No-Act: Weldotron 5.23.91

Company Name: Weldotron Corp.
Public Availability Date: 05-23-1991

INQUIRY LETTER 1

Weldotron Corporation
1532 So. Washington Avenue (at 1-287)
Piscataway, New Jersey 08855
TELEPHONE(201) 752-6700

April 05, 1991

Securities and Exchange Commission
Division of Corporation Finance
450 Fifth Street, N.W.
Washington, D.C. 20549

Dear Sir or Madam:

Weldotron Corporation, a New Jersey corporation (the "Company") has received a letter from Walter & Edwin Schloss Associates, L.P. (the "Proponent"), a shareholder of the Company, containing a proposal and supporting statement (collectively, the "Proposal") for inclusion in the Company's proxy materials for the 1991 Annual Meeting of Shareholders (the "Proxy Materials").

Pursuant to Rule 14a-8(d) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), enclosed please find the following:

1. Six (6) copies of the Proposal;

2. Six (6) copies of this letter stating why the Company believes the omission of the Proposal from the Proxy Materials to be proper; and

3. Six (6) copies of an opinion of Sills Cummis Zuckerman Radin Tischman Epstein & Gross, P.A., counsel to the Company, supporting the Company's position with respect to the omission of the Proposal pursuant to Rule 14a-8(c)(4) and 14a-8(c)(8), 14a-8(c)(1), 14a-8(c)(7) and 14a-8(c)(3).

The Proposal reads as follows:

"RESOLVED, that the shareholders of the Company assembled in person and by proxy hereby request the Board of Directors to take all such action as may be necessary to maximize the value of shareholdings in the Company by contacting and negotiating with potential buyers for a sale or merger of the Company."

Pursuant to Rule 14a-8(b)(1), we hereby request that the following supporting statement be included in the Company's proxy statement and form of proxy relating to the 1991 Annual Meeting of the Company:

"REASONS: The Company faces a variety of challenges in the 1990's. Among other things, in order to keep pace with changes in the industries it serves, new product lines will be required and a shifting of priorities among existing product lines is clearly necessary. In addition, the Company must poise itself to take advantage of the market opportunities in the European Economic Community, beginning in 1992. All of this requires capital resources that the Company simply does not have available to it in its present posture. Even in the best lending environment, the Company's operating results in recent years would create serious obstacles to favorable financing. Given today's banking situation, the difficulties would be even greater. In any event, the burden of additional debt service would only further deteriorate the bottom line.

"It is, therefore, clear to us that the only rational and feasible option is a sale of the company or a transaction with an appropriate merger partner. At quarter ended November 30, 1990, the Company's shares were selling at $2 7/8. Since then (to February 20, 1991), the prices have ranged from a low of 2 5/8 to a high of 3 5/8. This is in the face of a book value at November 30, 1990 of $8.02 per share compared to a book value of $5.28, $7.17, and $8.50 at the fiscal years ended 2/28/90, 2/28/89 and 2/29/88, respectively. This consistent deterioration in shareholder value (the increase as of November 30, 1990 being due to the settlement of the Hobart litigation, rather than from operations) and the disparity between market and book value only reinforces our firm conclusion that shareholder worth can only be maximized, indeed preserved, by a sale or merger.

"The window of opportunity to accomplish this is NOW.

"If you AGREE with this proposal, please mark your proxy FOR this resolution."

Please be advised that the Company intends to omit the Proposal from the Proxy Materials based upon the following conclusions:

1. the Proposal represents an effort to redress a personal grievance against the Company and its management involving the Proponent's failed attempts to obtain a seat on the Company's Board of Directors and may therefore be excluded under Rule 14a-8(c)(4) and 14a-8(c)(8);

2. the Proposal is, under the laws of the Company's domicile, not a proper subject for action by security holders and may therefore be excluded under Rule 14a-8(c)(1);

3. the Proposal deals with a matter relating to the conduct of the ordinary business operations of the Company and may therefore be excluded under Rule 14a-8(c)(7); and

4. the Proposal may be omitted pursuant to Rule 14a-8(c)(3) because it is contrary to the Securities and Exchange Commission's proxy rules and regulations, including Rule 14a-9, which prohibits false or misleading statements in proxy soliciting materials.

Rule 14a-8(c)(4) and 14a-8(c)(8)

The submission of the Proposal is a tactic being used by the Proponent in an attempt to obtain a seat on the Company's Board of Directors. Accordingly, the Proposal may be omitted from the Proxy Materials under Rule 14a-8(c)(4) and 14a-8(c)(8) because it relates to a benefit to the proponent, or is in furtherance of a personal interest of the Proponent, which benefit or interest is not shared with other security holders at large.

On numerous occasions, beginning in October, 1990, the Proponent has approached the Company's President to request a seat on the Company's Board. On January 17 and January 18, 1991, the Proponent met with the President of the Company to discuss the possibility of the Proponent obtaining two seats on the Board. The Proponent has also been engaged in an effort to have the Company sold to two individuals solicited by the Proponent in a transaction in which the Proponent and/or its principals may be participants and receive direct or indirect benefits as a consequence thereof.

On October 19, 1990, the Proponent and 12 other shareholders of the Company filed a Schedule 13D with the Securities and Exchange Commission which states:

The Reporting Persons have each acquired the Common Stock of Weldotron for the purpose of investment. The Reporting Persons may be deemed to constitute a "group" for purposes of Section 13(d)(3) of the Exchange Act, by virtue of their intention to communicate with each other and other shareholders of Weldotron and to act together, and meet with management of Weldotron in order to exert influence with the ultimate goal of protecting their investment and enhancing the value of the stock. While the Reporting Persons or one or more of them may demand from Weldotron a shareholder list in order to facilitate their communications with the shareholders of Weldotron with respect to the objectives of the Reporting Persons, they have no present intention of engaging in a proxy solicitation to elect or oppose the election of directors of Weldotron or with respect to any other matter. The Reporting Persons contemplate that their efforts will result in other shareholders of Weldotron joining with the Reporting Persons and filing amendments to this Statements to reflect their so doing.

The Schedule 13D further indicates that the shareholder "group" collectively then beneficially owned 16.8% of the Company's Common Stock. A copy of the Schedule 13D is attached hereto as Exhibit A.

On January 30, 1991, the Proponent, together with Walter J. Schloss, Edwin W. Schloss and Paul Z. Miles, filed an amended Schedule 13D with the Securities and Exchange Commission. In this filing, the Proponent and the three other shareholders disclosed that:

The Reporting Persons are seeking to maximize their investment through a sale of Weldotron's assets or a merger of Weldotron with another entity. Certain of the Reporting Persons met with management of Weldotron on January 17, 1991, and January 18, 1991, and may continue to meet with management of Weldotron, in order to attain the objective set forth above. In addition, the Reporting Persons are seeking representation on the Board of Directors of Weldotron. The Reporting Persons may be deemed to constitute a "group" for purposes of Section 13(d)(3) of the Exchange Act, by virtue of their intention to communicate with each other and to act together. While the Reporting Persons or one or more of them may demand from Weldotron a shareholders list in order to facilitate their communications with the shareholders of Weldotron with respect to the objectives of the Reporting Persons, they have no present intention of engaging in a proxy solicitation to elect or oppose the election of directors of Weldotron or with respect to any other matter.

The amended Schedule 13D indicates that it was filed only by the Proponent, its two principals and one other shareholder which collectively then beneficially owned 10.6% of the Company's Common Stock. The amended Schedule 13D does not expressly state the reason that the nine other shareholders, which beneficially owned 6.2% of the Company's Common Stock, ceased to be members of the "group" which filed the original Schedule 13D. However, the amended Schedule 13D reveals for the first time that the Proponent is seeking representation on the Company's Board of Directors, as well as the sale or merger of the Company. The nine other shareholders which filed the original Schedule 13D were obviously not seeking to achieve the same objectives. Indeed, the amended Schedule 13D is particularly notable for its omission of the sentence that the Proponent and the other reporting persons therein contemplate that their efforts will result in additional shareholders of the Company joining with them. The Company believes that the only clear and correct inference that may be drawn from the foregoing is that the Proponent seeks a benefit or is acting in furtherance of a personal interest (i.e., representation on the Company's Board of Directors) which benefit or interest is not shares with other security holders at large. A copy of the amended Schedule 13D is attached hereto as Exhibit B.

Moreover, the fact that the Proponent has submitted the Proposal as a bargaining tool in its ongoing negotiations with the Company regarding representation on the Company's Board of Directors is clearly revealed by the memorandum dated February 20, 1991, from the Proponent's counsel to the Company's counsel, transmitting draft of the Proposal. In his memorandum, the Proponent's counsel states "I believe that the Proposal is innocuous and, hopefully, events will eliminate any reason for its inclusion." The "events" to which the Proponent's counsel refers, of course, are the circumstances under which the Proponent may obtain representation on the Company's Board of Directors. A copy of such memorandum is attached hereto as Exhibit C.

In fact, the Company offered the Proponent the right to elect one representative to its Board of Directors pursuant to the terms of a certain proposed "standstill" agreement. The terms of the "standstill" agreement. were not acceptable to the Proponent. As a consequence, the Proponent submitted the Proposal to the Company as a means of increasing the pressure on the Company to give the Proponent a seat on the Board of Directors on the Proponent's terms. The Company's President has on several occasions been specifically informed by Mr. Walter J. Schloss, a principal of the Proponent, that the Proponent would withdraw the Proposal if it were given a seat on the Company's Board of Directors.

The Staff of the Division of Corporation Finance (the "Staff") has found that while a proposal may appear to relate to matters of general interest to all shareholders, information submitted to the Staff may suggest that "a proponent is using the proposal as a tactic to redress an existing personal grievance against the Company." Letter to Cummings, Incorporated (February 6, 1980); Letter to Armco, Incorporated (January 29, 1980). In Richton International Corporation (August 9, 1983), the proponent submitted a proposal that the board of directors of a company "proceed to sell or close down each unprofitable part of the Company and thereafter seek a merger or acquisition with another company." The issuer apprised the Staff that the proponent had submitted his name as a nominee for election as a director of the company and had advised the issuer that he would nominate himself for director at the issuer's annual meeting of shareholders. The issuer argued that the proponent was using the proposals in furtherance of his efforts to be elected to the issuer's board of directors. The Staff concurred with the issuer's views that the proposals were related to the proponent's effort to be elected to be board and therefore concurred in the issuer's view that the proposal could be omitted under Rule 14a-8(c)(8). The Richton International letter is attached hereto as Exhibit D.

Further, the Proponent's attempt to obtain a personal benefit has damaged the Company's relationship with its employees, suppliers and customers. When the Company's employees learned about the Proponent's intention that the Company be sold or merged after an article appeared in The Star Ledger (the newspaper with the largest circulation in the State of New Jersey), they became concerned about their job security. This reaction prompted management, on February 13, 1991, to circulate a memorandum assuring the employees that the Company was in fact not "for sale" and that their jobs were safe. A copy of the newspaper article and the memorandum are attached hereto as Exhibit E. The Company has also received several telephone calls from its suppliers, distributors and dealer network expressing concur that their relationship with the Company would be terminated, as well as telephone calls from its customers (including its largest customer) stating that in the event the Company is sold such customers may terminate their relationship with the Company and thereafter do business with one of the Company's competitors. The Staff has held in the past that proposals which are an attempt to harass management are excludible from proxy materials. See letter to Cabot Corporation (November 9, 1988).

Thus, the Proposal represents an effort to accomplish through the shareholder proposals process the personal goals of the Proponent and may properly be omitted from the Proxy Materials under Rules 14a-8(c)(4) and 14a-8(c)(8).

Rule 14a-8(c)(1)

The Company also believes that the Proposal may be omitted from the proxy materials under Rule 14a-8(c)(1) because the Proposal is not, under the laws of the State of New Jersey (the Company's domicile), a proper subject for action by the Company's shareholders.

Section 14A:6-1(1) of the New Jersey Business Corporation Act, as amended (the "NJBCA"), states that "the business and affairs of a corporation shall be managed by or under the direction of its board, except as in this act or in its certificate of incorporation otherwise provided." Neither the NJBCA nor the Certificate of Incorporation of the Company otherwise provides.

The Proposal directs the Company's Board of Directors to contact and negotiate with potential buyers for a sale or merger of the Company. While the proposal appears initially to be a "request" that the Company's Board of Directors take action to maximize shareholder value, the Proponent proceeds to state in the Proposal itself exactly what actions must be taken by the Board in order to maximize shareholder value. In particular, the supporting statement included in the Proposal states:

. . .Among other things, in order to keep pace with changes in the industries it serves, new product lines will be required and a shifting of priorities among existing product lines is clearly necessary. In addition, the Company must poise itself to take advantage of the market opportunities in the European Economic Community, beginning in 1992. All of this requires capital resources that the Company simply does not have available to it in its present posture. . . .It is therefore clear to us that the only rational and feasible option is a sale of the Company or a transaction with an appropriate merger partner. (Emphasis added.)

By stating that the sale or merger of the Company is the only option, the Proponent is in fact directing the sale or merger of the Company, regardless of the use of the word "request" at the beginning of the Proposal. The Proposal also requires that the Company's Board of Directors contact and negotiate with potential buyers. This is in direct opposition to Section 14A:6-1(1) of the NJBCA discussed above, as well as Section 14A:6-1(2) and Section 14A:6-1(3) of the NJBCA which state:

(2) In discharging his duties to the corporation and in determining what he reasonably believes to be in the best interest of the corporation, a director may, in addition to considering the effects of any action on shareholders, consider any of the following: (a) the effects of the action on the corporation's employees, suppliers, creditors, and customers; (b) the effects of the action on the community in which the corporation operates; and (c) the long term as well as the short-term interests of the corporation and its shareholders, including the possibility that these interests may best be served by the continued independence of the corporation.

(3) If on the basis of the factors described in subsection (2) of this Section, the board of directors determines that any proposal or offer to acquire the corporation is not in the best interest of the Corporation, it may reject such proposal or offer. If the board of directors determines to reject any such proposal or offer, the board of directors shall have no obligation to facilitate, remove any barriers to, or refrain from impeding the proposal or offer. (Emphasis added.)

Section 14A:6-1(2) and Section 14A:6-1(3) of the NJBCA were enacted into law by an amendment to the NJBCA effective as of June 29, 1989. These provisions are unlike the laws of the State of Delaware and other jurisdictions which the Staff has previously considered in the context of determining whether a shareholder proposal may be omitted from a company's proxy materials pursuant to Rule 14a-8(c)(1). The legislative history of these provisions provides:

While consideration by a director of any of the factors enumerated in paragraphs (a) and (b) of subsection (2) of section 1 of this bill is expressly intended to be discretionary and not mandatory, this bill is designed to encourage consideration of these factors in determining the best interests of the corporation. (Emphasis added.) Statement to Senate, No. 3295 (February 23, 1989). A copy of the law and such legislative history is attached hereto as Exhibit F.

As discussed above, the Proponent's attempts to obtain a personal benefit has damaged the Company's relationship with its employees, suppliers and customers. The Company will undoubtedly suffer substantial additional damage to such relationships if the Proposal is included in the Proxy Materials. These potential effects are exactly the same as the factors set forth in Section 14A:6-1(2)(a) of the NJBCA which the Company's Board of Directors should consider in discharging its duties to the Company and in determining what it reasonably believes to be in the Company's best interests. The Board has no obligation under the laws of the State of New Jersey, and should not be compelled pursuant to the shareholder proposal process, to contact and negotiate with potential buyers or otherwise "take all such action as may be necessary to maximize the value of shareholdings in the Company" by arranging for a sale or merger of the Company. The laws of the State of New Jersey clearly provide that the Company's Board of Directors, after consideration of the above-quoted factors, may reject an acquisition proposal and has no duty to facilitate, remove any barriers to or refrain from impeding an acquisition proposal. Thus, the Board of Directors should have no obligation to contact and negotiate with potential buyers for a sale or merger of the Company would not be in the best interests of the Company and that such interests and best served at the present time by the Company's continued independence.

Based on the foregoing, the Proposal should be excluded pursuant to Rule 14a-8(c)(1) because the Proposal is not, under the laws of the State of New Jersey, a proper subject for shareholder action.

Rule 14a-8(c)(7)

The Proposal may also be omitted from the Proxy Materials pursuant to Rule 14a-8(c)(7) because it deals with matters relating to the conduct of the ordinary business operations of the Company.

The Proposal addresses specific actions to be taken by the Company's Board of Directors in order to maximize shareholder value and also sets forth the changes that the Company should effectuate to become more profitable. Specifically, the Proposal states in conclusory terms that new product lines are "required" and that the Company "must" take advantage of international marketing opportunities in 1992. However, the Proposal fails to indicate any reason why such actions on the part of the Company are necessary. The Proposal also states that such changes require "capital resources that the Company simply does not have available to it in its present posture."

Under New Jersey law, it is the primary duty of the Board of Directors and management to operate the Company in the manner they believe appropriate to maximize shareholders' value. In order to maximize such value, the Company's Board of Directors and management regularly review and decide among various strategies and make determinations as to which actions would be appropriate. Clearly, it is within the basic responsibility of the Board of Directors to determine (i) whether "new product lines will be required," (ii) the "priorities among existing product lines" and (iii) the manner and extent to which "the Company must poise itself to take advantage of market opportunities in the European Economic Community." In addition, the Board of Directors (not the shareholders of the Company) is responsible for determining the capital requirements of the Company and how best to fulfill those requirements.

The Company strongly disagrees with the Proponent that "the only rational and feasible option to fulfill the Company's capital requirement is a sale of the Company or a transaction with an appropriate merger partner." First, the Company has adequate financing in place for its current capital requirements. The Company recently received a large settlement in a patent litigation, the proceeds of which were used to repay outstanding bank debt. As a result, the Company has a net worth of approximately $13 million, a substantial asset base in excess of $23 million and less than $1.5 million of bank debt, and is currently negotiating with bank lenders for additional long-term financing. Second, the Company has also initiated a licensing program as a consequence of the patent settlement, which program the Company believes will be a significant source of additional revenues. The Company has recently concluded its first license agreement with a U.S. company, and is currently discussing licensing arrangements with several other domestic and international companies. Third, the Company expects to continue in the future its past practice of expansion of its international marketing activities through joint venture opportunities with third parties. Finally, at the present time almost all acquisition proposals relating to public companies (such as the Company) are structured as a sale or merger pursuant to which the shareholders receive payment for their outstanding shares, rather than the public company receiving any part of the consideration. Accordingly, any such sale or merger of the Company as proposed by the Proponent may result in little or no capital infusion for the Company, and certainly would not be the "only rational and feasible option" for satisfying the Company's future capital requirements.

The Proposal, therefore, concerns a matter directly relating to the conduct of the Company's ordinary business operations (i.e., how to satisfy the Company's future capital requirements), and may properly be omitted from the Proxy Materials pursuant to Rule 14a-8(c)(7).

Rule 14a-8(c)(3)

Finally, the Proposal may be omitted from the Proxy Materials pursuant to Rule 14a-9 because it contains false or misleading statements.

The Proposal is false and misleading on its face. The Proposal states that in order to maximize shareholder value, the Company must either be sold or merged with another company. Other possibilities certainly exist to increase the value of the Company to shareholders, including restructuring certain business operations, issuing additional capital stock or debt and entering into joint ventures with other companies.

Moreover, virtually every sentence of the supporting statement included in the Proposal is false, misleading, vague or otherwise without factual support. The first sentence of the supporting statement included in the Proposal states that "the Company faces a variety of challenges in the 1990's." This is vague and misleading because it does not describe what challenges are being faced and how they differ from the challenges that the Company has previously encountered. The next sentence provides that "among other things, in order to keep pace with changes in the industries it serves, new product lines will be required and a shifting of priorities among existing product lines is clearly necessary." This sentence is false, misleading and vague. The sentence does not indicate what industry changes are being addressed and does not describe how the Company is failing to keep pace with such changes. In addition, there is no factual support for the statement that "new product lines are required" or that a "shifting of priorities among existing product lines is clearly necessary." The Proponent offers no specific suggestions as to proposed new product lines or which among the Company's existing product lines deserves a higher or lower priority. The Proponent, moreover, offers no factual support that any such action will maximize the value of shareholdings in the Company. The Proponent also does not indicate whether, when and the extent to which a sale or merger of the Company will result in any or all of such changes. Accordingly, this sentence is clearly false, misleading, vague and without factual basis.

The sentence wherein the Proponent states that "the Company must poise itself to take advantage of the market opportunities in the European Economic Community, beginning in 1992" is also false, misleading and vague. The sentence does not indicate what opportunities are being addressed nor explain why the Company "must" take advantage of these opportunities or how it must "poise" itself to do so. In fact, the Company has recently established a subsidiary in Germany under the name Weldotron GmbH, and has also appointed distributors in France, the United Kingdom and Greece and formed a business partnership in Spain, for the very purpose of expanding its international marketing opportunities in the European Economic Community. Moreover, in contrast to the current position of the Proponent necessary to support its statement concerning the Company's capital resources, the principals of the Proponent, on several occasions during the past year, have actually criticized the Company's management for expansion of the Company's international marketing activities because of their stated belief that such efforts would not be profitable.

The statement that "all of this requires capital resources that the Company simply does not have available to in its present posture" is seriously false and misleading. The statement does not indicate why the Proponent believes that the Company has insufficient capital resources available or the extent to which additional capital resources are necessary. The Company's "present posture" is also not specifically addressed. As indicated above, the Company has substantially reduced its outstanding bank debt and is negotiating for additional long-term bank financing. Management of the Company believes that such resources will be sufficient to finance its future capital requirements.

The supporting statement next states that "even in the best lending environment, the Company's operating results in recent years would create serious obstacles to favorable financing." This sentence is obviously false, misleading and vague. The term "favorable financing" is not defined in the supporting statement. The statement also does not disclose how the Company's recent operating results would create "serious obstacles" to the Company obtaining financing, the nature of such "serious obstacles" or the manner and extent to which such obstacles would be overcome by a sale or merger of the Company or otherwise. The sentence "given today's banking situation, the difficulties would be even greater" is pure speculation on the part of the Proponent and is otherwise misleading. Further, the sentence "in any event, the burden of additional debt service would only further deteriorate the bottom line" is false and misleading. This statement assumes that the Company's return on borrowed funds is less than the interest payable for the use of such funds. The Company also has substantially reduced its outstanding bank debt as a result of the patent litigation settlement, and the Company's interest burden relating to additional financing will be much less than in the past. As previously indicated, the Company has existing bank financing and, in view of its substantial asset base and reduced bank debt, management believes that the Company will obtain additional financing to satisfy its future capital requirements.

The statement that "the only rational and feasible option to obtain future capital resources is a sale of the Company or a transaction with an appropriate merger partner" is seriously false and misleading. As indicated above, other "rational and feasible" options certainly do exist, including additional bank financing, the issuance of additional equity in a public or private offering and participation in joint venture opportunities. It is simply improper and incorrect for the Proponent to suggest that the Company may require additional capital in the future due to unspecified changes in its product lines and to "poise" itself for expansion of its international marketing activities, which capital the Company may not be able to raise in the unsupported and unfounded view of the Proponent, and therefore the Company must be sold or merged. The Proponent offers no explanation of why a sale or merger is "the only rational and feasible option," or any evidence, credible or otherwise, that a sale or merger will result in any capital resources being made available to the Company.

The comparison of stock price to book value is misleading because book value is a concept based on historical data used for accounting purposes and stock price depends upon market perception, supply and demand and other factors. The Proponent states that there is a consistent deterioration in "shareholder value," without indicating how shareholder value is calculated. The Proponent then states that "...the disparity between market and book value only reinforces our firm conclusion that shareholder worth can only be maximized, indeed preserved, by a sale or merger." This statement is both false and misleading. It is faulty logic to assume that because the stock price has decreased such that there is a disparity between market and book value that the only option for the Company is a sale or merger. As indicated above, the Company has substantially reduced its bank debt from over $10 million to less than $1.5 million and is currently negotiating with various bank lenders for additional financing. It is also misleading for the Proponent to refer to the "consistent deterioration in shareholder value" in view of the substantial increase in the Company's book value (i.e., net worth) to approximately $13 million. The Company's Board of Directors may consider both the long-term and the short-term interests of the Company and its shareholders under Section 14A:6-1(2)(c) of the NJBCA, including the possibility that these interests may best be served by the continued independence of the Company, in determining whether an acquisition proposal should be accepted or rejected. It would seem to be a mistake and seriously misleading to suggest that the Board should base such decisions only upon the short-term disparity between the stock price and book value of the Company.

Finally, the statement that "the window of opportunity to accomplish this is Now" is both inflammatory and misleading. Why has this opportunity suddenly become available and why will it no longer be available after the Company's 1991 Annual Meeting of Shareholders? The Proponent simply does not address either of these questions in its supporting statement. In the event that the Company were to take any precipitous action concerning a sale or merger, such action may in fact have a substantial negative impact on shareholder value. This statement clearly must be omitted from the Proxy Materials.

In summary, the Proposal, including the supporting statement, may properly be omitted from the Proxy Materials pursuant to Rule 14a-8(c)(3) because the Proposal is false, misleading, vague or without factual basis.

Conclusion

In conclusion, and for the reasons set forth herein, the Company requests a determination that the Staff will not recommend enforcement proceedings against the Company if the Proposal is omitted from the its Proxy Materials pursuant to one or more of paragraphs (c)(4) and (c)(8), (c)(1), (c)(7) and (c)(3) of Rule 14a-8 under the Exchange Act.

In compliance with Rule 14a-8(d), a copy of this letter and the enclosed documents are being sent concurrently to the Proponent.

We would appreciate your acknowledging receipt of this letter and its enclosures by stamping on the enclosed copy of this letter the time and date of receipt and returning such copy to us in the enclosed envelope provided for this purpose. If you have any questions or require any additional information concerning this matter, please contact our counsel, Steven E. Gross, Esq. or, in his absence, Ira A. Rosenberg, Esq., at (201) 643-7000. Should the Staff disagree with the Company's conclusions, we would appreciate an opportunity to confer with the Staff prior to the issuance of its response.

Very truly yours,

WELDOTRON CORPORATION

By:
Martin Siegel, President

INQUIRY LETTER 2

WALTER & EDWIN SCHLOSS ASSOCIATES, L.P.
52 VANDERBILT AVENUE
NEW YORK, NY 10017
TELEPHONE(212) 370-1844

VIA FEDERAL EXPRESS
RECEIPT REQUESTED

Weldotron Corporation
1532 South Washington Avenue
Piscataway, New Jersey 08855-5816

Attention: Saymour G. Siegel, Secretary

Re: Shareholder Proposal for Action at 1991 Annual Meeting of
Shareholders

Gentlemen:

Pursuant to Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended, Walter & Edwin Schloss Associates L.P., the owner of 152,800 shares of common stock, $.05 per value, ("Common Stock"), of Weldotron Corporation, plans to introduce the following resolution at the 1991 Annual Meeting of Weldotron Corporation (the "Company"):

"RESOLVED, that the shareholders of the Company assembled in person and by proxy hereby request the Board of Directors to take all such action as may be necessary to maximize the value of shareholdings in the company by contracting and negotiating with potential buyers for a sale or merger of the Company."

Pursuant to Rule 14a-8(b)(1), we hereby request that the following supporting statement be included in the Corporation's proxy statement and form of proxy relating to the 1991 Annual Meeting of the Company:

"REASONS: The Company faces a variety of challenges in the 1990's. Among other things, in order to keep pace with changes in the industries it serves, new product lines will be required and a shifting of priorities among existing product lines is clearly necessary. In addition, the Company must poise itself to take advantage of the market opportunities in the European Economic Community, beginning in 1992. All of this requires capital resources that the Company simply does not have available to it in its present posture. Even in the best lending environment, the Company's operating results in recent years would create serious obstacles to favorable financing. Given today's banking situation the difficulties would be even greater. In any event, the burden of additional debt services would only further deteriorate the bottom line.

"It is, therefore, clear to us that the only rational and feasible option is a sale of the company or a transaction with an appropriate merger partner. At the quarter ended November 30, 1990, the Company's shares were selling at $2 7/8. Since then (to February 20, 1991), the prices have ranged from a low of 2 5/8 to a high of 3 5/8. This is in the face of a book value at November 30, 1990 of $8.02 per share compared to a book value of $5.28, $7.17, and $8.50 at the fiscal years ended 2/28/90, 2/28/89 and 2/29/88, respectively. This consistent deterioration in shareholder value (the increase as of November 30, 1990 being due to the settlement of the Hobart litigation, rather than from operations) and the disparity between market and book value only reinforces our firm conclusion that shareholder worth can only be maximized, indeed preserved, by a sale or merger.

"The window of opportunity to accomplish this is NOW.

"If you AGREE with this proposal, please mark your proxy FOR this resolution."

Walter & Edwin Schloss Associates, L.P. is the holder of at least one percent of the shares of Common Stock entitled to vote at the 1991 Annual Meeting of the Company, based on 1,830,173 Shares outstanding as of January 18, 1991, has held such securities for at least one year, and intends to continue to own such shares through the date on which the meeting is held.

Thank you for your attention to this matter.

Sincerely,

WALTER & EDWIN SCHLOSS
ASSOCIATES, L.P.
By: Schloss Management Company,
General Partner

By:
Walter J. Schloss, General Partner

INQUIRY LETTER 3

SILLS CUMMIS ZUCKERMAN RADIN TISCHMAN EPSTEIN & GROSS
ONE RIVERFRONT PLAZA
NEWARK, NEW JERSEY 07102-5400
TELEPHONE(201) 643-7000

Weldotron Corporation
1532 South Washington Avenue
Piscataway, New Jersey 08855-3816

Gentlemen:

You have requested our opinion as to whether Weldotron Corporation, a New Jersey Corporation (the "Company"), may properly omit from the Company's proxy statement and form of proxy for the Company's 1991 Annual Meeting of Shareholders (the "Proxy Materials") a proposal and supporting statement (collectively, the "Proposal") submitted by letter dated February 21, 1991 from Walter & Edwin Schloss Associates, L.P. (the "Proponent"), a copy of which is attached hereto as Exhibit A.

In our opinion, the Proposal may be omitted from the Company's Proxy Materials for one or more of the following reasons:

2. the Proposal is, under the laws of the Company's domicile, not a proper subject for action by security holders and may therefore be excluded under Rule 14a-8(c)(1);

3. the Proposal deals with a matter relating to the conduct of the ordinary business operations of the Company and may therefore be excluded under Rule 14a-8(c)(7); and

I. The Proposal represents an effort to redress a personal grievance and/or obtain a personal benefit.

We are of the opinion, based on the facts which you have provided to us, that the Proposal represents an effort by the Proponent to redress a personal grievance against the Company and its management and/or obtain a personal benefit not shared with other shareholders at large and, therefore, the Proposal may be omitted pursuant to Rules 14a-8(c)(4) and 14a-8(c)(8).

The Staff of the Division of Corporation Finance (the "Staff") has found that while a proposal may appear to relate to matters of general interest to all shareholders, information submitted to the Staff may suggest "a proponent is using the proposal as a tactic to redress an existing personal grievance against the Company" or to obtain a personal benefit. Letter to Cummings, Incorporated (February 6, 1980); Letter to Armco, Incorporated (January 29, 1980). For example, in Richton International Corporation (August 9, 1983), the proponent submitted a proposal that the board of directors of a company "proceed to sell or close down each unprofitable part of the Company and thereafter seek a merger or acquisition with another company." The issuer argued that the proponent was using the proposals in furtherance of his efforts to be elected to the issuer's board of directors. The Staff concurred with the issuer's views that the proposals were related to the proponent's effort to be elected to the board and therefore concurred in the issuer's view that the proposal could be omitted under Rule 14a-8(c)(8).

You have informed us that on numerous occasions, as set forth in the Company's letter of even date to the Staff, beginning in October, 1990, the Proponent has approached the President of the Company to request a seat on the Company's Board. The memorandum from Proponent's counsel to this firm transmitting a draft of the Proposal states in part "I believe that the Proposal is innocuous and, hopefully, events will eliminate any reason for its inclusion." The memorandum clearly supports the Company's understanding that the Proponent is using the shareholder proposal process in an effort to obtain a personal benefit or in furtherance of a personal interest (i.e., obtaining a seat on the Company's Board of Directors) which benefit or interest is not shared with other security holders at large.

Additionally, as more fully set forth in the Company's letter to the Staff, on January 19, 1991, the Proponent, together with 12 other investors which collectively then owned 16.8% of the Company's Common Stock, filed a Schedule 13D with the Securities and Exchange Commission stating their intention to communicate with each other and meet with the Company's management to exert influence with the objective of "protecting their investment and enhancing the value of the stock." The Schedule 13D also stated that such investors "contemplate that their efforts will result in other shareholders of Weldotron joining with them and filing amendments to the Schedule 13D to reflect their so doing." On January 30, 1991, an amended Schedule 13D was filed by the Proponent, joined only by its two principals and one other investor. The amended Schedule 13D reveals for the first time that the Proponent is seeking representation on the Company's Board of Directors, as well as the sale or merger of the Company. The amended Schedule 13D also indicates that nine shareholders which collectively then owned 6.2% of the Company's outstanding Common Stock ceased to be members of the "group" and that no other shareholders of the Company joined in the filing. Moreover, the statement that the members of the "group" contemplate that they will be joined by other stockholders of the Company is conspicuous by its absence in the amended Schedule 13D. Accordingly, it appears from the Schedule 13D and the amendment thereto submitted by the Proponent itself that the Proponent seeks a benefit or is acting in furtherance of a personal interest (i.e., representation on the Company's Board of Directors) which benefit or interest is not shared with other security holders at large.

We also are aware that the Company offered the Proponent the right to elect one representative to its Board of Directors pursuant to the terms of a certain proposed "standstill" agreement, which were not acceptable to the Proponent. You have also informed us that Mr. Walter J. Schloss, a principal of the Proponent, has on several occasions informed the Company's President that the Proponent would withdraw the Proposal if it were given a seat on the Company's Board of Directors. It therefore appears as if the Proponent submitted the Proposal to the Company as a means of increasing the pressure on the Company to give the Proponent a seat on the Board of Directors on the Proponent's terms.

The Staff has also held in the past that proposals which are an attempt to harass management are excludible from proxy materials. See letter to Cabot Corporation (November 9, 1988). As discussed in the letter of even date from the Company to the Staff, the Proponent's actions appear to be an attempt to harass management and have caused considerable damage to the Company's relationships with its employees, customers, distributors, dealer network and suppliers. These actions appear to be an effort to harass the Company's management and, as such, the Proposal may properly be omitted from the Proxy Materials.

Based upon the foregoing, we are of the opinion that the Proposal may be omitted from the Company's Proxy Materials pursuant to Rules 14a-8(c)(4) and 14a-8(c)(8).

II. The Proposal is not a proper subject for shareholder action.

The Proposal may be omitted from the Proxy Materials pursuant to Rule 14a-8(c)(1) because, under laws of the State of New Jersey (the Company's domicile), the Proposal is not a proper subject for shareholder action.

Pursuant to New Jersey law, the business of every corporation is to be managed by its board of directors. See Treadway v. Care Corporation, 638 F.2d 357 (2d Cir. 1980); Elevator Supplies Co. v. Wylde, 150 A. 347 (Ch. N.J. 1930); Dvorin v. Greenberg, 151 A. 95 (Ch. N.J. 1930); Auburn Button Works, Inc. v. Perryman Electric Co., 154 A 1 (Ch. N.J. 1931). Section 14A:6-1(1) of the New Jersey Business Corporation Act, as amended (the "NJBCA"), states that "the business and affairs of a corporation shall be managed by or under the direction of its board, except as in this act or in its certificate of incorporation otherwise provided." Neither the NJBCA nor the Certificate of Incorporation of the Company otherwise provides.

In addition to this general provision, subsections (2) and (3) of Section 14A:6-1 specifically provide that:

(a) the effects of the action on the corporation's employees, suppliers, creditors, and customers; (b) the effects of the action on the community in which the corporation operates; and (c) the long term as well as the short-term interests of the corporation and its shareholders, including the possibility that these interests may best be served by the continued independence of the corporation.

Section 14A:6-1(2) and Section 14A:6-1(3) of the NJBCA were enacted into law by an amendment to the NJBCA effective as of June 29, 1989. These provisions are unlike the laws of the State of Delaware and other jurisdictions (which usually contain only general provisions to the effect that a corporation shall be managed by or under the direction of its board of directors) that the Staff has previously considered in the context of determining whether a shareholder proposal may be omitted from a company's proxy materials pursuant to Rule 14a-8(c)(1). The legislative history of the above provisions of the NJBCA provides:

Statement to Senate, No. 3295 (February 23, 1989).

As discussed above, the Proponent's actions appear to have caused damage to the Company's relationships with its employees, suppliers and customers. The Company believes that it will suffer substantial additional damage to such relationships if the Proposal is included in the Proxy Materials. These potential effects are exactly the same as the factors set forth in Section 14A:6-1(2)(a) of the NJBCA which the Company's Board of Directors should consider in discharging its duties to the Company and in determining what it reasonably believes to be in the Company's best interests.

The Board of Directors of the Company has no obligation under the laws of the State of New Jersey to contact and negotiate with potential buyers or otherwise "take all such action as may be necessary to maximize the value of shareholdings in the Company" by arranging for a sale or merger of the Company, as requested by the Proponent. The laws of the State of New Jersey clearly provide that the Company's Board of Directors, after consideration of the above-quoted factors, may reject an acquisition proposal and has no duty to facilitate, remove any barriers to or refrain from impeding an acquisition proposal. Thus, the Board of Directors has no obligation under the laws of the State of New Jersey to contact and negotiate with potential buyers for a sale or merger of the Company when the Board reasonably believes (as the Company has informed us that it does) that the sale or merger of the Company would not be in the best interests of the Company and that such interests are best served at the present time by the Company's continued independence.

Based upon the foregoing, we are of the opinion that the Proposal may be omitted from the Company's Proxy Materials because, pursuant to the laws of the State of New Jersey (the Company's domicile), it is not a proper subject for shareholder action.

III. The Proposal relates to the conduct of the Company's ordinary business operations.

We are also of the opinion that the Proposal may be omitted pursuant to Rule 14a-8(c)(7) because it relates to the conduct of the ordinary business operations of the Company.

Under New Jersey law, it is the primary duty of the board of directors and management to operate the Company in the manner they believe appropriate to maximize shareholders' value. N.J.S.A. ?14A:6-1(1).

The supporting statement included in the Proposal expressly states that the reason that the Company must be sold or merged is because a sale or merger of the Company is the "only rational and feasible option" to raise the necessary capital resources to (i) establish new product lines, (ii) effect "a shifting of priorities among existing product lines" and (iii) enable the Company to "poise itself to take advantage of market opportunities in the European Economic Community, beginning in 1992." Under the laws of the State of New Jersey, the determination of how, when and the extent to which the Company should raise capital, expand its product lines, change priorities among existing product lines and expand its international marketing activities is clearly the responsibility of, and is required to be carried out under the direction of, the Company's Board of Directors, not its shareholders, N.J.S.A. ?14A:6-1. Accordingly, the Proposal relates to the conduct of the ordinary business operations of the Company.

The Staff has previously determined that proposals regarding the development of new products may be omitted from proxy materials. See letter to Stewart Warner Corporation (March 12, 1987). Also, proposals regarding the restructuring of a company may be excluded from a company's proxy materials. See letter to The Statesman Group, Incorporated (March 22, 1990); letter to Pinnacle West Capital Corporation (March 28, 1990). In Sears Roebuck and Company (March 10, 1987), the Staff held that decisions to sell certain operating units or make certain acquisitions were within a company's ordinary business operations. The Staff has also held that proposals relating to how a Company's assets and investments are structured and utilized may be omitted pursuant to Rule 14a-8(c)(7). See letter to Newmont Mining Corporation (March 20, 1990).

Based upon the foregoing, we are of the opinion that the Proposal relates to the conduct of the ordinary business of the Company and may be omitted from the Proxy Materials pursuant to Rule 14a-8(c)(7).

IV. The Proposal is false and misleading.

Finally, the Proposal (including the supporting statement) appears to be false, misleading, vague or without any factual support and, therefore, is in violation of the Securities and Exchange Commission's proxy rules and regulations, including Rule 14a-9, which prohibits false or misleading statements in proxy soliciting materials.

As more fully set forth in the letter of even date from the Company to the Staff, each statement contained in the Proposal appears to be false, misleading, vague or without any factual support. The Proposal states that, in order to maximize shareholder value and obtain necessary capital resources, the "only rational and feasible option" is for the Company to be either sold or merged with another company. Other possibilities certainly exist to increase the value of the Company to shareholders, for example, refinancing Company debt, restructuring certain business operations and issuing new stock. In addition, the Proposal contains numerous conclusive statements without providing any basis therefor. The Staff has held in the past that assertions which are not sufficiently supported are misleading and may be omitted from a company's proxy materials. See letter to Firestone Tire & Rubber Company (December 20, 1978).

Based upon the foregoing, we are of the opinion that the Proposal may be omitted from the Proxy Materials because the Proposal contains false and/or misleading statements in violation of the Securities and Exchange Commission's proxy rules and regulations, including Rule 14a-9, which prohibits false or misleading statements in proxy soliciting materials.

In conclusion, for the reasons set forth above, we are of the opinion that the Proposal may properly be omitted from the Proxy Materials.

This opinion is furnished to you in connection with your request that the Staff concur with you that some basis exists for your decision to omit the Proposal from the Proxy Materials. We understand that you propose to file with the Securities and Exchange Commission (the "Commission"), pursuant to Rule 14a-8(d) under the Securities Exchange Act of 1934, as amended, a statement of the reasons why the Company deems the omission of the Proposal from the Proxy Materials to be proper, together with copies of this opinion letter in support of the Company's position. We consent to such use of this opinion letter for such purpose and to the forwarding of a copy thereof to the Proponent as required by Rule 14a-8(d). However, this opinion letter and the opinions expressed herein may not be relied upon by you, the Commission or the Proponent for any other purpose and may not be relied upon by any other person, without our prior written consent. This opinion letter may be made publicly available by the Commission at the same time that the Company's statement and the Commission's response thereto are made publicly available, but it may not otherwise be furnished to, or quoted by, any other person without our prior written consent.

Very truly yours,

SILLS CUMMIS ZUCKERMAN RADIN
TISCHMAN EPSTEIN & GROSS, P.A.

INQUIRY LETTER 4

WALTER & EDWIN SCHLOSS ASSOCIATES, L.P.
52 VANDERBILT AVENUE
NEW YORK, NEW YORK 10017

April 18, 1991

Securities and Exchange Commission
Division of Corporate Finance
450 Fifth Street, N.W.
Washington, D.C. 20549

Dear Sir or Madam:

This is in reply to the letter to you, dated April 5, 1991, from Weldotron Corporation ("Weldotron"), concerning Weldotron's intention to omit our proposal pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended, from its proxy materials for the 1991 Annual Meeting of Shareholders.

Weldotron cites four "conclusions" as supporting its intention to omit our proposal, each of which we shall address in turn.

1. Rule 14a-8(c)(4) and 14a-8(c)(8)

Weldotron contends that we submitted our proposal as "a tactic. . . to obtain a seat on the Company's Board of Directors." Weldotron cites four alleged acts as supporting this argument: (a) the amendment to the Schedule 13D filed by the group of Weldotron shareholders of which we were members (the "Group"); (b) a facsimile transmission by the Group's counsel to the Company's counsel; (c) the Group's alleged rejection of a proposed "standstill agreement"; and (d) certain statements alleged to have been made by Walter J. Schloss to Weldotron's president.

(a) The suggestion that we offered our proposal to obtain a board seat is ludicrous. Weldotron would have the Commission believe that anything that preceded the proposal was the motivating cause of the proposal. The simple fact is that the board seat was requested to protect shareholder interests and obtain a voice in the management of the company. Only later did we conclude that a sale of Weldotron was the only practical way to stop the drain of assets from becoming fatal.

As to the reference to the Group's deletion of its intention to enlarge the Group, suffice it to say that this was for reasons entirely independent of the board seat issue. Simply put, the Group determined that there was no need to cross the percentage representation threshold that might require the expense and distraction of testing the defensive measures that the existing Board and controlling shareholders had put into place.

(b) The facsimile transmission referred to in Weldotron's letter of April 5 stated, "I the Group's counsel believe that the Proposal is innocuous and, hopefully, events will eliminate any reason for its inclusion." With extreme disingenuity, Weldotron urges that the "events" were the Group being given a seat on the Board. As our counsel, Bernard Stebel, of Law Firm of Bernard Stebel, P.C., informs us, Weldotron's counsel knew full well that the events to which Mr. Stebel referred were discussions that had commenced with at least one potential buying group or other possible constructive conversations with interested third parties.

(c) Put as charitably as possible, the reference to the "standstill" agreement is simply inaccurate. Weldotron asserts that the terms of the "standstill" were not acceptable to the Group, "as a consequence" (emphasis added) of which, we submitted the proposal as a means of increasing pressure for a board seat. The fact is that our proposal was mailed to Weldotron on February 20, 1991, and received by it on February 21 (see Exhibit "A" attached hereto). The "standstill" agreement was mailed by Weldotron's counsel on February 21, 1991, and received by the Group's counsel on February 22, two days after we sent our proposal (see Exhibit "B" attached hereto). We also note that there never were substantive discussions on Weldotron's form of "standstill" agreement.

(d) Finally, Weldotron alleges that Walter J. Schloss informed its president that the proposal would be withdrawn if the Group was given a seat on the Board. This statement is, quite simply, a blatant falsehood.

It is, therefore, abundantly clear that Weldotron has cited nothing other than its own conjectures, non-sequiturs, misleading statements, and falsehoods, to support its argument that the proposal may properly be omitted from its proxy statement and Rules 14a-8(c)(4) and 14-8(c)(8).

2. Rule 14a-8(c)(1)

Weldotron next cites Rule 14a-8(c)(1), and asserts that the proposal may be omitted as it is not, under New Jersey law, a proper subject for action by the Weldotron's shareholders. Weldotron bases this statement on its clearly erroneous interpretation of the proposal and supporting statement as being mandatory directives, rather than a precatory request.

Despite Weldotron's exercise in obfuscation, it is clear that the proposal is precatory, and therefore may not be omitted under Rule 14a-8(c)(1). The supporting statement says nothing to the contrary. The proposal "requests" management to maximize shareholder value by contacting and negotiating with potential buyers. It does not "require" management to do anything but entertain the shareholder's request. In addition, the emphasized language on page 7 of Weldotron's letter fails to include six very important words: "It is therefore clear to us..." It is obvious to any reader that we are stating our belief that the only rational and feasible option is a sale or merger; this is not a statement of fact that it is the only option or that we are correct in our belief.

Weldotron's protestations to the contrary, the Board is not being compelled to do anything other than to take cognizance of its shareholders' request. Therefore, the exclusionary provisions of Rule 14a-8(c)(1) are inapplicable.

3. Rule 14a-8(c)(7)

Weldotron's urges that the proposal deals with the "ordinary business operations" of Weldotron and therefore may be excluded. Obviously, this is in error. The proposal merely requests that the Board seek a sale or merger of Weldotron, an action that even Weldotron does not describe as "ordinary business operations." It is only the supporting statement that, according to Weldotron, is concerned with "ordinary business operations."

Although the first paragraph of the supporting statement mentions implementing new product lines, shifting priorities among product lines, and participation in the European Economic Community, it does not require the Board to take any action concerning these matters. It is self-evident that these are the reasons we believe certain action should be taken; they are not the action itself. If management believes Weldotron can survive the coming decade without taking any or all of these actions, that is certainly management's prerogative. Indeed, pursuant to Rule 14a-8(c), management is free to submit its own statement in opposition to our proposal. Even if our proposal had actually referred to "ordinary business operations," the overall context is clear; a request that management seek a sale or merger of Weldotron. This has absolutely nothing to do with "ordinary business operations."

4. Rule 14a-8(c)(3)

Finally, Weldotron seeks to omit our proposal on the grounds that it contains false or misleading statements. Weldotron's fourth objection distorts and mischaracterizes both the proposal itself and the supporting statement.

First, Weldotron alleges that the proposal states that in order to maximize shareholder value, the company must either be sold or merged. The proposal does not state or even imply that this is the only way to increase the value of Weldotron; rather, it is a statement to management that the shareholders believe a sale or merger to be the best way of increasing value. If Weldotron is referring to the second paragraph of the supporting statement, it is equally clear, as noted above, that this is a statement of our belief that a sale or merger is the only rational and feasible option.

Weldotron then goes on to allege that "virtually every sentence of the supporting statement... is false, misleading, vague or otherwise without factual support." We do not intend to respond here to every one of Weldotron's allegations. Suffice it to say that the supporting statement is a statement of our belief. Surely, Weldotron is not suggesting that we do not believe our statements. Weldotron's attempts to mischaracterize our proposal should not be countenanced by the Commission.

Weldotron characterizes as inflammatory and misleading the statement that "the window of opportunity to accomplish this is NOW" and asks why the opportunity will no longer be available after the 1991 meeting. The transcendent fact is that, during the past year, Weldotron's shares traded as low as $2 per share. Yesterday, they closed at $2 3/4 per share. This is in comparison to trading as high as $4.63 per share and as low as $2.38 per share during fiscal year 1990, between $7.37 and $2.87 per share during calendar year 1989, between $8.87 and $4.50 in calendar year 1988, $9.25 and $3.50 in calendar year 1987, and $10.62 and $6.75 in calendar year 1986. Clearly, the window is quite close to shut.

Conclusion

Accordingly, we respectfully urge that our proposal must be included in Weldotron's proxy statement, as Weldotron has failed to establish a single ground on which it may be omitted.

We are enclosing five additional copies of this letter, and are sending a copy of this letter and the exhibits hereto to Weldotron.

Please acknowledge receipt by date-stamping the enclosed duplicate copy of this letter and returning the same in the enclosed self-addressed stamped envelope.

Thank you for your attention to this matter.

Sincerely,

WALTER & EDWIN SCHLOSS
ASSOCIATES, L.P.

By: Schloss Management Company,
General Partner

By:
Walter J. Schloss, General Partner

STAFF REPLY LETTER

MAY 23 1991

RESPONSE OF THE OFFICE OF CHIEF COUNSEL
DIVISION OF CORPORATION FINANCE

Re: Weldotron Corporation (the "Company")
Incoming letter dated April 5, 1991

The proposal involves a request that the board of directors (the "Board") solicit offers to purchase or merge the Company.

The staff is unable to concur in your view, supported by the opinion of counsel, that the proposal may be excluded pursuant to rule 14a-8(c)(1). Since the proposal is in precatory form and does not appear to involve any act by the Board inconsistent with applicable state law, we are unable to conclude that an improper subject for action by security holders is presented. Accordingly, we do not believe that rule 14a-8(c)(1) may be relied upon as a basis to omit the proposal from the Company's proxy materials.

The Division is unable to concur in your view that the proposal may be excluded pursuant to rule 14a-8(c)(3). There appears to be some basis for your position, however, that the first, second and fourth sentences in the first paragraph of the supporting statement accompanying the proposal may be deleted unless cast as opinions. Further, the assertions made in the fifth and seventh sentences of the first paragraph should either be deleted or revised to include those facts necessary to support the assertions. In the staff's view, these two contentions, even if cast as opinions, appear to be false and misleading in contravention of rule 14a-9, absent factual support. Assuming the Proponent provides the Company with a supporting statement revised in the manner indicated, within seven calendar days after receipt of this response, the staff does not believe that the Company may rely on rule 14a-8(c)(3) as a basis to omit the subject portions from its proxy materials.

The Division also is unable to concur in your view that the proposal may be excluded pursuant to rule 14a-8(c)(4). Based on the facts presented, the staff is unable to conclude that the proposal was designed either to result in a benefit or to further an interest unique to the Proponent. Under these circumstances, we do not believe that rule 14a-8(c)(4) may be relied on as a basis to omit the proposal from the Company's proxy materials.

The Division is unable to concur in your position regarding the applicability of rule 14a-8(c)(7). Accordingly, the staff does not believe that rule 14a-8(c)(7) may be relied on as a basis to omit the proposal from the Company's proxy materials.

The Division also is unable to concur in your position regarding the applicability of rule 14a-8(c)(8). Accordingly, the staff does not believe that rule 14a-8(c)(8) may be relied on as a basis to omit the proposal from the Company's proxy materials.

Sincerely,

John C. Brousseau
Special Counsel

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Company Name: Weldotron Corp. Public Availability Date: 05-23-1991

Company Name: Weldotron Corp.
Public Availability Date: 05-23-1991