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. )
Filed by the registrant [ ]Registrant [x]
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Check theCheckthe appropriate box:
[X][x] Preliminary proxy statement [Information Statement]Proxy Statement
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[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule s 14a-11(c)Section 240.14a-11(c) or
sSection 240.14a-12
T/F PURIFINER, INC.
- --------------------------------------------------------------------------------Puradyn Filter Technologies Incorporated
----------------------------------------
(Name of Registrant as Specified inIn Its Charter)
- --------------------------------------------------------------------------------not applicable
--------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing feeFiling Fee (Check the appropriate box):
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[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)(4)
and 0-110-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactionstransaction applies:
NOT APPLICABLE
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pursuant to Exchange Act Rule 0-11 (set(Set forth the amount on which the
filing fee is calculated and state how it was determined):
NOT APPLICABLE
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(4) Date filed:
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2Filed:
T/F PURIFINER, INC.Puradyn Filter Technologies Incorporated
3020 High Ridge Road, Suite 100
Boynton Beach, Florida 33426
INFORMATION STATEMENT
WE ARE NOT ASKING YOUTelephone 561-547-9499 Facsimile 561-547-4025
June , 2002
Dear Stockholder:
You are cordially invited to attend the 2002 Annual Meeting of
Stockholders of Puradyn Filter Technologies Incorporated, to be held on Tuesday,
July 9, 2002 at 2:00 p.m. at the Holiday Inn Catalina, 1601 North Congress
Avenue, Boynton Beach, Florida 33426. The formal Notice of the 2002 Annual
Meeting of Stockholders and Proxy Statement are attached.
The matters to be acted upon by our stockholders are set forth in the
Notice of 2002 Annual Meeting of Stockholders and include,
o the election of our Board of Directors;
o the ratification of the engagement of Ernst & Young LLP as our
independent auditors;
o the approval of an amendment to our Certificate of Incorporation to
increase the number of shares of common stock we are authorized to
issue from 20,000,000 shares to 30,000,000 shares; and
o the approval of such other matters as may properly come before the
meeting.
It is important that your shares be represented and voted at the
meeting. Accordingly, after reading the attached Proxy Statement, please sign,
date and return the enclosed proxy card. Your vote is important regardless of
the number of shares you own.
I hope that you will attend the meeting in person, at which time I will
review the business and operations of Puradyn Filter Technologies Incorporated.
Sincerely,
/s/ Richard C. Ford
-----------------------------------
Richard C. Ford
Chief Executive Officer
PURADYN FILTER TECHNOLOGIES INCORPORATED
NOTICE OF 2002 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 9, 2002
The 2002 Annual Meeting of the Stockholders of Puradyn Filter
Technologies Incorporated will be held at 2:00 p.m., at the Holiday Inn
Catalina, 1601 North Congress Avenue, Boynton Beach, Florida 33426, on Tuesday,
July 9, 2002. At the 2002 Annual Meeting, you will be asked to vote on the
following matters:
1. To elect a Board of Directors consisting of seven (7) members;
2. To ratify the appointment of Ernst & Young LLP as our
independent auditors, to serve at the pleasure of the Board of
Directors;
3. To approve an amendment to our Certificate of Incorporation
increasing the number of shares of common stock we are
authorized to issue from 20,000,000 shares to 30,000,000
shares; and
4. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Only stockholders of record, as shown on our transfer books at the
close of business on May 24, 2002, will be entitled to notice of and to vote at
the meeting. A list of stockholders entitled to vote at the 2002 Annual Meeting
will be available for examination by any stockholder, for proper purposes,
during normal business hours at our offices for a period of at least 10 days
preceding the 2002 Annual Meeting.
The Board of Directors recommends that you vote FOR Athe Board's slate
of nominees to serve on the Board of Directors, FOR the ratification of the
appointment of Ernst & Young LLP, and FOR the amendment to our Certificate of
Incorporation.
By Order of the Board of Directors
/s/ Richard C. Ford
-----------------------------------
Richard C. Ford
Chief Executive Officer
June ___, 2002
PLEASE FILL IN, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE
PROVIDED AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU ARE REQUESTED
NOTPLAN TO SEND US A PROXY.
GENERAL
This Information StatementATTEND THE ANNUAL
MEETING. IF YOU LATER DESIRE TO REVOKE YOUR PROXY FOR ANY REASON, YOU MAY DO SO
IN THE MANNER DESCRIBED IN THE ATTACHED PROXY STATEMENT.
PURADYN FILTER TECHNOLOGIES INCORPORATED
PROXY STATEMENT
2002 ANNUAL MEETING OF STOCKHOLDERS
JULY 9, 2002
INTRODUCTION
The accompanying proxy is being furnishedsolicited by the Board of Directors of
Puradyn Filter Technologies Incorporated ("Puradyn", "we", "us", "our") to be
voted at the 2002 Annual Meeting of Stockholders to be held on July 9, 2002, and
any adjournments thereof. When such proxy is properly executed and returned, the
shares it represents will be voted at the meeting as directed. If no
specification is indicated, the shares will be voted in accordance with the
recommendation of the Board with respect to each matter submitted to our
stockholders for approval. Abstentions and broker non votes are counted for
purposes of T/F
Purifiner, Inc. (the "Company"),determining a Delaware corporation,quorum, but will not be counted as votes cast in
connection with the proposed adoptionelection of directors, the ratification of our auditors, or
the approval to amend our Certificate of Incorporation. Any stockholder giving a
proxy has the power to revoke it prior to its exercise by notice of revocation
to Puradyn, in writing, by voting in person at the 2002 Annual Meeting or by
execution of a Certificatesubsequent proxy; provided, however, that such action must be
taken in sufficient time to permit the necessary examination and tabulation of
Amendmentthe subsequent proxy or revocation before the vote is taken.
The shares entitled to vote at the 2002 Annual Meeting consist of
shares of our common stock. Each share entitles the holder to one vote. At the
close of business on May 24, 2002, the record date for determining those
stockholders entitled to notice of and to vote at the 2002 Annual Meeting, there
were 17,589,962 shares of our common stock issued and outstanding. This Proxy
Statement and the accompanying form of proxy are first being sent to
stockholders on or about June 3, 2002, and are accompanied by Puradyn's Annual
Report on Form 10-KSB for the year ended December 31, 2001, and its Quarterly
Report on Form 10-QSB for the quarter ended March 31, 2002.
In addition to the Company's Certificate of
Incorporation (the "Amendment") by the written consentuse of the holdersmail, solicitations may be made by our
employees, by us, by telephone, email, mailgram, facsimile, telegraph, cable and
personal interview. We will bear all expenses of a
majority in interest of the Company's outstanding Common Stock ("Common Stock").
The Company'ssoliciting proxies.
PROPOSAL 1
ELECTION OF DIRECTORS
NOMINEES AND DIRECTORS
Our Board of Directors on November 22, 1996, approvedcurrently consists of seven members. At the
meeting, seven directors will be elected to serve until the next annual meeting
of stockholders and recommended
that the Certificate of Incorporation be amended in order to effectuate up tountil their successors are elected and qualified. Directors
are elected by a five for one (5:1) forward stock splitplurality of the Company's outstanding Common Stockvotes cast, in person or represented by proxy,
at the 2002 Annual Meeting. Therefore, the seven nominees receiving the greatest
number of votes cast will be elected directors of Puradyn (assuming a quorum is
present). We have no reason to occurbelieve that any nominee will be unable to serve
if elected. A vote FOR the nominees includes discretionary authority to vote for
a substitute nominee named by the Board, if any of the nominees become unable or
unwilling to serve.
The following persons have been nominated by the Board for election to
the Board of Directors:
Name Age Position
- --------------------- ------- -----------------------------------------------
Joseph V. Vittoria 66 Chairman of the Board of Directors
Richard C. Ford 58 Chief Executive Officer and Director
Kevin G. Kroger 50 President, Chief Operating Officer and Director
Alan J. Sandler 63 Vice President, Secretary, and Director
Peter H. Stephaich 46 Director
Ottavio Serena 49 Director
Michael Castellano 61 Director
JOSEPH V. VITTORIA was appointed to the Board of Directors and appointed as
Chairman on February 8, 2000. Mr. Vittoria was Chairman and Chief Executive
Officer of Travel Services International, Inc. where he served since 1998. From
1987 to 1997, Mr. Vittoria served as Chairman and Chief Executive Officer of
Avis, Inc. and was President and Chief Operating Officer of Avis, Inc. from 1982
to 1987. Mr. Vittoria also serves on the Boards of Directors of Sirius Satellite
Radio, Inc., ResortQuest International, Inc. and Transmedia Asia, Inc.
RICHARD C. FORD has been a Director of the Company since its inception in one or more sequences or transactions during1988.
He served as President of the Company from its inception in 1988 until April
1997 and as Chief Executive Officer and Treasurer until June 1997. He also
served as Secretary of the Company from its inception until August 1996. Mr.
Ford returned to the Company in April 1998 and in January 1999, Mr. Ford was
elected Chairman of the Board of Directors and appointed Chief Executive
Officer. Mr. Ford was also a period notDirector of TF Purifiner Ltd. through July 17, 1997
at which time he resigned, and was re-appointed as a Director in 1999.
KEVIN G. KROGER joined the Company July 3, 2000 as President, Chief Operating
Officer, and was appointed to exceed
twelve (12) monthsthe Board of Directors. Mr. Kroger was with
Detroit Diesel Corporation from 1989 to the time he joined the Company, serving
in various executive positions prior to his appointment in 1998 to the position
of Vice President and General Manager of Series 30/40 Product. From 1987 to 1989
he was Vice President of R.E.S. Leasing and of VE Corporation. Prior to this,
from 1971 to 1987, he held several management positions with Caterpillar
Corporation.
2
ALAN J. SANDLER joined the Company in June 1998 as President, Chief Operating
Officer, Secretary, Chief Financial Officer, and Director. In January 2000, he
became Vice President and resigned from the datepositions of President and Chief
Operating Officer. In March 2001, he resigned as Chief Financial Officer. In
August 2001, Mr. Sandler resumed the position of Chief Financial Officer and
then resigned from the position in March 2002. From 1995 until 1997 Mr. Sandler
served as President and Chief Executive Officer to Hood Depot, Inc., a national
restaurant supply manufacturer/distributor. From 1979 to 1995 he was President
and Chief Executive Officer of Sandler & Sons Dental Supply Company, a regional
dental supply and equipment distributor. Previous to this Information Statementposition he was a Vice
President of Gardner Advertising Company, a national advertising agency. Mr.
Sandler was appointed as determineda Director of TF Purifiner Ltd. in 1999.
PETER H. STEPHAICH was appointed to the Board of Directors at its meeting June
12, 2000. Mr. Stephaich is currently Chairman, Chief Executive Officer and
President of Blue Danube Incorporated, a private holding Company engaged in the
river transportation industry on the Upper Ohio River. Mr. Stephaich has been on
its Board of Directors since 1982 and has held the titles of Chief Executive
Officer and President since 1995. Prior to 1995, Mr. Stephaich worked for
various financial institutions, including four years at Banker Trust Company
where he provided international financial advisory services to the
transportation and aerospace industries.
OTTAVIO SERENA was appointed to the Board of Directors at it meeting June 12,
2000. Mr. Serena is a principal of The Lynx Partners, a private equity
consulting firm. He is also President of The Explorer and Fiber Group, and is a
director and Vice President of Financial Performance Corporation, a publicly
traded financial Company. From 1993 to 1999, Mr. Serena was with Citicorp
Venture Capital, a leveraged buyout Company. Mr. Serena co-founded and was
managing director of The Lynx Partners from 1987 to 1993.
MICHAEL CASTELLANO was appointed to the Board of Directors at its January 24,
2001 meeting. Mr. Castellano retired in 1997. From 1995 to 1997, Mr. Castellano
was Chief Administrative Officer of Kobren Insight Group, a mutual fund Company,
and in 1994, he was Executive Vice President of Wall Street Access, a discount
brokerage firm. Prior to that, from 1988 to 1993, Mr. Castellano was Senior Vice
President and Corporate Controller for Fidelity Investments.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
During 2001, our Board of Directors met on 3 occasions and took action
by unanimous written consent on 16 occasions. Each Director attended each
meeting and concurred in each Board action by consent. We currently have an
audit committee and a compensation committee.
Audit Committee
The Audit Committee of the Board of Directors is composed of three
independent directors and operates under a written charter adopted by the Board
of Directors. The proposed Amendmentcommittee members are Michael Castellano (chairperson), Peter
H. Stephaich and Joseph V. Vittoria. During the fiscal year ended December 31,
2001, the Audit Committee met on 5 occasions.
The Audit Committee reviews our financial reporting process on behalf
of the Board of Directors. Management has the primary responsibility for the
financial statements and the reporting process including the system of internal
controls.
3
In this context, the chairperson has met and held discussions with
management and the independent auditors. Management represented to the Certificate of
Incorporation will become effective upon (i)committee
that Puradyn's consolidated financial statements were prepared in accordance
with accounting principles generally accepted in the United States, and the
committee has reviewed and discussed the consolidated financial statements with
management and the independent auditors. The committee discussed with the
independent auditors matters required to be discussed by Statement on Auditing
Standards No. 61 (Communication with Audit Committees).
In addition, the committee has discussed with the independent auditors
the auditor's independence from Puradyn and its management, including the
matters in the written consentdisclosures required by the Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees).
The committee discussed with our independent auditors the overall scope
and plans for their respective audit. The committee meets with the independent
auditors with and without management present, to discuss the results of their
examinations, the evaluations of Puradyn's internal controls, and the overall
quality of our financial reporting.
In reliance on the reviews and discussions referred to above, the
committee recommended to the board of directors, and the Board has approved,
that the audited consolidated financial statements be included in Puradyn's Form
10-KSB for the year ended December 31, 2001, for filing with the Securities and
Exchange Commission.
Submitted by the Audit Committee of the holdersBoard of Directors:
Michael Castellano Peter H. Stephaich Joseph V. Vittoria
Compensation Committee
The Compensation Committee provides overall guidance for officer
compensation programs, including salaries and other forms of compensation
including all employee stock option grants and warrant grants to non-employees.
The Compensation Committee consists of Peter Stephaich (chairperson), Joseph V.
Vittoria, Ottavio Serena and Michael Castellano. The Compensation Committee held
1 meeting during the fiscal year ended December 31, 2001.
EXECUTIVE COMPENSATION
Cash Compensation
The following table shows, for the three year period ended December 31,
2001, the cash and other compensation paid by us to our Chief Executive Officer
and to each other executive officers who had annual compensation in excess of
$100,000.
4
SUMMARY COMPENSATION TABLE
OTHER
NAME AND ANNUAL NUMBER OF LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (2) OPTIONS PAYOUTS COMPENSATION (3)
- -------------------------- ---------- -------------- ---------- ------------------- ------------ ------------ ---------------------
Richard C. Ford (4) 2001 $ 208,000 $ - $ 6,890 - - $ 11,000
CEO and Director 2000 200,000 150,000 1,644 - - 12,000
1999 145,608 (1) 1,000 1,171 1,064,510 - 9,000
Kevin G. Kroger 2001 166,000 76,000 17,641 - - 13,000
President, COO and 2000 83,000 50,000 12,289 300,000 - 6,000
Director
Alan J. Sandler 2001 100,000 - 8,650 - - -
Vice President and 2000 96,615 - 7,865 - - -
Secretary and
Director (5)
(1) Mr. Ford elected to defer payment of $53,000 included in his 1998
salary, which he received in 2000. Richard C. Ford's salary in 1999
includes stock options granted at a nominal exercise price in lieu of
cash compensation for Mr. Ford (114,510 options having a value of
$50,163).
(2) This amount represents payments made by us for health insurance
premiums and, in the case of Mr. Kroger, also for life insurance and
disability insurance premiums.
(3) This amount represents payments made to Mr. Ford for consulting
services in 1998, and a car allowance in 1999, 2000 and 2001. For Mr.
Kroger, this amount represents a car allowance.
(4) Mr. Ford served as our Secretary until August 1996. Mr. Ford served as
our President until April 1, 1997 and served as Chief Executive
Officer, Treasurer and Chief Financial Officer until June 19, 1997. Mr.
Ford left our employment on July 17, 1997, and provided consulting
services to us under an agreement until April 1, 1998, when he rejoined
us as a Director. In February 2000, Mr. Ford resigned as Chairman of
the Board of Directors, but remained as a Director. (See Certain
Relationships and Related Transactions).
(5) Mr. Sandler joined us in June 1998 as President, Chief Operating
Officer, Secretary, Chief Financial Officer, and Director. In January
2000, he became Vice President and resigned from the positions of
President and Chief Operating Officer. In March 2001, he resigned as
Chief Financial Officer. In August 2001, Mr. Sandler resumed the
position of Chief Financial Officer and then resigned from the position
in March 2002.
Incentive and Non-qualified Stock Option Plans
The Board of Directors adopted the 2000 Non-Employee Directors' Plan
(the "Directors' Plan") on November 8, 2000, under which options to purchase
400,000 shares have been authorized for issuance. The Directors' Plan provides a
means to attract and retain highly qualified persons to serve as non-employee
directors and advisory.
Each member of the Board of Directors will be automatically granted
5,000 options at the date of commencement of the Directors' Plan and on their
initial election as new members to the Board of Directors. Each director
receives an additional 5,000 options at the close of each annual meeting of
stockholders. Additionally, each director automatically receives 2,500 options
for each committee of the Board on which the director serves. Options are
5
granted at a price equal to the fair market value of the stock on the date of
grant, are exercisable commencing two years following grant, and will expire
five years from the date of grant. In the event a person ceases to serve on the
Board of Directors, the outstanding options expire one year from the date of
cessation of service. The Directors' Plan is administered by the Board of
Directors.
The Company's 1999 Stock Option Plan (the "1999 Plan") and the 1996
Stock Option Plan (the "1996 Plan"), adopted on September 15, 1999 and amended
in June 2000 and July 31, 1996, respectively, will work to increase the
proprietary interest in Puradyn by our employees, Board of Advisors,
consultants, and non-employee Directors, and to align more closely their
interests with the interests of Puradyn's stockholders. The Plans will also
maintain our ability to attract and retain the services of experienced and
highly qualified employees and non-employee directors.
Under the 1999 Plan and 1996 Plan, we had reserved an aggregate of
3,000,000 and 2,200,000 shares, respectively, of common stock for issuance
pursuant to options granted under the Plans ("Plan Options"). The Board of
Directors or a Committee of the Board of Directors (the "Committee") administers
the Plans including, without limitation, the selection of the persons who will
be granted Plan Options under the Plans, the type of Plan Options to be granted,
the number of shares subject to each Plan Option and the Plan Option price.
Options granted under the 1996 and 1999 Plans may either be options
qualifying as incentive stock options ("Incentive options") under Section 422 of
the Internal Revenue Code of 1986, as amended, or options that do not so qualify
("Non-Qualified Options"). In addition, the Plans also allow for the inclusion
of a reload option provision ("Reload Option"), which permits an eligible person
to pay the exercise price of the Plan Option with shares of Common Stock owned
by the eligible person and receive a new Plan Option to purchase shares of
Common Stock equal in number to the tendered shares. Any Incentive Option
granted under the Plans must provide for an exercise price of not less than a majority100%
of the fair market value of the underlying shares on the date of such grant, but
the exercise price of any Incentive Option granted to an eligible employee
owning more than 10% of the Company's outstanding Common Stock approvingmust be at least 110% of such
fair market value as determined on the Amendment and (ii) the filingdate of the Certificategrant. The term of Amendment toeach Plan
Option and the Certificate of Incorporation withmanner in which it may be exercised is determined by the Secretary of StateBoard of
the StateDirectors or the Committee, provided that no Plan Option may be exercisable
more than 10 years after the date of Delaware. The Company anticipates thatits grant and, in the filingcase of an Incentive
Option granted to an eligible employee owning more than 10% of our common stock,
no more than five years after the date of the written consents will
occur on or about _____________, 1996 (the "Effective Date"). If the proposed
Amendment were not adoptedgrant.
The exercise price of Non-Qualified Options shall be determined by written consent, it would have been required to be
considered by the Company's stockholders at a special stockholders' meeting
convened for the specific purpose of approving the Amendment.
The elimination of the need for a special meeting of stockholders to
approve the Amendment is made possible by Section 228 of the Delaware General
Corporation Law (the "Delaware Law") which provides that the written consent of
the holders of outstanding shares of voting capital stock, having not less than
the minimum number of votes which would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted, may be substituted for such a special meeting. Pursuant to Section
242 of the Delaware Law, a majority of the outstanding shares of voting capital
stock entitled to vote thereon is required in order to amend the Company's
Certificate of Incorporation. In order to eliminate the costs and management
time involved in holding a special meeting and in order to effect the Amendment
as early as possible in order to accomplish the purposes of the Company, as
hereafter described, the
Board of Directors or the Committee and cannot be less than the par value of
Puradyn's Common Stock.
The per share purchase price of shares subject to Plan Options granted
under the Plans may be adjusted in the event of certain changes in our
capitalization, but any such adjustment shall not change the total purchase
price payable upon the exercise in full of Plan Options granted under the Plan.
Officers, directors, key employees and consultants of Puradyn and its
subsidiaries (if applicable in the future) are eligible to receive Non-Qualified
Options under the Plans. Only our officers, directors and employees, and those
of our subsidiaries are eligible to receive Incentive Options.
All Plan Options are generally nonassignable and nontransferable,
except by will or by the laws of descent and distribution, and during the
lifetime of the Company votedoptionee, may be exercised only by such optionee. If an
optionee's employment is terminated for any reason, other than his death or
disability or termination for cause, or if an optionee is not an employee but is
a member of Puradyn's Board of Directors and his service as a Director is
terminated for any reason, other than death or disability, the Plan Option
granted to utilizehim generally shall lapse to the written consentextent unexercised on the earlier of
6
the expiration date or one year following the date of termination. If the
optionee dies during the term of his employment, the Plan Option granted to him
generally shall lapse to the extent unexercised on the earlier of the holders of a majority in interestexpiration
date of the Common StockPlan Option or the date one year following the date of the
Company,optionee's death. If the optionee is permanently and totally disabled within the
meaning of Section 22 (c) (3) of the Internal Revenue Code of 1986, the Plan
Option granted to him generally lapses to the extent unexercised on the earlier
of the expiration date of the option or one year following the date of such
disability.
The Board of Directors or the Committee may amend, suspend or terminate
the Plans at any time, except that no amendment shall be made which is(i)
increases the only classtotal number of capital stock currently outstanding. As
discussed hereafter,shares subject to the Plans or changes the minimum
purchase price therefore (except in either case in the event of adjustments due
to changes in the Company's capitalization), (ii) extends the term of any Plan
Option beyond ten years, or (iii) extends the termination date of the Plan.
Unless the Plans shall theretofore have been suspended or terminated by the
Board of Directors, has recommended the Amendment1996 Plan shall terminate on July 31, 2006 and the 1999
Plan shall terminate on September 15, 2009. Any such termination of the Plans
shall not affect the validity of any Plan Options previously granted thereunder.
As of December 31, 2001, under the Directors' Plan, options to purchase
260,000 shares of common stock were outstanding. As of December 31, 2001, under
the 1996 Plan, incentive stock options to purchase 165,407 shares of common
stock were outstanding and non-qualified options to purchase 595,000 shares of
common stock were outstanding and, under the 1999 Plan, incentive stock options
to purchase 1,238,750 shares of common stock were outstanding and non-qualified
options to purchase 197,000 shares of common stock were outstanding.
Options Granted to Officers and Directors
On January 24, 2001 and May 16, 2001 director Michael Castellano was
granted 7,500 and 2,500 at $6.50 and $4.81, respectively. On October 23, 2001
directors Michael Castellano, Peter Stephaich and Ottavio Serena were granted
10,000, 10,000 and 7,500 options, respectively, at $2.60 per share. These
options were granted under the Directors' Plan and vest over two years from the
date of grant.
On July 3, 2000, Kevin Kroger was granted 300,000 qualified options at
$9.25 per share, which become exercisable at 75,000 per year beginning July 3,
2001. On October 23, 2000 directors Joseph Vittoria, Peter Stephaich and Ottavio
Serena were granted 205,000, 10,000 and 7,500 options, respectively, at $5.88
per share. These options vest over two years from the date of grant.
On January 7, 1999 Richard C. Ford was granted 100,000 non-qualified
options at $.21 per share, which were immediately vested and exercisable. On
April 1, 1999, Mr. Ford was granted 175,000 non-qualified options at $.94 per
share of which 100,000 were immediately vested and exercisable and 75,000 vested
on April 1, 2000. On April 14, 1999 Mr. Ford was granted 100,000 non-qualified
options at $.56 per share, which vest on April 14, 2001. From June 18, 1999 to
September 24, 1999 Mr. Ford was granted 114,510 non-qualified options at a zero
exercise price compared to market prices of from $.31 to .51 per share in orderlieu
of cash compensation. All vested and were exercisable immediately. On December
20, 1999, Mr. Ford was granted 275,000 qualified options at $1.10 per share,
which were immediately vested and exercisable. Also, on December 20, 1999, Mr.
Ford was granted 300,000 qualified options at $1.10 per share of which 150,000
vested on December 20, 2000 and 150,000 will vest on December 20, 2001.
On July 8, 1998, Richard C. Ford was granted 300,000 stock options to
restructure the Company's capitalization in order to adjust the
Company's outstanding capitalization to stimulate interest inpurchase shares of the Company's Common Stock at $.38 per share. Of these
options, 150,000 vested on July 8, 1998 and possibly promote greater liquidity by attracting a broader
based market following.
The written consent of such stockholders to the Amendment will become
effective upon the filing of their written consents with the Secretary of the
Company. The Company anticipates that the filing of such written consents will
occur150,000 vested on or about _________________,July 7, 1999.
7
On August 2, 1996, following which the Company will
prepare and file a Certificategranted Richard C. Ford Incentive Plan
Options to purchase an aggregate of Amendment to its Certificate of Incorporation
with the State of Delaware effectuating up to a five-for-one (5 for 1) forward
stock split of the Company's outstanding50,000 shares of Common Stock. A copycommon stock at $2.20 per
share through August 2, 2001, of the
proposed Amendment to the Company's Certificate of Incorporation is set forth as
Exhibit A to this Information Statement. The datewhich 25,000 vested on which this Information
Statement was first sent to the stockholders isAugust 2, 1996, 12,500
vested on or about December __, 1996.
The record date established byAugust 2, 1997, and 12,500 vested on August 2, 1998. Mr. Ford
surrendered these options for cancellation in 1999. On August 2, 1996, the
Company for purposesgranted Richard C. Ford non-qualified options to purchase an aggregate
of determining the
number of outstanding200,000 shares of Common Stock at $2.00 per share through August 2, 2004, of
which 100,000 vested on August 2, 1996, 50,000 vested on August 2, 1997, and
50,000 vested on August 2, 1998. Mr. Ford also surrendered these 200,000 options
for cancellation in 1999.
Option Exercises and Holdings
The following table sets forth information with respect to the exercise
of options to purchase shares of common stock during the fiscal year ended
December 31, 2001 to each person named in the Summary Compensation Table and the
unexercised options held as of the Company is December ___,
1996 (the "Record Date").
Pursuant to Section 228end of the Delaware Law,2001 fiscal year.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED AT VALUE OF UNEXERCISED IN THE-MONEY
ACQUIRED ON OPTIONS/ SARS YEAR END (#) OPTIONS/ SARS AT YEAR END ($)
EXERCISE VALUE EXERCISABLE/ ---------------------------------------
REALIZED (#) EXERCISABLE/ ($) UNEXERCISABLE EXERCISABLE UNEXERCISABLE (1)
---------------- ----------------- ---------------- ------------------- -------------------
875,000 /
Richard C. Ford 875,000 $3,371,000 (3) 375,000 / - $1,521,000 -
Chief Executive
Officer and Director
75,000 /
Kevin G. Kroger - - 225,000 (2) (2)
President, COO and
Director
Alan J. Sandler 260,000 (4) - - - -
Vice President,
Secretary and
Director
(1) In accordance with the Securities and Exchange Commission's rules,
values are calculated by subtracting the exercise price from the fair
market value of the underlying common stock. For purposes of this
table, fair market value is deemed to be $4.70, the closing price
reported on December 31, 2001.
(2) The closing price at December 31, 2001 of $4.70 is less than the
exercise price of the options.
(3) Mr. Ford exercised 875,000 options and has a promissory note payable to
the Company is requiredfor the total exercise price of $756,250.
(4) Mr. Sandler exercised 260,000 options and has a promissory note payable
to provide prompt noticethe Company for the total exercise price of $97,500.
8
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the takingExchange Act requires our directors and executive
officers, and persons who own more than ten percent (10%) of a registered class
of our equity securities, to file with the corporate action without a meeting to
stockholders who have not consentedCommission initial reports of
ownership and reports of changes in writing to such action. Inasmuch as the
Company will have provided to its stockholders of record this Information
Statement, the Company will notify its stockholders at the time of distribution
of its next Quarterly Report on Form 10-QSB or Annual Report on Form 10-KSB of
the effective date of the Amendment. No additional action will be undertaken
pursuant to such written consents, and no dissenters' rights under the Delaware
Law are afforded to the Company's stockholders as a result of the adoption of
the Amendment.
EXECUTIVE OFFICES
The Company's principal executive offices are located at 3020 High Ridge
Road, Suite 100, Boynton Beach, Florida 33426. Its telephone number is (561)
547-9499.
OUTSTANDING VOTING STOCK OF THE COMPANY
As of the Record Date, there were ____________ sharesownership of Common Stock outstanding, representingand other equity
securities of Puradyn. Officers, directors and greater than ten percent (10%)
stockholders are required by Commission regulation to furnish us with copies of
all Section 16(a) forms they file.
To our knowledge, based solely on a review of the voting capital stockcopies of such
reports furnished to us and written representations that no other reports were
required, during the Company
outstandingyear ended December 31, 2001, all Section 16(a) filing
requirements applicable to its officers, directors and entitled to votegreater than ten percent
(10%) beneficial owners were completed and filed on matters submitted to the stockholders of the
Company. Each share of Common Stock entitles the holder thereof to one vote on
all matters submitted to stockholders.
2
a timely basis.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth Common Stockshows certain information regarding Puradyn's
common stock beneficially owned on the May 24, 2002 record date, by:
o each person who is known by us to own beneficially or exercise voting
or dispositive control over 5% or more of Puradyn's common stock,
o each of Puradyn's directors,
o each officer named in the Summary Compensation Table, and
o all officers and directors as a group.
A person is considered a beneficial owner of any securities that the
person owns or has the right to acquire beneficial ownership informationof within 60 days.
At May 24, 2002, there were 17,589,962 shares of common stock outstanding.
Except as of
September 15, 1996,otherwise indicated, (a) we have been informed that the persons
identified in the table have sole voting and dispositive power with respect to
(i) each person known totheir shares, and (b) the Company to be
the beneficial owner of more than 5% of the Company's Common Stock; (ii) each
director of the Company; and (iii) all directors, executive officers and
designated stockholders of the Company as a group. This information as to
beneficial ownership was furnished to the Company by or on behalf of the persons
named. Unless otherwise indicated, the business address of each person listed is 3020 High Ridge Road, Suite
100, Boynton Beach, Florida 33426.
Information with
respect to the percent of class is based on 1,502,294 issued and outstanding
shares of Common Stock as of September 15, 1996.
No. of Shares Percent of
Name and Address or of Common Stock Beneficial
Identity of Group Beneficially Owned Ownership
- ------------------- ------------------ ----------
Richard C. Ford (1)(2) 678,383 43.1%
Richard J. Ford (2)(3) 462,305 30.3%
Traci M. Ford(3) 152,300 10.0%
Jennifer D. Ford/Roe(3) 152,300 10.0%
Stephen J. Hauser(4) 20 *
Byron Lefebvre(5) 44,070 2.9%
All executive officers and directors
as a group (4 persons) 1,184,823 74.4%
J.W. Taylor(6)(7) 114,000 7.5%
Percent of
Name and Address or of Common Stock Beneficial
Identity of Group Beneficially Owned Ownership
- ---------------------------------------------------------------------------------------------------------
Quantum Industrial Partners LDC ("QIP") (1) 4,570,000 25.98%
Richard C. Ford (2) 2,118,118 11.79%
Kevin G. Kroger (3) 182,000 1.03%
Alan J. Sandler (4) 316,538 1.80%
Joseph V. Vittoria (5) 1,317,573 7.45%
Peter H. Stephaich (6) 110,000 *
Ottavio Serena (7) 125,000 *
Michael Castellano (8) 15,250 *
All Officers and Directors as a group (7 persons) 4,184,479 22.82%
- -------------------------
* Less than 1%.
(1) Address is c/o Curacao Corporation Company, N.V., Kaya Flamboyan,
Willenstad Curacao, Netherlands,
Antilles.
9
(2) Mr. Ford is the Company's President, Treasurer,serves as Chief Executive Officer and as a Director, and currently the Chief Financial Officer of the Company.Director. Includes
11,400 shares owned by Catherine Ford, Mr. Ford's wife, of which
Mr. Ford disclaims beneficial ownership. Also included 500options to purchase (i) 100,000 shares of Common Stock beneficially owned by Mrs. Ford's son and for whom Mrs. Ford
is the custodian. Also includesat $.56 per
share through April 14, 2004, options to purchase (i)100,000 shares at
$.21 per share through January 7, 2004, and options to purchase 175,000
shares at $.94 per share through April 1, 2004.
(3) Mr. Kroger is President, Chief Operating Officer, and a Director.
Includes options to purchase 75,000 shares of Common Stock at $9.25
through July 3, 2010.
(4) Mr. Sandler serves as Vice President, Secretary, and a Director.
(5) Mr. Vittoria serves as Chairman of the Board of Directors. Includes
options to purchase 102,500 shares of Common Stock at $5.88 through
October 23, 2005.
(6) Mr. Stephaich serves as a Director. Includes options to purchase 10,000
shares of Common Stock at $5.50 per Share$5.88 through August 2, 2001; 40,000October 23, 2005.
(7) Mr. Serena serves as a Director. Includes options to purchase 5,000
shares of Common Stock at $5.00 per Share$5.88 through August 2, 2006;October 23, 2005, and (iii) options
issued to Mrs. Catherine Fordwarrants
to purchase 3,750100,000 shares of Common Stock.
(8) Mr. Castellano serves as a Director. Includes options to purchase 5,000
shares of Common Stock at $5.50$6.50 through August 2, 2001 for which Mr. Ford disclaims beneficial
ownership.
3
(2) Ownership of approximately 440,000 shares owned by Mr. R.C. FordJanuary 24, 2006 and his
children is currently being contested by members of the Taylor Family.
(3) Mr. Ford is a Vice President, the Secretary and a Director of the Company.
Includes 152,300 shares owned by Traci M. Ford and 152,300 shares owned by
Jennifer D. Ford/Roe over which Richard J. Ford has irrevocable proxy
voting power through 2006. Also includes options to purchase 3,7501,250
shares of Common Stock at $5.50 per Share$4.81 through August 2,May 16, 2006.
(4) Mr. HauserCERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1998, Richard C. Ford, who was, formerlyat the Company's Chief Financial Officer, Chief Oper-
ating Officer and a Vice President.
(5) Mr. Lefebvre is a Directortime, our Chairman of the Company. Includes options to purchase
15,000 shares of Common Stock at $5.00 per Share through August 2, 2006.
(6) Includes 28,500 shares owned by each of Margaret A. Taylor, Barbara A.
Taylor and John F. Taylor, of which James W. Taylor has voting power.
(7) The address is c/o N.A. Taylor and Company, 10 W.9th Avenue, Gloversville,
N.Y. 12078.
AMENDMENT TO CERTIFICATE TO EFFECT UP TO 5 FOR 1 FORWARD STOCK SPLIT
Generally
- ---------
The
Board of Directors and a major stockholder, loaned us $150,000, for which we
issued notes payable due one year from the date of issuance, bearing interest at
12%, and secured by accounts receivable and inventories. On January 24, 2000,
Mr. Ford converted the loan and the related accrued interest totaling $175,504
into 150,000 shares of common stock.
During 1998 and 1999, we borrowed an aggregate of $525,000 from our
bank under a revolving line-of-credit. The revolving line of credit was secured
by certificates of deposit in the name of Richard C. Ford and held by the bank
and a personal guarantee.
In exchange for Mr. Ford's personal guarantee of our borrowings, the
Board of Directors granted Mr. Ford 175,000 options. The fair value of the
Company proposesoptions, estimated at $171,500 using the Black-Scholes valuation model, was
recorded as a deferred financing cost and has been amortized to interest expense
over the term of facility. Included in interest expense in the accompanying
statements of operations for 2000 is amortization of such deferred financing
costs of $39,000.
On January 24, 2000, Mr. Ford and his daughter personally repaid the
bank on our behalf and simultaneously converted their loans totaling $525,000
into 525,000 shares of our common stock. As a result of this conversion, and the
conversions discussed above, we recorded compensation expense in 2000 totaling
approximately $1,687,500 which represents the excess of the fair market value of
the common stock received by Mr. Ford and his daughter over conversion price at
the date of the conversion.
At December 31, 1999, we were obligated to Quantum Industrial Partners
LDC ("QIP"), a significant stockholder, under a 12% Senior Subordinated
Convertible Note due 2003. In addition, during 1998, Puradyn and QIP entered
into a Note Purchase Agreement whereby we issued QIP a 12% Senior Subordinated
Convertible Note totaling $2.5 million.
On December 31, 1999, Puradyn and QIP entered into an agreement for QIP
to convert the outstanding principal amount payable to QIP into 2,500,000 shares
of our common stock at a conversion rate of $1 per share. As a result of the
10
modification of the conversion terms, we recognized interest expense in 1999
totaling $2,115,909, equal to the fair market value of the additional shares
received by QIP resulting from the modification, pursuant to SFAS No. 84,
Induced Conversions of Convertible Debt. On January 24, 2000, QIP converted the
principal balance of the notes, totaling $2,500,000, and forgave the related
accrued interest totaling $717,997, into 2,500,000 shares of our common stock.
In July 2001, we received promissory notes from two officers for the
exercise of their vested stock options in the amount of $853,750 and bearing
interest of 5.63%. The principal and accrued interest are due upon the earlier
of the expiration of the original option periods, which range from July 2008 to
December 2009, or upon the sale of the common stock acquired by the execution of
the options.
On March 28, 2002, we executed a commitment letter with one of our
stockholders to fund up to $2.5 million through the end of 2002. Under the terms
of the commitment, we may draw amounts as needed in multiples of $500,000 to
fund operations subject to Board of Director approval. Amounts drawn will bear
interest at 8% and will become due and payable on December 31, 2003 or upon a
change in control of Puradyn or consummation of any other financing over $3
million. As incentive, we granted such stockholder 100,000 common stock purchase
warrants at an exercise price equal to the closing market price of our stock on
the date of grant.
On April 1, 2002, we executed an agreement with Richard J. Ford, who is
the son of Richard C. Ford the Company's C.E.O., and a third unrelated party, to
receive web site and advertising consulting services. The agreement is for a
term of 15 weeks and the two consultants will receive 10,000 stock options each
as well as cash payments for services rendered. The fair value of the options
was estimated at the date of grant using a Black-Scholes option pricing model
with the following assumptions: risk free interest rates of 4.65, volatility
factors of the expected market price of our common stock of 1.39; and an
expected life of 3 years. The deferred charge of approximately $64,000 will be
amortized over the commitment period.
We believe that the transactions referred to above were on terms no
less favorable to us than terms which could have been obtained from unrelated
third parties.
Private Offering Investment by Directors
In connection with Puradyn's March 2000 private offering of common
stock, at $1.00 per share, the following Directors participated:
Joseph V. Vittoria $1,000,000
Peter H. Stephaich $ 100,000
Ottavio Serena $ 20,000
In connection with Puradyn's September 2000 private offering of common
stock, at $7.50 per share, the following Directors participated:
Joseph V. Vittoria $1,000,000
Kevin G. Kroger $ 150,000
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE BOARD'S
DIRECTOR NOMINEES.
11
PROPOSAL 2
PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP
AS INDEPENDENT AUDITORS OF PURADYN FILTER TECHNOLOGIES INCORPORATED
The appointment of Ernst & Young LLP as our independent auditors for
the fiscal year ending December 31, 2002, will be submitted for ratification by
our stockholders. Ratification of the appointment of our auditors requires the
affirmative vote of a majority of the shares of Puradyn's common stock voting at
the annual meeting in person or by proxy.
Fees to Auditors.
Audit Fees: The aggregate fees, including expenses, billed by Ernst &
Young LLP in connection with their audit of our consolidated financial
statements for the fiscal year ended December 31, 2001, and for their review of
our quarterly reports on Form 10-QSB during the 2001 fiscal year, were $152,495.
Financial Information Systems Design and Implementation Fees: The
aggregate fees billed by Ernst & Young LLP for the fiscal year ended December
31, 2001, for the professional services described in Paragraph (c)(4)(ii) of
Rule 2.01 of Regulation S-X were nil.
All Other Fees: The aggregate fees billed by Ernst & Young LLP for
professional services rendered to us by Ernst & Young LLP during the 2001 fiscal
year, other than Audit Fees and Financial Information Systems Design and
Implementation Fees, were $2,500, including audit related services of $2,500 and
nonaudit services of nil. Audit related services generally include fees for
statutory audits, business combinations accounting consultations, Securities and
Exchange Commission registration statements and internal audit outsourcing
services. Nonaudit fees generally include tax compliance, tax services and
corporate compliance services performed for us
General.
- -------
Representatives of Ernst & Young LLP are expected to be present at the
2002 Annual Meeting, and (a) will be provided with an opportunity to make a
statement if they desire to do so, and (b) are expected to be available to
respond to appropriate questions from stockholders.
Although the Board of Directors is submitting the appointment of Ernst
& Young LLP for stockholder approval, it reserves the right to change the
selection of Ernst & Young LLP as auditors, at any time during the fiscal year,
if it deems such change to be in Puradyn's best interest, even after stockholder
approval.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF ERNST & YOUNG LLP AS PURADYN'S INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2002.
12
PROPOSAL THREE
APPROVAL OF AMENDMENT TO THE CERTIFICATE OF
INCORPORATION TO INCREASE AUTHORIZED COMMON STOCK
On May 22, 2002, the Board of Directors approved a proposal to amend
the Company'sPuradyn's Certificate of Incorporation to effectuate up to a five for one (5:1) forward
stock split of the Company's outstanding Common Stock to occur in one or more
sequences or transactions during a period not to exceed twelve (12) months from
the date of this Information Statement as determined by the Board of Directors.
The forward stock split will be undertaken on the basis of the issuance of up to
five (5) newly issued shares of Common Stock ("New Common Stock") for each one
(1) share of the Company's presently issued and outstanding Common Stock (the
"Forward Stock Split"). The par value of the Common Stock would remain at $.001
per share. No fractional share or scrip representing a fractional share will be
issued upon the Forward Stock Split. Fractional shares of .5 of New Common Stock
will be rounded up to the next highest share, and fractional interests of less
than .5 of New Common Stock will be reduced down to the next nearest share. The
Board of Directors reserve the right, without further action by the
stockholders, to determine the amount of the Forward Stock Split, which may be
authorized in one or more sequences or transactions as determined by the Board
of Directors. The authority to undertake such Forward Stock Split or splits,
pursuant to the written authorization of the majority in interest of the Common
4
Stock of the Company as described herein, shall be limited to a period not to
exceed twelve (12) months from the date of this Information Statement.
The Company is currently authorized to issue 20,000,000 shares of Common
Stock, $.001 par value, of which ____________ (pre-split) shares were issued and
outstanding at the close of business on the Record Date. There are no shares of
Preferred Stock issued or outstanding. Stockholders of the Company will not be
entitled to dissenters' rights under the Delaware Law in connection with this
proposed amendment to the Certificate of Incorporation.
As proposed, the Forward Stock Split would increase the number of the
Company's outstanding shares to approximately ___________ shares of Common Stock
as of the Record Date. The proposed Forward Stock Split would not affect any
stockholder's proportionate equity interest in the Company, except to the extent
that any fractional shares are rounded up or down to the next whole number.
Reasons for the Proposed Stock Split
- ------------------------------------
The Board of Directors of the Company believes that the Forward Stock
Split is necessary to provide a manageable number of shares of Common Stock and
to effectively insure the marketability of the Company's New Common Stock. There
can be no assurances, however, that the trading market for the Common Stock will
increase or improve, nor can the Board of Directors of the Company predict what
effect, if any, the Forward Stock Split will have on the market price of the
Common Stock. The Board of Directors is hopeful that an increase in the number
of shares of Common Stock outstanding, as a consequence of the proposed Forward
Stock Split, and the anticipated corresponding decrease in the price per share,
will stimulate interest in the Company's Common Stock by attracting a broader
based market following, and thereby possibly promote greater liquidity for the
Company's stockholders with respect to those shares presently held by them.
The Company does not propose to modify the number of authorized
shares of Common Stock or Preferredfrom 20,000,000 shares to 30,000,000 shares, and further
decreed that the proposal be submitted to the stockholders with the
recommendation that the amendment be approved. The approval of this Proposal
requires the affirmative vote of a majority of our issued and outstanding common
stock.
If Proposal 3 is approved by the stockholders of Puradyn, the newly
authorized shares of Common Stock will have voting and other rights identical to
the currently authorized shares of Common Stock. It is estimatedThe increase in authorized
shares will have no immediate effect on the rights of existing stockholders. To
the extent that after the Forward Stock
Split (assuming completionadditional authorized shares are issued in the future, the
existing stockholders' percentage ownership of Puradyn will decrease, and
depending upon the price at which such shares are issued, could be dilutive to
existing stockholders. The text of the 5:1 Forwardproposed amendment is set forth in
Appendix A attached to this Proxy Statement.
The Board of Directors believes that adoption of Proposal 3 is
desirable so that, as the need may arise, Puradyn will have more flexibility and
be able to issue shares of Common Stock Split) approximately
___________without the expense and delay of a
special stockholders' meeting, in connection with future opportunities for
expanding the business through investments or acquisitions, public and private
equity financing, management incentive and employee benefit plans, and for other
purposes. As of the date of this Proxy Statement, we do not have any specific
plans for the additional shares of Common Stock that would result from the
approval of this proposal, but we do anticipate issuing equity securities during
the course of the current year if market conditions are favorable.
If Proposal 3 is approved by the stockholders, authorized but unissued
shares of Puradyn's Common Stock will remain, which
shares willmay be availableissued at such times, for future corporate purposes.such purposes
and for such consideration as the Board of Directors may determine to be
appropriate without further action by our stockholders, except as otherwise
required by applicable law, rules or regulations.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE AMENDMENT TO
PURADYN'S CERTIFICATE OF INCORPORATION INCREASING THE NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK.
13
INFORMATION CONCERNING STOCKHOLDER PROPOSALS
The Forward Stock Split is not intendedstockholder intending to changepresent a proposal to be included in the
proportionate equity
interestsproxy statement for our 2003 Annual Meeting of the Company's stockholders; however, some incidental change can be
expectedStockholders must deliver a
proposal in writing to occur in connection with the rounding up or down of fractional
shares. Voting rights and other rights of the stockholders will not be altered
by the Forward Stock Split.our executive offices no later than February 1, 2003.
OTHER MATTERS
Management of the Company is not aware of any present efforts ofother matters to be presented for action
at the 2002 Annual Meeting. However, if any persons to accumulate Common Stock or to obtain controlother matter is properly presented,
it is the intention of the Company, andpersons named in the 5
proposed Forward Stock Splitenclosed form of Common Stock is not intendedproxy to be an
anti-takeover device. The amendment is being sought solely to augment liquidity,
enhance corporate flexibility, and to be more acceptable to the brokerage
community and to investors generally.
Issuance of Stock Certificates
- ------------------------------
The Forward Stock Split will be effected by the filing of an Amendment to
the Company's Certificate of Incorporationvote
in accordance with the Secretary of State of the
State of Delaware. The Company plans to file the amendment as soon as
practicable. The Amendment will become effective at the close of businesstheir best judgment on the
date of filing, unless the Company specifies otherwise. The record datesuch matter.
ADDITIONAL INFORMATION
Our Annual Report on Form 10-KSB, which includes audited, consolidated
financial statements for the Forward Stock Split will be the effective date of the Amendment to the
Certificate of Incorporation (the "Forward Stock Split Date")year ended December 31, 2001, and the
stockholders will be notified following the Forward Stock Split Date that the
Forward Stock Split has been effected.
As soon as practicable after the Forward Stock Split, stockholders will
receive additional shares of Common Stock corresponding to the multiple of the
actual Forward Stock Split and basedour Quarterly
Report on the amount of shares of Common Stock of
the Company listed in their names. To the extent a stockholder holds a number of
shares not evenly divisible by the amount of the Forward Stock Split, the
Company will issue one whole share for fractional interests as described below.
Fractional Shares
- -----------------
No scrip or fractional certificates will be issued in connection with the
Forward Stock Split. Fractional shares of .5 of New Common Stock will be rounded
up to the next highest share, and fractional interest of less than .5 of New
Common Stock will be reduced down to the next nearest share. No service charge
will be payable by stockholders in connection with the exchange of certificates,
and the costs will be borne and paid by the Company.
Federal Income Tax Consequences
- -------------------------------
The Forward Stock Split should not result in the recognition of gain or
loss. The holding period of the shares of New Common Stock will include the
stockholders holding periodForm 10-QSB, which contains unaudited, condensed, consolidated
financial statements for the corresponding shares of Common Stock owned
prior to the Forward Stock Split. The adjusted basis of New Common Stock
(including the original shares) will be equal to the adjusted basis of a
stockholder's original shares. The adjusted basis of each share will be equal to
the total adjusted basis divided by the number of shares, both new and original.
6quarter ended March 31, 2002, accompany this proxy
statement.
No Dissenter's Rights.
- ----------------------
Under Delaware law, stockholders are not entitled to dissenter's rights of
appraisal with respect to the Company's proposed amendment to the Company's
Certificate of Incorporation to effect the Forward Stock Split.
The complete text of the proposed Amendment to the Certificate of
Incorporation is set forth as ExhibitAPPENDIX A
to this Information Statement.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Richard C. Ford,
--------------------------------------------
Richard C. Ford, President
7
EXHIBIT A----------
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
T/F PURIFINER, INC.
T/F Purifiner, Inc.PURADYN FILTER TECHNOLOGIES INCORPORATED
Puradyn Filter Technologies Incorporated (the "Corporation"), a
corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Corporations haveCorporation has adopted a
resolution proposing and declaring advisable the following amendment to the
Certificate of Incorporation of the Corporation:
RESOLVED, that the Certificate of Incorporation of T/F Purifiner, Inc.Puradyn Filter
Technologies Incorporated be amended by changing Article V thereof, so that, as
amended, said Article shall be and read as follows:
ARTICLE V
Capital Stock
The aggregate number of shares of all classes of capital stock which
the Corporation has authority to issue is 20,500,00030,500,000 of which 20,000,00030,000,000 are to
be shares of Common Stock, $.001 par value per share, and of which 500,000 are
to be shares of Preferred Stock, $.001 par value per share. The shares may be
issued by the Corporation from time to time as approved by the Board of
Directors of the Corporation without the approval of the stockholders except as
otherwise provided in this Article V or the rules of a national securities
exchange if applicable.
A description of the different classes and series (if any) of the
Corporation's capital stock, and a statement of the relative powers,
designations, preferences and rights of the shares of each class and series (if
any) of capital stock, and the qualifications, limitations or restrictions
thereof, are as follows:
A. COMMON STOCK.Common Stock. Except as provided in this Certificate, the
holders of the Common Stock shall exclusively possess all voting power. Each
holder of shares of Common Stock shall be entitled to one vote for each share
held by such holder, except as otherwise expressly set forth in this
Certificate.
Whenever there shall have been paid, or declared and set aside for
payment, to the holders of the outstanding shares of any class of stock having
preferences over the Common Stock as to the payment of dividends, the full
amount of dividends and sinking fund or retirement fund or other retirement
payments, if any, to which such holders are respectively entitled in preference
to the Common Stock, then dividends may be paid on the Common Stock, and on any
class or series of stock entitled to participate therewith as to dividends, out
of any assets legally available for the payment of dividends, but only when and
as declared by the Board of Directors of the Corporation.
In the event of any liquidation, dissolution or winding up of the
Corporation, after there shall have been paid, or declared and set aside for
payment, to the holders of the outstanding shares of any class having preference
over the Common Stock in any such event, the full preferential amounts to which
they are respectively entitled, the holders of the Common Stock and of any class
A-1
or series of stock entitled to participate therewith, in whole or in part, as to
distribution of assets shall be entitled, after payment or provision for payment
of all debts and liabilities of the Corporation, to redeem the remaining assets
of the Corporation available for distribution, in cash or in kind.
Effective as of the effective date of this Amendment, each share of Common
Stock, $.001 par value per share, outstanding before the effective date of the
Amendment will be changed into [up to five (5)] fully paid and nonassessable
shares of Common Stock $.001 par value per share; and that after the effective
date of the Amendment each holder of record of one or more certificates
representing shares of the old Common Stock shall be entitled to receive an
additional certificate or certificates representing the proportionate number of
additional shares of new Common Stock. If a stockholder shall be entitled to a
number of shares of new Common Stock which is not a whole number, then the
fractional interests of .5 of New Common Stock will be rounded up to the next
highest share, and fractional interests of less than .5 of New Common Stock will
be reduced down to the next nearest share. The authorized number of shares of
Common Stock and of Preferred Stock shall not be affected by this Amendment.
Each share of Common Stock shall have the same relative powers,
preferences and rights as, and shall be identical in all respects with, all the
other shares of Common Stock of the Corporation, except as otherwise expressly
set forth in this Certificate.
B. PREFERRED STOCK.Preferred Stock. Preferred Stock may be issued from time to
time in one or more series, each of such series to have such powers, vote
designations, preferences, qualifications, limitations, restrictions,
participation, options or other relative or special rights, as are stated and
expressed herein or, to the extent permitted by law, in the resolution or
resolutions providing for the issuance of such series, as adopted by the Board
of Directors. The Board of Directors is hereby expressly empowered, subject to
the provisions of this Paragraph, to provide for the issuance of Preferred Stock
from time to time in one or more series and to fix, as to such series, by
resolution or resolutions providing for the issuance of such series:
(1) the number of shares to constitute such series and
the title or designation of the series;
(2) the rate of dividend, whether or not cumulative, and
the extent of further participation in dividends or
distributions, if any;
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(3) the price and the terms and conditions, if any, upon
which shares of such series are redeemable;
(4) whether or not the shares of such series shall be
subject to sinking fund provisions for the redemption
or purchase of shares;
(5) the amount, if any, payable upon shares in event of
voluntary or involuntary liquidation of the
Corporation;
(6) the terms and conditions, if any, on which shares of
such series are convertible;
(7) the voting power, if any, of such series by
determining the votes (or fraction of a vote) per
share and the elections or events upon which such
series may be voted, or may determine to restrict or
eliminate entirely the right of such series to vote;
(8) such other powers, designations, preferences and
relative, participating, optional or other special
rights, and the qualifications, limitations or
restrictions thereof, as and to the extent permitted
by law.
Each share of each series of Preferred Stock shall have the same
relative powers, preferences and rights as, and shall be identical in all
respects with, all the other shares of the Corporation of the same series,
except as otherwise expressly set forth in this Certificate or any amendment
thereto.
SECOND: That in lieuthe aforesaid amendment was duly adopted by the
Corporation's Board of a meeting and vote of stockholders, the holders of
outstanding shares of Common Stock having not less than the minimum number of
votes which would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted have given
theirDirectors by unanimous written consent to said amendmenton May 22, 2002 in
accordance with the provisions of Section 228141(f) of the General Corporation Law
of the State of Delaware, and by the affirmative vote of stockholders holding a
majority of the Corporation's outstanding shares of capital stock at the
Corporation's 2002 Annual Meeting of the Stockholders on July 9, 2002 in
accordance with the provisions of Section 212 of the General Corporation Law of
the State of Delaware.
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THIRD: That the aforesaid amendments wereamendment was duly adopted in accordance with
the applicable provisions of Section 242 and Section 228 of the General Corporation Law of the
State of Delaware.
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FOURTH: That the aforesaid amendment shall become effective upon
filing.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be
signed by Richard C. Ford, its President, and attested by Richard J. Ford, its
SecretaryChief Executive Officer, this ________ day of
December, 1996.
T/F PURIFINER,__________, 2002.
PURADYN FILTER TECHNOLOGIES, INC.
SEAL
By: _____________________________________________________
Richard C. Ford, President
ATTEST:
By: __________________________
Richard J. Ford, Secretary
4C.E.O.
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