-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ax9wKaGrwmnIocDz2NDyHDS/UI2qzRqipXnzvWoBMy0KQW0NTnBWOXvLfcsNgEkw Q4xi0Bx/Qap9CysJXlEpFA== 0000950137-99-002068.txt : 19990615 0000950137-99-002068.hdr.sgml : 19990615 ACCESSION NUMBER: 0000950137-99-002068 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990728 FILED AS OF DATE: 19990614 FILER: COMPANY DATA: COMPANY CONFORMED NAME: M WAVE INC CENTRAL INDEX KEY: 0000883842 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS, NEC [3679] IRS NUMBER: 363809819 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-19944 FILM NUMBER: 99645352 BUSINESS ADDRESS: STREET 1: 216 EVERGREEN ST CITY: BENSENVILLE ILLINOIS STATE: IL ZIP: 60106 BUSINESS PHONE: 6308609542 MAIL ADDRESS: STREET 1: 216 EVERGREEN STREET CITY: BENSENVILLE STATE: IL ZIP: 60106 DEF 14A 1 NOTICE & PROXY 1 SCHEDULE 14A (RULE 14A-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by 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 Section 14a-11(c) or Section 14a-12 M-WAVE INC. ________________________________________________________________________________ (Name of Registrant as Specified In Its Charter) M-WAVE INC. ________________________________________________________________________________ (Name of Person(s) Filing Proxy Statement if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [ X ] No fee required [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. 1) Title of each class of securities to which transaction applies: ________________________________________________________________________________ 2) Aggregate number of securities to which transaction applies: ________________________________________________________________________________ 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): ________________________________________________________________________________ 4) Proposed maximum aggregate value of transaction: ________________________________________________________________________________ 5) Total fee paid: ________________________________________________________________________________ [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1) Amount Previously Paid: ________________________________________________________________________________ 2) Form, Schedule or Registration Statement No.: ________________________________________________________________________________ 3) Filing Party: ________________________________________________________________________________ 4) Date Filed: ________________________________________________________________________________ 2 M-WAVE LOGO M-WAVE, INC. 216 Evergreen Street Bensenville, Illinois 60106 To Our Stockholders: You are invited to attend the Annual Meeting of Stockholders of M-Wave, Inc. to be held at the Union League Club, 65 West Jackson, Chicago, Illinois, on Wednesday, July 28, 1999 at 10:00 a.m. local time. We are pleased to enclose the notice of our annual stockholders meeting, together with a Proxy Statement, a Proxy and an envelope for returning the Proxy. Please carefully review the Proxy Statement and then complete, date and sign your Proxy and return it promptly. If you plan to attend the meeting, please so indicate by marking the box on the Proxy. If you attend the meeting and decide to vote in person, you may withdraw your Proxy at the meeting. If you have any questions or need assistance in how to vote your shares, please call Investor Relations at (630) 860-9542. Your time and attention to this letter and the accompanying Proxy Statement and Proxy is appreciated. Sincerely, TUREK SIGNATURE Joseph A. Turek Chairman and Chief Executive Officer June 8, 1999 3 M-WAVE LOGO M-WAVE, INC. NOTICE OF ANNUAL MEETING OF STOCKHOLDERS The Annual Meeting of Stockholders of M-Wave, Inc., a Delaware corporation (the "Company"), will be held on Wednesday, July 28, 1999 at 10:00 a.m. local time, at the Union League Club, 65 West Jackson, Chicago, Illinois, for the following purposes: 1. To elect two Class III Directors for a term expiring in 2001; 2. To elect two Class I Directors for a term expiring in 2002; 3. To ratify the appointment of Grant Thornton LLP as auditors of the Company for the 1999 calendar year; and 4. To transact such other business that is properly brought before the meeting. Only holders of Common Stock of record on the books of the Company at the close of business on June 4, 1999, will be entitled to vote at the Annual Meeting. The Board of Directors' nominees for Director are set forth in the accompanying Proxy Statement. Your vote is important. All stockholders are invited to attend the Annual Meeting in person. However, to assure your representation at the Annual Meeting, please mark, date and sign your Proxy and return it promptly in the enclosed envelope. If you plan to attend the Annual Meeting, please so indicate by marking the box on the Proxy. Any stockholder attending the Annual Meeting may vote in person even if the stockholder returned a Proxy. By Order of the Board of Directors PAUL SCHMITT SIG. Paul H. Schmitt Secretary Chicago, Illinois June 8, 1999 THE ENCLOSED PROXY, WHICH IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY, CAN BE RETURNED IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. 2 4 M-WAVE, INC. 216 Evergreen Street Bensenville, Illinois 60106 PROXY STATEMENT The Board of Directors of the Company solicits your proxy for use at the Annual Meeting of Stockholders on Wednesday, July 28, 1999, or at any adjournment thereof. The Proxy Statement and the form of Proxy are being mailed to stockholders commencing on or about June 8, 1999. INFORMATION CONCERNING SOLICITATION AND VOTING REVOCABILITY OF PROXIES Any stockholder who executes and returns a Proxy may revoke the same at any time before it is exercised by filing with the Secretary of the Company written notice of such revocation or a duly executed proxy bearing a later date, or by attending the Annual Meeting and voting in person. Attendance at the Annual Meeting will not in and of itself constitute revocation of a Proxy. RECORD DATE Stockholders of record at the close of business on June 4, 1999 (the "Record Date") are entitled to notice of and to vote at the Annual Meeting. At the Record Date, 2,267,842 shares of Common Stock, $.01 par value of the Company (the "Common Stock"), were issued and outstanding. VOTING AND SOLICITATION Holders of Common Stock of record as of the close of business on the Record Date are entitled to one vote per share of Common Stock. The Company's Certificate of Incorporation does not provide for cumulative voting rights. A plurality of the votes cast at the Annual Meeting is required to elect directors. The affirmative vote of the holders of a majority of the shares of Common Stock present (either in person or by proxy) and entitled to vote at the Annual Meeting is required to ratify the selection of Grant Thorton LLP as the Company's independent auditors for 1999. In accordance with Delaware law and the Company's Certificate of Incorporation and Bylaws, (i) for the election of directors, which requires a plurality of the votes cast, only proxies and ballots indicating votes "FOR" or "WITHHELD" are counted to determine the total number of votes cast, and broker non-votes are not counted, and (ii) for the adoption of all other proposals, which are decided by a majority of the shares of the stock of the Company present in person or by proxy and entitled to vote, only proxies and ballots indicating votes "FOR", "AGAINST", or "ABSTAIN" on the proposal or providing the designated proxies with the right to vote in their judgment and discretion on the proposal are counted to determine the number of shares present and entitled to vote, and broker non-votes are not counted. The cost of soliciting proxies will be borne by the Company. In addition, the Company may reimburse brokerage firms and other persons representing beneficial owners of shares for their expenses in forwarding solicitation material to such beneficial owners. Proxies may also be solicited by certain of the Company's directors, officers and regular employees, without additional compensation, personally or by telephone or telecopier. DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING Proposals of stockholders which are intended to be presented by such stockholders at the Company's next annual meeting of stockholders to be held in 2000 must be received by the Company no later than April 1, 2000 in order that they may be included in the proxy statement and form of proxy relating to that meeting. 3 5 SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS The following table sets forth certain information regarding the beneficial ownership of the Company's Common Stock as of May 31, 1999 by (i) each person known to the Company to beneficially own 5% or more of the Company's Common Stock, (ii) each of the Directors and executive officers of the Company, and (iii) all executive officers and directors of the Company as a group. The number of shares of Common Stock shown as owned below assumes the exercise of all currently exercisable options held by the applicable person or group, and the percentage shown assumes the exercise of such options and assumes that no options held by others are exercised. Unless otherwise indicated below, the persons named below have sole voting and investment power with respect to the number of shares set forth opposite their respective names. For purposes of the following table, each person's "beneficial ownership" of the Company's Common Stock has been determined in accordance with the rules of the Securities and Exchange Commission ("SEC").
NUMBER OF SHARES PERCENTAGE OF SHARES NAME OF BENEFICIAL HOLDER BENEFICIALLY OWNED BENEFICIALLY OWNED - ------------------------- ------------------ -------------------- Joseph A. Turek(1)...................................... 822,000 36.2% Heartland Advisors, Inc.(2)............................. 525,000 23.1 Michael Bayles.......................................... 18,181 * Paul Schmitt(3)......................................... 25,000 * Lavern D. Kramer(4)..................................... 11,500 * Rick Mathes............................................. 0 * Steve Grzywna........................................... 0 * All Directors and executive officers as a group (7 persons)(5)........................................... 876,681 36.7%
- --------------- * Less than 1%. (1) Includes 75,000 shares of Common Stock which may be acquired upon the exercise of immediately exercisable options. (2) Based on a Schedule 13G filed with the SEC with respect to 525,000 shares of Common Stock which Heartland Advisors, Inc., in its capacity as investment advisor, may be deemed to beneficially own. Heartland has sole voting power with respect to 225,000 shares and sole dispositive power with respect to 525,000 shares. (3) Includes 25,000 shares of Common Stock which may be acquired upon the exercise of immediately exercisable options. (4) Includes 10,000 shares of Common Stock which may be acquired upon the exercise of immediately exercisable options. (5) Includes 110,000 shares which may be acquired by directors and executive officers of the Company upon the exercise of immediately exercisable options. See footnotes 1, 3 and 4. The addresses of the persons shown in the table above who are beneficial owners of more than 5% of the Company's Common Stock are: Mr. Turek, c/o M-Wave, Inc., 216 Evergreen Street, Bensenville, Illinois 60106; and Heartland Advisors, Inc., 790 North Milwaukee Street, Milwaukee, Wisconsin 53202. The foregoing table excludes warrants held by First Chicago Equity Corporation to purchase up to 781,964 shares of Common Stock with an exercise price of $1 per share (increasing by $.05 per share each anniversary of December 18, 1998). These warrants are exercisable only if the Company engages in an extraordinary transaction (e.g., a merger, consolidation, combination or dissolution) within five years of December 18, 1998. See "Certain Transactions." 4 6 SECTION 16 REPORTING Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act") requires the Company's officers and directors, and persons who own more than 10% of the Company's outstanding Common Stock, to file reports of ownership and changes in ownership of such securities with the SEC. Officers, directors and greater-than-10% beneficial owners are required to furnish the Company with copies of all Section 16(a) forms they file. Based solely upon a review of the copies of the forms furnished to the Company, and/or written representations from certain reporting persons that no other reports were required, the Company believes that all Section 16(a) filing requirements applicable to its officers, directors and 10% during or with respect to the year ended December 31, 1998 were met. 1. ELECTION OF DIRECTORS The Board of Directors is divided into three classes, each of whose members serve for a staggered three-year term. The Board is comprised of two Class I Directors (Michael Bayles and Steve Grzywna), one Class II Director (Joseph A. Turek) and two Class III Directors (Lavern D. Kramer and Rick Mathes). The Board of Directors has nominated Messrs. Lavern D. Kramer and Rick Mathes to stand for reelection as Class III Directors for a term ending upon the election of directors at the 2001 annual meeting of stockholders. The Board of Directors has nominated Messrs. Michael Bayles and Steve Grzywna to stand for reelection as Class I Directors for a term ending upon the election of directors at the 2002 annual meeting of stockholders. The Class II Director is not up for election this year and has a term ending upon the election of directors at the 2000 annual meeting of stockholders. At the Annual Meeting, the shares of Common Stock represented by Proxies in the form accompanying this Proxy Statement, unless otherwise specified, will be voted to reelect to nominees for Class III Directors and Class I Directors. The nominees have agreed to serve if elected. However, if any of the nominees becomes unable or unwilling to serve if elected, the Proxies will be voted for the election of the person, if any, recommended by the Board of Directors or, in the alternative, for holding a vacancy to be filled by the Board of Directors. The Board of Directors has no reason to believe that either any of the nominees will be unable or unwilling to serve. THE BOARD OF DIRECTORS RECOMMENDS THAT EACH STOCKHOLDER VOTE "FOR" ITS NOMINEES. NOMINEES FOR ELECTION AT THE ANNUAL MEETING Class III Directors LAVERN D. KRAMER, has been a director of the Company since April 1992. Mr. Kramer has been the President of Kester Solder, a division of Litton Industries, since 1970. He is a member of the Board of Directors and Executive Committee of the Lead Industries Association. Mr. Kramer received a B.S.C. degree from International College. RICK MATHES, has been a director of the Company since June 1998. Rick Mathes has been Chairman and CEO of Standard Car Truck Company since 1989. Mr. Mathes received his degree from Elmhurst College in 1986. Class I Directors MICHAEL BAYLES, has been a director of the Company since December 1998. Mr. Bayles has been the President and COO of Standard Car Truck Company since May 1998. Mr. Bayles served as President and Chief Operating Officer of M-Wave from February 1997 to May 1998. From April 1991 to February 1997, Mr. Bayles was with Varlen Corporation, where he held the position of President. 5 7 STEVE GRZYWNA, has been a director of the Company since March 1999. Mr. Grzywna served as President of Sovereign Circuits from 1994 to March 1999. Mr. Grzywna received his degree from Youngstown State University. DIRECTORS CONTINUING IN OFFICE UNTIL 2000 ANNUAL MEETING Class II Director JOSEPH A. TUREK, is the founder of the Company and has served as Chairman of the Board and Chief Executive Officer since June 1993 and as a director of the Company since 1988. Mr. Turek served as President of the Company from 1988 to February 1997. Mr. Turek served for more than five years in various positions at West-Tronics, Inc., a manufacturer of low frequency circuit boards and a contract assembler of electronic products, with his last position as President in 1987 and 1988. West-Tronics entered into an assignment for the benefit of creditors in December 1988 pursuant to which the Company purchased the assets and assumed certain liabilities of West-Tronics, Inc. He received a B.S.E.E. degree from the University of Notre Dame and a M.B.A. degree from Northwestern University. BOARD OF DIRECTORS MEETINGS AND COMMITTEES The Board of Directors of the Company held eight meetings during 1998 The Board of Directors also has an Audit Committee and a Compensation Committee. The Audit Committee held two meetings and the Compensation Committee held one meeting during 1998 The Committees received their authority and assignments from the Board of Directors and report to the Board of Directors. No Director attended fewer than 75% of the aggregate number of meetings of the Board of Directors and the Committees on which he served during the period for which he was a member of the Board. Messrs. Kramer and Mathes are members of the Audit Committee. The Audit Committee recommends the engagement of the Company's independent auditors and is primarily responsible for approving the services performed by the Company's independent auditors. The Committee also reviews and evaluates the Company's accounting principles and its system of internal accounting controls. Messrs. Bayles and Kramer are the members of the Compensation Committee. The Compensation Committee reviews and approves the Company's executive compensation policy, makes recommendations concerning the Company's employee benefit policies, and has authority to administer the Plan. COMPENSATION OF DIRECTORS The Company does not pay any direct compensation to Directors. Mr. Kramer, who is a non-employee director of the Company, received stock options in April 1992 for 10,000 shares of Common Stock under the Plan. EXECUTIVE OFFICERS' COMPENSATION COMPENSATION OF EXECUTIVE OFFICERS The following table shows the compensation paid by the Company to the Company's Chief Executive Officer and its most highly compensated officers during 1998. No other executive officer of the Company had a total annual salary and bonus for 1998 which exceeded $100,000. The executive officers of the Company do not currently have employment agreements with the Company, are appointed annually by the Board of Directors and serve until their successors have been duly elected and qualified. 6 8 SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION --------------------------------- ANNUAL COMPENSATION AWARDS PAYOUTS --------------------------------------- ----------------------- ------- RESTRICTED SECURITIES OTHER ANNUAL STOCK UNDERLYING LTIP SALARY BONUS COMPENSATION AWARD(S) OPTIONS/ PAYOUTS NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($) SARS (#) ($) - --------------------------- ---- -------- ------ ------------ ---------- ---------- ------- Joseph A. Turek........... 1998 $131,307 none none none none none (Chairman and CEO)........ 1997 $126,511 none none none none none 1996 $120,000 none none none none none Michael Bayles............ 1998 $ 72,346 47,500 62,708 none none none (Former President......... 1997 $160,769(2) 50,000 none none 210,000 none and Chief Operating Officer)
- --------------- (1) Other annual compensation did not exceed the lesser of $50,000 or 10% of the total salary and bonus, except that Mr. Bayles received $62,708 for consulting services in 1998. (2) Mr. Bayles joined the Company on February 3, 1997 and resigned on March 1, 1999. No options were granted to the named executive officers during the fiscal year ended December 31, 1998. The following table sets forth certain information with respect to the unexercised options to purchase the Company's Common Stock held by the named executive officers at December 31, 1998. None of the named executive officers exercised any stock options during the fiscal year ended December 31, 1998. AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS FY-END (#) AT FY-END ($)(1) --------------------------- --------------------------- NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - ---- ----------- ------------- ----------- ------------- Joseph A. Turek.............................. 75,000 -- 0 -- Michael Bayles............................... 84,000 126,000 0 0
- --------------- (1) Based on the fair market value of the Common Stock on December 31, 1998 ($1.875 per share) less the option exercise price. BONUS PLAN Although there is no formal written plan, it is the Company's practice to grant discretionary cash bonuses to the Team Leaders other than the Chief Executive Officer on an annual basis. The Compensation Committee has the discretion to award performance bonuses. No bonuses were awarded to the Company's employees in 1998. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Compensation Committee during 1998 was comprised of non-employee Directors of the Company, Mr. Kramer and former director Mr. Timothy A. Dugan. For a description of transactions between the Company and entities affiliated with such members, see "Certain Transactions." No executive officer of the Company served on the Compensation Committee of another entity or on any other Committee of the Board of Directors of another entity performing similar functions during 1998. 7 9 COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The Compensation Committee of the Board of Directors has furnished the following report on executive compensation: Executive Compensation Policies. The Compensation Committee bases its review and recommendations regarding the Company's executive compensation with the goal of attaining the following objectives: (1) to attract, motivate and retain the highest quality executives, (2) to align both the short-term and the long-term interest of executives with those of the Company's stockholders, and (3) to encourage executives to achieve their assigned tactical and strategic business objectives as well as overall corporate financial results. During 1998, the executive compensation program was generally comprised of base salary and, with respect to executives other than the Chief Executive Officer, variable bonus awards based on current corporate and individual performance. The Committee believes that this compensation program best serves the interests of stockholders by ensuring that the executives are compensated in a manner which provides incentives based upon both the short-term and long-term performance of the Company. The compensation for the executives involves a significant proportion of pay which is at risk: the variable annual bonus and stock options (which directly relate a portion of their long-term remuneration to stock price appreciation realized by the Company's stockholders). The discussion below regarding Mr. Turek pertains to his compensation during 1998. Base Salary. Mr. Turek's base salary of $131,307 as Chief Executive Officer for 1998 was based on his prior employment agreement with the Company. The salary of the other executive officers of the Company during 1998, was based upon subjective factors such as the level of experience and competence and complexity of the duties performed by such executive officer. Bonus. The Compensation Committee also reviews and approves bonus compensation for Team Leaders, other than the Chief Executive Officer, on an annual basis as described above. During 1998, no bonuses were paid to any executive officers or Team Leaders due to the Company's financial performance. Stock Options. The Company's long-term incentives are in the form of stock option awards. The objective of these awards is to advance the longer-term interests of the Company and its stockholders and complement incentives tied to annual performance. These awards provide rewards to executives upon the creation of incremental stockholder value and the attainment of long term earnings goals. Stock options only produce value to executives if the price of the Company's stock appreciates, thereby directly linking the interest of executives with those of stockholders. During 1998, no options were granted to any executive officers due to the Company's financial performance. Compliance With Internal Revenue Code Section 162(m). Section 162(m) of the Internal Revenue Code, enacted in 1993, generally disallows a tax deduction to public companies for compensation over $1 million paid to the corporation's Chief Executive Officer or four other most-highly compensated executive officers named in the proxy statement. The Compensation Committee has reviewed the possible effect on the Company of Section 162(m), and it does not believe that such section will be applicable to the Company in the foreseeable future, but will review compensation practices as circumstances warrant. To this effect, the Plan makes it possible for the Company to satisfy the conditions for an exemption from Section 162(m)'s deduction limit. However, other characteristics of a grant 8 10 effect whether or not compensation received from a stock option is counted in determining whether an executive officer has received compensation in excess of $1 million. COMPENSATION COMMITTEE Lavern D. Kramer PERFORMANCE INFORMATION The following graph compares the performance of the Company with the performance of the NASDAQ Composite Index and the average performance of a group consisting of the Company's peer corporations which are industry competitors for the period from January 1, 1994, to December 31, 1998. The corporations making up the peer companies group are Advance Circuits Inc., Electronic Fab Technology Corp., Merix Corp., Norris Communications Corp., Talomar Med Technologies Inc. and Parlex Corp. The graph assumes that the value of the investment in the Company's Common Stock and each index was $100 at January 1, 1994 and that all dividends, if any, were reinvested. PERFORMANCE GRAPH
'M-WAVE INC.' 'PEER GROUP' 'NASDAQ COMPOSITE INDEX' ------------- ------------ ------------------------ '31-Dec-93' 100 100 100 '31-Dec-94' 113 117 98 '31-Dec-95' 50 194 138 '31-Dec-96' 19 226 170 '31-Dec-97' 26 211 208 '31-Dec-98' 14 141 293
CERTAIN TRANSACTIONS On December 18, 1998, the Company repurchased 781,964 shares of Common Stock owned by First Chicago Equity Corporation ("FCEC") and its affiliates. The aggregate consideration paid by the Company consisted of $781,964 plus warrants to purchase up to 781,964 shares of the Common Stock with an exercise price of $1 per share (increasing by $.05 per share each anniversary of the issue date of the warrants). The 9 11 warrants are exercisable only if the Company engages in an extraordinary transaction (e.g., a merger, consolidation, combination or dissolution) within five years of the issue date of the warrants. A special committee of the Board of Directors of the Company, consisting of Lavern Kramer and Rick Mathes, determined that the repurchase of the shares of the Common Stock owned by FCEC and its affiliates is in the best interests of the Company's stockholders. In connection with the repurchase, (i) Eric C. Larson and Timothy A. Dugan, two directors of the Company designated by FCEC, resigned from the Board of Directors and (ii) FCEC withdrew its notice to nominate two additional directors at the Company's next annual meeting of stockholders. 2. INDEPENDENT AUDITORS The Board of Directors recommends that stockholders ratify the appointment of Grant Thornton LLP by voting "FOR" ratification of Grant Thornton LLP as the Company's auditors for 1999. In the event such selection is not ratified, the Board of Directors will reconsider its selection. Grant Thornton LLP has audited the Company's financial statements since 1998. Representatives of Grant Thornton LLP are expected to be present at the meeting with the opportunity to make a statement if they desire to do so, and are expected to be available to respond to appropriate questions. 3. OTHER MATTERS The Board of Directors of the Company is not aware that any matter other than those listed in the Notice of Meeting is to be presented for action at the Annual Meeting. If any of the Board's nominees is unavailable for election as a Director or any other matter should properly come before the meeting, it is intended that votes will be cast pursuant to the Proxy in respect thereto in accordance with the best judgment of the person or persons acting as proxies. June 8, 1999 10 12 PROXY M-WAVE, INC. ANNUAL MEETING OF STOCKHOLDERS, JULY 28, 1999 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby (i) appoints Joseph A. Turek and Paul H. Schmitt and each of them as Proxy holders and attorneys, with full power of substitution, to appear and vote all of the shares of Common Stock of M-Wave, Inc. which the undersigned shall be entitled to vote at the Annual Meeting of Stockholders of the Company, to be held at the Union League Club, 65 W. Jackson, Chicago, Illinois, on Wednesday, July 28, 1999 at 10:00 a.m. local time, and at any adjournments thereof, hereby revoking any and all proxies heretofore given and (ii) authorizes and directs said Proxy holders to vote all of the shares of Common Stock of the Company represented by this Proxy as follows, with the understanding that if no directions are given below, said shares will be voted "FOR" the election of the Directors nominated by the Board of Directors and to ratify the appointment of Grant Thornton LLP as the Company's independent auditors. PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. [ ] Check Box if you plan to (Continued and to be signed attend the meeting. on reverse side.) M-WAVE, INC. PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [ ] 1. ELECTION OF DIRECTORS For Withhold For All Nominees for Class III Directors: Lavern D. Kramer and Rick All All Except(*) Mathes. [ ] [ ] [ ] ----------------------------------------------------------- *(Except nominee(s) written above.) For Against Abstain Nominees for Class I Directors: Michael Bayles and Steve Grzywna. [ ] [ ] [ ] ----------------------------------------------------------- *(Except nominee(s) written above.) For Against Abstain 2. Ratify appointment of independent auditors. [ ] [ ] [ ]
3. In their discretion to act on any other matters which may properly come before the Annual Meeting. THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE ABOVE PROPOSALS Dated: ________________________, 1999 Signature(s) --------------------------------------- --------------------------------------------------- Your signature to this Proxy form should be exactly the same as the name imprinted herein. Persons signing as executors, administrators, trustees or in similar capacities should so indicate. For joint accounts, the name of each joint owner must be signed. - -------------------------------------------------------------------------------- * FOLD AND DETACH HERE * YOUR VOTE IS IMPORTANT! PLEASE MARK, SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. -----END PRIVACY-ENHANCED MESSAGE-----