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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
MELTRONIX, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
MELTRONIX, INC.
NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
July 26, 2000
TO THE SHAREHOLDERS OF MELTRONIX, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of MELTRONIX,
INC. (the "Company"), a California corporation, will be held on July 26, 2000,
at 10:00 a.m., local time, at 9577 Chesapeake Drive, San Diego, California
92123-1304, for the following purposes:
1. To elect directors to serve for the ensuing year or until their
successors are elected and qualified.
2. To ratify the appointment of BDO Seidman, LLP ("BDO") as independent
accountants of the Company for the fiscal year ended December 31, 2000.
3. To vote upon such other matters as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on June 8, 2000, are
entitled to notice of and to vote at the meeting. The stock transfer books
will not be closed between the record date and the date of the meeting. A list
of shareholders entitled to vote at the Annual Meeting will be available for
inspection at the executive offices of the Company for a period of ten days
before the Annual Meeting.
All shareholders are cordially invited to attend the meeting in person.
However, to ensure your representation at the meeting, you are urged to sign
and return the enclosed Proxy as promptly as possible in the envelope enclosed
for that purpose.
Any shareholder attending the meeting may vote in person even if he or she
has returned a Proxy.
Sincerely,
Andrew K. Wrobel
Chairman, President and Chief
Executive Officer
May 1, 2000
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE READ THE ATTACHED
PROXY STATEMENT CAREFULLY, AND COMPLETE, SIGN AND DATE THE ENCLOSED PROXY
CARD AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE>
PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
<S> <C>
GENERAL................................................................... 1
Revocability of Proxies................................................... 1
Solicitation.............................................................. 1
Deadline for Receipt of Shareholder Proposals............................. 1
Record Date and Voting.................................................... 1
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING............................ 2
Proposal One--Election of Directors....................................... 2
Nominees................................................................ 2
Business Experience of Directors........................................ 4
Director Remuneration................................................... 4
Certain Relationships and Related Transactions.......................... 5
Proposal Two--Ratification of Independent Accountants..................... 7
Other Matters............................................................. 7
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.......... 8
EXECUTIVE COMPENSATION AND RELATED INFORMATION............................ 11
Summary of Cash and Certain Other Compensation............................ 11
Option Grants in Last Fiscal Year......................................... 12
Aggregated Option Exercises and Fiscal Year-End Values.................... 12
Compensation and Stock Option Committee Interlocks and Insider
Participation............................................................ 12
Employment Contracts and Termination of Employment and Change in Control
Arrangements............................................................. 13
COMPENSATION AND STOCK OPTION COMMITTEE REPORT............................ 13
General Compensation Policy............................................... 13
Factors................................................................... 14
Base Salary............................................................... 14
Annual Incentive Compensation............................................. 14
Long-Term Incentive Compensation.......................................... 14
CEO Compensation.......................................................... 14
Compliance with Internal Revenue Code Section 162 (m)..................... 15
COMPARISON OF SHAREHOLDER RETURN.......................................... 16
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934...... 17
FORM 10-K................................................................. 17
</TABLE>
i
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MELTRONIX, INC.
9577 Chesapeake Drive
San Diego, California 92123-1304
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 26, 2000
GENERAL
The enclosed proxy ("Proxy") is solicited on behalf of the Board of
Directors of MELTRONIX, INC., a California corporation (the "Company"), for
use at the Annual Meeting of Shareholders to be held on July 26, 2000 (the
"Annual Meeting"). The Annual Meeting will be held at 10:00 a.m., local time,
at the Company's corporate headquarters at 9577 Chesapeake Drive, San Diego,
California, 92123-1304.
These proxy solicitation materials were mailed on or about June 15, 2000, to
all shareholders entitled to vote at the Annual Meeting.
Revocability of Proxies
Any person giving a Proxy has the power to revoke it at any time before its
exercise. It may be revoked by filing with the Chief Financial Officer of the
Company at the Company's principal executive offices, 9577 Chesapeake Drive,
San Diego, California, 92123-1304, a notice of revocation or another signed
Proxy with a later date. Any person may also revoke his or her Proxy by
attending the Annual Meeting and voting in person.
Solicitation
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement, the Proxy
and any additional soliciting materials furnished to shareholders. Copies of
solicitation materials will be furnished to brokerage houses, fiduciaries, and
custodians holding shares in their names that are beneficially owned by others
so that they may forward this solicitation material to such beneficial owners.
In addition, the Company may reimburse such persons for their costs in
forwarding the solicitation materials to such beneficial owners. The original
solicitation of proxies by mail will be supplemented by solicitation by
telephone, telegram, or other means by directors, officers or employees of the
Company. No compensation will be paid to directors, officers or employees for
any such services.
Deadline for Receipt of Shareholder Proposals
Proposals of shareholders of the Company that are intended to be presented
by such shareholders at the 2001 Annual Meeting of Shareholders must be
received by the Company no later than December 31, 2000, in order that they
may be included in the proxy statement and form of proxy relating to that
meeting.
Record Date and Voting
Shareholders of record on June 8, 2000 are entitled to notice of and to vote
at the Annual Meeting. On April 15, 2000, 11,211,344 shares of the Company's
common stock ("Common Stock"), no par value, were issued and outstanding and
9,362,777 shares of Series A Convertible Restricted Preferred Stock
("Restricted Preferred Stock") were outstanding. Abstentions and broker non-
votes are counted as present for the purpose of determining the presence of a
quorum for the transaction of business. Each shareholder is entitled to one
vote for each share of Common Stock held and two votes for each share of
Restricted Preferred Stock held. In addition, as long as any shares of
Restricted Preferred Stock are outstanding, the holders of the Restricted
Preferred Stock voting as a separate series with cumulative voting rights as
among themselves, shall be entitled to elect one director. The holders of the
Restricted Preferred Stock and the Common Stock, voting together as a single
class, shall be entitled to elect the remaining directors of the Company. All
votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes.
1
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MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
PROPOSAL ONE--ELECTION OF DIRECTORS
The Bylaws of the Company provide that the Board of Directors shall be
comprised of no fewer than four (4) nor greater than seven (7) Directors, with
the exact number to be fixed by the Board. The currently authorized number of
Directors is seven (7), and, as of the date of this Proxy Statement, is
comprised of Messrs. Wrobel, Bryan, Howland, Hong, Heeb, Waring and Dr.
Barrow. Proxies cannot be voted for a greater number of persons than the
number of nominees named. At the Annual Meeting, seven (7) Directors are to be
elected to serve until the Company's next annual meeting or until their
successors are elected and qualified. The Board of Directors has selected
seven (7) nominees, all of whom are current Directors of the Company. Each
person nominated for election has agreed to serve if elected and management
has no reason to believe that any nominee will be unavailable to serve. Unless
otherwise instructed, the proxy holders will vote the Proxies received by them
FOR the nominees named below. The seven (7) candidates receiving the highest
number of affirmative votes of the shares entitled to vote at the Annual
Meeting will be elected Directors of the Company.
Nominees
Set forth below is information regarding the nominees, including information
furnished by them as to principal occupations, certain other directorships
held by them, any arrangements pursuant to which they were selected as
directors or nominees and their ages as of April 15, 2000.
<TABLE>
<CAPTION>
Positions and Offices Held With The
Name Age Company
---- --- -----------------------------------
<C> <C> <S>
Chairman, President and Chief Executive
Andrew K. Wrobel(3)(4)...... 48 Officer
Abigail A. Barrow........... 39 Director
Anthony J. A. Bryan(2)(4)... 77 Director
Frank Howland(2)(4)......... 73 Director
Lin Hong Wong(1)(3)......... 54 Director
Waldemar Heeb(2)(3)(4)...... 71 Director
James T. Waring, Esq.(1).... 52 Director
</TABLE>
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(1) Member of the Compensation and Stock Option Committee
(2) Member of the Audit Committee
(3) Member of the Interested Directors' Transaction Committee
(4) Member of the Creditors' Restructuring Committee
Business Experience of Directors
The principal occupations of each current director of the Company for at
least the last five (5) years are as follows:
Andrew K. Wrobel has served as the Chairman, President and Chief Executive
Officer of the Company since January 1999. Prior to that, Mr. Wrobel was
President, Chief Executive Officer and Director of the Company since October
1997. From 1988 to 1997, Mr. Wrobel served as Chairman, President and Chief
Executive Officer of GIGATEK Memory Systems, Inc., a manufacturer of computer
disk drive back up cartridges. Prior to 1988, Mr. Wrobel was Vice President of
Technology for Carlisle Memory Products Group and Vice President of
Engineering for Data Electronics, and held various management positions in
Marketing and Engineering at Texas Instruments and BASF. Mr. Wrobel holds a
Masters degree from the Massachusetts Institute of Technology.
Abigail A. Barrow was appointed to the Company's Board of Directors in
January 2000. From 1990 to the present, Dr. Barrow has been the Program
Director of the University of California, San Diego, CONNECT Program. Dr.
Barrow has a B.Sc. in Mechanical Engineering from the University of Edinburgh,
Scotland, and a Ph.D. in Science and Technology Studies from the University of
Edinburgh.
2
<PAGE>
Anthony J. A. Bryan has served on the Company's Board of Directors since
November 1996. Since March 1996, Mr. Bryan has been Senior Managing Director
of The Watley Group, LLC, a firm that specializes in corporate restructurings,
management consulting, merchant banking and mergers and acquisitions. From
December 1987 to December 1995, Mr. Bryan was Chairman of the Executive
Committee of Hospital Corporation International, a hospital management and
health care company. From March 1988 to February 1991, Mr. Bryan was Chairman
and Chief Executive Officer of Oceanics Group, a company specializing in
offshore surveying and positioning services. Prior to that, Mr. Bryan was
Chairman, President and Chief Operating Officer of Copperweld Corporation and
President and Chief Executive Officer of Cameron Iron Works. Mr. Bryan has
served on the boards of directors of several industrial, charitable and
educational institutions, including Federal Express, Chrysler Corporation,
Pittsburgh National Corporation and Imetal (Paris). Mr. Bryan holds a Masters
Degree in Business Administration from Harvard University.
Frank L. Howland has served on the Company's Board of Directors since June
1994. Since March 1989, Dr. Howland has been President of Frank L. Howland
Inc., a consulting company specializing in the area of assembly and packaging
of electronic components. From 1955 to 1989, Dr. Howland was a manager in the
Electronic Component Research and Development divisions of Bell Laboratories,
Inc. Dr. Howland holds a B.S. degree in civil engineering from Rutgers
University and an M.S. and Ph.D. in civil/structural engineering from the
University of Illinois.
Lin Hong Wong has served on the Company's Board of Directors since August
1998. Mr. Wong is a director and Executive Vice President of Transpac Capital
Pte. Ltd., ("Transpac") a private equity investment company based in
Singapore. Mr. Wong has been with Transpac since August 1990. From January
1986 to July 1990, Mr. Wong was the Managing Director and Vice President of
Micropolis Ltd., the Singapore subsidiary of Micropolis Corporation, a
manufacturer of high capacity hard disk drives. Mr. Wong was also previously
the Managing Director of Computer Memories (Far East) Ltd., a manufacturer of
hard disk drives; the General Manager of Micro Peripherals Singapore Pte.
Ltd., a manufacturer of floppy disk drives; and the Head of Electronics of the
Economic Development Board, the government agency that promotes economic and
industrial development in Singapore. Mr. Wong currently serves on the boards
of several other companies and educational institutions and is the Vice
Chairman of the Singapore Venture Capital Association. Mr. Wong holds a degree
in electrical engineering and a diploma in business administration.
Waldemar Heeb has served on the Company's Board of Directors since July
1998. Mr. Heeb served as President of CTM Electronics, Inc. ("CTM") since its
inception in February 1984 and continued to serve as President of CTM after
CTM was acquired by the Company in June 1993. Mr. Heeb retired in 1996. CTM
became a wholly-owned subsidiary of the Company in June of 1993. In November
1999, CTM's name was changed to MeltroniX Solutions, Inc.
James T. Waring, Esq. has served on the Company's Board of Directors since
August 1999. Mr. Waring is a principal in FI Financial, LLC, a real estate
investment company with major projects including land acquisitions and
building construction in the greater San Diego area. Since 1982, Mr. Waring
has been of counsel to Ross, Dixon and Bell LLP (formerly Miller, Boyko and
Bell) in San Diego, California. In addition, Mr. Waring has been active in
real estate organizing, financing and bid strategy, as well as an investor for
various real estate projects. From 1975 to 1982, Mr. Waring practiced law,
specializing in tax planning and asset acquisition and sale. Mr. Waring holds
a Juris Doctor degree from the University of San Diego and a Bachelor of
Science degree from the University of Southern California.
There are no family relationships among executive officers or directors of
the Company.
During the fiscal year ended December 31, 1999, the Board of Directors held
six (6) meetings and acted by unanimous written consent on two (2) occasions.
The Board of Directors has an Audit Committee, a Compensation and Stock Option
Committee, an Interested Directors' Transaction Committee and a Creditors'
Restructuring Committee. No Director serving for the full fiscal year attended
fewer than 75% of the aggregate number of meetings of the Board of Directors
and meetings of the Committees of the Board on which he serves.
3
<PAGE>
The Audit Committee currently consists of three (3) Directors, Mr. Howland,
Mr. Heeb and Mr. Bryan. The Audit Committee is primarily responsible for
approving the services performed by the Company's independent accountants and
reviewing their reports regarding the Company's accounting practices and
systems of internal accounting controls. During the fiscal year ended December
31, 1999, the Audit Committee held one (1) meeting.
The Compensation and Stock Option Committee currently consists of two (2)
Directors, Mr. Wong and Mr. Waring. Mr. Wrobel is entitled to attend meetings
of the Compensation and Stock Option Committee as a non-voting observer.
During the fiscal year ended December 31, 1999, the Compensation and Stock
Option Committee held one (1) meeting. This Committee reviews and approves the
Company's general compensation policies and sets compensation levels, subject
to Board review, for the Company's directors and executive officers.
The Interested Directors' Transaction Committee currently consists of three
(3) Directors, Mr. Wong, Mr. Heeb and Mr. Wrobel. The Interested Directors'
Transaction Committee held one (1) meeting during the fiscal year ended
December 31, 1999.
The Creditors' Restructuring Committee currently consists of four (4)
Directors, Mr. Wrobel, Mr. Bryan, Dr. Howland and Mr. Heeb. The Creditors'
Restructuring Committee held three (3) meetings during the fiscal year ended
December 31, 1999.
Director Remuneration
Fees and Expenses. Directors are reimbursed for expenses incurred in
connection with attending Board and Committee meetings. Each non-employee
Director receives a fee of $1,500 for each meeting attended, $750 for each
Board committee meeting that does not occur on the date of a Board meeting and
a fee of $1,000 for each quarter of Board service as a Director. Directors who
are also employees of the Company receive no additional remuneration for
serving as Directors (other than reimbursement for expenses incurred).
During 1999, the Company paid fees to the following Directors in their
capacity as a Director: Mr. Bryan--paid $1,000 and accrued $4,000;
Dr. Howland--paid $5,000; Mr. Heeb--paid $2,500 and accrued $2,500; Mr. Wong--
paid $1,000 and accrued $4,000; Mr. Waring--paid $478 and accrued $2,500.
Automatic Option Grants. Pursuant to the Automatic Option Grant Program of
the 1993 Plan as amended May 17, 1999, by the Board and approved by the
Shareholders in October 1999, on which date it became effective, each
individual who first joins the Board as a non-employee director receives an
option grant for 40,000 shares of Common Stock on the date of his or her
initial election or appointment to the Board. Beginning with the upcoming July
2000 Annual Meeting each individual who is to continue to serve as a non-
employee Board member, whether or not he or she is standing for re-election at
that particular meeting, will receive an option grant for 30,000 shares of
Common Stock. Each grant under the Automatic Option Grant Program will have an
exercise price per share equal to the fair market value per share of the
Common Stock on the grant date and will have a maximum term of ten years,
subject to earlier termination should the optionee cease to serve as a Board
member. Each option granted under the Automatic Option Grant Program becomes
exercisable in four successive equal annual installments over the optionee's
period of continued Board service, measured from the grant date. However, the
shares subject to each outstanding option under the Automatic Option Grant
Program will accelerate and become exercisable in full upon (i) an acquisition
of the Company by merger or asset sale, (ii) a hostile takeover of the Company
or (iii) the optionee's death or disability while continuing to serve as a
Board member.
On August 18, 1999, Mr. Waring was appointed to the Board. Pursuant to the
Automatic Option Grant Program of the 1993 Plan, Mr. Waring received a stock
option grant for 15,000 shares of Common Stock at an exercise price of $0.37
per share, the fair market value of the Common Stock on the date of grant.
4
<PAGE>
Under the Automatic Option Grant Program, a stock option for 10,000 shares
of Common Stock was granted on August 18, 1999, to each of Messrs. Bryan,
Heeb, Hong and Dr. Howland who continued to serve as non-employee Board
members following the Annual Shareholders Meeting held on that date. Each of
these options has an exercise price of $0.37 per share, the fair market value
of the common stock on the date of grant.
On October 14, 1999, additional options were granted to the members of the
board, upon approval by the shareholders of the amendments to the 1993 Stock
Option / Stock Issuance Plan. In connection therewith stock option grants were
issued to Mr. Bryan for 306,733 shares, Mr. Heeb for 43,000 shares, Dr.
Howland for 267,976 shares, Mr. Waring for 25,800 shares and Mr. Wong for
43,000 shares at an exercise price of $0.32, the fair market value of the
common stock on the date of grant.
Certain Relationships and Related Transactions
The Company signed a Debt Conversion and Mutual Settlement and Release
Agreement ("Debt Conversion Agreement") with Transpac wherein in October 1999,
Transpac converted all of the debt and accrued interest obligations the
Company owed to Transpac in exchange for 4,031,826 shares of the Company's
Restricted Preferred Stock, each share of which is convertible into two shares
of the Company's Common Stock. The Restricted Preferred Stock is convertible
into 8,063,652 shares of the Company's Common Stock. The Debt Conversion
Agreement also provides that the warrants issued to Transpac to purchase
500,000 shares of the Company's Common Stock at $0.50 per share. Transpac was
also granted demand registration rights for the 8,063,652 shares of Common
Stock.
The Company entered into a letter agreement dated April 14, 1999, with
STMicroelectronics, Inc., and FI Financial, LLC. Mr. Waring, a member of the
Company's Board of Directors, is an officer of FI Financial. Under the terms
of the agreement, STMicroelectronics, a former creditor of the Company,
assigned its rights to a series of agreements with the Company to FI
Financial. FI Financial, for consideration paid to STMicroelectronics of
$500,000, received 1,322,647 shares of the Company's Restricted Preferred
Stock, which shares are convertible into 2,645,294 shares of the Company's
Common Stock pursuant to the debt conversion transaction and related matters
which were approved by the shareholders of the Company in October 1999.
FI Financial also entered into a series of Assignment of Interest agreements
with a group of employees, directors and officers of the Company, whereby
these parties and others paid FI Financial a total of $240,000 in exchange for
396,794 shares of the Company's Restricted Preferred Stock, which is
convertible into 899,392 shares of the Company's Common Stock. FI Financial
and the Company employees also were granted demand registration rights with
respect to their Common Stock.
Mr. Waring, a director, loaned the Company $250,000 pursuant to a Loan
Agreement and Stock Issuance Agreement dated March 22, 2000. The loan bears
interest at 10% per annum and the entire balance is due on June 22, 2001. Mr.
Waring has the right, at any time after May 21, 2000, to convert the principal
and accrued interest due on the loan as consideration for the purchase of
shares of Common Stock under the 1993 Stock Option / Stock Issuance Plan
("1993 Plan") at 85% of the fair market value of the Common Stock on the date
the election is made.
In connection with the debt conversion transaction and the other matters
approved by the shareholders in October 1999, Mr. Wrobel purchased in October
1999, 39,679 shares of Restricted Preferred Stock which are convertible into
79,358 shares of Common Stock, and received options to acquire 1,032,000
shares of Common Stock of the Company.
Messrs. Lin Hong Wong, Frank Howland, Waldemar Heeb, Anthony Bryan and James
Waring, directors of the Company, each received options to acquire: 43,000;
267,976; 43,000; 306,733 and 25,800 shares, respectively, of Common Stock of
the Company pursuant to the debt conversion transaction and the other matters
approved by the shareholders of the Company in October 1999.
5
<PAGE>
Mr. Trafecanty, the Chief Financial Officer and Senior Vice President from
August 1996 until January 2000 when he ceased to be an employee of the
Company, as part of the group of employees discussed above, paid $35,000 and
entered into an Assignment of Interest Agreement with FI Financial wherein he
received in October 1999, 92,585 shares of Restricted Preferred Stock, which
was convertible into 185,170 shares of Common Stock of the Company. Mr.
Trafecanty also had vested options to acquire 244,166 shares of Common Stock,
all of which options were exercised as of April 15, 2000.
Mr. Sullivan, the Vice President and Controller from March 1997 until he
ceased to be an employee of the Company in March 2000, as part of the group of
employees discussed above, paid $5,000 and entered into an Assignment of
Interest Agreement with FI Financial wherein he received in October 1999,
13,226 shares of Restricted Preferred Stock which was convertible into 26,452
shares of Common Stock of the Company. Mr. Sullivan also has vested options to
acquire 137,500 shares of Common Stock which were exercisable on the date he
left the Company and for 90 days thereafter.
Development Bank of Singapore, Ltd., ("DBS") signed a Debt Conversion
Agreement wherein in October 1999, it converted all of its principal and
accrued interest obligations which the Company had defaulted on, in exchange
for 1,154,311 shares of Restricted Preferred Stock, which are convertible into
2,308,622 shares of Common Stock of the Company.
Texas Instruments Singapore, Ltd., signed a Debt Conversion Agreement
wherein in October 1999 it agreed to exchange all of the principal and accrued
interest obligations which the Company had defaulted on, in exchange for
1,056,026 shares of Restricted Preferred Stock which are convertible into
2,112,053 shares of Common Stock of the Company.
Motorola, Inc., signed a Debt Conversion Agreement wherein in October 1999
it converted all of the principal and accrued interest obligations owed to it
which the Company had defaulted on, in exchange for 869,932 shares of
Restricted Preferred Stock, which are convertible into 1,739,864 shares of
Common Stock of the Company.
Transpac, DBS, Texas Instruments Singapore, Ltd., and Motorola entered into
Registration Rights Agreements in October 1999 with the Company which gives
each of them demand registration rights with respect to the referenced
underlying Common Stock of the Company.
The Company believes that all of the transactions set forth above were made
on terms no less favorable to the Company than could have been obtained from
unaffiliated third parties. All future transactions between the Company and
its officers, directors, principal shareholders and affiliates will be
approved by a majority of the Board of Directors, including a majority of the
independent and disinterested outside directors on the Board of Directors, and
will be on terms no less favorable to the Company than could be obtained from
unaffiliated third parties.
The Board of Directors recommends that the shareholders vote FOR the
election of each of the nominees to serve as Directors of the Company until
the next Annual Meeting or until their successors have been elected and
qualified.
6
<PAGE>
PROPOSAL TWO--RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed the firm of BDO Seidman, LLP ("BDO"),
independent accountants, to audit the financial statements of the Company for
the fiscal year ended December 31, 2000, and is asking the shareholders to
ratify this appointment.
In the event the shareholders fail to ratify the appointment, the Board of
Directors will reconsider its selection. Even if the selection is ratified,
the Board of Directors in its discretion may direct the appointment of a
different independent accounting firm at any time during the year if the Board
of Directors believes that such a change would be in the best interests of the
Company and its shareholders. The affirmative vote of a majority of the
Company's voting shares represented and voting at the Annual Meeting is
required to ratify the selection of BDO.
A representative of BDO is expected to be present at the Annual Meeting,
will have the opportunity to make a statement if he or she desires to do so,
and will be available to respond to appropriate questions.
The Board of Directors recommends that the shareholders vote FOR the
ratification of the selection of BDO Seidman, LLP to serve as the Company's
independent accountants for the fiscal year ended December 31, 2000.
OTHER MATTERS
The Company knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters properly come before
the annual meeting, it is the intention of the persons named in the enclosed
form of Proxy to vote the shares they represent as the Board of Directors may
recommend. Discretionary authority with respect to such other matters is
granted by the execution of the enclosed Proxy.
7
<PAGE>
SECURITIES OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information known to the Company regarding
the ownership of the Company's Common Stock as of April 15, 2000 for (i) each
Director and nominee who owns Common Stock, (ii) all persons or entities who
were known by the Company to be beneficial owners of five percent (5%) or more
of the Company's Common Stock, (iii) the Chief Executive Officer and the other
executive officers whose compensation for 1999 were each in excess of $100,000
and (iv) all executive officers and Directors of the Company as a group.
<TABLE>
<CAPTION>
Percent of
Number of Total Shares
Shares Outstanding
Beneficially Beneficially
Name and Address of Beneficial Owner Owned(1) Owned
------------------------------------ ------------ ------------
<S> <C> <C>
Entities that may be deemed to be affiliated with
Transpac Capital Pte. Ltd.(2)..................... 9,405,395 30.9%
6 Shenton Way
#2D-09 DBS Building
Tower Two
Singapore 068809
Development Bank of Singapore(3)................... 2,308,622 7.7%
6 Sheraton Way #20-09
DBS Building Tower Two
Singapore 06880
Motorola, Inc.(4).................................. 1,739,864 5.8%
1303 East Algonquin Road
Schaumburg, Illinois 60196
Texas Instruments Singapore, Ltd.(5)............... 2,112,052 7.0%
Anthony J. A. Bryan(6)............................. 485,066 1.6%
Abigail A. Barrow(6)............................... 40,000 0.1%
Frank Howland(6)................................... 423,776 1.4%
Waldemar Heeb(6)................................... 68,000 0.2%
Lin Hong Wong(6)................................... 68,000 0.2%
Randal D. Siville(6)............................... 100,000 0.3%
James Waring(7).................................... 1,389,910 4.6%
Andrew K. Wrobel(8)................................ 1,715,358 5.4%
Denis J. Trafecanty(9)............................. 429,336 1.4%
Timothy R. Sullivan(10)............................ 163,952 0.5%
All current directors and executive officers as a
group (8 persons)................................. 4,290,110 13.1%
</TABLE>
- --------
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G filed with the
Securities and Exchange Commission ("Commission"). Beneficial ownership
is determined in accordance with the rules of the Securities and Exchange
Commission and generally includes voting or investment power with respect
to securities. Percentage beneficially owned is based on a total of
29,963,898 shares of Common Stock issued and outstanding as of April 15,
2000. Shares of Common Stock subject to options or warrants currently
exercisable or convertible, or exercisable or convertible within 60 days
of April 30, 2000, are deemed outstanding for computing the percentage of
the person holding such options or warrants but are not outstanding for
computing the percentage of any other person. Except as indicated in the
footnotes to this table and pursuant to applicable community
8
<PAGE>
property laws, the persons named in the table have sole voting and
investment power with respect to all shares of Common Stock beneficially
owned.
(2) Transpac Capital Pte. Ltd. ("Transpac Capital"), a Singapore private
limited company; does not have a direct ownership interest in the Common
Stock of MeltroniX, Inc., a California corporation ("MeltroniX").
Transpac Nominees Pte. Ltd. (Transpac Nominees"), a Singapore private
limited company and wholly-owned subsidiary of Transpac Capital, holds
securities of MeltroniX in a nominee capacity for the benefit of several
entities associated with Transpac Capital, including Transpac Industrial
Holdings Limited ("TIH"), a Singapore public listed company; Regional
Investment Company Limited ("Regional"), a Singapore public limited
company; Transpac Equity Fund ("TEF"), a British Virgin Islands trust;
Transpac Venture Partnership II ("TVP"), a collective investment scheme,
Transpac Managers Fund III Ltd. ("TMF"), a British Virgin Islands
international business company, and NatSteel Equity III Pte. Ltd.
("NATSTEEL"), a Singapore private limited company. In its capacity as
the investment adviser to each of these entities and the sole
stockholder of Transpac Nominees, Transpac Capital has the power to
control the voting and disposition of the shares of Common Stock and
Restricted Preferred Stock and warrants for Common Stock held by
Transpac Nominees described below. Each of the foregoing entities other
than Transpac Nominees may be referred to herein as a "Transpac Entity".
Each share of Restricted Preferred Stock is currently convertible into
two shares of Common Stock.
Transpac Nominees holds 1,599,632 shares of Restricted Preferred Stock,
convertible into 3,199,264 shares of Common Stock, 334,069 shares of
Common Stock and warrants for 198,500 shares of Common Stock for the
benefit of TIH. Transpac Nominees holds 440,843 shares of Restricted
Preferred Stock, convertible into 881,686 shares of Common Stock, 92,066
shares of Common Stock and warrants for 54,500 shares of Common Stock for
the benefit of Regional. Transpac Nominees holds 944,664 shares of
Restricted Preferred Stock, convertible into 1,889,328 shares of Common
Stock, 197,285 shares of Common Stock and warrants for 117,151 shares of
Common Stock for the benefit of TEF. Transpac Nominees holds 667,563
shares of Restricted Preferred Stock, convertible into 1,335,126 shares of
Common Stock, 139,415 shares of Common Stock and warrants for 82,787
shares of Common Stock for the benefit of TVP. Transpac Nominees holds
12,595 shares of Restricted Preferred Stock, convertible into 25,190
shares of Common Stock, 2,631 shares of Common Stock and warrants for
1,562 shares of Common Stock for the benefit of TMF. Transpac Nominees
holds 366,529 shares of Restricted Preferred Stock, convertible into
733,058 shares of Common Stock, 76,547 shares of Common Stock and warrants
for 45,500 shares of Common Stock for the benefit of NatSteel. Each of
TIH, Regional, TEF, TVP, TMF and NatSteel disclaims beneficial ownership
of any shares held for the benefit of any other Transpac entity.
(3) Includes 1,154,311 shares of Restricted Preferred Stock which are
convertible into 2,308,622 shares of Common Stock within 60 days of
April 30, 2000.
(4) Includes 869,932 shares of Restricted Preferred Stock which are
convertible into 1,739,864 shares of Common Stock within 60 days of
April 30, 2000.
(5) Includes 1,056,026 shares of Restricted Preferred Stock which are
convertible into 2,112,052 shares of Common Stock within 60 days of
April 30, 2000.
(6) All shares in the form of stock options exercisable within 60 days of
April 30, 2000.
(7) Includes 630,000 shares of Restricted Preferred Stock held by the Waring
Family Trust, which are convertible within 60 days of April 30, 2000,
into 1,260,000 shares of Common Stock of the Company. Also includes
37,500 shares of Restricted Preferred Stock held by two individual
trusts for the benefit of Mr. Waring's two minor children, which are
convertible within 60 days of April 30, 2000, into 75,000 shares of
Common Stock of the Company. Mr. Waring also holds options to acquire
40,800 shares of Common Stock which are exercisable within 60 days of
April 30, 2000.
(8) Includes 39,679 shares of Restricted Preferred Stock which is
convertible within 60 days of April 30, 2000, into 79,358 shares of
Common Stock of the Company. Includes 4,000 shares purchased in December
1999. Also includes options to acquire a total of 1,632,000 shares of
Common Stock which are exercisable within 60 days of April 30, 2000.
9
<PAGE>
(9) Includes 92,585 shares of Restricted Preferred Stock which are
convertible within 60 days of April 30, 2000, into 185,170 shares of
Common Stock of the Company and vested options to acquire 244,166 shares
of Common Stock of the Company, all of which options were exercised.
(10) Includes 13,226 shares of Restricted Preferred Stock which are
convertible within 60 days of April 30, 2000, into 26,452 shares of
Common Stock of the Company, and options to acquire 137,500 shares of
Common Stock exercisable on the date he ceased to be an employee of the
Company and for 90 days thereafter.
(11) Mr. Trafecanty was the Chief Financial Officer and Senior Vice President
of the Company from August 1996 until January 11, 2000, when he ceased
to be an employee of the Company.
(12) Mr. Sullivan was the Vice President and Controller of the Company from
March 1997 until March 13, 2000, when he ceased to be an employee of the
Company.
10
<PAGE>
EXECUTIVE COMPENSATION AND RELATED INFORMATION
Summary of Cash and Certain Other Compensation
The following table provides certain summary information concerning
compensation earned, for services rendered in all capacities to the Company
and its subsidiaries, for the fiscal years ended December 31, 1999, 1998 and
1997, by all persons who served as the Company's Chief Executive Officer
during 1999, and each of the other four (4) most highly compensated executive
officers of the Company who earned more than $100,000 in compensation for the
1998 fiscal year (hereafter referred to as "Named Executive Officers").
<TABLE>
<CAPTION>
Long Term Compensation
--------------------------------
Annual Compensation Awards Payouts
---------------------------- --------------------- -------
Restricted Securities
Other Annual Stock Underlying LTIP All Other
Name and Principal Salary Bonus Compensation Award(s) Options Payouts Compensation
Position Year ($) ($) ($)(1) ($) (#) ($) ($)(2)
- ------------------ ---- ------- ------- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Andrew K. Wrobel(3)..... 1999 242,546 141,786 -- -- 1,032,000 -- 6,344
Chairman, President and 1998 220,898 133,980 -- -- -- -- 3,015
Chief Executive Officer 1997 46,664 25,000 -- -- 600,000 -- 99
Denis J. Trafecanty(4).. 1999 162,462 10,000 32,050(5) -- 516,000 -- 10,219
Senior Vice President
and 1998 158,154 80,000 46,723(5) -- -- -- 11,858
Chief Financial Officer 1997 149,414 35,000 28,798(5) -- 300,000(6) -- 5,102
Timothy R. Sullivan(7).. 1999 121,233 17,562 -- -- 258,000 -- 3,677
Vice President and 1998 117,335 59,583 -- -- -- -- 4,559
Controller 1997 97,741 20,000 -- -- 150,000 -- 21,612(7)
</TABLE>
- --------
(1) Other Annual Compensation for all other employees listed in the table is
less than $50,000 and 10% of the total of annual salary and bonus for such
individual.
(2) All other compensation is comprised of (i) matching contributions made by
the Company on behalf of the Named Executive Officer to its Section 401(k)
Plan and (ii) annual premiums paid for group term life insurance policies.
Under such policies, the Named Executive Officer may designate the
beneficiary of the insurance proceeds payable upon death. The amounts of
the Company's matching contribution to its Section 401(k) Plan and the
life insurance premiums are set forth below:
<TABLE>
<CAPTION>
Matching 401(k) Life Insurance
Contribution ($) Premium ($)
---------------- --------------
<S> <C> <C> <C>
Andrew K. Wrobel........................ 1999 -- 6,344
1998 -- 3,015
1997 -- 99
Denis J. Trafecanty..................... 1999 4,869 5,350
1998 4,748 7,110
1997 4,360 742
Timothy R. Sullivan..................... 1999 3,677 --
1998 3,594 965
1997 1,650 112
</TABLE>
(3) Mr. Wrobel was appointed as Chairman of the Board of Directors in January
1999. Mr. Wrobel was appointed President and Chief Executive Officer of
the Company in October 1997.
(4) Mr. Trafecanty was appointed as Chief Financial Officer of the Company in
August 1996 and ceased to be an employee of the Company January 11, 2000.
(5) The Company provided a car allowance to Mr. Trafecanty of $6,000 for each
of 1999 and 1998, living expenses totaling $7,199 and $10,926 for 1999 and
1998 respectively, and reimbursed Mr. Trafecanty for other benefits, which
totaled $19,232 and $18,637 for 1999 and 1998 respectively.
11
<PAGE>
(6) Includes options for 50,000 shares granted on August 21, 1997 in exchange
for the cancellation of an option for 50,000 shares originally granted on
August 26, 1996 with an exercise price $4.00 per share.
(7) Mr. Sullivan was appointed as Vice President and Controller of the Company
in March 1997 and ceased to be an employee of the Company March 13, 2000.
The Company paid Mr. Sullivan $19,850 in connection with consulting
services rendered to the Company during January and February 1997. These
fees are included in the caption All Other Compensation.
(8) Cumulative dividends on the Convertible Restricted Preferred Stock held by
Mr. Wrobel, Mr. Trafecanty and Mr. Sullivan in the amounts of $295, $688
and $98 respectively were accrued but not declared or paid at December 31,
1999.
Option Grants in Last Fiscal Year
The following table contains information concerning stock option grants made
to the Company's Chief Executive Officer and each of the other Named Executive
Officers during the fiscal year ended December 31, 1997. No stock appreciation
rights were granted or exercised during such fiscal year.
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------
Potential Realizable Value
Number of % of Total at Assumed Annual Rates
Securities Options of Stock Price Appreciation
Underlying Granted to Exercise or for Option Term
Options Employees in Base Price Expiration ----------------------------
Name Granted (#) Fiscal Year ($/SH) Date 5% ($) 10% ($)
---- ----------- ------------ ----------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Andrew K. Wrobel........ 1,032,000 30.3% $ 0.32 Oct. 14, 2009 2,090,428 3,524,269
Denis J. Trafecanty..... 516,000 15.2% $ 0.32 Oct. 14, 2009 1,045,214 1,762,134
Timothy R. Sullivan..... 258,000 7.6% $ 0.32 Oct. 14, 2009 522,607 881,067
</TABLE>
Aggregated Option Exercises and Fiscal Year-End Values
No options were exercised by the Company's Chief Executive Officer or the
other Named Executive Officers during the fiscal year ended December 31, 1999.
The following table sets forth information concerning option holdings for such
fiscal year with respect to the Company's Chief Executive Officer and each of
the other Named Executive Officers. The fair market value of the Common Stock
at fiscal year-end was $1.44 per share, based on the average of the highest
bid and lowest ask price as quoted on the OTC Bulletin Board. No stock
appreciation rights were exercised or outstanding during such fiscal year.
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
Fiscal Year-End (#) Fiscal Year-End ($)
------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Andrew K. Wrobel............ 433,334 1,198,666 $432,251 $1,322,089
Denis J. Trafecanty......... 244,166 571,834 $282,654 $ 637,016
Timothy R. Sullivan......... 125,000 283,000 $144,948 $ 314,887
</TABLE>
Compensation and Stock Option Committee Interlocks and Insider Participation
The individuals who served on the Compensation and Stock Option Committee of
the Company's Board of Directors during the fiscal year ended December 31,
1999, were Mr. Wong and Mr. Waring with Mr. Wrobel as a non-voting observer.
Mr. Wrobel is an officer and employee of the Company.
No current executive officer of the Company has ever served as a member of
the board of directors or compensation committee of any other entity that has
or has had one or more executive officers serving as a member of the Company's
Board of Directors or Compensation and Stock Option Committee. Mr. Wong is a
12
<PAGE>
director and Executive Vice President of Transpac. Transpac entered into a
Debt Conversion Agreement with the Company, in October 1999 it converted all
of the debts and accrued interest obligations the Company owed to it in
exchange for 4,031,826 shares of Restricted Preferred Stock, which is
convertible into 8,036,652 shares of Common Stock at the option of Transpac.
Transpac has demand registration rights with respect to the 8,036,652 shares
of Common Stock. Transpac also owns additional shares of common stock, and is
the beneficial owner of 9,405,665 shares of common stock of the Company. Mr.
Wong is a director of the Company and holds options to purchase 68,000 shares
of Common Stock of the Company. While he continues as a director, Mr. Wong
shall also receive an option to purchase 30,000 shares of Common Stock on the
date of each annual meeting of shareholders in accordance with the Company's
amended 1993 Stock Option / Stock Issuance Plan.
Employment Contracts and Termination of Employment and Change in Control
Arrangements
Employment Agreement with Andrew K. Wrobel. Effective October 6, 1997, the
Company entered into a one (1) year employment agreement ("Agreement") with
Andrew K. Wrobel. The term of this Agreement shall automatically be extended,
unless not less than one (1) year prior to the expiration date, the Company
shall have delivered written notice to Mr. Wrobel that the term of this
Agreement shall terminate on the expiration date; or Mr. Wrobel, not less than
thirty (30) days prior to the expiration date, elects to terminate this
Agreement by delivering written notice of such desire to terminate to the
Company. Under the terms of this agreement, Mr. Wrobel is entitled to a base
salary of not less than $220,000 per year, plus a minimum increase of
six (6) percent of his base salary on each anniversary of the agreement. Mr.
Wrobel is also entitled to receive a bonus equal to sixty percent (60%) of his
then existing base salary, payable quarterly pro rata upon the Company's
achievement of the performance criteria set forth in the business plan to be
prepared by Mr. Wrobel for the Company and approved by the Board. The
Agreement also guaranteed Mr. Wrobel a stock option for 500,000 shares of the
Company's Common Stock at the fair market value on the date of the Agreement
($0.43 per share). The options will become exercisable on an accelerated basis
in the event of an acquisition of the Company by merger or asset sale, unless
the options are assumed by the acquiring entity. Mr. Wrobel participates in
all of the Company's employee benefit plans. In the event of his termination
other than for cause, Mr. Wrobel is entitled to full acceleration of his
options and a severance payment equal to one (1) year of his then current
salary within five (5) business days of his termination plus twelve (12)
months additional coverage under the Company's health, medical and dental
plans.
Change in Control Arrangements. The Compensation and Stock Option Committee
of the Board of Directors has the authority as Plan Administrator of the 1993
Plan to provide for the accelerated vesting of the shares of Common Stock
subject to outstanding options held by the Chief Executive Officer and the
Company's other executive officers under that plan in the event their
employment were to be terminated (whether involuntarily or through a forced
resignation) following an acquisition of the Company by merger or asset sale.
In connection with a hostile change in control of the Company effected through
a successful tender offer for more than 50% of the Company's outstanding
voting stock or through a proxy contest for the election of Board members, the
Plan Administrator has the discretionary authority to provide for automatic
acceleration of outstanding options under the Discretionary Option Grant
Program of the 1993 Plan and the automatic vesting of outstanding shares under
the Stock Issuance Program.
COMPENSATION AND STOCK OPTION COMMITTEE REPORT
For the 1999 fiscal year, the Compensation and Stock Option Committee of the
Board of Directors was responsible for establishing the base salary and
incentive cash bonus programs for the Company's executive officers and other
key employees and administering certain other compensation programs for such
individuals, subject in each instance to review and final approval by the full
Board. The Compensation and Stock Option Committee also had the exclusive
responsibility during such year for the administration of the Company's
1993 Plan under which grants may be made to executive officers and other key
employees.
13
<PAGE>
General Compensation Policy. The fundamental policy of the Compensation and
Stock Option Committee is to provide the Company's executive officers and
other key employees with compensation opportunities based upon their
contribution to the financial success of the Company and their personal
performance. It is the Compensation and Stock Option Committee's objective to
have a substantial portion of each officer's compensation contingent upon the
Company's performance as well as upon his own level of performance.
Accordingly, the compensation package for each executive officer and key
employee is comprised of three elements: (i) base salary which reflects
individual performance, (ii) annual variable performance awards payable in
cash and tied to the Company's achievement of financial performance targets,
and (iii) long-term stock-based incentive awards which strengthen the
mutuality of interests between the executive officers and the Company's
shareholders. As an executive officer's level of responsibility increases, it
is the intent of the Compensation and Stock Option Committee to have a greater
portion of his total compensation be dependent upon Company performance and
stock price appreciation rather than base salary.
Factors. For Andrew K. Wrobel, the Compensation and Stock Option Committee
followed the terms of his employment agreement with the Company in determining
his compensation for 1999. That agreement specifies the compensation, subject
to Board adjustment, that was paid to Mr. Wrobel during 1999. Several of the
more important factors which the Compensation and Stock Option Committee
considered in establishing the components of the compensation packages for
executive officers who do not have an employment agreement with the Company
for the 1999 fiscal year are summarized below. Additional factors were also
taken into account and the Compensation and Stock Option Committee may, in its
discretion, apply entirely different factors, particularly different measures
of financial performance, in setting executive compensation for future fiscal
years.
Base Salary. The base salary for each officer who does not have an
employment agreement with the Company is determined on the basis of the
following factors: experience, personal performance and internal comparability
considerations. The weight given to each of these factors differs from
individual to individual, as the Compensation and Stock Option Committee deems
appropriate.
Annual Incentive Compensation. Annual bonuses are earned by each executive
officer primarily on the basis of the Company's achievement of certain
corporate financial performance targets established for each fiscal year
combined with the individual performance of such individual.
Long-Term Incentive Compensation. Long-term incentives are provided through
stock option grants. The grants are designed to align the interests of each
executive officer with those of the shareholders and provide each individual
with a significant incentive to manage the Company from the perspective of an
owner with an equity stake in the business. Each grant allows the individual
to acquire shares of the Common Stock at a fixed price per share (the market
price on the grant date) over a specified period of time (up to ten years).
Each option generally becomes exercisable in installments over a two and one-
half (2 1/2) or three (3)-year period, contingent upon the executive officer's
continued employment with the Company or a subsidiary. Accordingly, the option
will provide a return to the executive officer only if the executive officer
remains employed by the Company during the vesting period, and then only if
the market price of the underlying shares appreciates over the option term.
The number of shares subject to each option grant is set at a level intended
to create a meaningful opportunity for stock ownership based on the officer's
current position with the Company, the base salary associated with that
position, the size of comparable awards made to individuals in similar
positions within the industry, the individual's potential for increased
responsibility and promotion over the option term, and the individual's
personal performance in recent periods. The Compensation and Stock Option
Committee also takes into account the number of vested and unvested options
held by the executive officer in order to maintain an appropriate level of
equity incentive for that individual. However, the Compensation and Stock
Option Committee does not adhere to any specific guidelines as to the relative
option holdings of the Company's executive officers. In 1999, Messrs. Wrobel,
Trafecanty and Sullivan as Named Executive Officers each received option
grants. Such options are described in the Summary Compensation Table, in the
column entitled "Long Term Compensation Awards--Securities Underlying Options"
and in the "Option Grants in Last Fiscal Year" table.
14
<PAGE>
CEO Compensation. In setting the compensation payable to the Company's Chief
Executive Officer, Mr. Wrobel, the Compensation and Stock Option Committee
followed the terms of the employment agreement that was previously negotiated
between Mr. Wrobel and the Company and subsequently executed. In accordance
with the terms of his employment agreement, Mr. Wrobel received a base salary
of $243,546 in 1999.
For fiscal year 1999, Mr. Wrobel was entitled to a bonus equal to sixty
percent of his then-existing base salary, payable quarterly pro-rata upon the
Company's achievement of the performance criteria set forth in the business
plan prepared by Mr. Wrobel for the Company and approved by the Board. The
business plan approved by the Board required the Company to achieve a defined
cumulative net income for fiscal year 1999 measured as of each quarterly
period for Mr. Wrobel to be entitled to a bonus in that quarter equal to 15%
of his then-existing base salary. Based on these factors and such other
factors as the Board of Directors deemed appropriate, the Board of Directors
awarded Mr. Wrobel a bonus of $141,786 in 1999. The 1999 base salary in Mr.
Wrobel's employment agreement was based on such factors as the Board of
Directors determined to be appropriate at the time the employment agreement
was negotiated in 1997. On October 6, 1997, Mr. Wrobel was granted an option
to purchase 500,000 shares of Common Stock (see "Employment Contracts and
Termination of Employment and Change in Control Arrangements--Employment
Agreement with Andrew K. Wrobel") to make a portion of his total compensation
contingent on increased value for the Company's Shareholders; the option will
have no value unless there is appreciation in the value of the Company's
Common Stock over the option term. On November 4, 1997, Mr. Wrobel received an
option to purchase 100,000 shares of Common Stock. On October 14, 1999, Mr.
Wrobel received an option to purchase 1,032,000 shares of Common Stock.
Compliance with Internal Revenue Code Section 162(m). As a result of Section
162(m) of the Internal Revenue Code, the Company will not be allowed a federal
income tax deduction for compensation paid to certain executive officers, to
the extent that compensation exceeds $1 million per officer in any fiscal
year. This limitation applies to all compensation paid to the covered
executive officers, which is not considered to be performance-based.
Compensation that does qualify as performance-based compensation will not have
to be taken into account for purposes of this limitation. Non-performance
based compensation paid to the Company's executive officers for the 1999
fiscal year did not exceed the $1 million limit per officer, and the
Compensation and Stock Option Committee does not anticipate that the non-
performance based cash compensation to be paid to the Company's executive
officers for fiscal 2000 will exceed that limit. In addition, option grants
and other awards made under the 1993 Plan prior to January 1, 1998 were
structured so that any compensation deemed paid to an executive officer in
connection with those awards will qualify as performance-based compensation
which will not be subject to the $1 million limitation. However, any
compensation deemed paid by the Company in connection with transactions
relating to options or other awards granted during the 1999 fiscal year will
have to be taken into account for purposes of the $1 million limitation.
Because it is unlikely that the compensation payable to any of the Company's
executive officers in the foreseeable future will approach the $1 million
limit, the Compensation and Stock Option Committee has decided at this time
not to take any action to limit or restructure the elements of compensation
payable to the Company's executive officers. The Compensation and Stock Option
Committee will reconsider this decision should the individual compensation of
any executive officer ever approach the $1 million level.
Dated as of April 30, 2000
Mr. Lin Hong Wong
Mr. James T. Waring
15
<PAGE>
COMPARISON OF SHAREHOLDER RETURN
The graph below reflects a comparison of the cumulative total return (change
in stock price plus reinvestment dividends) of the Company's Common Stock
price with the cumulative total returns of the Company's peer group based on
the Company's four-digit SIC Code Index (3674--Semiconductors and Related
Devices) and the S&P 500 Index.
[PERFORMANCE GRAPH]
- --------
(1) The graph covers the period from January 1, 1995, through the fiscal year
ended December 31, 1999.
(2) The graph assumes that $100 was invested on April 22, 1994 in the
Company's Common Stock and in each index and that all dividends were
reinvested. No cash dividends have been declared on the Company's Common
Stock.
(3) Shareholder returns over the indicated period should not be considered
indicative of future shareholder returns.
(4) The performance graph and all of the material in the Compensation and
Stock Option Committee Report is not deemed filed with the Securities and
Exchange Commission, and is not incorporated by reference to any filing of
the Company under the Securities Act of 1933, as amended or the Securities
Exchange Act of 1934, whether made before or after the date of this Proxy
Statement and irrespective of any general incorporation language in any
such filing.
16
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than ten percent of
the Company's Common Stock, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission ("SEC"). Executive
officers, directors and greater than ten percent shareholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Form 4's or 5's
were required for such persons, the Company believes that all filing
requirements applicable to its officers, directors, and greater than ten
percent beneficial owners during the period from January 1, 1999 to December
31, 1999, were complied with.
FORM 10-K
The Company files an Annual Report on Form 10-K with the SEC. A copy of the
Annual Report on Form 10-K (excluding exhibits) including financial statements
and schedules has been included with the mailing of this proxy to all
shareholders. Shareholders may obtain additional copies of these reports,
including financial statements and financial statement schedules, without
charge, by writing to Randal D. Siville, Vice President of Finance and Chief
Financial Officer of the Company, at the Company's executive offices at 9577
Chesapeake Drive, San Diego, California 92123-1304.
The Company knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters properly come before
the Annual Meeting, it is the intention of the persons named in the enclosed
form of Proxy to vote the shares they represent as the Board of Directors may
recommend. Discretionary authority with respect to such other matters is
granted by the execution of the enclosed Proxy.
THE BOARD OF DIRECTORS
Dated: May 1, 2000
17
<PAGE>
PROXY
MELTRONIX, INC.
Annual Meeting of Shareholders--July 26, 2000
This Proxy is Solicited on Behalf of the Board of Directors of
MELTRONIX, INC.
The undersigned revokes all previous proxies, acknowledges receipt of the Notice
of the Annual Meeting of Shareholders to be held July 26, 2000 and the Proxy
Statement and appoints Andrew Wrobel and Randal D. Siville and each of them, the
Proxy of the undersigned, with full power of substitution, to vote all shares of
Common Stock and Preferred Stock with each share of Preferred Stock entitled to
two votes of MELTRONIX, INC. (the "Company") which the undersigned is entitled
to vote, either on his or her own behalf or on behalf of any entity or entities,
at the Annual Meeting of Shareholders of the Company to be held at 9577
Chesapeake Drive, San Diego, California 92123-1304 on July 26, 2000, at 10:00
a.m. (the "Annual Meeting"), and at any adjournment or postponement thereof,
with the same force and effect as the undersigned might or could do if
personally present thereat. The shares represented by this Proxy shall be voted
in the manner set forth on the reverse side.
(To be Signed on Reverse Side)
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
WITHHOLD INSTRUCTION: To withhold
AUTHORITY authority to vote for any
FOR TO VOTE individual nominee, strike a line
1. TO ELECT [_] [_] through the nominee's name in
SEVEN the list below:
Andrew K. Wrobel
DIRECTORS TO SERVE FOR Abigail A. Barrow
THE NEXT YEAR UNTIL THE EXPIRATION Anthony J. A. Bryan
OF THEIR TERMS IN 2001 OR UNTIL Frank Howland
THEIR SUCCESSORS ARE ELECTED Lin Hong Wong
AND QUALIFIED. Waldemar Heeb
and James T. Waring, Esq.
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The Board of Directors recommends a vote FOR the proposals. This Proxy, when
properly executed, will be voted as specified above. This Proxy will be voted
FOR the proposals if no specification is made. This Proxy will also be voted at
the discretion of the Proxy holder on such matters other than the two specific
proposals as may come before the meeting.
2. To ratify the appointment of BDO Seidman, LLP ("BDO") as independent
accountants of the Company for the fiscal year ended December 31, 2000.
FOR AGAINST ABSTAIN
____ ____ ____
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<S> <C>
Please print the name(s) appearing on each share certificate(s) over which you have authority: ______________________
(Print name(s) on certificate)
Please sign your name: _________________________________________________ Date:________________________________________
(Authorized Signature(s))
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