 60 days
pursuant to the exercise of outstanding stock options.
None of the Directors holds a directorship in any other company with a class of
securities registered pursuant to Section 12 of the Securities Exchange Act of
1934, or subject to the requirements of Section 15(d) of the Securities Act of
1933, or any company registered as an Investment Company under the Investment
Company Act of 1940.
BOARD MEETINGS AND DIRECTOR COMPENSATION
During the fiscal year ended April 30, 2000, the Board of Directors
held a total of three (3) meetings. Each of the incumbent directors being
nominated for re-election attended more than 75% of the Board of Directors
meetings held while he was a Director. H. James Serrone is to be compensated at
the rate of $100 per Board of Directors meeting attended. Dale H. Sizemore, Jr.
and Richard A. Sizemore are to be compensated at the rate of $6,000 per fiscal
year, plus $600 per Board of Directors meeting attended, and $400 per committee
meeting attended. Due to the Corporation's financial condition, all directors'
compensation has been deferred.
COMMITTEES
H. James Serrone and Dale H. Sizemore, Jr. are members of the
Administrative Committee for the Employee Stock Purchase Plan (the "Plan
Committee"). The Plan Committee receives its authority from the Employee Stock
Purchase Plan (the "Plan") and from the Board of Directors. The Plan Committee
administers and implements the Plan and determines the eligibility of employees
to participate in the Plan. The Plan Committee does not meet on a regular basis
but meets as required. The Plan Committee did not meet during the last fiscal
year.
Dale H. Sizemore, Jr. and Richard A. Sizemore are members of the
Compensation Committee, the purpose of which is to determine the compensation of
the executive officers of the Corporation. The Compensation Committee did not
meet during the last fiscal year.
The Corporation does not have a nominating committee.
None of the Directors meet the definition of independence as described
in Rule 4200(a)(15) of the NASD's listing standards. As a result, the
Corporation does not have an Audit Committee; however, in executing its
fiduciary duties, the Board of Directors has assumed the responsibilities of the
Audit Committee. In fulfilling
5
<PAGE>
these responsibilities, the activities of the Board of Directors included, but
were not limited to, reviewing internal accounting controls, financial
activities, financial position and related consolidated reports of the
Corporation, reviewing the engagement and scope of the audit to be rendered by
the independent accountants, and reviewing the report of the independent
accountants upon completion of its audit.
CUMULATIVE VOTING
There will be cumulative voting for the election of Directors. In
cumulative voting, each share carries as many votes as there are vacancies to be
filled and each Shareholder is permitted to distribute the votes for all of his
or her shares among the nominees in any way he or she desires. Since three
Directors are nominated, each Shareholder may cast that number of votes which is
equal to the number of shares owned by him or her multiplied by three. If no
choice is indicated on the enclosed Proxy, the persons named in the Proxy will
cumulate the votes and distribute them among the nominees in their discretion.
If a Shareholder desires to cumulate his or her votes for the Directors in a
particular manner, he or she should indicate the number of votes to be cast on
the Shareholder's behalf for each nominee immediately following that nominee's
name on the Proxy. The Proxies cannot be voted for a greater number of persons
than the number named herein. If any nominee should be unable to serve, the
Proxy will be voted for such person as shall be designated by the Board of
Directors of the Corporation to replace any such nominee. The Board of Directors
presently has no knowledge that any of the nominees will be unable to serve.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE IN FAVOR
OF THE ELECTION OF EACH OF THE NOMINEES TO THE BOARD OF DIRECTORS.
EXECUTIVE OFFICER COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation of the named executive
officers for each of the Corporation's last three completed fiscal years.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
Annual Long-Term
Compensation Compensation
---------------------------------------------------------------------------------------------------------------
Name and Options All other
Principal Position Year Salary Bonus Awarded Compensation
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dale H. Sizemore, Jr. (a) 2000 $ -0- $ -0- -0- $ -0-
President and Chief Executive 1999 $ -0- $ -0- -0- $ 1,500
Officer 1998 $ -0- $ -0- -0- $ 10,200
---------------------------------------------------------------------------------------------------------------
Christian T. Hughes (b) 1999 $125,000 $ -0- -0- $ -0-
President and Chief Operating 1998 $124,216 $ -0- -0- $ 700
Officer
---------------------------------------------------------------------------------------------------------------
Peter B. Caloyeras (c) 1999 $ -0- $ -0- -0- $ -0-
Chief Executive Officer
---------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Dale H. Sizemore, Jr. became Chief Executive Officer effective
August 4, 1996, and President effective April 20, 1999.
(b) Christian T. Hughes was terminated effective April 20, 1999.
(c) Peter B. Caloyeras served as Chief Executive Officer from
February 8, 1999 until March 15, 1999, at which time the
contemplated merger with Mr. Caloyeras' company, Electronika,
Inc., was terminated.
6
<PAGE>
OPTION GRANTS
There were no grants of stock options made to any executive officers
during the Corporation's last completed fiscal year.
AGGREGATE OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE
There were no stock option exercises made during the last completed
fiscal year and the executive officers identified above did not have any
unexercised stock options as of April 30, 2000.
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires executive officers and
directors of the Corporation, and persons who beneficially own more than ten
percent (10%) of the Corporation's Common Stock (collectively referred to herein
as "Reporting Persons"), to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission (the
"Commission"). Reporting Persons are required by Commission regulations to
furnish the Corporation with copies of all Section 16(a) forms they file. Based
solely upon a review of copies of Forms 3, 4 and 5 and amendments thereto
furnished to the Corporation during its most recent fiscal year, the Corporation
believes that all of these forms required to be filed by Reporting Persons were
timely filed pursuant to Section 16(a) of the Exchange Act.
CERTAIN RELATIONSHIPS AND LEGAL PROCEEDINGS
INDEBTEDNESS TO FORMER OFFICER
The Corporation has a $429,000 promissory note with Alfred F. Marsh,
former President of Torotel, Inc., dated July 10, 1996. The amount of this note
consists of the principal sum of $250,000 from a note executed in April 1986,
plus $179,000 of accrued unpaid interest. For the year ended April 30, 2000, the
Corporation incurred $41,000 in interest on the note. The outstanding balance of
this unsecured note bears interest at a fixed rate of 10% per annum. The note
requires monthly principal and interest payments of $10,881, and matures on July
1, 2000. Under the terms of the note, no payments will be made to Mr. Marsh as
long as any default condition exists under the terms of the loan with
Phillipsburg National Bank & Trust Corporation, unless the bank has waived the
default condition prior to any payment. As of April 30, 2000, the aggregate
amount due under the note was $520,000, which consists of the outstanding
principal balance of $384,000 plus accrued interest of $136,000. The Corporation
has suspended all payments under the note due to the reasons discussed in the
section below entitled "Legal Proceedings."
LEGAL PROCEEDINGS
On May 6, 1997, Torotel Products, Inc., the Corporation's operating
subsidiary, was accepted into the Voluntary Disclosure Program by the Inspector
General of the United States Department of Defense, resulting from its failure
to perform some required testing as frequently as required, and inaccurately
certifying that all required testing had been performed. As a result of the
Corporation's investigation into the testing deficiencies, the Corporation
recorded an estimated charge of $486,000 against earnings. The Corporation's
investigation included a review of historical sales and pricing data, labor bid
sheets, and interviews with past and present employees, to arrive at a best
estimate of the cost impact to the government. On June 27, 2000, the Corporation
entered into a Release and Settlement Agreement with the United States of
America. Pursuant to the agreement, the Corporation will make an initial payment
of $10,000 followed by eighteen monthly installments of $5,000, for an aggregate
total of $100,000. As a result of the settlement, the Corporation recorded a
credit to earnings of $386,000 in its fiscal year ended April 30, 2000. The
Corporation believes that certain of its former officers may have been
responsible for the misconduct related to the test failures, and is evaluating
ways of recovering the costs and damages. The Corporation has suspended all
payments due under a note payable to a former officer.
7
<PAGE>
OTHER MATTERS
OTHER BUSINESS
The Board of Directors knows of no other business to be transacted at
the Meeting. If any other business is properly brought before the Meeting, the
persons named in the enclosed Proxy or their substitutes will vote in accordance
with their best judgment on such matters.
AVAILABILITY OF ACCOUNTANTS
Representatives of Grant Thornton LLP, the principal accountants for
the Corporation, are expected to be present at the Meeting. An opportunity will
be provided for the representatives to make a statement, if they desire to do
so, and to respond to appropriate shareholder questions.
DEADLINE FOR RECEIPT OF SHAREHOLDERS' PROPOSALS
Proposals of shareholders of the Corporation which are intended to be
presented by the Corporation at the Corporation's 2001 annual meeting of
shareholders must be received by the Corporation no later than May 15, 2001, so
that they may be included in the Proxy Statement relating to that meeting.
GENERAL
In order that your shares may be represented if you do not plan to
attend the Meeting, and in order to assure the required quorum and voting,
please sign, date and return the enclosed Proxy promptly.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ H. James Serrone
H. James Serrone
Secretary of the Corporation
8
<PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TOROTEL, INC.
13402 SOUTH 71 HIGHWAY
GRANDVIEW, MO 64030
The undersigned hereby appoints Harold E. Norem and H. James Serrone,
as Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of common
stock of Torotel, Inc. held of record by the undersigned on August 4, 2000, at
the Annual Meeting of Shareholders to be held on September 18, 2000, and any
adjournments thereof.
1. ELECTION OF DIRECTORS:
FOR all nominees listed below. WITHHOLD AUTHORITY to vote for
(except as marked to the contrary below) all nominees listed below.
H. JAMES SERRONE ( ) DALE H. SIZEMORE, JR. ( ) RICHARD A. SIZEMORE ( )
INSTRUCTION: A checkmark in the box before "FOR all nominees" gives the Proxies
full voting authority. A checkmark in the box before "WITHHOLD AUTHORITY"
precludes the Proxies voting on nominees. TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.
UNLESS YOU INDICATE OTHERWISE, THE PROXIES WILL CUMULATE YOUR VOTES AND
DISTRIBUTE THEM AMONG THE NOMINEES IN THEIR DISCRETION. If you do not wish to
distribute your cumulative votes equally among the nominees (refer to enclosed
Proxy Statement), please indicate the number of votes to be cast for each
nominee on your behalf following that nominee's name. Please note that you are
allowed that number of votes which is equal to the number of shares owned by you
multiplied by three (3).
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting. In addition, in the event a
nominee named herein is unable to serve, or for good cause will not serve, the
Proxies are authorized to vote for the election of any other person as a
director.
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" ALL NOMINEES LISTED IN PROPOSAL 1. PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
DATED THIS _____ DAY OF _______________, 2000. _______________________________
SIGNATURE
-------------------------------
SIGNATURE IF HELD JOINTLY
Please sign exactly as your name appears hereon. When signing as attorney,
executor, administrator, trustee, guardian or any similar representative
capacity, please give your full title as such. If a corporation, please sign in
full corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person. When stock is held by
joint tenants, both must sign.
8
