AMERICAN SCIENCE & ENGINEERING INC, DEFS14A, 1996-09-10

AMERICAN SCIENCE & ENGINEERING INC
DEFS14A, 1996-09-10
X-RAY APPARATUS & TUBES & RELATED IRRADIATION APPARATUS

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<PAGE> 1

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)

Filed by the Registrant /X/

Filed by a party other than the Registrant / /

Check the appropriate box:

/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to [Section]240.14a-11(c)
or [Section]240.14a-12

American Science and Engineering, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant))

Payment of filing Fee (Check the appropriate box):

/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.

/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).

/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1) Title of each class of securities to which transaction applies: ______
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:

/X/ 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: _______________________________________________________

Date Filed: ___________________________________________________________________

<PAGE> 2

2) Form, Schedule or Registration Statement No.: _______________________

3) Filing Party: _______________________________________________________

Date Filed: ___________________________________________________________________

<PAGE> 3
PRELIMINARY COPY

AMERICAN SCIENCE AND ENGINEERING, INC.
829 MIDDLESEX TURNPIKE
BILLERICA, MASSACHUSETTS 01821

NOTICE OF SPECIAL MEETING IN LIEU OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 26, 1996

The Special Meeting in Lieu of Annual Meeting of Stockholders of American
Science and Engineering, Inc. (the "Company") will be held Thursday, September
26, 1996, at 9:00 A.M., at the office of the Company, 829 Middlesex Turnpike,
Billerica, Massachusetts, for the following purposes:

(1) To fix the number of Directors of the Company at six for the ensuing year,
and to elect the six persons named in the accompanying Proxy Statement to
serve as Directors until the next Annual Meeting and until their successors
are elected and qualified;

(2) To consider and act upon a proposed amendment to the Company's Restated
Articles of Organization, as amended (the "Articles") limiting the
liability of directors to the extent permitted by Massachusetts law;

(3) To consider and act upon a proposed amendment to the Articles which would
increase the number of authorized shares of the Company's Common Stock,
$.66 2/3 par value, from 8,000,000 to 20,000,000 shares;

(4) To consider and act upon proposed amendments to the Articles and to the
Company's ByLaws to provide for the classification of the Company's Board
of Directors into three classes and to make related changes;

(5) To consider and act upon a proposal to amend the Articles to increase the
number of authorized shares of the Company's no par Preferred Stock from
100,000 to 1,000,000 and to amend the terms of such Preferred Stock;

(6) To consider and act upon a proposed amendment to the Articles to require
that, in certain circumstances, actions by vote of the stockholders must be
approved by a 66 2/3% affirmative vote of each class of stock outstanding
and entitled to vote on the matter;

(7) To consider and act upon a proposal to amend the By-Laws to require 90 days
notice of any proposal by a stockholder to nominate candidates for director
at the Annual Meeting;

(8) To consider and act upon a proposed amendment to the By-Laws to require
that special meetings of the stockholders may only be called by the
President, a majority of directors or by stockholders who hold at least 50%
of the Company's voting stock;

(9) To consider and act upon a proposed amendment to the Articles to add a
"fair price" provision; and

(10) To consider and act upon any other business that may properly come before
the meeting and any adjournment or adjournments thereof.

<PAGE> 4

Stockholders of record at the close of business on August 2, 1996, are entitled
to notice of, and to vote at, the meeting.

By Order of the Board of Directors

Jeffrey A. Bernfeld
Clerk

September 10, 1996

- --------------------------------------------------------------------------------

YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU INTEND TO ATTEND THE MEETING IN
PERSON, PLEASE DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ACCOMPANYING ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY REVOKE THE PROXY AND
VOTE YOUR SHARES IN PERSON.

- --------------------------------------------------------------------------------

<PAGE> 5

AMERICAN SCIENCE AND ENGINEERING, INC.
829 MIDDLESEX TURNPIKE
BILLERICA, MASSACHUSETTS 01821

PROXY STATEMENT

The enclosed Proxy is solicited by the Board of Directors of American Science
and Engineering, Inc. (the "Company") for use at the Special Meeting in Lieu of
Annual Meeting of Stockholders to be held on Thursday, September 26, 1996, at
9:00 a.m. at the principal office of the Company, 829 Middlesex Turnpike,
Billerica, Massachusetts, and at any adjournment of the meeting (the "Meeting").
The matters to be considered and acted upon at the Meeting are described in the
attached notice of the Meeting and in this Proxy Statement.

Stockholders of record at the close of business on August 2, 1996 are entitled
to notice of and to vote at the Meeting. Each share of Common Stock of the
Company outstanding on the record date is entitled to one vote. As of the close
of business on August 2, 1996, 4,512,907 shares of Common Stock of the Company
were outstanding.

This Proxy Statement and the accompanying Proxy will first be mailed to
stockholders on or about September 10, 1996. A copy of the Annual Report of the
Company for its fiscal year ended March 31, 1996 accompanies this Proxy
Statement.

PROPOSAL NO. 1

ELECTION OF DIRECTORS

The Company's By-laws provide that the Board of Directors of the Company shall
consist of not less than three nor more than twelve directors. The Board of
Directors currently consists of five members, whose terms expire at the Meeting.
The Directors are recommending that the Board be expanded to six members and
that in addition to re-electing the five incumbent directors identified below,
William E. Odom be elected to fill the new seat.

The affirmative vote of a majority of the shares of Common Stock of the Company
voted in person or by proxy at the Meeting is required to fix the number of
directors and a plurality of the affirmative votes cast is required to elect
each of the six directors. If Proposal No. 4 below is approved, the nominees
below designated as "Class I" will serve an initial term of one year; the Class
II nominees will serve an initial term of two years and the Class III nominees
will serve an initial term of three years (in all cases, nominees will also
serve until their successors are elected and qualified). Subsequent to this
year's election, all directors will be elected to three year terms. If Proposal
No. 4 is not adopted, each director will serve for one year and until his
successor is elected and qualified. If any nominee at the time of the election
is unable or unwilling to serve or is otherwise unavailable for election, the
Board of Directors may designate another nominee and the persons named as
proxies will vote all proxies for such nominee. The Board of Directors has no
reason to believe that any nominee is unwilling or unable to serve. There are no
arrangements between any nominee and any other person relating to such nominee's
nomination.

Proxies solicited by the Board of Directors of the Company, if properly signed
and returned and containing no instructions to the contrary, will be voted FOR
fixing the number of directors at six and electing the six nominees listed below
as directors of the Company.

<PAGE> 6

NOMINEES

<TABLE>

The names of, and certain information with respect to, the persons nominated by
the Board of Directors for election as directors are as follows:
<CAPTION>

Positions and Offices Date Assumed
Name Age Class of Company Held Each Position
- ---- --- ----- --------------- -------------

<S> <C> <C> <C> <C>
Herman Feshbach 79 III Director September 1975
Chairman July 1993

Al Gladen 58 I Director September 1995

Hamilton W. Helmer 49 I Director February 1993

Donald J. McCarren 55 II Director February 1993

William E. Odom 64 III Nominee for Director N/A

Ralph S. Sheridan 46 II Director January 1994
President and Chief Executive Officer September 1993
</TABLE>

Dr. Herman Feshbach is the current Chairman of the Board of Directors, a
position he was elected to in 1993 after serving on the Board since 1976. Dr.
Feshbach also has been Institute Professor Emeritus at the Massachusetts
Institute of Technology for more than five years and has served as Chairman of
the Physics Department at MIT, and Director of the MIT Center for Theoretical
Physics. He is a past President of the American Physical Society and the
American Academy of Arts and Sciences and is a Fellow of both those
organizations and of the American Association for the Advancement of Sciences.
He is on the Board of Governors of the Weizmann Institute of Science, Editor of
the Annals of Physics, and has served as Chairman or Member on numerous
committees for the Department of Energy, the National Science Foundation, the
National Academy of Sciences, and the American Physical Society. He was awarded
the National Medal of Science by President Reagan in 1986. Dr. Feshbach holds a
Ph.D. in Physics from MIT.

Mr. Al Gladen has been President of Dabster, Inc., a technology consulting firm
specializing in engineering and technology management assistance, with offices
in Kent, Washington since 1981. Mr. Gladen's consulting activities have included
strategic technology planning, new product development, project management and
acquisition review. Mr. Gladen has acted as a technology and engineering
consultant to the Company since 1993, and it is expected that he will continue
to provide such assistance on a part-time basis. Mr. Gladen holds four U.S.
patents and is a director of four other privately held corporations.

Mr. Hamilton W. Helmer has, for the last 14 years, been Managing Partner of
Helmer & Associates, a strategic consulting firm located in Los Altos,
California. Prior to that, Mr. Helmer worked for Bain & Co. Mr. Helmer holds a
Ph.D in Economics from Yale University.

Mr. Donald J. McCarren was until July 1996 President and Chief Executive Officer
of Tacora Corporation, a medical technology company located in Seattle,
Washington. From July 1992 to June 1994, he was President and Chief Operating
Officer of ImmunoGen, Inc., a bio-tech research and development company located
in Cambridge, Massachusetts. Prior to that, he was President (1990 to 1992) of
the Adria Laboratories Division of Erbamont N.V. in Columbus, Ohio, and
Corporate Vice President of Worldwide Marketing and Business Development (1989
to 1990) and Vice President of Far East and Australian Operations (1986 to 1989)
of Erbamont, N.V. Mr. McCarren holds a Ph.D. in Developmental Economics.

General William E. Odom is the Director of National Security Studies for the
Hudson Institute in Washington, D.C. and an adjunct Professor in the Department
of Political Science at Yale University. Prior to joining the Hudson Institute
in 1988, General Odom spent 34 years as an officer in the United States Army,
retiring with the rank of Lieutenant General. While on active duty,

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<PAGE> 7
General Odom served as Director of the National Security Agency for three years,
Assistant Chief of Staff for Intelligence for the Department of the Army for
four years and Military Assistant to the President's National Security Advisor
for four years. General Odom received his BS degree from West Point and Masters
and Ph.D. degrees from Columbia University. General Odom is on the Board of
Directors of Nichols Research Corporation of Huntsville, Alabama, V-ONE
Corporation of Rockville, Maryland, Middlebury College, from which he received
an honorary doctorate, and the Institute for the Study of Diplomacy at
Georgetown University. General Odom is the author of five books and numerous
articles.

Mr. Ralph S. Sheridan was elected President and Chief Executive Officer of the
Company in September 1993, and in January of 1994, he was elected a Director.
Prior to joining the Company, Mr. Sheridan ran his own consulting and investment
firm, Value Management Corporation, in Waltham, Massachusetts. Prior to that,
Mr. Sheridan was President and CEO (1988-1989) and Vice President of Marketing
and Operations (1987-1988) of HEC Energy Corp., in Boston, Massachusetts. Mr.
Sheridan held the position of Vice President of Operations for the Engineered
Systems and Controls Group (1984-1986) and Vice President of Corporate Business
Development (1981-1984) at Combustion Engineering, Inc. in Stamford,
Connecticut. Mr. Sheridan holds a B.S. in Chemistry and an M.B.A., both from
Ohio State University.

<TABLE>

EXECUTIVE OFFICERS (WHO ARE NOT ALSO DIRECTORS)
<CAPTION>
Positions and Offices Date Assumed
Name Age of Company Held Each Position
- ---- --- --------------- -------------

<S> <C> <C> <C>
Jeffrey A. Bernfeld 39 Vice President, General Counsel and Clerk February 1996

Peter W. Harris 43 Vice President, Sales and Marketing April 1994

Michael V. Hynes 45 Vice President, Science and Technology September 1995

Alan H. Rutan 55 Vice President, Engineering July 1996

Lee C. Steele 45 Treasurer, Vice President of Finance, and Chief October 1994
Financial Officer
</TABLE>

Mr. Jeffrey A. Bernfeld joined AS&E as Vice President, General Counsel and Clerk
in February 1996. Prior to that time, he was Vice President and General Counsel
of Spire Corporation in Bedford, Massachusetts for three and one-half years; a
founder and Managing Director of Global Solutions, Inc. in Wellesley,
Massachusetts for one year; Vice President and General Counsel of The Mediplex
Group in Wellesley, Massachusetts for two years; and a partner at Goldstein &
Manello in Boston, Massachusetts, where he began his career as an Associate in
1981. Mr. Bernfeld received his B.A. from Brandeis University and his J.D. from
New York University School of Law. Mr. Bernfeld is a director of Summit
Technology, Inc. of Waltham, Massachusetts.

Mr. Peter W. Harris joined the Company in February 1994 as Vice President, Sales
and Marketing. Prior to joining the Company, Mr. Harris was Manager of External
Affairs for Stone & Webster, an architectural engineering firm in Boston,
Massachusetts, where he held a number of positions beginning in 1988. During his
time at Stone & Webster, Mr. Harris concentrated on Federal government and
international sales. Mr. Harris, a graduate of the U.S. Naval Academy, holds the
rank of Captain in the U.S. Naval Reserve and commanded several units during his
twelve years of active duty and seven years in the Naval Reserve. Mr. Harris
holds a Master's degree in National Security Studies from Georgetown University.

Dr. Michael V. Hynes joined AS&E as Vice President, Science and Technology and
Chief Technical Officer in September 1995. Prior to joining AS&E, Dr. Hynes had
been at Los Alamos National Laboratory for fifteen years, where he held a number
of positions including Industrial Fellow, Program Manager and Project Leader.
Dr. Hynes earned three degrees from the Massachusetts Institute of Technology: a
B.S. in Physics; an M.S. in Management and a Ph.D in Physics. Dr. Hynes has
authored more than fifty articles in the peer-reviewed literature and has won
numerous awards and honors including Weizmann and Sloan Fellowships from MIT, an
Oppenheimer Fellowship from Los Alamos Scientific Laboratory and a Distinguished
Performance Award from Los Alamos National Laboratory.

3
<PAGE> 8
Mr. Alan H. Rutan joined the Company in July 1996 as Vice President of
Engineering. Prior to that time, Mr. Rutan spent 11 years at Raytheon Company,
most recently as Manager of the Air Defense Systems Department, where his work
focused on radar systems engineering and signal processing. Prior to his
Raytheon experience, Mr. Rutan spent seven years at GTE Laboratories as a
Senior Member of the Technical Staff. From 1974 to 1978, Mr. Rutan ran his own
consulting firm, Signal Processing Associates, Inc., which specialized in image
processing applications for various government security organizations. Mr.
Rutan received his BA in Physics from Harvard University.

Mr. Lee C. Steele joined the Company in September 1994 as its Vice President of
Finance and Chief Financial Officer. From 1991 until he joined the Company, Mr.
Steele was a principal of Asset Management Corporation, a Waltham, Massachusetts
consulting firm specializing in the analysis and resolution of complex financial
and operational challenges for small and medium size businesses. Until 1991, Mr.
Steele was a Partner at Deloitte & Touche, specializing in profit planning,
corporate finance and troubled company situations. He holds an M.B.A. from
Harvard Business School and an engineering degree from Case Western Reserve
University.

MEETINGS OF BOARD OF DIRECTORS AND COMMITTEES

During the fiscal year ended March 31, 1996, the Board of Directors of the
Company met seven times. Each incumbent director attended 75% or more of the
aggregate of the total number of meetings of the Board held during the period he
was a director and of the meetings of committees of the Board on which he
served. The Board of Directors has three standing Committees: the Audit,
Compensation and Nominating Committees.

The Audit Committee consists of Dr. Feshbach, Mr. Helmer, and Mr. McCarren. This
Committee, which met once during fiscal 1996, is primarily responsible for
reviewing the activities of the Company's independent auditors, reviewing and
evaluating recommendations of the auditors, recommending areas of review to the
Company's management, and reviewing and evaluating the Company's financial
statements, accounting policies, reporting practices and internal controls.

The Compensation Committee consists of Dr. Feshbach, Mr. Helmer, and Mr.
McCarren. This Committee, which met four times in conjunction with full Board
meetings during fiscal 1996, is responsible for making recommendations to the
Company's Board of Directors concerning the levels and types of compensation and
benefits to be paid and granted to the Company's Chief Executive Officer and
other executive employees of the Company and for the administration of the
Company's stock option plans.

The Nominating Committee consists of Messrs. Helmer, McCarren and Sheridan. The
Committee met two times during fiscal 1996 in conjunction with full Board
meetings and is charged with the responsibility of identifying appropriate
candidates for nomination to the Board. The Company's By-Laws currently do not
set forth any procedure for the nomination of candidates for director by
stockholders. See Proposal No. 7 for a description of the proposed amendment to
the By-Laws which would provide such a procedure.

COMPENSATION OF DIRECTORS

Directors who are also employees of the Company do not receive additional
compensation as Directors. Non-Employee Directors (other than the Chairman)
receive annual compensation of 2,000 shares of Company Common Stock (2,055
shares in the 1996 fiscal year) issuable on January 10th in each year, and
options to purchase 7,000 shares of Common Stock at the closing price on the
date of the Annual Meeting in each year. The Chairman receives 2,500 shares of
Common Stock on January 10th in each year, as well as cash payments totalling
$15,330 in 1996 and continues to receive deferred compensation under a now
discontinued plan described below. No meeting fees or other fees are payable to
any Director.

Dr. Feshbach, the Company's Chairman, is covered by a nonfunded deferred
compensation plan (adopted in 1976 and amended in 1977, 1980, 1986, 1990 and
1992) that provides for periodic payments beginning at age 65, based on length
of service. During the year, Dr. Feshbach received $4,752 under the Plan. The
Company accrues the current cost of the plan, which amounted to $20,529 in
fiscal 1996.
4

<PAGE> 9

OWNERSHIP OF COMMON STOCK OF THE COMPANY BY CERTAIN PERSONS

As of August 2, 1996, the Company was not aware of any person or entity
beneficially owning 5% or more of the Company's Common Stock. The following
table sets forth the Common Stock holdings of the Company's directors, nominees
for director, each named executive officer in the Summary Compensation Table
under "Executive Compensation" below and all directors and executive officers as
a group as of August 2, 1996.

<TABLE>

BENEFICIAL HOLDINGS OF THE COMPANY'S COMMON STOCK BY DIRECTORS AND EXECUTIVE
OFFICERS AS OF AUGUST 2, 1996.

Name of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership(1) of Class
- ---------------- ----------------------- --------

<S> <C> <C>
Herman Feshbach 12,790 (2)
Al Gladen 35,055
Peter W. Harris 22,250 (2)
Hamilton W. Helmer 23,781 (2)
Donald J. McCarren 31,581 (2)
William E. Odom - (2)
Ralph S. Sheridan 276,500 5.97
Lee C. Steele 33,250 (2)
Directors and Executive Officers as a Group
(11 persons) 455,207 9.56

<FN>

(1) Includes shares that may be acquired under stock options and warrants
exercisable within sixty days after the date of this table, as follows: Dr.
Feshbach - 3,750; Mr. Gladen - 30,000; Mr. Harris -22,000; Mr. Helmer -
20,000; Mr. McCarren - 26,000; Mr. Sheridan - 100,000; Mr. Steele - 32,500;
and all Directors and Executive Officers as a group - 246,250. All
ownership reported herein includes sole voting and investment power.

(2) Amount owned constitutes less than one percent.

</TABLE>

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<PAGE> 10

EXECUTIVE COMPENSATION

The following chart provides information concerning compensation paid by the
Company during the fiscal year ended March 29, 1996 to the Chief Executive
Officer and each of the most highly compensated executive officers of the
Company whose aggregate compensation exceeded $100,000 (collectively, the "named
executive officers").

<TABLE>

SUMMARY COMPENSATION TABLE
<CAPTION>

Long-Term
Annual Compen-
Compensation sation Awards

Securities All Other
Name and Principal Fiscal Underlying Compen-
Position Year Salary ($) Bonus ($) Options (#) sation ($)(1)
- ------------------ ------ ----------- --------- ------------- ------------

<S> <C> <C> <C> <C> <C>
Ralph S. Sheridan 1996 200,000 202,168(3) 0 2,486
President and CEO
1995 200,000 111,055(3) 0 2,198
1994(2) 104,038 0 120,000 163

Peter W. Harris 1996 110,000 40,000 0 403
Vice President of
Sales and Marketing
1995 110,000 0 0 721
1994(2) 18,615 0 30,000 0

Lee C. Steele 1996 110,752 27,000 0 1,344
Vice President and CFO
1995(2) 55,000 0 50,000 900
<FN>

(1) All Other Compensation includes imputed income from taxable life insurance.

(2) The indicated years were years of partial employment with the Company for
each named executive officer.

(3) Mr. Sheridan's bonus is paid in respect of "contract years" ending
September 30th in each year and includes cash, stock and payments made to
him to alleviate the tax impact of his stock bonus.
</TABLE>

Mr. Sheridan has an employment contract with the Company that provides for his
employment as President and Chief Executive Officer, and as a Director, through
September 1996, at an annual salary of $200,000, plus performance bonuses tied
to specific accomplishments.

Under the contract, Mr. Sheridan is eligible to receive an annual bonus of up to
$75,000 and 10,000 shares of Common Stock in each contract year, based on his
achievement of goals established by the Compensation Committee. Mr. Sheridan
also receives a cash amount calculated to compensate him for the taxes due on
the stock portion of this bonus. In addition, in 1994, pursuant to the contract,
the Company granted Mr. Sheridan options to purchase 120,000 shares of the
Company's Common Stock at $4.00 per share, the fair market value of the
Company's Common Stock on the date of grant.

Of the 120,000 options, an option to purchase 40,000 shares became fully
exercisable on September 15, 1994. The option to purchase the remaining 80,000
shares was approved by the stockholders at the 1994 Annual Meeting of
Stockholders and becomes exercisable for up to: (i) 50% of the shares covered
thereby at any time after September 15, 1995, (ii) 75% of the shares covered
thereby at any time after September 14, 1996, and (iii) subject to Mr. Sheridan
agreeing prior to September 14, 1996 to remain employed by the Company for an
additional year from that date, 100% of the shares covered thereby at any time
after September 14, 1996. The vesting schedule is accelerated upon the

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<PAGE> 11

occurrence of certain events. The options will expire on December 16, 2003,
unless earier exercised or terminated in accordance with their terms.

Under the Employment Agreement, Mr. Sheridan purchased 160,000 treasury shares
of the Company's Common Stock at a price of $4.00 per share, payable by
promissory note with interest at the rate of 6.26% per year. The note is due on
the earlier of September 15, 2003 or the termination of Mr. Sheridan's
employment. The note may also become due in the event of Mr. Sheridan's failing
to comply with the terms and provisions of the note. The Company has agreed to
reimburse Mr. Sheridan for the interest payable under the note, in most
circumstances. The note permits payment in part or in full by return of the
shares purchased in connection with the note, and the note sets the value of the
stock for such purposes as $2.00 per share for the year following September 15,
1994, $3.00 for the year following September 15, 1995, and $4.00 after September
15, 1996. In the event of termination of Mr. Sheridan's employment by the
Company without Cause at any time, the value of the stock for such purposes
shall be $4.00 per share.

Under the Employment Agreement, Mr. Sheridan is entitled to receive the same
benefits as other senior executives of the Company, as well as to the use of a
car (which Mr. Sheridan declined until April 1996).

In the event that Mr. Sheridan's employment with the Company is terminated
without Cause, or by him for Good Reason (as defined in the Employment
Agreement), he will receive twelve months' pay and any previously earned
bonuses. In the event that Mr. Sheridan's employment with the Company is
terminated for Cause, or by him other than for Good Reason, or by his death or
disability, he will not be entitled to receive any salary beyond the date of
termination, and he will only be entitled to receive previously earned bonuses
if the termination is caused by death or disability.

Mr. Steele has an agreement with the Company providing for a three year term,
subject to termination for cause as defined. The contract establishes a base
salary of $110,000 plus a potential bonus of up to $30,000 upon the achievement
of semiannual individual and corporate goals as established by the President of
the Company in consultation with Mr. Steele. The Agreement grants Mr. Steele
severance payments equal to one year's salary if he is terminated in connection
with a change of control of the Company, as defined in the Agreement.

There were no options granted to, or exercised by, the named executive officers
in fiscal year 1996.

COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION

The Company's Compensation Committee includes Dr. Herman Feshbach, Mr. Hamilton
W. Helmer and Mr. Donald J. McCarren. No reportable relationship existed between
the Company and any member of the Compensation Committee.

RELATED PARTY TRANSACTIONS

In April, 1995 a group that included three of the Company's Officers and one
Company Director made a loan to the Company in the total amount of $650,000. The
proceeds of the loan were used for general working capital purposes. The loan
was paid off in full on time in August, 1995 and bore interest at the prime rate
plus two percent. As additional consideration, the Company issued a total of
6,500 shares of its Common Stock and warrants to purchase 65,000 shares of its
Common Stock proportionately to the lenders. The warrant exercise price is the
lowest trading price of the stock on the American Stock Exchange during the term
of the loan. The Company has registered these shares with the Securities and
Exchange Commission.

Ralph S. Sheridan, the Company's President and CEO, provided $200,000 of the
loan funds. Al Gladen, who subsequently became a Director of, and remains a
Consultant to, the Company, provided $300,000. Lee C. Steele, the

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<PAGE> 12

Company's Vice President of Finance and CFO, provided $75,000. Donald J.
McCarren, a Director of the Company, provided $50,000. Peter W. Harris, the
Company's Vice President of Sales and Marketing, provided $25,000.

Mr. Gladen provides engineering and management services to the Company on a
regular basis. In fiscal year 1996, the compensation paid to Dabster, Inc., a
corporation of which Mr. Gladen is the President, for such services was
$168,800.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Compensation Committee of the Board of Directors (consisting of the three
outside Directors whose names appear below this Report) has sole responsibility
for compensation issues relating to the Chief Executive Officer. Compensation
practices and policies for the other executive officers are set by the Chief
Executive Officer with the advice of the Compensation Committee.

The Compensation Committee has formulated an approach to all executive
compensation that emphasizes the establishment of goals and objectives for each
executive and for the Company as a whole and ties a substantial portion of
executive compensation to the performance of the executive and the Company with
respect to these goals and objectives. Base compensation for executive officers
(and many other Company employees) is established on the basis of an analysis of
salaries received by comparable employees of high-tech and manufacturing
companies in the Greater Boston area, company financial results and prospects,
and individual contributions relative to the job description and past
performance of each executive.

In line with this approach, the Company entered into an Employment Agreement
with its President and Chief Executive Officer, Mr. Ralph S. Sheridan, in
December 1993 (effective as of September 1993). This Agreement was based, in
part, on an independent consultant's analysis of compensation arrangements for
chief executives of comparable companies, and was also based on a careful review
of the most important goals and objectives for the Company. The Agreement
provides for cash compensation of $200,000, plus annual incentive bonuses of up
to $75,000 and 10,000 shares of Company stock, tied to specific, agreed upon
performance criteria. In addition, in order to provide for long-term incentives,
under the Agreement the Company has issued Mr. Sheridan stock options to
purchase 120,000 shares of Common Stock, and Mr. Sheridan has purchased 160,000
shares of the Company's Treasury Stock.

For the contract year ended in September 1995, the Committee awarded Mr.
Sheridan a cash bonus of $63,750 and 8,500 shares of stock, representing 85% of
the potential award under his contract, plus the amount required by Mr.
Sheridan's contract to compensate him for the taxes due on the stock portion of
the bonus. This award represents the Committee's determination that Mr. Sheridan
had done an excellent job over the preceding twelve months and had met most but
not all of the goals and objectives jointly established by the Committee and Mr.
Sheridan.

Also in keeping with its performance-based compensation philosophy, in the
spring of 1994, the Company implemented an incentive compensation program for
all executives who report directly to the Office of the President. Under this
policy, these executives receive a specified portion of their total compensation
(ranging from 10% to 27%), as determined by the Chief Executive Officer, based
upon two factors: their completion of agreed upon goals and objectives, and the
performance of the entire Company.

Report Submitted By: Dr. Herman Feshbach, Mr. Hamilton W. Helmer and Mr. Donald
J. McCarren.

8
<PAGE> 13

/ / STOCK PERFORMANCE CHART

<TABLE>

The following chart graphs the performance of the cumulative total return to
shareholders (stock price appreciation plus dividends) during the previous five
years in comparison to the returns of the Standard & Poor's 500 Composite Stock
Price Index and the Standard & Poor's 500 High-Tech Composite Stock Price Index.

INDEXED RETURNS
Years Ending March
<CAPTION>

1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----

<S> <C> <C> <C> <C> <C> <C>
AS&E 100 85.45 120.00 56.36 90.91 143.64
S&P 500 100 111.04 127.95 129.84 150.05 198.22
S&P Hi-Tech 100 102.33 112.44 132.25 167.36 225.95

<FN>

Note: Assumes $100 invested at the close of trading on the last trading day
preceding the first day of the fifth preceding fiscal year (and
reinvestment of dividends) in the Company's Common Stock, Standard &
Poor's 500 Composite Stock Price Index and the Standard & Poor's 500
High-Tech Composite Stock Price Index.

</TABLE>

9
<PAGE> 14

PROPOSAL NO. 2

PROPOSED AMENDMENT TO RESTATED ARTICLES OF ORGANIZATION
TO LIMIT CERTAIN DIRECTOR LIABILITIES

Under Massachusetts law, directors stand in a fiduciary relationship to a
corporation and its stockholders, owing a duty of care and a duty of loyalty in
the management of the corporation's affairs. The duty of care is the duty of
directors to exercise diligence and care in overseeing the business and affairs
of the corporation. The duty of loyalty is the duty of directors to act in good
faith and in the manner they reasonably believe to be in the best interest of a
corporation and its stockholders. In an action by a corporation or its
stockholders for the breach of a fiduciary duty, a director could be subject to
monetary damages and equitable remedies.

The Massachusetts Business Corporation Law, under which the Company is
organized, permits Massachusetts corporations to include in their Articles of
Organization a provision relieving directors of liability to the corporation or
its stockholders for monetary damages for negligent breach of the directors'
fiduciary duty. Delaware corporate law includes a similar provision, and many
public companies have adopted amendments to their charters including these
provisions. The adoption of these statutes by a number of states reflects a
significant concern that directors may be subjected to unwarranted personal
liability for business decisions made in good faith.

Any provision adopted pursuant to the Massachusetts statute that eliminates or
limits the ability of the corporation and its stockholders to recover monetary
damages from a director for breach of fiduciary duty as a director, may not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for authorizing dividends or distributions to
stockholders, stock redemptions, or loans to officers or directors of the
corporations which are not repaid, in violation of Sections 61 or 62 of the
Massachusetts Business Corporation Law, or (iv) for any transaction from which
the director derived an improper personal benefit.

The right to pursue non-monetary equitable remedies for such a breach, such as
injunctions and rescission of contracts, is unaffected. Additionally, the
amendment has no effect on directors' liabilities under federal securities laws.
Finally, the new provision does not eliminate or limit the liability of a
director for any act or omission occurring prior to the date upon which the
provision becomes effective. There is currently no litigation pending or, to the
best of the Company's knowledge, threatened, involving the Board of Directors or
any of its members which would be affected by the proposed amendment were it
currently in effect.

The Board of Directors has determined that the ability of the Company to
continue to attract and retain qualified directors will be enhanced by amending
the Company's Restated Articles of Organization, as amended (the "Articles") to
eliminate the personal liability of directors to the extent permitted by the
Massachusetts statute. The proposed amendment reflects the statutory provision
and includes all of the limitations in the statute preserving director liability
for nonnegligent acts or omissions in certain circumstances, as described above.
On May 22, 1996, the Directors unanimously voted to approve and to recommend to
the stockholders for their approval a proposed amendment to Article Six of the
Company's Articles which would add the following language to Article Six:

ELIMINATION OF DIRECTORS' PERSONAL LIABILITY. No director shall be
personally liable to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director notwithstanding any
provision of law imposing such liability; provided, however, that this
provision shall not eliminate or limit the liability of a director (i) for
any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under section
sixty-one or sixty-two of chapter 156B of the Massachusetts General Laws, or
(iv) for any transaction from which the director derived an improper
personal benefit. No amendment to or repeal of this paragraph shall apply to
or have any effect on the liability or alleged liability of any director of
the Corporation for or with respect to any acts or omissions of such
director occurring prior to the date of such amendment or repeal.

This amendment to the Articles would supplement the protection provided to
directors by the indemnification provisions set forth in the Company's By-Laws
and by the Company's directors and officers liability insurance.

10
<PAGE> 15

Adoption of the proposed amendment may discourage or deter stockholders or
management from bringing a lawsuit against any of the Directors for breach of
fiduciary duty, including grossly negligent business decisions, even though such
an action, if successful, might otherwise benefit the Company and its
stockholders. In light of the foregoing, the Directors could directly benefit
from recommending the proposed amendment. However, the Directors believe they
are acting in good faith and in a manner they reasonably believe to be in the
best interests of the Company in proposing this amendment.

If approved by the stockholders, the proposed amendment would become effective
upon the filing of Articles of Amendment with the Secretary of State of
Massachusetts, which filing is expected to take place within thirty (30) days
after the Meeting.

Adoption of the amendment to the Company's Articles requires the affirmative
vote of the holders of two-thirds of the outstanding shares of the Company's
Common Stock entitled to notice of and to vote at the Meeting.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
APPROVAL OF PROPOSAL NO. 2.

PROPOSAL NO. 3

AMENDMENT TO ARTICLES TO INCREASE
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK

The Board of Directors unanimously recommends that the stockholders approve a
proposal to amend the Company's Articles to increase the number of authorized
shares of Common Stock, $.66 2/3 par value, from 8,000,000 to 20,000,000. The
additional shares of Common Stock would be part of the existing class of Common
Stock and, if and when issued, would have the same rights and privileges as the
shares of Common Stock presently outstanding.

As of August 2, 1996, there were outstanding 4,512,907 shares of Common Stock.
In addition, an aggregate of 1,328,167 shares of Common Stock were reserved for
issuance upon exercise of options and warrants outstanding or options available
to be granted in the future under the Company's various stock option plans.

Pursuant to Massachusetts corporate law, the Board of Directors is authorized to
issue from time to time any and all authorized and unissued shares of Common
Stock for any proper corporate purposes without prior stockholder approval,
except as may be required for a particular transaction by the Company's
Articles.

The Board of Directors believes that the proposed increase in the number of
authorized shares of Common Stock is in the best interests of the Company and
its stockholders. The increase will give the Company greater flexibility by
allowing shares of Common Stock to be issued by the Board of Directors without
the delay and expense of a special meeting of stockholders. For example, the
Board of Directors may deem it appropriate to make a private or public offering
of the Company's Common Stock in order to raise funds for working capital or
other purposes, or the Common Stock may be issued to finance possible future
acquisitions, or for distribution to the Company's stockholders in the event of
a stock dividend or stock split, or for distribution pursuant to employee
benefit plans and for other corporate purposes. The Board of Directors does not
have any current plans to issue any additional shares of Common Stock, other
than and pursuant to outstanding options and existing employee benefit and
director stock plans. No further action or authorization by the Company's
stockholders would be necessary prior to issuance of the additional shares,
except as may be required for a particular transaction by the Articles, by
applicable law or regulatory agencies or by the rules of any stock exchange on
which the Company's capital stock may then be listed. Issuance of such shares,
however, could dilute existing stockholders.

The flexibility to issue Common Stock also could enhance the Board's bargaining
capability in a takeover situation. For example, any amount of such additional
shares of Common Stock could be privately placed with purchasers who might

11
<PAGE> 16

side with management of the Company in opposing a tender offer by a third party
or such shares could be issued in conjunction with the adoption of a stockholder
purchase rights plan. These actions could have the effect of delaying, deferring
or preventing a change in control of the Company. See "Introduction to
Anti-Takeover Amendments" later in this proxy statement for a further discussion
of the advantages and disadvantages of anti-takeover measures.

Stockholders of the Company do not now have preemptive rights to subscribe for
or purchase additional shares of Common Stock, and the stockholders will have no
preemptive rights to subscribe for or purchase any of the additional shares
authorized by the proposed amendment.

The affirmative vote of a majority of the votes entitled to be cast by holders
of the Common Stock outstanding and entitled to vote is required for the
adoption of Proposal No. 3.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
APPROVAL OF PROPOSAL NO. 3

INTRODUCTION TO ANTI-TAKEOVER AMENDMENTS

The Board of Directors unanimously has determined that certain amendments to the
Company's Articles and By-Laws are advisable and has unanimously voted to
recommend them to the Company's stockholders for adoption at the Meeting. These
amendments are being submitted in the form of six separate proposals: (i) a
proposal to create a classified Board of Directors and related matters; (ii) a
proposal to authorize an additional 900,000 shares of the Company's no par
Preferred Stock, and to amend the terms of such Preferred Stock such that it
shall have such rights, powers, preferences and terms as shall from time to time
be fixed by the Board of Directors of the Company without further stockholder
approval, (iii) a proposal to require a supermajority (i.e. 66 2/3%) vote of
stockholders in certain circumstances, (iv) a proposal requiring stockholders to
give the Company notice of their intention to nominate directors, (v) a proposal
limiting the right of stockholders to call a special meeting of stockholders to
stockholders who hold at least 50% of the Company's voting stock, and (vi) a
proposal to add to the Articles a so-called "Fair Price Provision" with regard
to certain business combinations (collectively, the "Anti-Takeover Amendments").
The purposes and effects of the six proposals are set forth below, followed by a
more detailed description of each proposal and how it would operate.

PURPOSES AND EFFECTS

The Board of Directors believes that, without the Anti-Takeover Amendments which
it is recommending for stockholder approval at the Meeting, the Company may be
vulnerable to certain tactics -- including the accumulation of substantial
voting positions as a prelude to an attempt to take over corporate control or to
effect a significant corporate restructuring, proxy fights, and similar tactics
- -- which have become relatively more common in recent years. For the reasons
discussed below, the Board of Directors believes that such tactics could be
highly disruptive to the Company and could result in dissimilar and unfair
treatment of the Company's stockholders. Proposals No. 4 through 9 are being
submitted for stockholder approval as a means of protecting the Company from
these kinds of tactics. The Board of Directors believes that the Anti-Takeover
Amendments, taken as a whole, will reduce the vulnerability of the Company to
takeover proposals that are not in the best interests of the Company or its
stockholders and will allow the Board to carefully consider and act upon any
proposed takeover or other major corporate restructuring.

The Anti-Takeover Amendments are interrelated but are being presented as six
separate proposals. The Anti-Takeover Amendments are not being recommended in
response to any past problems regarding Board of Director continuity or any
specific effort of which the Board of Directors is aware to accumulate the
Company's stock or to acquire control of the Company, but rather in recognition
that such activities might occur in the future.

If Proposal No. 4 creating a classified Board of Directors is approved, because
only one of the three classes of a classified Board will be elected annually, at
least two annual stockholders' meetings, instead of one, will be required to
effect a change in the control of the Board through the normal election
processes. The classified board amendment would require

12
<PAGE> 17

a person seeking to acquire control of the Company to wait up to two years to
obtain control of the Board even though that person has acquired ownership of a
majority or controlling minority interest in the Company. The classified board
would thus make it more difficult and time-consuming for any individual or
entity who accumulates a substantial stock or voting position in the Company to
obtain control of the Board or to effect changes in the Company's day-to-day
operations.

If Proposal No. 5 authorizing an additional 900,000 shares of the Company's no
par Preferred Stock and amending the terms of such Preferred Stock is adopted,
the authority of the Board of Directors to issue shares of Preferred Stock might
be considered as having the effect of discouraging an attempt by another person
or entity to effect a takeover or otherwise gain control of the Company because
of the potential dilution of the voting power of the Common Stock to the extent
that a series of Preferred Stock might be convertible into Common Stock. In
addition, a series of Preferred Stock could be privately placed with a person or
entity friendly to management, whose vote would be required to approve the
proposed takeover, or issued in conjunction with the adoption of a stockholder
purchase rights plan.

Proposal No. 6 requiring a supermajority vote of stockholders in certain
circumstances, may have the effect of making it more difficult for a bidder to
obtain stockholder approval, through a proxy contest or otherwise, for certain
transactions, an amendment to the Company's Articles (to repeal a defensive
provision) or any other action not recommended by a majority of the Continuing
Directors (other than the election of directors).

If Proposal No. 7, requiring stockholders to give notice of their intention to
nominate directors, is adopted, it would be more difficult and time-consuming
for stockholders to nominate directors. This provision makes it easier for the
Company to obtain advance notice of nominations and makes more difficult the
assumption of control of the Company by a purchaser of a significant block of
the shares of the Company through the removal of incumbent directors.

Proposal No. 8 limiting the ability of stockholders to call Special Meetings of
stockholders, if adopted, would have the effect of making it more difficult for
the stockholders of the Company, other than a stockholder holding 50% of the
Company's voting stock, to take action at any time other than an annual meeting
(or a special meeting authorized by the Board of Directors or other authorized
persons) to replace directors, amend the Company's charter or take any other
action authorized to be taken by stockholders under Massachusetts law. The
proposed amendment may have the effect of discouraging potential purchasers from
attempting to acquire control of the Company or, in some cases, may discourage
the accumulation of large blocks of Common Stock by reducing the control effect
of such blocks.

Proposal No. 9, adding to the Articles a Fair Price Provision regarding certain
business combinations, if adopted, would give greater assurance to the holders
of the Company's capital stock that they will receive fair and equitable
treatment in the event of certain business combination transactions between the
Company and any interested stockholder or certain related persons.

The Company is not aware of any efforts to accumulate the Company's securities
or to obtain control of the Company, and the Company has no present intention or
agreement to issue any shares of Preferred Stock.

ADVANTAGES OF PROPOSALS

The proposed Anti-Takeover Amendments are intended to encourage persons seeking
to acquire control of the Company to initiate such an acquisition through arm's
length negotiations with the Company's Board of Directors. If the Board is
presented with a proposal from a third party who has acquired a substantial
block of the Company's Common Stock, the Directors will be able to evaluate the
proposal and study alternative proposals in the absence of the coercive
atmosphere that might otherwise prevail and without the imminent threat of
removal. This ability to evaluate and negotiate will help ensure that the best
price is obtained in any acquisition transaction that may ultimately be
consummated.

The Anti-Takeover Amendments cannot, and are not intended to, prevent a purchase
of all or a majority of the equity securities of the Company nor are they
intended to deter bids or other efforts to acquire such securities. Rather, the
Board of Directors believes that the Anti-Takeover Amendments will discourage
disruptive tactics and takeovers at unfair prices or on terms that do not
provide all stockholders with the opportunity to sell their stock at a fair
price and will encourage third parties which may seek to acquire control of the
Company to initiate such an acquisition through negotiations directly with the
Board of Directors. Therefore, the Board believes that it will be in a better
position to protect the interests of all

13
<PAGE> 18

of the stockholders if the Anti-Takeover Amendments are approved. In addition,
the stockholders of the Company will have a more meaningful opportunity to
evaluate such action.

DISADVANTAGES OF PROPOSALS

Adoption of the proposed Anti-Takeover Amendments may deter certain mergers,
tender offers, proxy contests or other future takeover attempts which holders of
some or even a majority of the outstanding stock believe to be in their best
interests, and may make removal of management more difficult even if such
removal would be beneficial in the judgment of many of the stockholders. Not all
takeovers or changes in control of the Board of Directors that are proposed and
effected without prior consultation and negotiation with the incumbent Board are
necessarily detrimental to the Company and its stockholders. However, the Board
believes that the benefits of seeking to protect its ability to negotiate with
the proponent of an unfriendly or unsolicited proposal to acquire or restructure
the Company outweigh the disadvantages of discouraging such proposals.

Although the Anti-Takeover Amendments are intended to encourage persons seeking
to acquire control of the Company to initiate such an acquisition through arm's
length negotiations with the board of directors, the overall effect of these
provisions may be to discourage a third party from making a tender offer for a
portion or all of the Company's securities, hostile or otherwise (including an
offer at a substantial premium over the then prevailing market value of the
Company's Common Stock), or otherwise attempting to obtain a substantial portion
of the Common Stock of the Company in order to commence a proxy contest or
engage in other takeover-related action, even though some or a majority of the
Company's stockholders might believe such actions to be beneficial. If third
parties are discouraged from making offers for all or a substantial portion of
the Company's Common Stock, the effect may be to dampen demand for, or
speculation in, the Company's Common Stock and therefore negatively impact the
price of the Common Stock.

To the extent that any third party potential acquirers are deterred by the
Anti-Takeover Amendments, such provisions may serve to benefit incumbent
management by making it more difficult to remove management, even when the only
reason for the proposed change of control or the stockholder action may be the
unsatisfactory performance of the present directors. In addition, since the
Anti-Takeover Amendments are in part designed to discourage accumulating large
blocks of the Company's voting securities by purchasers whose objective is to
gain control of the Company, their adoption could tend to reduce the temporary
fluctuation in the market price of such voting stock that frequently results
from such accumulations or attempted accumulations. Accordingly, stockholders
could be deprived of certain opportunities to sell their shares at a higher
market price.

RELATIONSHIP OF ANTI-TAKEOVER AMENDMENTS TO OTHER PROVISIONS

The Board of Directors does not believe that the Articles currently contain any
provisions which should be viewed as anti- takeover devices, except that the
Company currently has authorized 100,000 shares of no par Preferred Stock which
can be issued in series with the relative rights and preferences of the shares
of any series to be determined by the Directors. If Proposal No. 5 is adopted,
an additional 900,000 shares of no par Preferred Stock shall be authorized and
the terms of the Preferred Stock shall be amended such that the Board will have
even greater flexibility with respect to determining the rights, powers,
preferences and terms of any series of Preferred Stock which may be issued. In
addition to the Proposals set forth herein, the Board of Directors may, in the
future, adopt, or propose to stockholders for their adoption other measures
which could be characterized as having an anti-takeover effect, however, the
Board has no present intention to put before the stockholders any other proposal
which would operate as a significant impediment to an attempt by a third party
to gain control of the Company.

APPLICABLE PROVISIONS OF MASSACHUSETTS LAW.

CONTROL SHARE ACQUISITION LAW. Under Chapter 110D of the Massachusetts General
Laws governing "control share acquisitions," any stockholder of certain
publicly-held Massachusetts corporations who acquires 20% or more of voting
power of a covered corporation may not (except in certain transactions) vote
such stock unless the stockholders of the corporation so authorize. The
provisions of Chapter 110D are applicable to the Company.

BUSINESS COMBINATION STATUTE. Chapter 110F of the Massachusetts General Laws,
entitled "Business Combinations with Interested Shareholders," applies to
publicly-held Massachusetts corporations with 200 or more stockholders of
record.

14
<PAGE> 19

Generally, this statute prohibits such Massachusetts corporations from engaging
in a "business combination" with an "interested stockholder" for a period of
three years following the date of the transaction in which the person becomes an
interested stockholder unless (a) the interested stockholder obtains the
approval of the corporation's board of directors prior to becoming an interested
stockholder; (b) the interested stockholder acquires at least 90% of the voting
stock of the corporation (excluding shares held by certain affiliates of the
corporation) outstanding at the time he or it becomes an interested stockholder;
or (c) the business combination is both approved by the board of directors and
authorized at an annual or special meeting of stockholders by the holders of a
least two-thirds of the outstanding voting stock of the corporation (excluding
shares held by the interested stockholder). An "interested stockholder" is a
person who, together with affiliates and associates, owns (or at any time within
the prior three years did own) 5% or more of the outstanding voting stock of the
corporation. A "business combination" includes, among other transactions, a
merger, stock or asset sale and other transactions resulting in a financial
benefit to the stockholder. Chapter 110F is applicable to the Company. The
application of this statute to the Company could discourage or make it more
difficult for any person or group of persons to attempt to obtain control of the
Company. The Company may at any time amend its Articles of Organization or
By-Laws to elect not to be governed by Chapter 110F, by a vote of its
stockholders, but such an amendment would not be effective for twelve months and
would not apply to a business combination with any person who became an
interested stockholder prior to the date of the amendment.

STATUTORY FAIR PRICE PROVISION. Chapter 110C of the Massachusetts General Laws,
entitled "Regulation of Take-Over Bids in the Acquisition of Corporations," sets
forth disclosure and other requirements with which a person making a "take-over
bid" must comply. In addition, the statute generally requires that if a person
making a take-over bid increases the consideration he is willing to pay for
shares of the target corporation, then all stockholders of the target
corporation will be entitled to such higher price for their shares, whether or
not such shares are tendered before or after the offeror increases the
consideration he is willing to pay.

All of the various provisions described above, as well as Proposals No. 4
through 9, could be used by the Board of Directors in a manner calculated to
prevent the removal of management and to make more difficult or discourage a
change in control of the Company. Certain aspects of the foregoing provisions
were designed to afford the Board of Directors the opportunity to evaluate the
terms of a takeover attempt without haste or undue pressure, advise stockholders
of its findings, and to negotiate to protect the interests of all stockholders.

PROPOSAL NO. 4

AMENDMENT TO ARTICLES AND BY-LAWS
TO PROVIDE FOR A CLASSIFIED BOARD OF DIRECTORS
AND RELATED MATTERS

At present, all the Company's directors are elected at each annual meeting of
stockholders for a one year term. The Board of Directors unanimously recommends
that stockholders approve the addition of a new subsection to Article 6 of the
Articles to provide for the classification of the Company's Board of Directors
into three classes, each comprising as nearly as possible one-third of the
directors, and to address certain related matters. At the 1996 Annual Meeting,
the Class I directors would be elected for one year, the Class II directors for
two years and the Class III directors for three years. (See Exhibit A for the
entire text of the proposed amendment.) At each annual meeting thereafter, the
class of directors up for election would be elected for three years and the
directors in the other two classes would continue in office. The votes required
for election would remain unchanged. If the number of directors is changed, any
newly-created directorships or decreases in directorships are to be assigned by
the Board so as to make all classes as nearly equal in number as possible.

Under the proposed addition to Article 6, the ability of the stockholders to
enlarge the Board of Directors would be restricted. If the Proposal is adopted,
changes in the number of Directors may be effected by a vote of a majority of
the Continuing Directors (a defined term which is intended to include those
Directors in office prior to any takeover attempt) or by the stockholders by the
affirmative vote of 66 2/3% of the shares of voting stock outstanding voting as
a single class. Vacancies on the Board resulting from an increase in the number
of directors or otherwise shall be filled only by the affirmative vote of a
majority of the Continuing Directors for the remainder of the full term of the
class of directors in which the directorship was created or the vacancy
occurred. Under this provision, directors would be removable with or

15
<PAGE> 20

without cause only by vote of the holders of at least 66 2/3% of the combined
voting power of the outstanding shares of voting stock, voting together as a
single class or upon the vote of a majority of the Continuing Directors.

The proposed amendment is intended to moderate the pace of any change in the
Board of Directors by extending the time required to replace a majority of the
incumbent directors. At least two stockholder meetings, instead of one, will be
required to effect a change in a majority of the Board. The Board of Directors
believes that a classified Board would tend to assure desirable continuity in
leadership and policy since, when the classified Board becomes fully operative,
approximately two- thirds of the directors at any time will have had prior
experience on the Board.

The provision for electing only one class of the Board annually, rather than the
entire Board, will be applicable to every annual election of directors, and not
just to any election occurring after a change in stockholder control of the
Company. A classified Board could delay stockholders who do not like the
policies of the Board of Directors from removing a majority of the Board for up
to two years. This would be so even if the only reason for the attempted action
by a stockholder was dissatisfaction with the performance of the current Board.

The provisions relating to removal of directors or expanding the Board and
filling the resulting vacancies would make it more difficult for a third party
to remove incumbent directors or expand the Board and simultaneously gain
control of the Board by filling the vacancies created by such expansion with
its own nominees.

Stockholders should recognize that the amendment will also make more difficult
the removal of a director in circumstances which do not constitute a takeover
attempt and where, in the opinion of the holders of a majority of the Company's
outstanding shares, it is desirable that a director be removed. The proposed
provision would, in effect, give holders of one-third of the outstanding shares
of common stock a veto power over such removal without cause. Moreover, the
proposal may have the effect of delaying an ultimate change in existing
management that might be desired by a majority of the stockholders.

These provisions should increase the likelihood of continuity and stability in
the composition of the Board of Directors and, at the same time, reduce the
possibility that a third party could effect or threaten to effect a sudden or
surprise change in majority control of the Board of Directors without the
support of the incumbent Board. The Board of Directors does not believe that the
Company has had any problems in the past with respect to continuity in
leadership and policy. The amendment may also impede assumption of the
management of the Company by any other person or entity which, through a
takeover bid or otherwise, might obtain a substantial number of shares of Common
Stock.

If Proposal No. 4 is approved by the stockholders, the Company's By-Laws will
also be amended as set forth in Exhibit A to conform the By-Laws to the
provisions of this proposed amendment.

The affirmative vote of two thirds of the votes entitled to be cast by holders
of the Common Stock outstanding and entitled to vote is required for the
adoption of Proposal No. 4.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
APPROVAL OF PROPOSAL NO. 4.

PROPOSAL NO. 5

AMENDMENT TO ARTICLES
TO ADD BLANK CHECK PREFERRED STOCK

The Board of Directors has unanimously approved an amendment to the
Company's Articles to increase the number of authorized shares of the Company's
no par Preferred Stock (the "Preferred Stock") from 100,000 to 1,000,000 and to
amend the terms of the Preferred Stock such that it has such rights, powers,
preferences and terms as are determined by the Board of Directors at the time of
issuance, without further stockholder action. There are currently no shares of
Preferred Stock issued and outstanding.

<PAGE> 21

The proposed amendment would enable the Board of Directors to authorize the
issuance, without further stockholder action (unless required in a specific case
by applicable laws, regulations or stock exchange rules), of one or more series
of Preferred Stock, with such terms and at such times and for such consideration
as the Board of Directors may determine. With respect to any such series of
Preferred Stock, the Board of Directors will be authorized to determine, among
other things: (i) the dividend rate, which may be fixed or variable, the
conditions and times at which the dividend is payable, its preference as to any
other class or series of capital stock, and whether dividends will be cumulative
or non-cumulative; (ii) whether the shares are to be redeemable and, if so, at
which times and prices and on what other terms and conditions; (iii) the terms
and amount of any sinking fund provided for the purchase or redemption of the
shares; (iv) whether the shares shall be convertible or exchangeable and, if so,
the times, prices, rates, adjustments and other terms of such conversion or
exchange; (v) the voting rights, if any, applicable to the shares in addition to
those prescribed by law; (vi) the restrictions and conditions, if any, on the
issue or reissue of any additional shares of such series or of any other series
of Preferred Stock ranking on a parity with, or prior to, the shares of such
series; and (vii) the rights of the holders of such shares upon voluntary or
involuntary liquidation, dissolution or winding up of the Company. If Proposal
No. 5 is adopted, Article 4 of the Articles would read in its entirety as set
forth in Exhibit B.

If the amendment is adopted, the result will be to increase the flexibility of
the terms of the Preferred Stock to give the Board greater latitude in
determining the rights, powers, preferences and terms with respect to any series
and to simplify and modernize the language.

The Board of Directors believes that the proposed amendment is in the best
interests of the Company and its stockholders. The authorization of additional
shares of Preferred Stock will give the Company greater flexibility in equity
financing by permitting the Board of Directors to issue shares of Preferred
Stock without the delay and expense of a special meeting of stockholders. For
example, the Board of Directors may deem it appropriate to make a private or
public offering of the Company's Preferred Stock in order to raise funds for
working capital or other purposes or the Preferred Stock could be issued to
finance possible future acquisitions.

The flexibility to issue the "blank check" Preferred Stock could enhance the
Board's bargaining capability in a takeover situation. For example, the Board of
Directors could issue a series of Preferred Stock with the right as a separate
class to approve any merger or sale of the Company. This could have the effect
of delaying, deferring or preventing a change in control of the Company. In
addition, the Board of Directors of the Company could forestall or prevent a
change in control by means of a private placement of the Preferred Stock with a
person or entity friendly to management, whose vote would be required to approve
the proposed takeover. Preferred Stock could also be issued in conjunction with
the adoption of a stockholder purchase rights plan.

Stockholders of the Company do not have preemptive rights to subscribe for or
purchase any shares of Preferred Stock that may be issued in the future. Each
series of Preferred Stock could and probably would, as determined by the Board
of Directors at the time of issuance, rank senior to the Company's Common Stock
with respect to dividends, redemption and liquidation rights. The Company has no
current plans to issue any shares of Preferred Stock.

The affirmative vote of two thirds of the votes entitled to be cast by holders
of the Common Stock outstanding and entitled to vote is required for the
adoption of Proposal No. 5.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
APPROVAL OF PROPOSAL NO. 5

PROPOSAL NO. 6

AMENDMENT TO ARTICLES TO REQUIRE
A SUPERMAJORITY VOTE OF STOCKHOLDERS

Proposal No. 6 would amend the Articles to provide that, after the 1996 Meeting,
where a stockholder vote is required under Massachusetts law, other than with
respect to the election of directors, the affirmative vote of a majority of each

17
<PAGE> 22

class of stock outstanding and entitled to vote thereon is required, if such
vote is recommended by a majority of the Continuing Directors (a defined term
which is intended to include those Directors in office prior to any takeover
attempt) or, in the event such vote is not recommended by a majority of the
Continuing Directors, the affirmative vote of 66 2/3% of each class of stock
outstanding and entitled to vote thereon is required. (See Exhibit C for the
text of this amendment.) The supermajority voting provision would be subject to
other provisions of the Articles and By-Laws of the Company that specify a
different percentage vote in particular circumstances, as well as the
requirements of Massachusetts law. Massachusetts law already requires a vote of
two-thirds of the shares of each class of stock outstanding and entitled to vote
(unless the articles of organization provide for a lesser proportion, but not
less than a majority) to approve certain actions, such as a merger or a sale of
substantially all assets.

Requiring supermajority voting may have the effect of making it more difficult
for a bidder to obtain stockholder approval, through a proxy contest or
otherwise, for certain transactions, an amendment to the Company's Articles (to
repeal a defensive provision) or any other action other than the election of
Directors. A supermajority provision will also make it more likely that
management stockholders will be able to defeat a proposal that could be
detrimental to the Company.

The supermajority provision would allow the Company to protect itself to some
degree, while retaining the ability to require mere majority vote for actions
that a majority of the Continuing Directors recommend. In practice this
provision would likely require a bidder to come to agreement with the Continuing
Directors before taking action.

The affirmative vote of two thirds of the votes entitled to be cast by holders
of the Common Stock outstanding and entitled to vote is required for the
adoption of Proposal No. 6.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
APPROVAL OF PROPOSAL NO. 6.

PROPOSAL NO. 7

AMENDMENT TO BY-LAWS TO REQUIRE STOCKHOLDERS
TO GIVE NOTICE OF DIRECTOR NOMINATIONS

The Company's By-Laws do not set forth any procedure for the nomination of
candidates for director by stockholders. Proposal No. 7 would amend Article III,
Section 1 of the Company's By-Laws to require stockholders to give the Company
at least 90 days notice prior to the Annual Meeting of such stockholder's
intention to nominate Directors. The notice must include (a) the name and
address of the stockholder who intends to make the nomination and of the person
or persons to be nominated, (b) a representation that the stockholder is a
stockholder of record entitled to vote at such meeting and will appear in person
or by proxy at the meeting, (c) a description of all arrangements or
understandings between the stockholder and each nominee, (d) such other
information regarding each nominee as would be required to be included in a
Proxy Statement filed pursuant to the proxy rules of the Securities and Exchange
Commission, and (e) a consent of each nominee to serve as a Director of the
Company if so elected. The text of the proposed amendment is set forth in full
as Exhibit D to this proxy statement.

This provision will require stockholders to act well in advance of an annual
meeting if the stockholder desires to nominate a director. The provision also
requires the stockholder to supply the Company with a variety of information
concerning itself and the nominee. This provision may discourage some
stockholders from nominating directors, due both to the advanced timing required
and to the need to provide detailed information relating to the nominee. This
provision makes it easier for the Company to obtain advance notice of
nominations and makes more difficult the assumption of control of the Company by
a purchaser of a significant block of the shares of the Company through the
removal of incumbent directors. While the amendment does not give the Board of
Directors any power to approve or disapprove of a stockholder nomination, it
will preclude the possibility of unexpected nominations for directors from the
floor of meetings and limit the ability of stockholders to cause sudden changes
in the membership of the Board of Directors. The proposed provision will also
provide stockholders and the Board of Directors an opportunity to evaluate the
qualifications of nominees for election prior to the vote, thus furthering the
objective of the Board to identify candidates who have the character, experience
and proven accomplishments which give promise of significant contribution to the
Company's business.

18
<PAGE> 23
Although the Board of Directors does not believe that the amendment will have a
significant impact on any attempt by a third party to obtain control of the
Company, it is possible that the amendment may deter a third party from
conducting a solicitation of proxies to elect its own slate of directors or
otherwise attempt to obtain control of the Company or effect a change in
management, irrespective of whether such action would be beneficial to
stockholders generally.

The affirmative vote of a majority of the votes entitled to be cast by holders
of the Common Stock outstanding and entitled to vote is required for the
adoption of Proposal No. 7.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
APPROVAL OF PROPOSAL NO. 7.

PROPOSAL NO. 8

AMENDMENT TO BY-LAWS TO LIMIT STOCKHOLDERS' RIGHT TO CALL SPECIAL MEETINGS

The Company's By-Laws currently provide that Special Meetings of Stockholders
may be called by the President, by a majority of the Directors, or upon written
application of one or more stockholders who hold at least 10% of the voting
stock entitled to vote at the meeting. Unless otherwise provided in the articles
of organization or by-laws, Massachusetts law limits the right to call a special
meeting of stockholders to stockholders who hold at least 40% of the Company's
voting stock. The Board is proposing that Article II, Section 2 of the By-Laws
be amended to limit the right to call a special meeting of stockholders to
stockholders who hold at least 50% of the Company's voting stock. For the text
of this amendment to the By-Laws, see Exhibit E.

The Board of Directors believes that the current threshold affording holders of
10% of the Company's voting stock the right to call Special Meetings of
stockholders establishes too low a threshold and exposes the Company to the
costs of preparing for a Special Meeting without a showing of substantial
support by the stockholders. The Board believes that the decision whether to
hold such a meeting should properly rest with the holders of at least 50% of the
Company's outstanding shares and with the President and the Board of Directors.

This provision restricts the ability of a stockholder intending to bid for
control of the Company to call a special meeting at which he or she may attempt
to pack the Board of Directors or otherwise wage a proxy contest. For example,
such a person could attempt, through a resolution at a Special Meeting, to
emasculate a defensive measure previously implemented by the Company.

The affirmative vote of a majority of the votes entitled to be cast by holders
of the Common Stock outstanding and entitled to vote is required for the
adoption of Proposal No. 8.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
APPROVAL OF PROPOSAL NO. 8.

PROPOSAL NO. 9

AMENDMENT TO ARTICLES TO ADD FAIR PRICE PROVISION

In recent years, tactics have been used in connection with actual and threatened
unsolicited takeovers of corporate control which discriminate against certain
stockholders of the target corporation. These tactics include "two tiered,"
"front-end loaded" cash tender offers for a portion of the target corporation's
outstanding shares of voting stock, followed by "clean-up" or "squeeze out"
mergers or similar transactions that involve the elimination of the then
remaining public stockholders of the target company (i.e. those who did not
tender their shares to, or have their tenders accepted by, the acquirer in the
initial partial cash tender offer) for cash or other consideration having a
lower value than the amounts paid to the stockholders participating in the
initial partial cash tender offer. The Board of Directors has approved a
proposal to include a provision as an addition to Article 6 to the Company's
Articles for the purpose of giving greater assurance to the

19
<PAGE> 24

holders of the Company's capital stock that they will receive fair and equitable
treatment in the event of certain business combination transactions between the
Company and any interested stockholder or certain related persons.

The Fair Price Provision requires the affirmative vote of the holders of 66 2/3%
of the combined voting power of the Company's outstanding voting stock for
certain transactions defined as "Business Combinations" with a "Related Person"
unless specified price criteria and procedural requirements are met or the
approval of the Continuing Directors is given. (See Exhibit F to this proxy
statement for the complete text of the Fair Price Provision.)

A "Business Combination" is defined as (i) any merger or consolidation of the
Company with any Related Person or affiliate of a Related Person, or (ii) any
sale, lease, pledge or other disposition to any Related Person or affiliate of a
Related Person of assets of the Company having a fair market value greater than
10% of the Company's total stockholders' equity, or (iii) the issuance or
transfer by the Company of any securities of the Company to any Related Person
or affiliate of a Related Person in exchange for consideration having a fair
market value in excess of 10% of the Company's total stockholders' equity, or
(iv) the adoption of any proposal for the liquidation or dissolution of the
Company proposed by or on behalf of any Related Person or affiliate of a Related
Person, or (v) any reclassification of securities or recapitalization of the
Company or other transaction which has the effect, directly or indirectly of
increasing the proportionate share of securities of the Company directly or
indirectly owned by any Related Person or affiliate of a Related Person.

A "Related Person" is defined as any person which, together with such person's
affiliates and associates, acquires beneficial ownership, directly or
indirectly, of more than 5% of the voting power of the Company's outstanding
voting stock.

The Fair Price Provision requires that, in Business Combinations which involve
consideration received by the stockholders, either such Business Combination
shall be approved by a majority of the Continuing Directors or a number of
conditions must be met, including a condition which requires that the amount of
consideration received per share by stockholders be at least equal to the higher
of (a) the highest per share price paid by the Related Person for any such
shares within the two-year period immediately prior to the date of the
announcement of the proposed transaction or in the transaction in which it
became a Related Person, whichever is higher, or (b) the fair market value per
share on the date of such announcement, or (c) in the case of any class of
Preferred Stock, the highest preferential amount per share to which the holders
are entitled in the event of a winding up of the Company.

The Board of Directors believes that the adoption of the proposal is desirable
in addition to the provisions of Massachusetts law discussed above and
notwithstanding certain other provisions of Massachusetts law that provide that
stockholders who object to a merger or consolidation may, under certain
circumstances, have the statutory right to dissent, have their shares
"appraised" and receive the "fair value" of their shares in cash.

The affirmative vote of two thirds of the votes entitled to be cast by holders
of the Common Stock outstanding and entitled to vote is required for the
adoption of Proposal No. 9.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
APPROVAL OF PROPOSAL NO. 9.

OTHER MATTERS
VOTING

The representation in person or by proxy of at least a majority of the
outstanding shares of Common Stock of the Company is necessary to provide a
quorum at the Meeting. Directors are elected by a plurality of the affirmative
votes cast. Abstentions and broker "non-votes" are each counted as present in
determining whether the quorum requirement

20
<PAGE> 25

is satisfied. Abstentions and "non-votes" have the effect of votes against
proposals presented to the stockholders other than the election of directors. A
"non-vote" occurs when a broker or other nominee holding shares for a beneficial
owner votes on one proposal, but does not vote on another proposal because the
broker or other nominee does not have discretionary voting power and has not
received instructions from the beneficial owner.

PROXIES; REVOCATION OF PROXIES

All Proxies solicited by the Board of Directors of the Company that are properly
executed and returned, but which are not expressly voted, will be voted at the
Meeting in accordance with the recommendation of the Board of Directors of the
Company, unless such proxies are revoked prior to the Meeting. A Proxy may be
revoked by delivering a written notice of revocation to the principal office of
the Company or may be revoked in person at the Meeting at any time prior to the
voting thereof. Attendance at the Meeting will not, by itself, revoke a Proxy.

SOLICITATION

All expenses of this solicitation will be paid by the Company. Brokerage firms,
nominees, fiduciaries and other custodians have been requested to forward proxy
solicitation materials to the beneficial owners of shares of Common Stock of the
Company held of record by such persons, and the Company will reimburse such
brokerage firms, nominees fiduciaries and other custodians for reasonable
out-of-pocket expenses incurred by them in connection therewith. In addition to
solicitation of Proxies by mail, directors, officers and employees of the
Company, without receiving additional compensation therefor, may solicit Proxies
from stockholders of the Company by telephone, telegram, in person or by other
means. The Company will also use Georgeson & Company Inc., a paid proxy
solicitaion firm, to solicit proxies on behalf of the Company. The Company
expects to pay the firm approximately $11,000 plus certain expenses for its
proxy solicitation efforts.

INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors has selected Arthur Andersen LLP, as the independent
certified public accountants to audit the consolidated financial statements of
the Company for the fiscal year ending March 31, 1997.

A representative of Arthur Andersen LLP will be at the Meeting and will be given
an opportunity to make a statement, if so desired. The representative will be
available to respond to appropriate questions.

STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING

Any stockholder proposal to be included in the proxy statement and form of
proxy for the 1997 Annual Meeting of Stockholders must be received at the
principal office of the Company by May 13, 1997. It is suggested that proposals
be submitted by Certified Mail, Return Receipt Requested.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires certain persons,
including the Company's Directors and Executive Officers, to file initial
reports of beneficial ownership of the Company's securities and reports of
changes in beneficial ownership with the Securities and Exchange Commission. For
fiscal year 1996, the following reports were filed late: Herman Feshbach filed
one late report covering one transaction; Al Gladen filed two late reports
covering three transactions; Peter Harris filed one late report covering one
transaction; Hamilton Helmer filed one late report covering two transactions;
Donald McCarren filed one late report covering three transactions; and Lee
Steele filed one late report covering two transactions.

<PAGE> 26

INCORPORATION BY REFERENCE

To the extent that this Proxy Statement has been or will be specifically
incorporated by reference into any filing by the Company under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, the
sections of the Proxy Statement entitled "Compensation Committee Report on
Executive Compensation" and "Stock Performance Chart" shall not be deemed to be
so incorporated, unless specifically otherwise provided in any such filing.

OTHER PROPOSED ACTION

The Board of Directors knows of no other matters that are to be presented at the
Meeting. If, however, any other business should properly come before the
Meeting, the persons named in the enclosed proxy intend to vote such proxy upon
such matters in accordance with their best judgment.

By Order of the Board of Directors

Jeffrey A. Bernfeld
Clerk

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<PAGE> 27

EXHIBIT A

CLASSIFICATION OF BOARD OF DIRECTORS AND RELATED MATTERS

Text of Provision to be added to Article 6 of the Articles of Organization (to
- ------------------------------------------------------------------------------
be inserted at the beginning of Article 6).
- -------------------------------------------

(i) Classification of Board of Directors and Related Matters.
--------------------------------------------------------

A. Number, Election and Terms of Directors
---------------------------------------

1. Subject to the rights of the holders of any class or series of stock
having a preference over the Corporation's voting stock as to dividends or upon
liquidation to elect additional directors under specific circumstances, the
number of directors shall be fixed from time to time exclusively by the Board of
Directors pursuant to a resolution adopted by a majority of the Continuing
Directors (whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board of
Directors for adoption) or by the affirmative vote of the holders of at least 66
2/3% of the shares of voting stock outstanding, voting as a single class. At the
1996 annual meeting of stockholders, the directors, other than those who may be
elected by the holder of any class or series of stock having a preference over
the voting stock as to dividends or upon liquidation, shall be divided into
three classes, as nearly equal in number as possible, with the term of office of
the first class to expire at the 1997 annual meeting of stockholders, the term
of office of the second class to expire at the 1998 annual meeting of
stockholders and the term of office of the third class to expire at the 1999
annual meeting of stockholders. At each annual meeting of stockholders following
such initial classification and election, the successors of those directors
whose terms expire at that meeting shall be elected by a plurality vote of all
votes cast at such meeting for a term of office to expire at the third
succeeding annual meeting of stockholders after their election, unless by reason
of any intervening changes in the authorized number of directors, the Board of
Directors shall designate one or more of the then expired directorships as
directorships of another class in order more nearly to achieve equality of
number of directors among the classes.

2. The number of the Board of Directors may be changed by a vote of a
majority of the Continuing Directors or by the stockholders by vote of 66 2/3%
of the shares of voting stock outstanding, voting as a single class.

3. Notwithstanding the rule that the three classes shall be as nearly
equal in number of directors as possible, in the event of any change in the
authorized number of directors, each director then continuing to serve as such,
shall nevertheless continue as a director of the class of which he is a member
until the expiration of his current term, or his prior death, resignation or
removal. If any newly created directorship may, consistent with the rule that
the three classes shall be as nearly equal in number of directors as possible,
be allocated to one of two or more classes, the Board of Directors shall
allocate it to that of the available classes whose term of office is due to
expire at the earliest date following such allocation.

B. Newly Created Directorships and Vacancies
-----------------------------------------

Except as otherwise provided for or fixed by or pursuant to the provisions
of these Articles of Organization relating to the rights of the holders of any
class or series of stock having a preference over the voting stock as to
dividends or upon liquidation to elect directors under specified circumstances,
newly created directorships resulting from any increase in the number of
directors and any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other cause shall be filled only by
the affirmative vote of a majority of the Continuing Directors, even though less
than a quorum of the Board of Directors. Any director elected in accordance with
the preceding sentence shall hold office for the remainder of the full term of
the class of directors in which the new directorship was created or the vacancy
occurred and until such director's successor shall have been elected and
qualified. No decrease in the number of directors shall shorten the term of an
incumbent director.

C. Removal
-------

Subject to the rights of the holders of any class or series of stock having
a preference over the voting stock as to dividends or upon liquidation to elect
additional directors under specified circumstances, any director may be removed
from

23
<PAGE> 28

office with or without cause only by the affirmative vote of the holders of at
least 66 2/3% of the combined voting power of the outstanding shares of voting
stock, voting together as a single class or upon the vote of a majority of the
Continuing Directors.

D. Amendment, Repeal or Alteration
-------------------------------

Notwithstanding anything contained in these Articles of Organization to the
contrary, the affirmative vote of the holders of at least 66 2/3% of the
outstanding shares of voting stock, voting together as a single class, shall be
required to alter, change, amend or repeal this Article 6(i) or to adopt any
provision inconsistent with this Article 6(i).

Text of new Article III, Section 1 of By-Laws
---------------------------------------------

Section 1: Enumeration, Election and Term of Office.
- ---------- -----------------------------------------

The number of Directors on the Board of Directors shall be determined as
provided in the Articles of Organization of the Corporation. No Director need be
a Stockholder.

The Directors of the Corporation shall be divided into three classes: Class
I, Class II and Class III. Each class shall consist as nearly as may be
possible, of one-third of the whole number of the Board of Directors. In the
election of Directors at the 1996 Annual Meeting of Stockholders, the Class I
Directors shall be elected to hold office for a term to expire at the first
Annual Meeting of Stockholders thereafter; the Class II Directors shall be
elected to hold office for a term to expire at the second Annual Meeting of
Stockholders thereafter; and the Class III Directors shall be elected to hold
office for a term to expire at the third Annual Meeting of Stockholders
thereafter; and in the case of each class, until their respective successors are
duly elected and qualified. At each annual election held after the 1996 Annual
Meeting of Stockholders, the Directors elected to succeed those whose terms
expire shall be identified as being the same class as the Directors they succeed
and shall be elected to hold office for a term to expire at the third Annual
Meeting of Stockholders after their election, and until their respective
successors are duly elected and qualified. If the number of Directors changes,
any increase or decrease in Directors shall be apportioned among the classes so
as to maintain all classes as nearly equal in number as possible, and any
additional Director elected to any class shall hold office for a term which
shall coincide with the terms of the other Directors in such class and until his
successor is duly elected and qualified.

Any vacancy in the Board of Directors, however occurring, including a
vacancy resulting from the enlargement of the Board of Directors, shall be
filled as provided in the Articles of Organization of the Corporation. The Board
of Directors may be enlarged as provided in the Articles of Organization of the
Corporation. A Director, whether elected by the stockholders or Directors, may
be removed from office in the manner provided by the Articles of Organization of
the Corporation.

- -------------

Article V, Sections 2 and 3 of the By-Laws will also be amended to delete
inconsistent provisions regarding removal of directors and filling vacancies in
the Board of Directors.

24
<PAGE> 29

EXHIBIT B

BLANK CHECK PREFERRED STOCK
- ---------------------------

Text of new Article 4 of the Articles of Organization.
------------------------------------------------------

The classes of stock of the corporation authorized by Article 3 hereof
shall have the preferences, voting powers, qualifications, and special or
relative rights or privileges as to each class thereof and any series now
established as set forth in this Article 4. Stock of any class or series
authorized pursuant hereto may be issued from time to time by authority of the
Board of Directors for such consideration as from time to time may be fixed by
vote of the Board of Directors.

PART I - COMMON STOCK
---------------------

The holders of the Common Stock shall be entitled to one vote per share
and, subject to the rights and preferences of the holders of the Preferred Stock
and any other class of stock ranking senior to or on a parity with the Common
Stock, shall be entitled to dividends when, as and if declared and paid to the
holders of Common Stock, and upon liquidation, dissolution or winding up of the
corporation, to share ratably in the assets available for distribution to the
holders of the Common Stock.

PART II - PREFERRED STOCK
-------------------------

Preferred Stock may be issued by the Board of Directors, in one or more
series and with such rights, powers, preferences and terms and at such times and
for such consideration as the Board of Directors shall determine, without
further stockholder action. With respect to each series of Preferred Stock,
prior to issuance, the Board of Directors by resolution shall designate that
series to distinguish it from other series and classes of stock of the
Corporation, shall specify the number of shares to be included in the series,
and shall fix the rights, powers, preferences and terms of the shares of the
series, including, but without limitation: (i) the dividend rate, which may be
fixed or variable, its preference as to any other class or series of capital
stock, and whether dividends will be cumulative or non-cumulative; (ii) whether
the shares are to be redeemable and, if so, at what times and prices (which
price or prices may, but need not, vary according to the time or circumstances
of such redemption) and on what other terms and conditions; (iii) the terms and
amount of any sinking fund provided for the purchase or redemption of the
shares; (iv) whether the shares shall be convertible or exchangeable and, if so,
the times, prices, rates, adjustments and other terms of such conversion or
exchange; (v) the voting rights, if any, applicable to the shares in addition to
those prescribed by law; (vi) the restrictions and conditions, if any, on the
issue or reissue of any additional shares of such series or of any other series
of Preferred Stock ranking on a parity with or prior to the shares of such
series; (vii) whether, and the extent to which, any of the rights, powers,
preferences and terms of any such series may be made dependent upon facts
ascertainable outside of the Articles of Organization or outside the resolution
or resolutions providing for the issuance of such series by the Board of
Directors, provided that the manner in which such facts shall operate is clearly
set forth in the resolution or resolutions providing for the issuance of such
series adopted by the Board of Directors; and (viii) the rights of the holders
of such shares upon voluntary or involuntary liquidation, dissolution or winding
up of the Corporation.

25
<PAGE> 30

EXHIBIT C

SUPERMAJORITY VOTING
- --------------------

Text of Provision to be added to Article 6 of Articles of Organization (to
- --------------------------------------------------------------------------
be inserted after Article 6(i).
- -------------------------------

(ii) Supermajority Voting.
---------------------

Except as otherwise provided in these Articles of Organization, the By-Laws
and any designation of terms of any class of stock, any vote required by
stockholders pursuant to Massachusetts law, other than the election of directors
(which shall not be affected by this provision), shall be effective if
recommended by a majority of the Continuing Directors and the vote of a majority
of each class of stock outstanding and entitled to vote thereon; and if not
recommended by a majority of the Continuing Directors, then by the vote of
66 2/3% of each class of stock outstanding and entitled to vote thereon, voting
as separate classes.

26
<PAGE> 31

EXHIBIT D

NOMINATIONS OF DIRECTORS
- ------------------------

Text of New Provision to be Added to Article III of the By-Laws.
----------------------------------------------------------------

Section 7: Nomination of Directors
- ------------------------------------

Nominations for the election of directors at an annual meeting of the
stockholders, or special meeting in lieu of the annual meeting, may be made by
the Board of Directors or a committee appointed by the Board of Directors or by
any stockholder entitled to vote in the election of directors at the meeting.
Stockholders entitled to vote in such election may nominate one or more persons
for election as directors only if written notice of such stockholder's intent to
make such nomination or nominations has been given either by personal delivery,
overnight (receipted) courier or by United States mail, postage prepaid, to the
Clerk of the Corporation not later than ninety days prior to the anniversary
date of the immediately preceding annual meeting or special meeting in lieu
thereof. Such notice shall set forth: (a) the name and address of the
stockholder who intends to make the nomination and of the persons or person to
be nominated; (b) a representation that the stockholder is a holder of record of
stock of the Corporation entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to nominate the person or persons specified
in the notice; (c) a description of all arrangements or understandings between
the stockholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to be
made by the stockholder; (d) such other information regarding each nominee
proposed by such stockholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission; and (e) the consent of each nominee to serve as a director of the
Corporation if so elected. The presiding officer of the meeting may refuse to
acknowledge the nomination of any person not made in compliance with the
foregoing procedure.

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EXHIBIT E

SPECIAL MEETINGS OF SHAREHOLDERS
- --------------------------------

Text of new Article II, Section 2 of By-Laws.
---------------------------------------------

Section 2. Special Meetings.
- --------------------------------

Special meetings of the stockholders may be called at any time by the
President, or by the Board of Directors. Special meetings of the stockholders
shall be called by the Clerk, or in the case of the death, absence, incapacity
or refusal of the Clerk, by any other officer, upon written application by one
or more stockholders who hold at least 50% of each class of stock outstanding
and entitled to vote at such meeting. Such call shall state the time, place and
purposes of the meeting.

<PAGE> 33

EXHIBIT F

FAIR PRICE PROVISION
- --------------------

Text of Provision to be added to Article 6 of the Articles of Organization
--------------------------------------------------------------------------
(to be inserted after Article 6(ii).
------------------------------------

(iii) Fair Price Provision
--------------------

1. In addition to the affirmative vote otherwise required by law or any
provision of these Articles of Organization, except as otherwise provided in
Section 2 of this Article 6(iii), any Business Combination shall require the
affirmative vote of the holders of 66 2/3% of the combined voting power of all
Voting Stock voting together as a single class.

Such affirmative vote shall be required notwithstanding any other
provisions of these Articles of Organization, or any provision of law or of any
agreement with any national securities exchange which might otherwise permit a
lesser vote or no vote, and such affirmative vote of the holders of the combined
voting power of the outstanding shares of any particular class or series of the
Voting Stock or other capital stock required by law or by these Articles of
Organization.

2. The provisions of Section 1 of this Article 6(iii) shall not be
applicable in respect of a Business Combination if, in the case of such Business
Combination that does not involve any consideration received by the stockholders
of the Corporation, solely in their respective capacities as stockholders of the
Corporation, the condition specified in paragraph (a) below is met, or, in the
case of any other Business Combination, the conditions specified in either of
paragraphs (a) or (b) below are met; in which event, such Business Combination
shall require only such affirmative vote as is required by law, any other
provision of these Articles of Organization, or any agreement with any national
securities exchange, as the case may be:

(a) The Business Combination shall have been approved by a majority of the
Continuing Directors, it being understood that this condition shall not be
capable of satisfaction unless there is at least one Continuing Director.

(b) All of the following conditions shall have been met:

(i) The form of the consideration received by holders of shares of a
particular class of outstanding Voting Stock shall be in cash or in the same
form as the Related Person has paid for shares of such class of Voting Stock
within the two-year period ending on and including the Determination Date. If,
within such two-year period, the Related Person has paid for shares of any class
of Voting Stock with varying forms of consideration, the form of consideration
received per share by holders of shares of such class of voting stock shall be
either cash or the form used to acquire the largest number of shares of such
class of Voting Stock acquired by the Related Person within such two-year
period.

(ii) The aggregate amount of consideration received per share by
holders of each class of Voting Stock in such Business Combination shall be at
least equal to the higher of the following (it being intended that the
requirements of this paragraph (b)(ii) shall be met with respect to every such
class of Voting Stock outstanding, whether or not the Related Person has
previously acquired any shares of that particular class of Voting Stock):

(a) (if applicable) the highest per share price (including any
brokerage commission, transfer taxes and soliciting dealers' fees)
paid by the Related Person for any shares of that class of Voting
Stock acquired by it within the two-year period immediately prior to
the Announcement Date or in the transaction in which it became a
Related Person, whichever is higher; or

(b) the Fair Market Value per share of such Voting Stock on the
Announcement Date; or

(c) in the case of any class of Preferred Stock, the highest
preferential amount per share to which the holders of shares of such
class of Voting Stock are entitled in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation;

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<PAGE> 34

(iii) After such Related Person has become a Related Person and
prior to the consummation of such Business Combination:

(a) except as approved by a majority of the Continuing Directors,
there shall have been no failure to declare and pay at the regular
date therefor any full quarterly dividends (whether or not cumulative)
on any outstanding Preferred Stock;

(b) there shall have been (I) no reduction in the annual rate of
dividends paid on the Common Stock (except as necessary to reflect any
subdivision of the Common Stock), except as approved by a majority of
the Continuing Directors, and (II) an increase in such annual rate of
dividends as necessary to reflect any reclassification (including any
reverse stock split, recapitalization, reorganization or any similar
transaction which has the effect of reducing the number of outstanding
shares of the Common Stock), unless the failure so to increase such
annual rate of dividends is approved by a majority of the Continuing
Directors;

(c) such Related Person shall not have become the beneficial owner
of any newly issued shares of Voting Stock directly or indirectly from
the Corporation except as part of the transaction which results in
such Related Person becoming a Related Person;

(d) after such Related Person has become a Related Person, such
Related Person shall not have received the benefit, directly or
indirectly (except proportionately, solely in such Related Person's
capacity as a stockholder of the Corporation), of any loans, advances,
guarantees, pledges or other financial assistance or any tax credits
or other tax advantages provided by the Corporation, whether in
anticipation of or in connection with such Business Combination or
otherwise; and

(e) a proxy or information statement describing the proposed
Business Combination and complying with the requirements of the
Exchange Act and the rules and regulations thereunder (or any
subsequent provisions replacing such Act, rules or regulations) shall
be mailed to all stockholders of the Corporation at least 30 days
prior to the consummation of such Business Combination (whether or not
such proxy or information statement is required to be mailed pursuant
to the Exchange Act or subsequent provisions). Such proxy or
information statement shall contain on the front thereof, prominently
displayed, any recommendation as to the advisability or inadvisability
of the Business Combination which the Continuing Directors, or any of
them, may have furnished in writing to the Board of Directors and/or
shall contain an opinion by an investment banking firm, selected by a
majority of the Continuing Directors, as to the fairness (or
unfairness) of the Business Combination to the stockholders of the
Corporation, other than the Related Person.

3. A majority of the total number of Continuing Directors shall have the
power and duty to determine, on the basis of information known to them, after
reasonable inquiry, all facts necessary to determine compliance with this
Article 6(iii) including, without limitation, (i) whether a person is a Related
Person, (ii) the number of shares of voting stock beneficially owned by any
person, (iii) whether the applicable conditions set forth in paragraph (b) of
subsection 2 have been met with respect to any Business Combination, and (iv)
whether the assets which are the subject of any Business Combination or the
consideration received for the issuance or transfer of securities by the
Corporation or any Subsidiary in any Business Combination have an aggregate Fair
Market Value in excess of 10% of the Corporation's total stockholders' equity as
reflected on the Corporation's most recent audited financial statements.

4. Nothing contained in this Article 6(iii) shall be construed to relieve
any Related Person from any fiduciary obligation imposed by law.

5. Notwithstanding anything contained in these Articles of Organization
to the contrary, the affirmative vote of the holders of at least 66 2/3% of the
combined voting power of all Voting Stock, voting together as a single class,
shall be required to amend or repeal this Article 6(iii) or Article 6(iv) below,
or to adopt any provision inconsistent herewith or therewith.

(iv) Definitions
-----------

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<PAGE> 35

The following definitions shall apply for the purpose of Article 6.

(a) "Affiliate" shall have the meaning given such term Rule 12b-2 under the
Exchange Act.

(b) "Announcement Date" shall mean the date of first public announcement of
the proposal of a Business Combination.

(d) "Business Combination" shall mean:

(i) any merger or consolidation of the Corporation or any
Subsidiary with (a) any Related Person, or (b) any other Person
(whether or not itself a Related Person) which is, or after such
merger or consolidation would be, an Affiliate of a Related Person; or

(ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to or
with any Related Person or any Affiliate of any Related Person of any
assets of the Corporation or any Subsidiary having an aggregate Fair
Market Value in excess of 10% of the Corporation's total stockholder's
equity as reflected on the Corporation's most recent audited financial
statements; or

(iii) the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of transactions) of any securities of
the Corporation or any Subsidiary to any Related Person or any
Affiliate of any Related Person in exchange for cash, securities or
other property (or a combination thereof) having an aggregate Fair
Market Value in excess of 10% of the Corporation's total stockholders'
equity as reflected on the Corporation's most recent audited financial
statements; or

(iv) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of any Related
Person or any Affiliate of any Related Person; or

(v) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
other transaction (whether or not with or into or otherwise involving
the Related Person) which has the effect, directly or indirectly, of
increasing the proportionate share of securities of the Corporation or
any Subsidiary which is directly or indirectly owned by any Related
Person or any Affiliate of any Related Person.

(e) "Continuing Director" shall mean any member of the Board of Directors
who is not an affiliate of any Related Person and who was a member of the Board
of Directors prior to the time that any such Related Person became a Related
Person, and any successor of a Continuing Director who is unaffiliated with any
Related Person and is recommended to succeed a Continuing Director by a majority
of the Continuing Directors then on the Board of Directors. Notwithstanding the
above, a majority of the then existing Continuing Directors can deem a new
director to be a Continuing Director, even though such person is Affiliated with
a Related Person.

(f) "Determination Date" shall mean the date upon which the Business
Combination is consummated.

(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, from time to time.

(h) "Fair Market Value" shall mean: (i) in the case of stock, the highest
closing sale price during the 30-day period immediately preceding the date in
question of a share of such stock on the principal United States securities
exchange or quotation system on which such stock is listed or quoted, or, if no
such price or quotations are available, the highest closing bid price of a share
of such stock during such period on the quotation system on which such stock is
then quoted, or, if no such quotations are available, the fair market value on
the date in question of a share of such stock as determined by the Board of
Directors in good faith; and (ii) in the case of property other than cash or
stock, the fair market value of such property on the date in question as
determined by the Board of Directors in good faith.

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<PAGE> 36

(i) "Person" shall mean any individual, firm, partnership, joint venture,
joint stock company, trust, business trust, corporation, limited liability
partnership, limited liability corporation, unincorporated association or other
entity of whatsoever nature.

(j) "Related Person" shall mean any Person (other than the Corporation or
any Subsidiary) which, together with such Person's Affiliates and Associates and
with any other Person (other than the Corporation or any Subsidiary) with which
such Person or they have entered into any agreement, arrangements or
understanding with respect to acquiring, holding or disposing of voting stock,
acquires beneficial ownership (as defined in Rule 13d-3 of the Exchange Act,
except that such term shall include any voting stock which such person has the
right to acquire, whether or not such right may be exercised within 60 days),
directly or indirectly of more than 5% of the voting power of the outstanding
voting stock after September 26, 1996.

(k) "Subsidiary" shall mean any corporation in which a majority of the
capital stock entitled to vote generally in the election of directors is owned,
directly or indirectly, by the Corporation.

(l) "Voting Stock" shall mean all the then outstanding shares of Common
Stock and any other class of stock, voting together as a single class, entitled
to vote generally in the election of directors.

(v) Miscellaneous Matters
---------------------

[If approved, Proposal No. 2 will be inserted here, to be followed by
the existing provisions of Article 6.]

32
<PAGE> 37

AMERICAN SCIENCE AND ENGINEERING, INC.

SPECIAL MEETING IN LIEU OF ANNUAL MEETING OF STOCKHOLDERS

September 26, 1996

The undersigned hereby appoints Ralph S. Sheridan, Jeffrey A. Bernfeld and Paige
Ryan, or any of them, with full power of substitution, attorneys and proxies to
represent the undersigned at the Special Meeting in Lieu of Annual Meeting of
Stockholders ("Meeting") of American Science and Engineering, Inc. ("Company")
to be held Thursday, September 26, 1996 at 829 Middlesex Turnpike, Billerica,
Massachusetts at 9:00 a.m. and at any adjournments thereof, to vote in the name
and place of the undersigned, with all powers which the undersigned would
possess if personally present, all of the stock of the Company standing in the
name of the undersigned on the books of the Company, on all matters set forth in
the Notice of the Meeting and upon such other and further business as may
properly come before the Meeting.

WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS INSTRUCTED BY THE
UNDERSIGNED. IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF ALL NOMINEES FOR DIRECTOR LISTED BELOW, FOR EACH OF THE PROPOSALS
DESCRIBED IN THE NOTICE OF THE MEETING AND ACCOMPANYING PROXY STATEMENT, AND IN
THE DISCRETION OF THE NAMED PROXIES ON ANY OTHER MATTERS THAT MAY PROPERLY COME
BEFORE THE MEETING AND ANY ADJOURNMENTS OF THE MEETING.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.

TO BE COMPLETED AND SIGNED ON THE REVERSE SIDE.

<PAGE> 38

[REVERSE SIDE]

Your shares will be voted FOR the following proposals unless otherwise
indicated.

1. ELECTION OF DIRECTORS To fix the number of directors at six and to elect
Herman Feshbach , Al Gladen, Hamilton W. Helmer, Donald J. McCarren, William E.
Odom and Ralph S. Sheridan

FOR all nominees ___ WITHHOLD from all nominees____ FOR all nominees except for
the following ____________(INSTRUCTIONS: to withhold authority to vote for any
individual nominee(s), write that nominee's name(s) in the space provided.)

2. To amend the Company's Restated Articles of Organization, as amended (the
"Articles") to limit the liability of directors to the extent permitted by
Massachusetts law. FOR___ AGAINST__ ABSTAIN___

3. To increase the number of authorized shares of Common Stock, $.66 2/3 par
value, from 8,000,000 to 20,000,000 shares. FOR___ AGAINST___ ABSTAIN___

4. To amend the Articles and the Company's By-Laws ("By-Laws") to provide for
the classification of the Company's Board of Directors into three classes and to
make related changes. FOR___ AGAINST____ ABSTAIN___

5. To amend the Articles to increase the number of authorized shares of the
Company's no par Preferred Stock from 100,000 to 1,000,000 shares and to amend
the terms of such Preferred Stock as provided in the proxy statement. FOR___
AGAINST___ ABSTAIN___

6. To amend the Articles to require that in certain circumstances actions by
vote of the stockholders must be approved by a 66 2/3% affirmative vote of each
class of stock outstanding and entitled to vote on the matter. FOR___ AGAINST___
ABSTAIN____

7. To amend the By-Laws to require 90 days notice of any proposal by a
stockholder to nominate candidates for director at the Annual Meeting. FOR___
AGAINST___ ABSTAIN___

8. To amend the By-Laws to require that special meetings of the stockholders
may only be called by the President, a majority of the directors or by
stockholders who hold at least 50% of the Company's voting stock. FOR___
AGAINST___ ABSTAIN___

9. To amend the Articles to add a "fair price"provision as described in the
proxy statement. FOR___ AGAINST___ ABSTAIN___

The undersigned hereby acknowledges receipt of the Notice of Special Meeting in
Lieu of Annual Meeting of Stockholders, the Proxy Statement for the Meeting and
the 1996 Annual Report of the Company.

<PAGE> 39

Signature ________________________ Date____________

PLEASE SIGN YOUR NAME EXACTLY AS IT APPEARS ON THIS CARD. For joint accounts,
both owners should sign. Fiduciaries and corporate officers should indicate
their full titles.

PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE
ENCLOSED ENVELOPE.