MELTRONIX, INC.
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
JUNE XX, 2002
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of
MeltroniX, Inc., a California corporation (the "Company"), will be held
on June XX, 2002, at 10:00 a.m., local time, at 9577 Chesapeake Drive,
San Diego, California 92123, for the following purposes:
1. To amend certain provisions of the Amended and Restated Articles
of Incorporation as described in the accompanying Proxy Statement.
2. To amend certain provisions of the Bylaws as described in the
accompanying Proxy Statement.
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 May 1, 2002 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 Special Meeting
will be available for inspection at the executive offices of the Company
for a period of ten days before the Special 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,
Robert M. Czajkowski
President and Chief Executive Officer
May XX, 2002
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.
TABLE OF CONTENTS
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 SPECIAL MEETING ................ 2
PROPOSAL ONE--Amendment to the Company's Amended and Restated
Articles of Incorporation to Increase the number of Authorized
Shares of Common Stock ........................................ 2
Introduction .................................................. 2
Purposes of Amendment Generally ............................... 2
Making Shares of Common Stock Available for Issuance for New
Capital ....................................................... 2
US-Semi Financing ............................................. 3
Restructuring of Outstanding Payables and Other Debt
Obligations ................................................. 5
Advantages and Disadvantages Noted by Board of Directors ..... 5
Approvals Required ........................................... 8
PROPOSAL TWO--Amendment of ByLaws ............................ 8
Approvals Required ........................................... 8
PROPOSAL THREE--Election of Directors ........................ 9
Nominees ..................................................... 9
Business Experience of Directors ............................. 10
Material Proceedings ......................................... 11
Director Compensation ........................................ 11
Certain Relationships and Related Transactions ............... 12
Approvals Required ........................................... 13
REPORT OF THE AUDIT COMMITTEE ................................ 13
Previous Independent Accountants ............................. 14
New Independent Accountants .................................. 14
PROPOSAL FOUR--Ratification of Independent Auditors ............ 15
FEES PAID TO INDEPENDENT AUDITORS .............................. 15
OTHER MATTERS .................................................. 16
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 16
EXECUTIVE COMPENSATION AND RELATED INFORMATION ................. 18
Summary of Cash and Certain Other Compensation ................. 18
Option Grants in Last Fiscal Year .............................. 20
Aggregated Option Exercises and Fiscal Year-End Values ......... 20
Compensation and Stock Option Committee Interlocks and Insider
Participation .................................................. 21
Employment Contracts and Termination of Employment and Change
in Control Arrangements ........................................ 21
COMPENSATION AND STOCK OPTION COMMITTEE REPORT ................. 22
General Compensation Policy .................................... 22
Factors ........................................................ 22
Base Salary .................................................... 22
Annual Incentive Compensation .................................. 22
Long-Term Incentive Compensation ............................... 22
CEO Compensation ............................................... 23
Compliance with Internal Revenue Code Section 162(m)............ 23
COMPARISON OF SHAREHOLDER RETURN ............................... 24
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
OF 1934 ....................................................... 25
FORM 10-K ...................................................... 25
APPENDIX A - PROXY CARD ........................................ 26
MELTRONIX, INC.
PROXY STATEMENT
FOR A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL XX, 2002
General
The enclosed proxy ("Proxy") is solicited on behalf of the Board of
Directors of MeltroniX, Inc., a California corporation ("MeltroniX" or
the "Company"), for use at a Special Meeting of Shareholders to be held
on June XX, 2002 (the "Special Meeting"). The Special 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.
These proxy solicitation materials were mailed on or about May XX, 2002
to all shareholders entitled to vote at the Special 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, a notice of revocation or
another signed Proxy with a later date. Any person may also revoke his
or her Proxy by attending the Special 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.
Record Date and Voting
Shareholders of record on May 1, 2002 are entitled to notice of and to
vote at the Special Meeting. On April 26, 2002, 29,848,331 shares of the
Company's common stock, no par value (the "Common Stock"), and 8,230,780
shares of the Company's Series A Preferred Stock, no par value (each
share of which is convertible into two (2) shares of Common stock) (the
"Series A Preferred Stock") were issued and 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 Series A Preferred Stock held. In addition, as long as
any shares of Series A Preferred Stock are outstanding, the holders of
the Series A 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 Series A 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
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING
This Proxy Statement contains forward-looking statements concerning the
Company's anticipated future revenues and earnings, adequacy of future
cash flow and related matters. These forward-looking statements include,
but are not limited to, statements containing the words "expect", "believe",
"will", "may", "should", "project", "estimate", and like expressions, and
the negative thereof. These statements are subject to risks and
uncertainties that could cause actual results to differ materially from
the statements, including competition, as well as those risks described in
the Company's SEC reports, including the Company's Form 10-K filed pursuant
to the Securities and Exchange Act of 1934.
PROPOSAL ONE - AMENDMENT TO THE COMPANY'S AMENDED AND RESTATED ARTICLES
OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON
STOCK
Introduction
The Board has duly adopted a resolution approving, declaring
advisable and recommending to the Shareholders for their approval an
amendment to Article III of the Company's Amended and Restated Articles
of Incorporation. This Amendment would increase the number of authorized
shares of the Company's Common Stock from 50,000,000 to 130,000,000. If
the proposed amendment is approved by the Shareholders, the Company plans
to file a Certificate of Amendment with the Secretary of State of
California, upon which filing the amendment will take effect. The form of
the Amendment to the Articles of Incorporation is attached hereto as
Exhibit A.
Purposes of Amendment Generally
The increase in authorized shares is intended to create a significantly
larger pool of unissued and unreserved shares of Common Stock that could
be used for the following purposes:
1. issuance of shares of Common Stock in exchange for new capital;
2. issuance of shares of Common Stock in exchange for the restructuring
of outstanding payables and other debt obligations; and
3. reservation of shares of Common Stock for possible conversions into
Common Stock by holders of Series A Preferred Stock, notes, options,
warrants, and other agreements granting a right to convert into Common
Stock, including options currently held by or issued in the future to
Directors and employees.
The Board of Directors considers it advisable to have additional shares
of Common Stock available or future financing, debt restructuring,
acquisitions, stock dividends or for issuance under the Company's employee
benefit plans and for other general corporate purposes.
Making Shares of Common Stock Available for Issuance for New Capital
The primary reason for the proposed amendment is to increase the amount
of unissued and unreserved shares available for issuance to new investors
of the Company. The Company from time to time has sought, and must
continue to seek, outside financing to fund its operations. The Company
anticipates that it may in the future enter into agreements to obtain new
capital in exchange for the issuance of shares of Common Stock that would
be authorized by the approval of this Proposal One. The availability of
such shares for issuance in the future will give the Company greater
flexibility and permit such shares to be issued without the expense and
delay of a special shareholders' meeting.
2
As of April 26, 2002, 29,848,331 shares of the Company's Common Stock
were issued and outstanding, and an additional 19,712,527 shares of
Common Stock were issuable upon conversion of shares of Series A
Preferred Stock, Preferred Stock dividends, and exercise of options
and warrants. Further, as of April 26, 2002 an additional 9,968,105
shares of the Company's Common Stock were issuable upon conversion of
outstanding convertible notes. Thus, as of April 26, 2002 the Company
had issued 59,528,963 shares of its Common Stock on a fully diluted
basis, after giving effect to any possible conversions into Common Stock
by the holders of any Series A Preferred Stock, options, warrants, and
convertible notes granting a right to convert into Common Stock. This
fully diluted figure is 9,528,963 shares above the 50,000,000 shares of
Common Stock currently authorized by the Company's Amended and Restated
Articles of Incorporation.
In order to achieve equity financing on an interim basis, the Company
has obtained and continues to seek temporary forbearance agreements
from holders of its Preferred Stock, warrants, options and convertible
notes, all of which are convertible into shares of Common Stock. The
number of shares subject to executed forbearance agreements is
16,543,969 shares of Common Stock, allowing the Company to comply with
the terms of exercisable notes, warrants, options and other instruments.
If the Shareholders approve Proposal One, the Company will have 70,471,037
shares of Common Stock available for equity financing, debt restructuring,
and issuance of additional shares under its employee benefits plan or
otherwise. If Proposal One is not approved by the Shareholders, the
Company will not have a sufficient number of shares reserved for conversion
of Series A Preferred Stock, Preferred Stock dividends, and exercise of
options and warrants, and the Company will need to obtain additional
forbearances or other restructuring.
Management cannot predict whether the Company will be able to raise
capital in exchange for the issuance of new equity, the price per share
of Common Stock at which such new equity might be issued, or the number
of shares that would be issued. Although management will seek to obtain
the highest price per share in such sales of equity that it is able,
considering the amount of equity to be raised and all other pertinent
factors, there can be no assurance that any such sale can be completed or
that the price of the Common Stock sold will be at or above any fixed number.
The inability to secure additional funding could have a material adverse
effect on the Company, including the possibility that the Company could have
to cease operations.
US-Semi Financing
Among other possible equity transactions, the Company may issue a
significant number of shares of Common Stock to United States
Semiconductor Corporation, a privately held Delaware corporation
("US-Semi"), or a subsidiary or affiliate of US-Semi, currently proposed
to be Kansas Technologies Investments Corporation, a Kansas corporation
("KTI").
In February 2001, the Company executed a letter of intent ("LOI") with
US-Semi, for a proposed transaction (the "US-Semi Financing") pursuant to
which, if consummated, US-Semi and/or a US-Semi subsidiary or affiliate,
could receive as much as 50% (as of the date of issuance) of the issued
and outstanding Common Stock of the Company (the "US-Semi Shares") in
exchange for (i) an exclusive, non-transferable license by US-Semi and/or
KTI for the use of certain technology ("RHI-NO," as described below) and
(ii) cash payments. The US-Semi Shares would have the same dividend,
liquidation and voting rights as all other shares of Common Stock of the
Company. Neither the US-Semi Shares nor any other shares of the Company's
Common Stock are redeemable. The expenses to further develop RHI-NO to a
commercially feasible and manufacturable level are to be borne by US-Semi
and/or KTI. A portion of the US-Semi shares would only issue upon
demonstration that RHI-NO is commercially feasible, at or about which time
the parties propose to enter a commercially standard royalty fee payable
by the Company to either US-Semi or KTI.
US-Semi agreed to provide the Company with interim funding of between
$1,000,000 to $1,500,000 during the pendency of the LOI for the purposes
of paying and reducing agreed upon accounts payable and establishing
agreed upon reserves. In exchange for this interim funding, US-Semi was
granted the right to immediately nominate two (2) directors to the
Company's Board of Directors, and the parties agreed to work together to
determine the feasibility of the interim funding as well as the collateral
and/or consideration for such funding. As of April 26, 2002, the Company
has received $1,211,000 in such interim funds from US-Semi. Management is
continuing its discussion with US-Semi in anticipation of executing a
definitive agreement.
The consummation of the transactions contemplated by the LOI are subject
to a number of conditions that are outside the control of the Company and,
therefore, there is no assurance that such transactions will be
successfully completed.
The Company, founded in 1984 and its wholly-owned subsidiaries (MeltroniX
Solutions, Inc., Microelectronic Packaging of America, Inc., and MPI Place
Holder, Inc.) are providers of Advanced Electronic Manufacturing Services,
Products, Design, and Testing to high growth industries and applications
including: Internet equipment; wireless/telecommunication; medical;
satellites and military systems; and broadband communication and other
electronic systems manufacturers. This is based on the Company's ability to
develop and manufacture high-density packaging and interconnect
microelectronic products. Today the Company is placing renewed emphasis on
military and space applications by leveraging its capabilities in offering
devices, which are radiation tolerant and qualified to military
specifications.
RHI-NO is a proprietary, patented manufacturing process that improves
the radiation tolerance of commercially available semiconductors, enabling
satellite and military system designers to use commercial circuit parts
that may not have been available in the past because of radiation
performance problems. These enhanced devices are often called "rad hard"
devices. Tests at Sandia National Laboratory indicate RHI-NO should also
improve the speed and power characteristics of most chip devices, which
could open up large commercial applications.
4
RHI-NO is the result of intellectual property acquired by US-Semi from
Lawrence Livermore National Laboratory. In 1999, US-Semi purchased
exclusive licenses from Lawrence Livermore National Laboratory to certain
patents, which US-Semi improved. In 2000, Sandia National Laboratory tested
RHI-NO and published its conclusions that the technology eliminated
certain negative radiation effects on satellites, aviation, and ground
devices. In 2001, US-Semi became the exclusive worldwide licensee of this
intellectual property. US-Semi then entered into an agreement with
Sandia National Laboratory to act as a pilot plant in the productions of
high volume manufacturing versions of radiation hardened devices.
Restructuring of Outstanding Payables and Other Debt Obligations
The Company has in the past issued shares of equity in part as
consideration for the restructuring, reduction and/or forgiveness of
outstanding payables and other debt obligations. The Company may find
it necessary to continue this kind of debt restructuring in the future.
The number of shares that would be issued in connection with such
restructuring cannot currently be determined, but may be significant.
Management cannot predict whether the Company will be able to restructure
debt in exchange for the issuance of new equity, the price per share of
Common Stock at which such new equity might be issued, or the number of
shares that would be issued.
Advantages and Disadvantages Noted by Board of Directors
The Company's Board of Directors believes that approval of this Proposal
One is in the best interests of the Company and its shareholders. In
reaching this conclusion, the Board of Directors noted that there are
significant advantages and disadvantages to this Proposal One.
The advantages noted by the Board include the Company's ability to satisfy
its need for capital and value of the RHI-NO technology. The Company
requires additional capital and intellectual property to carry out its
transformation from its traditional role as solely a commercial
semiconductor interconnect solution provider to a leading role in the
delivery of proprietary products for defense and space applications, as
well. Further, additional capital will provide management with the
capability to fill an existing backlog of orders and with the flexibility
it needs to manage creditors.
5
Management believes that US-Semi would continue to be an important partner
to the Company in both respects because it offers an infusion of cash and a
license to use RHI-NO. As a significant shareholder in the Company, US-Semi
would have an incentive to work closely with the Company and to support its
transformation. The Company believes that a close, ongoing relationship
with US-Semi could be beneficial to the Company's future results of
operations.
The disadvantages noted by the Board include the following.
Dilution of Ownership. Issuance of Common Stock to US-Semi will
significantly reduce the percentage ownership of the Company's current
shareholders. In the absence of a proportionate increase in the Company's
earnings and book value, an increase in the aggregate number of the
Company's issued and outstanding shares of Common Stock would significantly
dilute the earnings per share and book value per share of all outstanding
shares of the Common Stock. If such factors were reflected in the price
per share of Common Stock, the potential realizable value of a shareholder's
investment could be materially adversely affected. In addition, as a
condition of US-Semi's willingness to provide the US-Semi Financing, the
Company has agreed to register the Common Stock proposed to be sold to
US-Semi. The Company is required to use its best efforts to register the
US-Semi Shares if the Shareholders approve Proposal One. These shares of
Common Stock would be freely tradable upon registration. Sales of such
freely tradable shares in the open market from time to time would
potentially have a negative effect on the trading price of the Company's
Common Stock. If and when US-Semi sells the Company's Common Stock, the
Common Stock price may decrease due to the additional shares in the market.
The significant downward pressure on the price of the common stock if
US-Semi sells material amounts of common stock could encourage short sales
by US-Semi or others. This could place further downward pressure on the
price of the common stock.
Change in Board of Directors. On July 27, 2001, Robert M. Czajkowski,
David J. Strobel and Charles L. Wood joined the Company's Board of Directors.
Subsequently, as reported in the Company's Form 8-K filed on September 27,
2001, Andrew K. Wrobel resigned as President and Chief Executive Officer of
the Company and the Board appointed Mr. Czajkowski to replace Mr. Wrobel in
these positions. Assuming that the Shareholders vote to increase the number
of authorized shares, the sum of all shares of Common Stock issuable to
US-Semi and its subsidiary through the US-Semi Financing could total as
much as 50% of the issued and outstanding Common Stock of the Company.
This percentage of Common Stock could enable US-Semi and KTI to exercise
significant control over the business and affairs of the Company.
The proposed increase in the authorized number of shares of Common Stock
could have a number of effects on the Company's shareholders depending on
the nature and circumstances of any actual issuances of authorized but
unissued shares. The increase could have an anti-takeover effect, in that
additional shares could be issued (within the limits imposed by applicable
law) in one or more transactions that could make a change in control or
takeover of the Company more difficult. For example, additional shares
could be issued by the Company so as to dilute the stock ownership or
voting rights of persons seeking to obtain control of the Company.
Similarly, the issuance of additional shares to certain persons allied
with the Company's management could have the effect of making it more
difficult to remove the Company's current management by diluting the stock
ownership or voting rights of persons seeking to cause such removal. No
further actions or authorizations by shareholders would be necessary or
sought by the Board of Directors prior to an issuance of shares of Common
Stock except as may be required by law or applicable stock exchange
regulations. As of the date hereof the Board of Directors of the Company
has no present knowledge of any attempts, other than the US-Semi Financing,
to accumulate stock of the Company, nor any knowledge of any attempts to
change the control of the Company.
6
Prior to the LOI, US-Semi was unaffiliated with the Company. The
following directors and officers of the Company, director nominees, and
their associates, have or had the following direct or indirect interest in
the transactions, which are the subject of this Proposal One:
Robert M. Czajkowski serves as President and Chief Executive Officer
of the Company and currently serves on the Company's Board of Directors.
Mr. Czajkowski is also a nominee for Director at the Company's Annual
Meeting of the Shareholders to be held on May 29, 2002. Mr. Czajkowski
formerly served as Chief Executive Officer of US-Semi, from which
position he resigned on March 19, 2002. If Proposal One is approved by
the Shareholders, the Company may proceed with the transactions
contemplated by the LOI, including issuance of common stock of the Company
to US-Semi.
David J. Strobel serves on the Company's Board of Directors and is a
nominee for Director at the Company's Annual Meeting of the Shareholders
to be held on May 29, 2002. Mr. Strobel also serves on the Board of
Directors of US-Semi. If Proposal One is approved by the Shareholders,
the Company may proceed with the transactions contemplated by the LOI,
including issuance of common stock of the Company to US-Semi.
Richard K. Ausbrook serves as Secretary of the Company. Mr. Ausbrook
formerly served as Interim Chief Financial Officer of US-Semi, from
which position he resigned on January 2, 2002. If Proposal One is
approved by the Shareholders, the Company may proceed with the
transactions contemplated by the LOI, including issuance of common stock
of the Company to US-Semi.
David M. Salva, Ph.D. is a nominee for Director at the Company's Annual
Meeting of the Shareholders to be held on May 29, 2002. Dr. Salva also
serves on the Board of Directors of US-Semi. If Proposal One is approved
by the Shareholders, the Company may proceed with the transactions
contemplated by the LOI, including issuance of common stock of the Company
to US-Semi.
The purchase price of the US-Semi Shares and the terms under which they
are proposed to issue were determined by negotiation between the Company
and US-Semi and assessment of the terms necessary to attract the investment
capital and intellectual property sought by the Company.
Management is continuing its discussion with US-Semi in anticipation of
executing a definitive agreement or agreements. As of the date of this
filing, the Company has received $1,211,000 from US-Semi pursuant to the
interim funding aspect of the LOI. Because it has provided these interim
funds, US-Semi was entitled to nominate two members of the Company's Board
of Directors. US-Semi used this right to nominate David J. Strobel and
Charles L. Wood, both of whom joined the Company's Board of Directors in
July, 2001. These and other management changes are further explained above.
The US-Semi Financing transaction is pending as US-Semi continues to raise
funds from private investors to complete the transaction. However, the
consummation of the transaction contemplated by the LOI is subject to
shareholder approval of Proposal One as well as a number of other conditions
that are outside the control of the Company and, therefore, there is no
assurance that such transaction will be
successfully completed.
After a review of the foregoing points, the Board of Directors of the
Company determined that approval of this Proposal One is in the best
interests of the Company's shareholders. This Proposal One was approved
by all of the directors of the Company present at a meeting of the Board
of Directors on March 19, 2002 at which meeting a quorum was present.
7
Approvals Required
Each share of Common Stock is entitled to one vote, and each share of
Series A Preferred Stock is entitled to two votes, on the proposed
amendment. The affirmative vote of a majority of the total number of
eligible votes is required for approval of the amendment to the Company's
Amended and Restated Articles of Incorporation to increase the number of
authorized shares of Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS
VOTE 'FOR' THE PROPOSAL TO INCREASE THE NUMBER OF AUTHORIZED SHARES
OF THE COMPANY'S COMMON STOCK FROM 50,000,000 TO 130,000,000.
ABSTENTIONS HAVE THE EFFECT OF VOTES AGAINST THIS PROPOSAL ONE. IF
YOUR SHARES ARE HELD IN STREET NAME, YOUR BROKER MAY VOTE
FAVORABLY FOR THIS PROPOSAL ONE, UNLESS YOU INSTRUCT YOUR BROKER
OTHERWISE.
If Proposal One is approved at the Special Meeting, the Company will
immediately thereafter file the Certificate of Amendment with the Secretary
of State of California.
PROPOSAL TWO - AMENDMENT OF BYLAWS
The Bylaws of the Company currently provide that the number of Directors
constituting the Board shall be no fewer than two (2) and no greater than
seven (7) Directors. The Board of Directors proposes to increase the
minimum number of Directors serving on the Board to five (5) Directors,
with the maximum number remaining at nine (9) Directors, and with the exact
number to be fixed by approval of the Board.
As a California corporation, the Company must abide by California law
requiring that in order to maintain a maximum number of Directors to nine
(9), the Company must increase the minimum number of Directors to at least
five (5). The addition of the provision allowing the Board to fix the exact
number of Directors will expressly grant this authority to the Board. As
indicated by the Company's prior Proxy Statements for Annual Meetings filed
from year to year with the Securities and Exchange Commission, the Board has
been operating on the understanding that it already has this authority.
The Directors propose that the Bylaws be amended in the following respect:
Article III, Section 1 would be changed to read as follows:
Number. The number of directors which shall constitute the whole board
shall be, unless otherwise fixed by the Articles of Incorporation, not
fewer than five (5) nor more than nine (9), with the exact number of
directors to be fixed by approval of the board. The directors shall be
elected at the annual meeting of the shareholders, except as provided in
Section 3 of this Article, and each director elected shall hold office
until his or her successor is elected and qualified. Directors need not
be shareholders.
The remainder of Article III would remain unchanged.
Approvals Required
Each share of Common Stock is entitled to one vote, and each share of
Series A Preferred Stock is entitled to two votes, on the proposed
amendment. The affirmative vote of a majority of the total number
of eligible votes is required for approval of the amendment to the
Company's Bylaws.
8
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE 'FOR'
THE PROPOSAL TO AMEND THE COMPANY'S BYLAWS. ABSTENTIONS HAVE THE EFFECT
OF VOTES AGAINST THIS PROPOSAL TWO. IF YOUR SHARES ARE HELD IN STREET
NAME, YOUR BROKER MAY VOTE FAVORABLY FOR THIS PROPOSAL TWO, UNLESS YOU
INSTRUCT YOUR BROKER OTHERWISE.
OTHER MATTERS
The Company knows of no other matters that will be presented for
consideration at the Special Meeting. If any other matters properly come
before the Special 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.
BY ORDER OF THE BOARD OF DIRECTORS
ROBERT M. CZAJKOWSKI
President and Chief Executive Officer
May XX, 2002
San Diego, California
25
APPENDIX A
MELTRONIX, INC.
PROXY
SPECIAL MEETING OF THE SHAREHOLDERS - JUNE XX, 2002
FOR SPECIAL MEETING OF THE SHAREHOLDERS OF MELTRONIX, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints ROBERT M. CZAJKOWSKI and RANDAL
D. SIVILLE, and each of them, with full power of substitution, as proxies
to vote the shares which the undersigned is entitled to vote at a Special
Meeting of the Shareholders to be held at 9577 Chesapeake Drive, San Diego,
California 92123 on June XX, 2002, at 10:00 a.m. (the "Special Meeting").
The shares represented by this Proxy shall be voted in the manner set forth
on the reverse side.
(Continued and to be signed on the reverse side.)
26
This proxy when properly signed will be voted in the manner directed herein
by the undersigned shareholder.
IF NO DIRECTION IS PROVIDED, THIS PROXY WILL BE VOTED
AS RECOMMENDED BY THE BOARD OF DIRECTORS.
Proposal 1: To amend Article III of FOR AGAINST ABSTAIN
the Amended and Restated Articles ____ ____ ____
of Incorporation of MeltroniX, Inc.
Proposal 2: To amend Article III, FOR AGAINST ABSTAIN
Section 1 of the Bylaws of ____ ____ ____
MeltroniX, Inc.
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 four specific proposals as may come before the meeting.
IMPORTANT-PLEASE SIGN AND RETURN PROMPTLY. When shares are held by joint
tenants, both should sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title as such. If
a corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
an authorized person.
Signature_________________________________________ Dated: ________, 2002
Signature if held jointly_________________________ Dated: ________, 2002
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