MARGATE INDUSTRIES, INC.
129 NORTH MAIN STREET
YALE, MICHIGAN 48097
(810) 387-4300
________________________________________________
PROXY STATEMENT
________________________________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held June 24, 1998
TO THE SHAREHOLDERS OF MARGATE INDUSTRIES, INC.
NOTICE HEREBY IS GIVEN that the Annual Meeting of Shareholders of Margate
Industries, Inc., a Delaware corporation (the "Company") will be held at
the Company's corporate offices at 129 North Main Street, Yale, Michigan,
on June 24, 1998, at 9:00 a.m., Eastern Daylight Time, and at any and all
adjournments thereof, for the purpose of considering and acting upon the
following matters:
1. To elect two (2) Directors of the Company;
2. To transact such other business as properly may come before the
meeting or any adjournment thereof.
Only holders of the voting $.005 par value common stock of the Company of
record at the close of business on May 22, 1998 will be entitled to notice
of and to vote at the Meeting or at any adjournment or adjournments
thereof.
All shareholders, whether or not they expect to attend the Annual Meeting
of Shareholders in person, are urged to sign and date the enclosed Proxy
and return it promptly in the enclosed postage-paid envelope which requires
no additional postage if mailed in the United States. The giving of a
proxy will not affect your right to vote in person if you attend the
Meeting.
A copy of the Company's Annual Report to Shareholders for the year ended
December 31, 1997 accompanies this Notice of Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS.
WILLIAM H. HOPTON
PRESIDENT
Yale, Michigan
May 22, 1998
<PAGE>
MARGATE INDUSTRIES, INC.
129 NORTH MAIN STREET
YALE, MICHIGAN 48097
(810) 387-4300
________________
PROXY STATEMENT
________________
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 24, 1998
GENERAL INFORMATION
-------------------
The enclosed Proxy is solicited by and on behalf of the Board of
Directors of Margate Industries, Inc., a Delaware corporation (the
"Company"), for use at the Company's Annual Meeting of Shareholders to be
held at the Company's corporate offices, 129 North Main Street, Yale,
Michigan, on June 24, 1998, at 9:00 a.m., Eastern Daylight Time, and at any
adjournment thereof. It is anticipated that this Proxy Statement and the
accompanying Proxy will be mailed to the Company's shareholders on or about
May 26, 1998.
Any person signing and returning the enclosed Proxy may revoke it at
any time before it is voted by giving written notice of such revocation to
the Company, or by voting in person at the Meeting. The expense of
soliciting proxies, including the cost of preparing, assembling and mailing
this proxy material to shareholders, will be borne by the Company. It is
anticipated that solicitations of proxies for the Meeting will be made only
by use of the mails; however, the Company may use the services of its
Directors, Officers and employees to solicit proxies personally or by
telephone, without additional salary or compensation to them. Brokerage
houses, custodians, nominees and fiduciaries will be requested to forward
the proxy soliciting materials to the beneficial owners of the Company's
shares held of record by such persons, and the Company will reimburse such
persons for their reasonable out-of-pocket expenses incurred by them in
that connection.
All shares represented by valid proxies will be voted in accordance
therewith at the Meeting.
The Company's Annual Report to Shareholders for the Company's fiscal
year ended December 31, 1997, is being simultaneously mailed to the
Company's shareholders, but does not constitute part of these proxy
soliciting materials.
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SHARES OUTSTANDING AND VOTING RIGHTS
------------------------------------
All voting rights are vested exclusively in the holders of the
Company's $.005 par value common stock, with each share entitled to one
vote. Only shareholders of record at the close of business on May 22,
1998, are entitled to notice of and to vote at the Meeting or any
adjournment thereof. On May 22, 1998, the Company had 4,573,637 shares of
its $.005 par value common stock outstanding, each share of which is
entitled to one vote on all matters to be voted upon at the Meeting,
including the election of Directors. Cumulative voting in the election of
Directors is not permitted.
A majority of the Company's outstanding common stock represented in
person or by proxy shall constitute a quorum at the Meeting.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------
The following table sets forth the number and percentage of shares of
the Company's $.005 par value common stock owned beneficially, as of May
22, 1998, by any person who is known to the Company to be the beneficial
owner of 5% or more of such common stock and, in addition, by each Director
of the Company and its subsidiaries and by all Directors and Officers of
the Company and its subsidiaries as a group. Information as to beneficial
ownership is based upon statements furnished to the Company by such
persons.
Amount and
Nature of
Name and Address of Beneficial Percent of
Beneficial Owner Ownership Class (1)
- ------------------- ---------- ----------
Paul L. Cosper 284,120 (2) 6.2%
P.O. Box 96050
Wixom, MI 48096
Charles H. Raches, Jr. 252,840 5.5%
6600 Tepee Ridge Road
Bozeman, MT 59715
Frederick G. and Patricia W. Schriever 795,147 17.3%
64 Clairview
Grosse Pointe Shores,
MI 48236
Frederick G. Berlet 225,416 (3) 4.9%
S.W.O. Management Consultants, Ltd.
35 Parkwood Drive
Tillsonburg, Ontario
Canada N4G 2B7
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<PAGE>
David A. Widlak 100,000 2.2%
P.O. Box 482
Washington, MI 48094
Delbert W. Mullens 15,000 (4) 0.3%
2888 Bloomfield Crossings
Bloomfield Hills, MI 48013
William H. Hopton 136,059 (5) 3.0%
604 Maple Lane
Columbus, MI 48063
All Officers and Directors 1,271,622 27.7%
of the Company & Subsidiaries
as a Group (5 Persons)
_____________________
(1) Each person has sole voting and investment power with respect to the
shares shown except as noted.
(2) The shares beneficially owned by Mr. Cosper are held in the name of
Paul L. Cosper, Trustee under an Agreement of Trust executed by Paul
L. Cosper as Grantor. The beneficiaries of this trust are Mr.
Cosper's wife and children.
(3) 225,416 shares are held in a trust for Mr. Berlet's children. Mr.
Berlet has no voting or dispositive power over the trust and hence,
discloses no beneficial interest in those shares held in trust.
(4) Does not include 200,000 options to purchase common stock.
(5) Includes 106,059 shares held by William Hopton, individually, 30,000
shares held by his three children.
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<PAGE>
ELECTION OF DIRECTORS
---------------------
The Bylaws presently provide for a Board of Directors of not less than
two (2) members. The number of Directors of the Company has been fixed not
to exceed six (6) by the Company's Board of Directors. The Board of
Directors are divided into three classes of two Directors which hold office
for a period of three years. Shareholders elect one class each year for a
three year term. Delbert W. Mullens and David A. Widlak, the Class B
Directors, have been nominated as directors for a three (3) year term,
commencing in June, 1998.
The Company's Board of Directors recommends election of the two (2)
Class B nominees listed below and for the term indicated, to hold office
until the Annual Meeting of Shareholders in the year indicated and until
their successors are elected and qualified or until their earlier death,
resignation or removal. The person named as "proxies" in the enclosed form
of Proxy, who have been designated by Management, intend to vote for the
two (2) nominees for election as a Director unless otherwise instructed in
such proxy. If at the time of the Meeting, if the nominees named below
should be unable to serve, which event is not expected to occur, the
discretionary authority provided in the Proxy will be exercised to vote for
such substitute nominees, if any, as shall be designated by the Board of
Directors.
The following table sets forth the name and age of the nominees for
Class B Director, indicating all positions and offices with the Company
presently held by them, the period during which they have served as such,
and the class and term for which they have been nominated:
CLASS B NOMINEES - TERM EXPIRING AT THE
ANNUAL SHAREHOLDERS MEETING IN 2001
Other Positions Period Served
and Offices Held as Director
Name Age with the Company of the Company
---- --- ---------------- --------------
Delbert W. Mullens 53 Vice Chairman of the Board July 1990 to present
and Director of the Company,
MCC, and Yale Industries
David A. Widlak 49 Vice President, Secretary November 1987 to present
and Director of the
Company, MCC, and
Yale Industries
The Company's Board of Directors held four (4) meetings during the
fiscal year ended December 31, 1997, and each Director attended all of the
meetings held.
There is no family relationship between any Director or nominee for
Director of the Company and any other Director, nominee or Executive
Officer of the Company.
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<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
-----------------------------------------------
Set forth below are the names of all Directors, including the two
Class B Nominees for Director, and Executive Officers of the Company, all
positions and offices held by each such person, the period during which
they have served as such, and the principal occupations and employment of
such persons during the last five years:
FREDERICK G. SCHRIEVER has been Chairman of the Company's Board of
Directors since November of 1987. He has been President of Casting Sales,
Inc. from 1972 to present. Casting Sales, Inc. acts as a manufacturer's
representative of foundries. Since 1955 to the present, Mr. Schriever has
also been President of Amber Tool and Engineering which holds real estate
and owns an interest in several companies and President of Trio Machine
Products Corp., a production machine shop. Since 1960 to the present, he
has also been President of J.P. Bell Co., a company specializing in machine
levelers, Vice President of Casting Industries, Inc. and Chairman of Arrow
Exit Systems, Inc. Mr. Schriever received a Bachelor of Science Degree in
Chemistry in 1949 from the University of Michigan. Mr. Schriever devotes
as much time as necessary to the business of the Company and its
subsidiaries.
DELBERT W. MULLENS has been a Director since July of 1990 and
President of NHF since September 1, 1992. He has been the President,
Director, and principal shareholder of Flint Coatings of Flint, Michigan,
a company engaged in painting automotive parts for major car manufacturers
including General Motors Corporation. Mr. Mullens is also Chairman of
Product-SDL Chemical, Inc. Mr. Mullens received a Bachelor of Science
Degree in Business Administration from Tennessee State University. Mr.
Mullens devotes as much time as is necessary to the business of the Company
and its subsidiaries.
WILLIAM H. HOPTON has been President of the Company since April of
1988, and a Director of the Company since January of 1986. Mr. Hopton also
served as the Company's vice President from January of 1986 to April of
1988. Since 1984, Mr. Hopton has been President of NHF. Effective
September 1, 1992, Mr. Hopton retired as President of NHF but will provide
consulting services to NHF as needed. Since that date, he has been
devoting his business time to the management of the Company. Mr. Hopton
received a B.A. Degree in Business Administration from the University of
Detroit in 1964.
FREDERICK G. BERLET has been a Director of the Company since November
of 1987 and its Treasurer since April of 1988. He also serves as Director
of numerous Canadian and U.S. corporations and is President of S.W.O.
Managements Consultants Limited. He graduated with a Masters Degree in
Business Administration in 1953 from the University of Western Ontario.
Mr. Berlet devotes as much time as is necessary to the business of the
Company and its subsidiaries.
DAVID A. WIDLAK has been Secretary and a Director of the Company since
November of 1987. In February 1994 he was named Vice President of Mergers
and Acquisitions. He received a Bachelors Degree from Wayne State
University in 1969 and a juris doctorate Degree in Law from the University
of Michigan in 1972. Mr. Widlak devotes as much time as is necessary to
the business of the Company and its subsidiaries.
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<PAGE>
The Officers of the Company and its subsidiaries are elected by the
respective Board of Directors at the first meeting after each annual
meeting of shareholders and hold office until the next annual meeting of
directors or their earlier resignation or removal.
The date of the next annual meeting of the Company will be determined
by the Company's Board of Directors in accordance with Delaware law.
No Director holds a directorship in any company with a class of
securities registered pursuant to Section 12 of the Securities Exchange Act
of 1934 or subject to the requirements of Section 15(d) of such Act or any
company registered as an investment company under the Investment Company
Act of 1940.
COMPLIANCE WITH SECURITIES EXCHANGE ACT REPORTING REQUIREMENTS
--------------------------------------------------------------
To the Company's knowledge, during the fiscal year ended December 31,
1997, the Company's Officers and Directors complied with all applicable
Section 16(a) filing requirements. This statement is based solely on a
review of the copies of such reports furnished to the Company by its
Officers and Directors and their written representations that such reports
accurately reflect all reportable transactions.
THE BOARD OF DIRECTORS AND ITS STANDING COMMITTEES
--------------------------------------------------
The Company's Board of Directors has the responsibility to review the
overall operations of the Company. The Board members are kept informed of
the Company's results of operations and proposed plans and business
objectives through periodic reports sent to them by the Company's
management or presented at Board and Committee meetings. The Board met
four times last year, once each quarter. All members of the Board of
Directors were present at all of these meetings.
DIRECTORS' COMPENSATION
Directors of the Company receive $6,000 a quarter and reimbursement
for expenses. The Chairman of the Board of Directors receives $7,000 per
quarter and reimbursement for expenses. Special Board Meetings are paid at
$3,000 per meeting. If a Director fails to attend any meetings during a
quarter, his Director's fee is reduced by $2,000 in that quarter.
BOARD COMMITTEES
The Board of Directors has three principal standing committees.
The NOMINATING COMMITTEE recommends to the Board of Directors
candidates to fill vacancies on the Board of Directors and consists of
Frederick G. Schriever, David Widlak and William H. Hopton. The Nominating
Committee has not established any formal policy or procedure for
considering nominees recommended by shareholders.
The AUDIT COMMITTEE recommends to the Board of Directors the
appointment of the independent certified public accountants for the
following year. The Committee reviews with
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<PAGE>
the accountants the scope of the Company's annual audit, the annual
financial statements of the Company, and the auditors' comments relative to
the adequacy of the Company's system of internal controls and accounting
systems. The Committee, which reports directly to the Board of Directors
is composed of Frederick Berlet, David Widlak and Fredrick Schriever. The
Committee met one (1) time during the year. Mr. Schriever and Mr. Berlet
are non-employees of the Company.
The COMPENSATION COMMITTEE, whose report follows, is composed of
Frederick Berlet and David Widlak, and reports directly to the Board of
Directors. The Committee met one (1) time during 1997 with the Board of
Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
-----------------------------------------------------------
Frederick Berlet, a member of the Compensation Committee, is a non-
employee of the Company.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE MANAGEMENT COMPENSATION
- -------------------------------------------------------------------------
The Compensation Committee of the Board of Directors (the "Committee")
evaluates and approves the overall policies which govern the annual base
salaries of the Company's President and Chief Executive Officer ("CEO")
and other Executive Officers.
The Committee reviews and evaluates the Company's corporate
performance and executive management compensation once each year. In
making its evaluations, the Committee considers a large number of factors
including those set forth under "Compensation Policies" herein, together
with other matters such as the inflation rate, and the Company's past
performance, generally over consecutive three year time frames.
COMPENSATION POLICIES
The Company's compensation policies, particularly as they apply to its
Executive Officers, including Mr. Hopton, the President and CEO, are
designed to achieve the following major objectives:
1. To set base annual salaries (base income) for key Executive Officers
which are deemed reasonably competitive in the context of American
industry generally, and the automotive industry specifically.
Business size, level of responsibility, complexity of operations, and
long term performance and prospects are among the factors considered.
2. The Committee considers a variety of intangible and other factors such
as each person's likely future contribution to the Company's
successful growth, the current state and prospects of the industry and
the Company's long-term goals and strategies which might from time to
time require temporary investment in personnel resources in the
absence of immediate positive results. Further, the Committee
considers the compensation and benefits previously paid to its
Executive Officers.
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<PAGE>
EXECUTIVE COMPENSATION
----------------------
The following table sets forth the total remuneration paid during the
Company's last fiscal year ended December 31, 1997 and the prior two years
to the Chief Executive Officer, the only executive office whose total cash
and non cash compensation exceeded $100,000 prior to 1995. In 1995 David
Widlak's, Vice President of Mergers and Acquisitions, compensation exceeded
$100,000.
<TABLE>
<CAPTION>
==========================================================================================================
SUMMARY COMPENSATION TABLE
- ----------------------------------------------------------------------------------------------------------
Long Term Compensation
------------------------------
Annual Compensation Awards Payouts
- -----------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other All
Name Annual Restricted LTIP Other
and Compen- Stock Options/ Pay- Compen-
Principal Salary Bonus sation Award(s) SARs outs sation
Position Year (1) ($) ($) ($)(2) ($) (#)(3) ($) ($)(4)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
William H. Hopton 1997 $ 87,500 $ -0- $ 24,000 $ 10,844
President and CEO 1996 $ 85,000 $ -0- $ 24,000 $ 8,257
1995 $ 82,500 $ 12,500 $ 27,000 $ 7,687
David Widlak 1997 $ 62,500 $ -0- $ 24,000 $ 9,084
Vice President of 1996 $ 60,000 $ -0- $ 24,000 $ 6,995
Mergers & 1995 $ 55,000 $ 8,300 $ 27,000 $ 10,490
Acquisitions
===========================================================================================================
</TABLE>
(1) Periods presented are for the year ended December 31.
(2) Represents Directors fees.
(3) Number of shares of Common Stock subject to options granted during the
year indicated.
(4) Represents employer contributions for insurance, disability insurance,
pension and car allowance.
STOCK OPTIONS
OPTIONS GRANTED
The following table sets forth the options that have been granted to
the Chief Executive Officer and President listed in the Executive
Compensation Table during the Company's last fiscal year ended December 31,
1997.
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<PAGE>
Option/SAR Grants in Last Fiscal Year (1997)
--------------------------------------------
Individual Grants
- ---------------------------------------------------------------------------
(a) (b) (c) (d) (e)
% of Total
Options/ Options/SARs Exercise
SARs Granted to or Base
Granted Employees Price Expiration
Name (#) in Fiscal year ($/Share) Date
---- ------- -------------- --------- ----------
William H. Hopton N/A N/A N/A N/A
President and CEO
AGGREGATE OPTIONS EXERCISED IN 1997 AND OPTION VALUES AT DECEMBER 31, 1997
The following table sets forth certain information regarding options
to purchase shares of Common Stock exercised during the Company's 1997
fiscal year and the number and value of exercisable and unexercisable
options to purchase shares of Common Stock held as of the end of the
Company's 1997 fiscal year by the Executive Officers of the Company named
in the Summary Compensation Table:
Aggregated Options Exercised in 1997
and Option Values at December 31, 1997
- --------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
Shares 12/31/97 12/31/97
Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized(1) Unexercisable Unexercisable
---- ----------- ----------- ------------- -------------
William H. Hopton None $0 -0- 0
President and CEO
- --------------------------------------------------------------------------
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<PAGE>
TRANSACTIONS WITH MANAGEMENT AND OTHERS
---------------------------------------
On March 24, 1998, the Company entered into a Stock Purchase Agreement
(the "Agreement") wherein the Company sold its 45% ownership interest in
the New Haven Foundry to Wesley Industries, Inc. Terms of the Agreement
included a purchase price of $2,200,000 paid $1,500,000 at Closing and the
$700,000 balance due in the form of a promissory note payable in quarterly
installments of $35,000. The promissory note is secured by the shares of
the New Haven Foundry. In addition, the Company entered into a new
cleaning contract with New Haven Foundry which includes a per piece price
and a service fee of $2,800,000 paid in quarterly installments of $140,000
over five (5) years.
Mr. Delbert Mullens, a Director of the Company, is also a director,
officer and major stockholder of Wesley Industries, Inc. and abstained from
voting on this transaction. In addition, certain options held by Mr.
Mullens were cancelled as part of the transaction.
OTHER BUSINESS
--------------
As of the date of this Proxy Statement, management of the Company was
not aware of any other matter to be presented at the Meeting other than as
set forth herein. However, if any other matters are properly brought
before the Meeting, the shares represented by valid proxies will be voted
with respect to such matters in accordance with the judgement of the
persons voting them. A majority vote of the shares outstanding is
necessary to approve any such matters.
ANNUAL REPORT
-------------
The Company's Annual Report for the year ended December 31, 1997,
accompanies this Proxy Statement. The Annual Report is not incorporated
into this Proxy Statement and is not to be considered part of the
solicitation material.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
FOR THE ANNUAL MEETING TO BE HELD IN JUNE, 1999
-----------------------------------------------
Any proposal by a shareholder intended to be presented at the
Company's Annual Meeting of Shareholders which is expected to be held in
June, 1999, must be received at the offices of the Company, 129 North Main
Street, Yale, Michigan 48097, no later than February 28, 1999, in order to
be included in the Company's proxy statement and proxy relating to that
meeting.
WILLIAM H. HOPTON, PRESIDENT
Yale, Michigan
May 22, 1998
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<PAGE>
PROXY PROXY
- ----- -----
MARGATE INDUSTRIES, INC.
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF THE SHAREHOLDERS TO BE HELD JUNE 24, 1998
The undersigned hereby constitutes and appoints Fredrick G. Schriever and
Mr. William H. Hopton, and each of them, the true and lawful attorneys and
proxies of the undersigned, with full power of substitution and
appointment, for and in the name, place and stead of the undersigned, to
act for and vote all of the undersigned's shares of the $.005 par value
common stock of Margate Industries, Inc., a Delaware corporation at the
Annual Meeting of Shareholders to be held at 129 North Main Street, Yale,
Michigan, at 9:00 a.m. Eastern Daylight Time, on June 24, 1998, and any and
all adjournments thereof, for the following purposes:
1. The election of two (2) Directors of the Company:
[ ] FOR the nominee listed below (except as marked to the
contrary):
[ ] WITHHOLD AUTHORITY to vote for the nominee listed below:
Class B Nominees
Three Year Term
---------------
Delbert W. Mullens
David A. Widlak
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR THE INDIVIDUAL
NOMINEE, CROSS OUT THE NOMINEE'S NAME ABOVE.)
2. To transact such other business as properly may come before the
meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ABOVE.
The undersigned hereby revokes any proxies as to said shares and heretofore
given by the undersigned, and ratifies and confirms all that said attorneys
and proxies may lawfully do by virtue hereof.
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<PAGE>
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN ACCORDANCE
WITH THE SHAREHOLDER'S SPECIFICATION ABOVE. THIS PROXY CONFERS
DISCRETIONARY AUTHORITY IN RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT
THE TIME OF THE MAILING OF THE NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
TO THE UNDERSIGNED.
The undersigned hereby acknowledges receipt
of the Notice of Annual Meeting of
Shareholders, Proxy Statement and Annual
Report to Shareholders furnished therewith.
Dated: ______________________________, 1998
___________________________________________
___________________________________________
Signature(s) of Shareholder(s)
Signature(s) should agree with the name(s)
hereon. Executors, administrators,
trustees, guardians and attorneys should
indicate when signing. Attorneys should
submit powers of attorney.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF MARGATE
INDUSTRIES, INC. PLEASE SIGN AND RETURN THIS PROXY TO MARGATE INDUSTRIES,
INC., 129 NORTH MAIN STREET, YALE, MICHIGAN 70801. THE GIVING OF A PROXY
WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
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