SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section(a) of the Securities Exchange Act of 1934
(Amendment No. ____)
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(3)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Edison Control Corporation
(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):
[X] No fee required.
[ ] 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:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
EDISON CONTROL CORPORATION
777 MARITIME DRIVE
P.O. BOX 308
PORT WASHINGTON, WI 53074-0308
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
June 8, 1999
TO THE SHAREHOLDERS OF EDISON CONTROL CORPORATION
You are cordially invited to attend the 1999 Annual Meeting of Shareholders of
Edison Control Corporation (the "Company") which will be held on Tuesday, June
8, 1999 at 9:00 A.M. Central Time, at the American Club on Highland Drive in
Kohler, WI 53044.
The meeting and any adjournment thereof will consider and take action upon the
following matters:
(1) To elect seven directors to serve until the next annual meeting of
shareholders;
(2) To approve the Edison Control Corporation 1999 Equity Incentive
Plan; and
(3) To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on April 16, 1999 as the
record date for the determination of shareholders entitled to notice of and to
vote at the meeting.
YOU ARE EARNESTLY REQUESTED, WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE
MEETING, TO COMPLETE, DATE, SIGN AND RETURN PROMPTLY THE ACCOMPANYING PROXY, TO
WHICH NO POSTAGE NEED BE AFFIXED. IF YOU ATTEND THE MEETING IN PERSON, YOU MAY
REVOKE THE PROXY AND VOTE YOUR OWN SHARES.
By order of the Board of Directors.
/s/Jay R. Hanamann
Jay R. Hanamann
Secretary
Port Washington, WI
April 30, 1999
<PAGE>
EDISON CONTROL CORPORATION
PROXY STATEMENT
1999 ANNUAL MEETING OF SHAREHOLDERS
June 8, 1999
This Proxy Statement is first being mailed to shareholders on or about April 30,
1999 in connection with the solicitation of proxies for use at the 1999 Annual
Meeting of Shareholders (the "Annual Meeting") of Edison Control Corporation
(the "Company"), to be held on June 8, 1999 at 9:00 A. M., Central Time, at the
American Club on Highland Drive in Kohler, WI 53044 or at any adjournments or
postponements thereof.
The enclosed proxy is solicited by the Board of Directors of the Company. Each
proxy properly executed and returned by a shareholder and not revoked will be
voted in accordance with the shareholder's instructions thereon. Any proxy may
be revoked at any time before it is voted at the meeting by providing the
Secretary of the Company with notice to such effect or a duly executed proxy
bearing a later date. If no instructions are indicated, a proxy will be voted
"For" the election of all nominees for directors, "For" approval of the Edison
Control Corporation 1999 Equity Incentive Plan and otherwise in accordance with
the best judgment of the proxy named in the proxy card. The persons named as
proxies intend to vote in accordance with their discretion on any other matters
which may properly come before the Annual Meeting. Execution of a proxy given in
response to this solicitation will not affect a shareholder's right to attend
the Annual Meeting and vote. Shareholders who are present at the Annual Meeting
may revoke their proxies and vote in person if they so desire.
Only holders of record of the Company's Common Stock, $.01 par value, at the
close of business April 16, 1999 are entitled to notice of and to vote at the
Annual Meeting. On that date, there were issued and outstanding 2,346,933 shares
of Common Stock of the Company. Each outstanding share is entitled to one vote
at the Annual Meeting.
2
<PAGE>
SHARE OWNERSHIP OF DIRECTORS, OFFICERS AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of March 31, 1999, the number of
shares of Common Stock beneficially owned by (i) each director of the
Company (including nominees), (ii) each of the executive officers named
in the Summary Compensation Table set forth below, (iii) all directors
and executive officers of the Company as a group, and (iv) each person
known to the Company to be the beneficial owner of more than 5% of the
Common Stock.
Name and Address of Number of Shares Percent
Beneficial Owner Owned of Class
--------------- ----- --------
Robert L. Cooney 42,500 (1) 1.8%
John J. Delucca 33,000 1.4%
Norman Eig - -
William B. Finneran 1,506,038 (2)(7) 52.9%
World Financial Center-34th Floor
New York, NY 10281
Jay R. Hanamann 81,944 (3) 3.4%
Alan J. Kastelic 163,889 (4) 6.7%
Mary E. McCormack 200,000 (5) 7.9%
Jay J. Miller 18,000 .8%
William C. Scott 25,000 (1) 1.1%
All directors and executive
officers as a group (9 in number) 2,070,371 (6) 63.8%
Cramer Rosenthal McGlynn, Inc. 215,000 (7) 9.2%
520 Madison Avenue
New York, NY 10022
EDCO Partners LLLP 195,053 (7) 8.3%
4605 Denice Drive
Englewood, CO 80111
- --------------
(1) Includes currently exercisable stock options to purchase 25,000 shares of
Common Stock.
(2) Includes a warrant to purchase 500,000 shares of Common Stock and 4,760
shares owned by two Uniform Gifts to Minors Act accounts, each for the
benefit of one of Mr. Finneran's children. Mr. Finneran disclaims
beneficial ownership of the 4,760 shares for purposes of Section 16 of
the Securities Exchange Act of 1934, as amended, or otherwise.
(3) Includes a currently exercisable stock option to purchase 48,611 shares
of Common Stock.
(4) Includes a currently exercisable stock option to purchase 97,222 shares
of Common Stock.
(5) Includes a currently exercisable stock option to purchase 200,000 shares
of Common Stock.
(6) Includes currently exercisable stock options and warrants, which in
aggregate are exercisable for 895,833 shares of Common Stock.
(7) Based on information set forth in the indicated party's Schedule 13D or
13G as filed with the Securities and Exchange Commission and the Company.
3
<PAGE>
ELECTION OF DIRECTORS
General
- -------
Assuming the presence of a quorum (a majority of the total issued and
outstanding shares of Common Stock of the Company), the favorable vote of the
holders of a plurality of the shares of the Company's common stock present and
voting at the Annual Meeting for the election of each nominee is required for
his or her election. For this purpose, "plurality" means the individuals
receiving the largest number of votes are elected as directors, up to the
maximum number of directors to be chosen at the Annual Meeting. Therefore, any
shares of Common Stock which are not voted on this matter at the Annual Meeting,
whether by abstention, broker non-vote or otherwise, will have no effect on the
election of directors at the Annual Meeting.
The Board of Directors has fixed the number of directors to be elected at the
Annual Meeting at seven. The shares represented by proxies submitted will be
voted for the election as directors of the persons named below unless authority
to do so is withheld. The directors elected will hold office until the Company's
next annual meeting of shareholders or until their respective successors are
duly elected. If any nominee is unable to serve as a director prior to the
Annual Meeting, then all submitted proxies will be voted for a substitute
nominee selected by the Board and the others named below, unless authority to
vote for such replaced director or all directors was withheld.
Director
Name Company Office(s) Since Age
- ---- ---------------- ----- ---
William B. Finneran Chairman of the Board 1991 58
and Director
Robert L. Cooney Director (2) 1997 65
John J. Delucca Director (1) 1991 55
Alan J. Kastelic Director 1997 55
President and Chief Executive
Officer of Edison Control
Corporation
Mary E. McCormack Director(1) 1995 45
William C. Scott Director(2) 1997 64
Norman Eig Director Nominee - 58
- -----------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
William B. Finneran is a Managing Director of CIBC Oppenheimer Corp., an
investment-banking firm, and has been employed with them since 1972. Mr.
Finneran is a Director of National Planning Association, a non-profit advisory
board and Covenant House, a non-profit charitable institution. Mr. Finneran also
serves on the Board of Operation Smile and Villanova University.
Robert L. Cooney is a Partner of Cooney, Schroeder & Co., a consulting firm
which he co-founded in February 1997. Mr. Cooney was a Managing Director-Equity
Capital Markets at Credit Suisse First Boston from 1977 to January 1997. Mr.
Cooney also serves as a director of Hoenig Group Inc., a Nasdaq-
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<PAGE>
listed global securities brokerage firm located in Rye Brook, New York and
Equity One, Inc., a NYSE-listed real estate investment trust located in Miami,
Florida.
John J. Delucca is Executive Vice President, Finance and Administration, and CFO
of Coty, Inc., a cosmetics and fragrance company. Previously, Mr. Delucca served
as Senior Vice President and Treasurer of RJR Nabisco from September 1993 to
December 1998, Chief Financial Officer of the Hascoe Association, a private
investment company from January 1991 to September 1993, President and Chief
Financial Officer for The Lexington Group from October 1990 to January 1991,
Senior Vice President of Finance and Managing Director of the Trump Group from
May 1988 to October 1990, and Senior Vice President of Finance for International
Controls Corporation from April 1986 to May 1988. In addition, Mr. Delucca is a
director of Enzo Biochem, Inc., a genetic research/testing company and Elliot
Company, a manufacturer of turbines and related equipment.
Norman Eig is Vice-Chairman of Lazard Freres & Co. LLC and has 32 years of
investment experience. Prior to joining Lazard in 1982, Mr. Eig served as a
General Partner of Oppenheimer & Company and as a Managing Director and Chief
Operating Officer of Oppenheimer Capital Corp. Previously, he was a fund manager
with International Research & Development, Rotunda Advisors and Scherl, Egener &
Co. Mr. Eig has an M.B.A. from Columbia University and a B.S. from Ohio State
University.
Alan J. Kastelic was appointed President and Chief Executive Officer of Edison
Control Corporation in June 1998 and President and Chief Executive Officer of
Construction Forms, Inc. in June 1996 when Construction Forms, Inc. was acquired
by the Company. Mr. Kastelic had previously been Executive Vice President and
Chief Operating Officer of Construction Forms, Inc. which he joined in 1977.
Prior to joining Construction Forms, Mr. Kastelic was Manufacturing Manager at
Badger Dynamics and Chief Cost Accountant, Material Control Manager and Manager
of Manufacturing at the PCM division of Koehring Corporation.
Mary E. McCormack is Director of Acquisitions of The Hertz Corporation. She was
President and Chief Executive Officer of the Edison Control Corporation from
February 1995 to February 1998. Prior to working with the Company, Ms. McCormack
was a Managing Director of Beechtree Capital Partners, Inc., a boutique merchant
banking firm, which she co-founded in 1989. From 1983 to 1989, she served in a
variety of capacities for the investment banking and brokerage firm of Advest,
Inc., most recently as Vice President-Corporate Finance. Ms. McCormack is a
Director of Star International Holdings, Inc., a manufacturer of commercial
cooking appliances.
William C. Scott was from 1988 to 1999 the Chairman and Chief Executive Officer
of Panavision Inc., the leading designer and manufacturer of high-precision film
camera systems for the motion picture and television industries. From 1972 until
1987, Mr. Scott was President and Chief Operating Officer of Western Pacific
Industries Inc., a manufacturer of industrial products. Prior to 1972 Mr. Scott
was a Group Vice President of Cordura Corporation (a business information
company) for three years and Vice President of Booz, Allen & Hamilton (a
management-consulting firm) for five years. He is currently Chairman of the
Board of TeleCast Communications Limited, London, England, a director of
Panavision Inc. and of Four Media Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ELECTION OF ALL DIRECTOR NOMINEES
SET FORTH ABOVE.
Committees, Meetings and Attendance
- -------------------------------------
The Board of Directors of the Company has two standing committees: an Audit
Committee and a Compensation Committee. The Board of Directors does not have a
Nominating Committee; the Board as a whole performs this function.
The Audit Committee, which met once during the year ended January 31, 1999,
recommends to the Board of Directors independent auditors
5
<PAGE>
for selection by the Company, discusses with the independent auditors the scope
and results of audits, and approves and reviews any nonaudit services performed
by the Company's independent auditing firm.
The Compensation Committee, which met once during the year ended January 31,
1999, establishes all forms of compensation for the officers of the Company,
administers the Company's benefit plans and responds to Securities and Exchange
Commission requirements on compensation committee reports.
The Board of Directors of the Company held four meetings during the year ended
January 31, 1999. Each director who was a director during the year ended January
31, 1999 attended all of the meetings of the Board of Directors and committees
on which he or she serves, except that Mr. Scott was absent from one meeting.
Director Compensation
- ---------------------
Directors who are not executive officers of the Company each receive an annual
retainer of $15,000. Directors of the Company do not receive additional
compensation for attendance at Board of Director meetings or committee meetings.
Mr. Finneran, Chairman of the Board, is not a full time employee of the Company;
however, he has devoted considerable time to portfolio management, the search
for acquisitions and consideration of the Company's current business operation.
For fiscal 1998, Mr. Finneran received compensation of $112,000.
EXECUTIVE COMPENSATION
Summary Compensation Table
- --------------------------
The following table sets forth the annual and long-term compensation for the
Company's Chief Executive Officer and other named executives who earned in
excess of $100,000 in fiscal 1998, as well as the total compensation paid to
each named executive for the Company's two previous fiscal years:
<TABLE>
<CAPTION>
Other Annual
Name and Compen- Options
Principal Position Year Salary($) Bonus($) sation($) Granted(shares)
- ------------------ ---- --------- -------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Alan J. Kastelic 1998 170,000 80,000 5,000 (1) -0-
President and Chief 1997 155,000 80,000 4,750 (1) -0-
Executive Officer 1996 145,000 60,000 4,520 (1) 97,222
Jay R. Hanamann 1998 100,000 50,000 4,481 (1) -0-
Secretary, Treasurer 1997 92,000 50,000 3,960 (1) -0-
and Chief Financial 1996 84,000 40,000 3,720 (1) 48,611
Officer
- -------------
(1) Represents the Company matching amount to the 401(k) Plan.
</TABLE>
Option Grants in Last Fiscal Year
- ---------------------------------
The Company did not grant options to any of the named executive officers during
the year ended January 31, 1999.
Option Exercises in Fiscal 1998 and Fiscal Year-End Option Values
- -----------------------------------------------------------------
The following table summarizes options exercised during fiscal 1998 and presents
the value of unexercised options held by the named executive officers at January
31, 1999. No options were exercised in fiscal 1998 by the named executive
officers.
<TABLE>
<CAPTION>
Number of Value of
unexercised options unexercised options
Shares at fiscal year at fiscal year
acquired Value end (shares) end ($)
on realized Exercisable (E)/ Exercisable (E)/
Name exercise ($) Unexercisable (U) Unexercisable (U)
- ---- -------- --- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Jay R. Hanamann -0- -0- 48,611 E 194,444 E (1)
Alan J. Kastelic -0- -0- 97,222 E 388,888 E (1)
- --------------
(1) Value was calculated by subtracting the respective option exercise price
from the fair market value of the Common Stock on January 31, 1999, which
was the closing sale price of $7.00 per share as reported by Nasdaq.
</TABLE>
6
<PAGE>
Benefit Plans
- -------------
The Company has a noncontributory defined benefit pension plan covering
substantially all full-time employees. The plan provides for benefits based on
years of service and compensation.
The following table shows the estimated annual straight-life annuity benefit
payable (in dollars) under the qualified retirement program to employees with
the specified Maximum Average Salary (average salary during the five consecutive
years that compensation was the highest within the last 10 years) and specified
years of service upon retirement at age 65, after giving effect to adjustments
for Covered Compensation:
Years of Service
Maximum --------------------------------------------
Average Salary(1) 15 20 25 30 35
- ----------------- -- -- -- -- --
125,000 13,287 17,716 22,145 26,574 26,574
150,000 17,787 23,716 29,645 35,574 35,574
175,000 19,587 26,116 32,645 39,174 39,174
200,000 19,587 26,116 32,645 39,174 39,174
225,000 19,587 26,116 32,645 39,174 39,174
- --------
(1) Section 401(a)(17) of the Internal Revenue Code limits the annual
compensation, which can be recognized in a qualified plan. The current
limit for 1998 is $160,000.
(2) Section 414 of the Internal Revenue Code currently limits the annual
benefits to $130,000 (estimated) for retirement under the Plan after
December 31, 1998.
The 1998 compensation used to calculate the Maximum Average Salary and the
number of years of credited service for Alan Kastelic were $177,000 and 22
years, respectively, and for Jay Hanamann were $105,000 and 8 years,
respectively.
The Company also has a retirement savings and thrift plan (401(k) plan) covering
substantially all of its employees. For each employee contribution to the 401(k)
plan of up to 6% of the employee's compensation for a year, the Company matches
one-half of the employees 401(k) contribution.
Section 16(a) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors to file reports concerning the ownership of the
Company's Common Stock with the Securities and Exchange Commission and the
Company. Based solely upon the information provided to the Company by individual
directors and executive officers, the Company believes that during the fiscal
year ended January 31, 1999 all of its directors and officers complied with the
Section 16(a) filing requirements.
7
<PAGE>
Agreements with Named Executive Officers
- ----------------------------------------
In connection with the Company's acquisition of Construction Forms, Inc.
("ConForms") in June 1996, ConForms entered into an Employment Agreement with
Alan J. Kastelic, pursuant to which ConForms agreed to employ Mr. Kastelic as
the President and Chief Executive Officer of ConForms until June 30, 1998. Mr.
Kastelic is also the President and Chief Executive Officer of the Company. The
term of Mr. Kastelic's Employment Agreement is automatically renewed for
successive one-year periods thereafter unless notice is given of non-renewal at
least 30 days prior to the end of the then current term or unless earlier
terminated in accordance with the provisions of the Employment Agreement. Under
this Employment Agreement, Mr. Kastelic is entitled to receive a minimum base
salary $147,000 per year and certain minimum performance bonuses and other
benefits. If Mr. Kastelic's employment is terminated by the Company other than
by reason of death, disability or cause or by Mr. Kastelic for good reason, then
Mr. Kastelic is entitled to continue to receive his base salary and benefits for
a period of twelve months. Mr. Kastelic's Employment Agreement also contains a
covenant not to compete that is in effect during the term of his employment and
during any period during which he receives severance compensation thereafter.
Also in connection with the Company's acquisition of ConForms in June 1996,
ConForms entered into an Employment Agreement with Jay R. Hanamann, pursuant to
which ConForms agreed to employ Mr. Hanamann as the Chief Financial Officer,
Secretary and Treasurer of ConForms until June 30, 1998. Mr. Hanamann is also
the Chief Financial Officer, Secretary and Treasurer of the Company. The term of
Mr. Hanamann's Employment Agreement is automatically renewed for successive
one-year periods thereafter unless notice is given of non-renewal at least 30
days prior to the end of the then current term or unless earlier terminated in
accordance with the provisions of the Employment Agreement. Under this
Employment Agreement, Mr. Hanamann is entitled to receive a minimum base salary
$84,000 per year and certain minimum performance bonuses and other benefits. If
Mr. Hanamann's employment is terminated by the Company other than by reason of
death, disability or cause or by Mr. Hanamann for good reason, then Mr. Hanamann
is entitled to continue to receive his base salary and benefits for a period of
twelve months. Mr. Hanamann's Employment Agreement also contains a covenant not
to compete that is in effect during the term of his employment and during any
period during which he receives severance compensation thereafter.
Compensation Committee Report on Executive Compensation
- -------------------------------------------------------
The Compensation Committee of the Board of Directors is responsible for all
aspects of the Company's compensation package offered to its corporate officers,
including the named executive officers. The Compensation Committee has prepared
the following report for fiscal year 1998.
The Company's executive compensation program is designed to be closely linked to
corporate performance. To this end, the Company has developed an overall
compensation strategy and specific compensations plans that tie a significant
portion of executive compensation to the Company's success. The overall
objectives of this strategy are to attract and retain qualified executive
talent, to motivate these executives to achieve the goals inherent in the
Company's business strategy, to link executive and shareholder interests through
the use of equity-based compensation plans and to provide a compensation package
that recognizes individual contributions as well as overall business results.
The key elements of the Company's executive compensation program consist of base
salary, annual bonus opportunity and grants of stock options. A general
description of the Company's compensation program, including the basis for the
compensation awarded to the Company's Executive Officer for fiscal 1998, are
discussed below.
Base Salary. Base salaries are initially determined by evaluating the
responsibilities of the position, the experience and contributions of the
individual and the salaries for comparable positions in the competitive
marketplace. Base salary levels for the Company's executive officers are
generally positioned at market competitive levels for comparable positions in
manufacturing companies of similar size. In determining annual salary
adjustments for executive officers, the Compensation Committee considers various
factors including the individual's performance and contribution, competitive
salary increase levels provided by the
8
<PAGE>
marketplace, the relationship of an executive officer's salary to the market
competitive levels for comparable positions, and the Company's performance. The
base salaries paid to the named executive officers, Alan J. Kastelic and Jay R.
Hanamann, are also based on their Employment Agreements. See above under "
Agreements with Named Executive Officers."
Annual Bonus. The Company's executive officers are eligible for annual cash
bonus awards under the Company's compensation program. In determining annual
bonuses for executive officers, the Compensation Committee considers various
factors including the individual's performance and contribution and the
Company's performance. The bonuses paid to the named executive officers, Alan J.
Kastelic and Jay R. Hanamann, are also based on their Employment Agreements. See
above under "Agreements with Named Executive Officers."
Stock Options. The Company's 1999 Equity Incentive Plan being submitted to the
shareholders for their approval at the Annual Meeting is designed to encourage
and create ownership of Company Common Stock by key executives, thereby
promoting a close identity of interests between the Company's management and its
shareholders. The 1999 Equity Incentive Plan is designed to motivate and reward
executives for long-term strategic management and the enhancement of shareholder
value. The Compensation Committee has determined that stock option grants to the
Company's key employees, including key executive officers, is consistent with
the Company's best interest and the Company's overall compensation program.
Stock options under the 1999 Equity Incentive Plan will be granted with an
exercise price equal to the market value of the Common Stock on the date of
grant. Vesting schedules will be designed to encourage the creation of
shareholder value over the long-term since the full benefit of the compensation
package cannot be realized unless stock price appreciation occurs over a number
of years and the executive remains in the Company's employ.
No named executive officer was granted stock options during fiscal 1998. The
Compensation Committee may grant stock options to key executive officers in
fiscal 1999 based upon individual performance criteria.
Chief Executive Officer Compensation. During fiscal 1998, the Company's Chief
Executive Officer, Alan J. Kastelic, was paid a salary of $170,000 and awarded a
bonus of $80,000. In evaluating Mr. Kastelic's performance during fiscal 1998,
the Compensation Committee considered the Company's overall financial
performance and the achievement of long-term objectives of the Company.
Section 162(m) Limitation. Other than with respect to shareholder approved stock
options and warrants, the Compensation Committee does not anticipate taking any
action to conform the Company's executive compensation policies with Section
162(m) of the Internal Revenue Code.
EDISON CONTROL CORPORATION
COMPENSATION COMMITTEE
John J. Delucca
Mary E. McCormack
STOCK PERFORMANCE GRAPH
The graph in Exhibit 1 and the table below set forth the cumulative total
shareholder return (assuming reinvestment of dividends) to the Company's
shareholders during the five fiscal years ended January 31, 1999, as well as an
overall stock market index (S&P 500 Index) and the Company's peer group indice
for the periods covered (S & P Diversified Manufacturers Index).
9
<PAGE>
<TABLE>
<CAPTION>
Annual Return Percentage
Years Ending
Company/Index Jan95 Jan96 Jan97 Jan98 Jan99
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Edison Control Corporation -25.93 -5.00 -5.26 -5.56 64.71
S&P 500 Index 0.53 38.67 26.34 26.91 32.49
Manufacturing(Divers)-500 -0.13 46.57 32.34 17.37 18.41
<CAPTION>
Base Indexed Returns
Period Years Ending
Company/Index Jan94 Jan95 Jan96 Jan97 Jan98 Jan99
------------- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Edison Control Corporation 100 74.07 70.37 66.67 62.96 103.70
S&P 500 Index 100 100.53 139.40 176.12 223.51 296.13
Manufacturing(Divers)-500 100 99.87 146.39 193.73 227.38 269.24
Note: Table prepared by Standard & Poor's Compustat Custom Business Unit
</TABLE>
1999 EQUITY INCENTIVE PLAN
General
The purpose of the Edison Control Corporation 1999 Equity Incentive Plan
("Plan") is to promote the best interests of the Company and its shareholders by
providing key employees and consultants of the Company and its affiliates, and
members of the Company's Board of Directors who are not employees of the Company
or its affiliates, with an opportunity to acquire a, or increase their,
proprietary interest in the Company. The Plan is intended to promote continuity
of management and to provide increased incentive and personal interest in the
welfare of the Company by those key employees and consultants who are primarily
responsible for shaping and carrying out the long-range plans of the Company and
securing the Company's continued growth and financial success. Also, by
encouraging stock ownership by directors, the Company seeks to attract and
retain on its Board persons of exceptional competence and to provide and to
furnish an added incentive for them to continue their association with the
Company.
The Company currently has in effect the 1986 Stock Option Plan ("1986 Plan") and
various individual employment and stock option agreements with key employees and
directors pursuant to which stock options have been granted. As of March 31,
1999, 935,111 shares of Common Stock were subject to outstanding options and
there were no shares available for the granting of additional options under the
1986 Plan. To allow for additional equity-based compensation awards to be made
by the Company, the Plan was adopted by the Board on January 25, 1999. The Plan
became effective on that date, subject to approval of the Plan by the Company's
shareholders within twelve months following the Board's adoption of the Plan.
The following summary description of the Plan is qualified in its entirety by
reference to the full text of the Plan, which is attached to this Proxy
Statement as Appendix A.
Administration and Eligibility
The Plan is required to be administered by a committee of the Board (the
"Committee") consisting of not less than two directors each of whom shall
qualify as a "non-employee director" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and as an
"outside director" within the meaning of Section 162(m)(4)(c) of the Internal
Revenue Code of 1986, as amended ("Code"). In the event that the Committee is
not appointed, the functions of the Committee will be exercised by the Board.
The Board may delegate to another committee of the Board or to one or more
10
<PAGE>
senior officers of the Company, any or all of the authority and responsibility
of the Committee with respect to the Plan, other than with respect to
participants who are subject to Section 16 of the Exchange Act. The Committee
has been designated as the current administrator of the Plan. Among other
functions, the Committee has authority to establish rules for the administration
of the Plan; to designate the participants to whom awards will be granted; to
determine the types of awards to be granted to participants and the number of
shares covered by such awards; and to determine the terms and conditions of such
awards. The Committee may also determine whether the payment of any proceeds of
any award shall or may be deferred automatically or at the election of the
participant participating in the Plan. Subject to the express terms of the Plan,
any designations, determinations, interpretations, with respect thereto will be
in the sole discretion of the Committee, whose determinations and
interpretations will be binding on all parties.
Any officer or other key employee of the Company or of any affiliate or
consultant who is responsible for or contributes to the management, growth or
profitability of the business of the Company or any affiliate or any director
who is not an employee of the Company or any affiliate is eligible to be granted
awards by the Committee under the Plan. Initially, approximately 20 employees
and directors will be eligible to participate in the Plan. The number of
eligible employees, consultants and directors may increase over time based upon
future growth of the Company.
Awards Under the Plan; Available Shares
The Plan authorizes the granting to key employees, consultants and directors of:
(a) stock options, which may be incentive stock options meeting the requirements
of Section 422 of the Code ("ISOs"); (b) stock appreciation rights ("SARs"); (c)
restricted stock and (d) performance shares. The Plan provides that up to a
total of 200,000 shares of Common Stock (subject to adjustment as described
below) will be available for the granting of awards thereunder.
If any shares subject to awards granted under the Plan, or to which any award
relates, are forfeited or if an award otherwise terminates, expires or is
cancelled prior to the delivery of all of the shares or other consideration
issuable or payable pursuant to the award such shares will be available for the
granting of new awards under the Plan. Any shares delivered pursuant to an award
may consist, in whole or in part, of authorized and unissued shares of Common
Stock and/or of treasury shares.
Terms of Awards
Option Awards. Options granted under the Plan to key employees may be either
ISOs or nonqualified stock options. Consultants and non-employee directors may
not be granted ISOs.
The exercise price per share of Common Stock subject to options granted to
participants under the Plan will be determined by the Committee, provided that
the exercise price may not be less than 100% of the fair market value of a share
of Common Stock on the date of grant. The term of any option granted to a
participant under the Plan will be as determined by the Committee, provided that
the term of an ISO may not exceed ten years from the date of its grant. Options
granted to participants under the Plan will become exercisable in such a manner
and within such a period or periods and in such installments or otherwise as
determined by the Committee. Options may be exercised by payment in full of the
exercise price, either (at the discretion of the Committee) in cash or in whole
or in part by tendering shares or other consideration having a fair market value
on the date of exercise equal to the option exercise price. All ISOs granted
under the Plan will also be required to comply with all other terms of Section
422 of the Code.
SARs. A SAR granted under the Plan will confer on the participant holder a right
to receive, upon exercise thereof, the excess of (a) the fair market value of
one share of Common Stock on the date of exercise over (b) the grant price of
the SAR as specified by the Committee. Non-employee directors are not eligible
to be granted SARs under the Plan. The grant price of a SAR under the Plan will
not be less than 100% of the fair market value of a share of Common Stock on the
date of grant. The grant price, term, methods of exercise, methods of settlement
(including whether the holder of an SAR will be paid in cash, shares of
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Common Stock or other consideration), and any other terms and conditions of any
SAR granted under the Plan will be determined by the Committee at the time of
grant.
Restricted Stock. Shares of restricted Common Stock granted to participants
under the Plan will be subject to such restrictions as the Committee may impose,
in its discretion, including any limitation on the right to vote such shares.
The restrictions imposed on the Shares may lapse separately or in combination at
such time or times, or in such installments or otherwise, as the Committee may
deem appropriate. Except as otherwise determined by the Committee, upon
termination of employment or consulting of a participant for any reason during
the applicable restriction period, all shares of restricted stock still subject
to restriction will be subject to forfeiture by the participant.
The Plan limits the total number of shares of restricted stock that may be
awarded thereunder to 20,000 shares. Non-employee directors are not eligible to
be granted shares of restricted stock under the Plan. The foregoing numerical
limitations on the issuance of shares of restricted stock are subject to
adjustment as described below.
Performance Shares. The Plan also provides for the granting of performance
shares to key employees and consultants. Non-employee directors are not eligible
to be granted performance shares. Performance goals established by the Committee
may be based on one or more measures such as return on shareholders' equity,
earnings or any other standard or standards deemed relevant by the Committee,
measured internally or relative to other organizations and before and after
extraordinary items. The Committee will determine and/or select the applicable
performance period, the performance goal or goals to be achieved during any
performance period, the proportion of payments, if any, to be made for
performance between the minimum and full performance levels for any performance
goal and, if applicable, the restrictions applicable to shares of restricted
stock received upon payment of performance shares if payment is made in such
manner, and any other terms, conditions and rights relating to the grant of
performance shares. The Committee may in its discretion at any time from time to
time adjust performance goals (up or down) and minimum or full performance
levels (and any intermediate levels and proportion of payments related thereto),
adjust the manner in which performance goals are measured, or shorten any
performance period or way in whole or in part any or all remaining restrictions
with respect to Shares of restricted stock issued in payments of performance
shares, if the Committee determines that conditions so warrant. Following
completion of the applicable performance period, payment on performance shares
granted to and earned by participants will be made in shares of Common Stock
equal to the number of performance shares payable.
Change in Control
Upon the occurrence of a Change in Control (as defined in the Plan) of the
Company (a) all outstanding options and SARs will immediately become
exercisable, (b) any restriction periods and related restrictions on restricted
stock will lapse and (c) each performance share will become payable in full.
Adjustments
If any dividend or other distribution, recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of shares of Common Stock or other
securities of the Company, issuance of warrants or other rights to purchase
shares of Common Stock or other securities of the Company, or other similar
corporate transaction or event affects the shares of Common Stock so that an
adjustment is appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan,
then the Committee will generally have the authority to, in such manner as it
deems equitable, adjust (a) the number and type of Shares subject to the Plan
and which thereafter may be made the subject of awards, (b) the number and type
of Shares subject to outstanding awards and (c) the grant, purchase or exercise
price with respect to any award, or may make provision for a cash payment to the
holder of an outstanding award.
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Limits on Transferability
No award granted under the Plan (other than an award of restricted stock on
which the restrictions have lapsed) may be assigned, sold, transferred or
encumbered by any participant, otherwise than by will, by designation of a
beneficiary, or by the laws of descent and distribution; provided, however, that
a participant at the discretion of the Committee may be entitled, in the manner
established by the Committee to transfer any award.
Amendment and Termination
The Board may amend, suspend or terminate the Plan at any time, except that no
such action may adversely affect any award granted and then outstanding
thereunder without the approval of the respective participant. The Plan provides
that shareholder approval of any amendment thereto must also be obtained if
required by (a) the Code or any rules promulgated thereunder (in order to allow
for ISOs to be granted thereunder) or (b) the quotation or listing requirements
of the Nasdaq National Market or any other exchange or market on which the
Common Stock is then traded (in order to maintain the quotation or the listing
of the Common Stock thereon). To the extent permitted by applicable law and
subject to such shareholder approval as may be required, the Committee may also
amend the Plan, provided that any such amendments may be reported to the Board.
Withholding
Not later than the date as of which an amount first becomes includible in the
gross income of a participant for federal income tax purposes with respect to
any award under the Plan, the participant will be required to pay to the
Company, or make arrangements satisfactory to the Company regarding the payment
of, any federal, state, local or foreign taxes of any kind required by law to be
withheld with respect to such amount. Unless otherwise determined by the
Committee, withholding obligations arising with respect to awards under the Plan
may be settled with shares of Common Stock previously owned by the participant;
provided, however, that the participant may not settle such obligations with
shares of Common Stock that are part of, or are received upon exercise of, the
award that give rise to the withholding requirement. The obligations of the
Company under the Plan are conditional on such payment or arrangements, and the
Company and any affiliate will, to the extent permitted by law, have the right
to deduct any such taxes from any payment otherwise due to the participant. The
Committee may establish such procedures as it deems appropriate for the settling
of withholding obligations with shares of Common Stock.
Term of Plan
No award shall be granted under the Plan following the tenth anniversary of its
effective date. However, unless otherwise expressly provided in the Plan or in
an applicable award agreement, any award theretofore granted makes then beyond
such date and, to the extent set forth in the Plan, the authority of the
Committee to amend, alter, adjust, suspend, discontinue or terminate any such
award, or to waive any conditions or restrictions with respect to such award,
and the authority of the Board to amend the Plan shall extend beyond such date.
Certain Federal Income Tax Consequences
Stock Options. The grant of a stock option under the Plan will create no income
tax consequences to the participant or the Company. A participant who is granted
a nonqualified stock option will generally recognize ordinary income at the time
of exercise in an amount equal to the excess of the fair market value of the
Common Stock at such time over the exercise price. The Company will be entitled
to a deduction in the same amount and at the same time as ordinary income is
recognized by the participant. A subsequent disposition of the Common Stock will
give rise to capital gain or loss to the extent the amount realized from the
sale differs from the tax basis, i.e., the fair market value of the Common Stock
on the date of exercise. This capital gain or loss will be a long-term or
short-term capital gain or loss depending upon the length of time the Common
Stock was held.
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In general, if a participant holds the shares of Common Stock acquired pursuant
to the exercise of an ISO for at least two years from the date of grant and one
year from the date of exercise, the participant will recognize no income or gain
as a result of exercise (except that the alternative minimum tax may apply). Any
gain or loss realized by the participant on the disposition of the Common Stock
will be treated as a long-term capital gain or loss. No deduction will be
allowed to the Company. If either of these holding period requirements is not
satisfied, the participant will recognize ordinary income at the time of the
disposition equal to the lesser of (a) the gain realized on the disposition or
(b) the difference between the exercise price and the fair market value of the
shares of Common Stock on the date of exercise. The Company will be entitled to
a deduction in the same amount and at the same time as ordinary income is
recognized by the participant. Any additional gain realized by the participant
over the fair market value at the time of exercise will be treated as a capital
gain. This capital gain will be a long-term or short-term capital gain depending
upon the length of time the Common Stock was held.
Stock Appreciation Rights. The grant of a SAR will create no income tax
consequences for the participant or the Company. Upon exercise of a SAR, the
participant will recognize ordinary income equal to the amount of any cash and
the fair market value of any shares of Common Stock or other property received,
except that if the participant receives an option or shares of Common Stock or
restricted stock upon exercise of a SAR, recognition of income may be deferred
in accordance with the rules applicable to such other awards. The Company will
be entitled to a deduction in the same amount and at the same time as income is
recognized by the participant.
Restricted Stock. A participant will not recognize income at the time an award
of restricted stock is made under the Plan, unless the election described below
is made. A participant who has not made such an election will recognize ordinary
income at the time the restrictions on the stock lapse in an amount equal to the
fair market value of the restricted stock at such time. The Company will be
entitled to a corresponding deduction in the same amount and at the same time as
the participant recognizes income. Any otherwise taxable disposition of the
restricted stock after the time the restrictions lapse will result in capital
gain or loss (long-term or short-term depending on the length of time the
restricted stock is held after the time the restrictions lapse). Dividends paid
in cash and received by a participant prior to the time the restrictions lapse
will constitute ordinary income to the participant in the year paid. The Company
will be entitled to a corresponding deduction for such dividends. Any dividends
paid in stock will be treated as an award of additional restricted stock subject
to the tax treatment described herein.
A participant may, within 30 days after the date of the award of restricted
stock, elect to recognize ordinary income as of the date of the award in an
amount equal to the fair market value of such restricted stock on the date of
the award. The Company will be entitled to a corresponding deduction in the same
amount and at the same time as the participant recognizes income. If the
election is made, any cash dividends received with respect to the restricted
stock will be treated as dividend income to the participant in the year of
payment and will not be deductible by the Company. Any otherwise taxable
disposition of the restricted stock (other than by forfeiture) will result in
capital gain or loss (long-term or short-term depending on the holding period).
If the participant who has made an election subsequently forfeits the restricted
stock, the participant will not be entitled to deduct any loss. In addition, the
Company would then be required to include as ordinary income the amount of the
deduction it originally claimed with respect to such shares.
Performance Shares. The grant of performance shares will create no income tax
consequences for the participant or the Company. Upon the receipt of shares of
Common Stock at the end of the applicable performance period, the participant
generally will recognize ordinary income equal to the fair market value of the
shares of Common Stock received. The Company will be entitled to a deduction in
the same amount and at the same time as income is recognized by the participant.
New Plan Benefits
No awards have been made to date under the Plan and the Company cannot currently
determine the awards that may be granted in the future to participants
thereunder. Such determinations will be made from time
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to time by the Committee. During fiscal 1998, no options were granted to key
employees or directors under the 1986 Plan or otherwise.
On March 31, 1999, the last reported sale per share price of Company on the
Nasdaq National Market was $8.75.
Vote Required
The affirmative vote of the holders of a majority of the shares of Common Stock
represented and voted at the Annual Meeting with respect to the Plan (assuming a
quorum is present) is required to approve the Plan. Any shares not voted at the
Annual Meeting with respect to the Plan (whether as a result of broker non-votes
or otherwise) will have no impact on the vote.
THE BOARD RECOMMENDS A VOTE "FOR" THE PLAN. SHARES OF COMMON STOCK REPRESENTED
AT THE ANNUAL MEETING BY EXECUTED BUT UNMARKED PROXIES WILL BE VOTED "FOR" THE
PLAN.
GENERAL
Proposals of shareholders intended to be presented at, and included in the
Company's proxy materials for the 2000 Annual Meeting of Shareholders pursuant
to Rule 14a-8 under the Securities Exchange Act of 1934 ("Rule 14a-8"), must be
received at the principal office of the Company no later than December 31, 1999.
If the Company does not receive notice of a shareholder proposal submitted
otherwise than pursuant to Rule 14a-8 prior to March 16, 2000, then the notice
will be considered untimely, and the persons named in proxies solicited by the
Board of Directors for the 2000 Annual Meeting of Shareholders may exercise
discretionary voting power with respect to such proposal.
The Annual Report of the Company for the fiscal year ended January 31, 1999,
including financial statements (the "Annual Report"), and the Company's Annual
Report on Form 10-K (without exhibits) was mailed to shareholders, together with
this Proxy Statement, on or about April 30, 1999. No part of such Annual Report
shall be regarded as proxy soliciting material or a communication by means of
which any solicitation was being or is to be made.
Deloitte & Touche LLP, which firm has served as auditor for the Company's fiscal
year ended January 31, 1999, has indicated that it expects to have a
representative present at the Annual Meeting. The representative will be
afforded the opportunity to make a statement, if he desires, and will be
available for appropriate shareholder questions.
The solicitation of proxies in the accompanying form is made by the Board of
Directors, and the cost thereof will be borne by the Company. The Company may
solicit proxies by mail, telephone or telegraph. Brokerage firms, custodians,
banks, trustees, nominees or other persons holding shares in their names, will
be reimbursed for their reasonable expenses in forwarding proxy material to
their principals.
As of the date of this Proxy Statement, the Board of Directors is not aware of
any other matters to be presented at the meeting, but if any other matters
properly come before the meeting, it is intended that the persons voting the
proxy will vote the shares represented thereby in accordance with their best
judgment.
It is important that proxies be returned promptly. Therefore, whether or not you
plan to attend in person, you are urged to execute and return your proxy, to
which no postage need be affixed if mailed in the United States.
By Order of the Board of Directors.
/s/Jay R. Hanamann
Jay R. Hanamann
Secretary
April 30, 1999
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Appendix A
January 25, 1999
EDISON CONTROL CORPORATION
1999 EQUITY INCENTIVE PLAN
Section 1. Purpose
The purpose of the Edison Control Corporation 1999 Equity
Incentive Plan (the "Plan") is to promote the best interests of Edison Control
Corporation (together with any successor thereto, the "Company") and its
shareholders by providing key employees and consultants of the Company and its
Affiliates (as defined below), and members of the Company's Board of Directors
who are not employees of the Company, with an opportunity to acquire a, or
increase their, proprietary interest in the Company. It is intended that the
Plan will promote continuity of management and increased incentive and personal
interest in the welfare of the Company by those key employees and consultants
who are primarily responsible for shaping and carrying out the long-range plans
of the Company and securing the Company's continued growth and financial
success. Also, by encouraging stock ownership by directors, the Company seeks to
attract and retain on its Board of Directors persons of exceptional competence
and to furnish an added incentive for them to continue their association with
the Company.
Section 2. Definitions
As used in the Plan, the following terms shall have the respective
meanings set forth below:
(a) "Affiliate" shall mean any entity that, directly or through
one or more intermediaries, is controlled by, controls, or is under common
control with, the Company.
(b) "Award" shall mean any Option, Stock Appreciation Right,
Restricted Stock or Performance Share or other award granted under the Plan.
(c) "Award Agreement" shall mean any written agreement, contract
or other instrument or document evidencing any Award granted under the Plan.
(d) "Change in Control" will be deemed to have occurred if: (i)
any entity not affiliated with the Company or any Affiliate is or becomes the
beneficial owner of securities of the Company representing at least 25% of the
combined voting power of the Company's then outstanding voting securities; (ii)
there is consummated any business combination of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which
shares of the Company's capital stock would be converted into cash, securities
or other property, other than a merger of the Company in which the holders of
the Company's capital stock immediately prior to the merger have the same
proportionate ownership of capital stock of the surviving corporation
immediately after the merger, or any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all, or substantially
all, of the consolidated assets of the Company; or (iii) the shareholders of the
Company approve any plan for the liquidation or dissolution of the Company.
(e) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(f) "Commission" shall mean the Securities and Exchange
Commission.
(g) "Committee" shall mean the Compensation Committee of the Board
of Directors of the Company (or any other committee thereof designated by such
Board to administer the Plan) consisting of not less than two Independent
Directors, each of whom shall qualify as a "non-employee
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director" within the meaning of Rule 16b-3 and as an "outside director" under
Section 162(m)(4)(C) of the Code or any successor provisions thereto.
(h) "Consultant" shall mean any consultant or advisor to the
Company, any Subsidiary or any Affiliate who is not otherwise an employee of the
Company or any Affiliate who is responsible for or contributes to the
management, growth or profitability of the business of the Company or any
Affiliate, as determined by the Committee in its discretion.
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
(j) "Fair Market Value" shall mean, with respect to any property
(including, without limitation, any Shares or other securities), the fair market
value of such property determined by such methods or procedures as shall be
established from time to time by the Committee.
(k) "Incentive Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is intended to meet the requirements of Section
422 of the Code (or any successor provision thereto).
(l) "Independent Directors" shall mean any member of the Company's
Board of Directors who is not an employee of the Company or of any Affiliate.
(m) "Key Employee" shall mean any officer or other key employee of
the Company or of any Affiliate who is responsible for or contributes to the
management, growth or profitability of the business of the Company or any
Affiliate, as determined by the Committee in its discretion.
(n) "Non-Qualified Stock Option" shall mean an option granted
under Section 6(a) of the Plan that is not intended to be an Incentive Stock
Option.
(o) "Option" shall mean an Incentive Stock Option or a
Non-Qualified Stock Option.
(p) "Participant" shall mean a Key Employee, Consultant or
Independent Director designated to be granted an Award under the Plan.
(q) "Performance Period" shall mean, in relation to Performance
Shares, any period for which a performance goal or goals have been established.
(r) "Performance Share" shall mean any right granted under Section
6(d) of the Plan that will be paid out as a Share (which, in specified
circumstances, may be a Share of Restricted Stock).
(s) "Person" shall mean any individual, corporation, partnership,
association, joint-stock company, limited liability company, trust,
unincorporated organization or government or political subdivision thereof.
(t) "Released Securities" shall mean Shares of Restricted Stock
with respect to which all applicable restrictions have expired, lapsed or been
waived.
(u) "Restricted Securities" shall mean Awards of Restricted Stock
or other Awards under which issued and outstanding Shares are held subject to
certain restrictions pursuant to the Plan or an Award Agreement.
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(v) "Restricted Stock" shall mean any Share granted under Section
6(c) of the Plan or, in specified circumstances, a Share paid in connection with
a Performance Share under Section 6(d) of the Plan.
(w) "Rule 16b-3" shall mean Rule 16b-3 as promulgated by the
Commission under the Exchange Act, or any successor rule or regulation thereto.
(x) "Shares" shall mean shares of Common Stock of the Company,
$.01 par value, and such other securities or property as may become subject to
Awards pursuant to an adjustment made under Section 4(b) of the Plan.
(y) "Stock Appreciation Right" shall mean any right granted under
Section 5(c) of the Plan.
Section 3. Administration
The Plan shall be administered by the Committee; provided,
however, that if at any time the Committee shall not be in existence, the
functions of the Committee as specified in the Plan shall be exercised by the
Board of Directors of the Company (the "Board") and all references to the
Committee herein shall include the Board. To the extent permitted by applicable
law, the Board may delegate to another committee of the Board or to one or more
senior officers of the Company any or all of the authority and responsibility of
the Committee with respect to the Plan, other than with respect to Participants
who are subject to Section 16 of the Exchange Act. To the extent that the Board
has delegated to such other committee or one or more officers the authority and
responsibility of the Committee, all references to the Committee herein shall
include such other committee or one or more officers.
Subject to the terms of the Plan and applicable laws and without
limitation by reason of enumeration, the Committee shall have full discretionary
power and authority to: (i) designate Participants; (ii) determine the type or
types of Awards to be granted to each Participant under the Plan; (iii)
determine the number of Shares to be covered by (or with respect to which
payments, rights or other matters are to be calculated in connection with)
Awards granted to Participants; (iv) determine the terms and conditions of any
Award granted to a Participant; (v) determine whether, to what extent and under
what circumstances Awards granted to Participants may be settled or exercised in
cash, Shares, other securities, other Awards or other property, and the method
or methods by which Awards may be settled, exercised, canceled, forfeited or
suspended; (vi) determine whether, to what extent and under what circumstances
cash, Shares, other Awards and other amounts payable with respect to an Award
granted to Participants under the Plan shall be deferred either automatically or
at the election of the holder thereof or of the Committee; (vii) interpret and
administer the Plan and any instrument or agreement relating to, or Award made
under, the Plan (including, without limitation, any Award Agreement); (viii)
establish, amend, suspend or waive such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the Plan;
and (ix) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations and other decisions under or with respect to the
Plan or any Award shall be within the sole discretion of the Committee, may be
made at any time or from time to time, and shall be final, conclusive and
binding upon all Persons, including the Company, any Affiliate, any Participant,
any holder or beneficiary of any Award, any shareholder and any employee of the
Company or of any Affiliate.
Section 4. Shares Available for Award
(a) Shares Available. Subject to adjustment as provided in Section
4(b):
(i) Number of Shares Available. The number of Shares
with respect to which Awards may be granted under the Plan shall
be 200,000, subject to the limitations set forth in Section
6(c)(i) and subject to the other provisions of this Section 4. If,
after the effective date
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of the Plan, any Shares covered by an Award granted under the
Plan, or to which any Award relates, are forfeited or if an
otherwise terminates, expires or is cancelled prior to the
delivery of all of the Shares or of other consideration issuable
or payable pursuant to such Award, then the number of Shares
counted against the number of Shares available under the Plan in
connection with the grant of such Award, to the extent of any such
forfeiture, termination, expiration or cancellation, shall again
be available for granting of additional Awards under the Plan.
(ii) Accounting for Awards. The number of Shares
covered by an Award under the Plan, or to which such Award
relates, shall be counted on the date of grant of such Award
against the number of Shares available for granting Awards under
the Plan.
(iii) Sources of Shares Deliverable Under Awards.
Any Shares delivered pursuant to an Award may consist, in whole or
in part, of authorized and unissued Shares and/or of treasury
Shares.
(b) Adjustments. In the event that the Committee shall determine
that any dividend or other distribution (whether in the form of cash, Shares,
other securities or other property), recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company, or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee may, in such manner as it may deem equitable, adjust any or all of (i)
the number and type of Shares subject to the Plan and which thereafter may be
made the subject of Awards under the Plan; (ii) the number and type of Shares
subject to outstanding Awards; and (iii) the grant, purchase or exercise price
with respect to any Award, or, if deemed appropriate, make provision for a cash
payment to the holder of an outstanding Award; provided, however, in each case,
that with respect to Awards of Incentive Stock Options no such adjustment shall
be authorized to the extent that such authority would cause the Plan to violate
Section 422(b) of the Code (or any successor provision thereto); and provided
further that the number of Shares subject to any Award payable or denominated in
Shares shall always be a whole number.
Section 5. Eligibility
Any Key Employee, including any executive officer or
employee-director of the Company or of any Affiliate, and any Consultant or
Independent Director, shall be eligible to be designated a Participant.
Section 6. Awards
(a) Option Awards. The Committee is hereby authorized to grant
Options to Key Employees, Consultants and Independent Directors with the terms
and conditions as set forth below and with such additional terms and conditions,
in either case not inconsistent with the provisions of the Plan, as the
Committee shall determine in its discretion; provided, however, that Consultants
and Independent Directors may not be granted Incentive Stock Options.
(i) Exercise Price. The exercise price per Share of
an Option granted pursuant to this Section 6(a) shall be
determined by the Committee; provided, however, that such exercise
price shall not be less than 100% of the Fair Market Value of a
Share on the date of grant of such Option.
(ii) Option Term. The term of each Option shall be
fixed by the Committee; provided, however, that in no event shall
the term of any Option exceed a period of ten years from the date
of its grant.
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(iii) Exercisability and Method of Exercise. An
Option shall become exercisable in such manner and within such
period or periods and in such installments or otherwise as shall
be determined by the Committee; provided, however, that regardless
of any other exercise or vesting period specified in any Award
Agreement with respect to any Option, each Option granted under
the Plan shall become immediately exercisable in full for the
remainder of the Option term automatically upon the occurrence of
a Change in Control. The Committee also shall determine the method
or methods by which, and the form or forms, including, without
limitation, cash, Shares, other securities, other Awards, other
property or any combination thereof, having a Fair Market Value on
the exercise date equal to the relevant exercise price, in which
payment of the exercise price with respect to any Option may be
made or deemed to have been made.
(iv) Incentive Stock Options. The terms of any
Incentive Stock Option granted under the Plan shall comply in all
respects with the provisions of Section 422 of the Code (or any
successor provision thereto) and any regulations promulgated
thereunder. Notwithstanding any provision in the Plan to the
contrary, no Incentive Stock Option may be granted hereunder after
the tenth anniversary of the adoption of the Plan by the Board.
(b) Stock Appreciation Rights. The Committee is hereby authorized
to grant Stock Appreciation Rights to Key Employees and Consultants. Independent
Directors are not eligible to be granted Stock Appreciation Rights under the
Plan. Subject to the terms of the Plan and any applicable Award Agreement, a
Stock Appreciation Right granted under the Plan shall confer on the holder
thereof a right to receive, upon exercise thereof, the excess of (i) the Fair
Market Value of one Share on the date of exercise over (ii) the grant price of
the Stock Appreciation Right as specified by the Committee, which shall not be
less than 100% of the Fair Market Value of one Share on the date of grant of the
Stock Appreciation Right. Subject to the terms of the Plan, the grant price,
term, methods of exercise, methods of settlement (including whether the
Participant will be paid in cash, Shares, other securities, other Awards, or
other property or any combination thereof), and any other terms and conditions
of any Stock Appreciation Right shall be as determined by the Committee in its
discretion; provided, however, that regardless of any other exercise or vesting
period specified in any Award Agreement with respect to any Stock Appreciation
Right, each Stock Appreciation Right granted under the Plan shall become
immediately exercisable in full for the remainder of the Stock Appreciation
Right term automatically upon the occurrence of a Change in Control. The
Committee may impose such conditions or restrictions on the exercise of any
Stock Appreciation Right as it may deem appropriate.
(c) Restricted Stock Awards.
(i) Issuance. The Committee is hereby authorized to
grant Awards of Restricted Stock to Key Employees and Consultants;
provided, however, that the aggregate number of Shares of
Restricted Stock granted under the Plan to all Participants as a
group shall not exceed 20,000 Shares of the total number of Shares
available for Awards under Section 4(a)(i), subject to Section
4(a)(ii) and the other provisions of Section 4. Independent
Directors are not eligible to be granted Restricted Stock under
the Plan.
(ii) Restrictions. Shares of Restricted Stock
granted to Participants shall be subject to such restrictions as
the Committee may impose in its discretion (including, without
limitation, any limitation on the right to vote a Share of
Restricted Stock or the right to receive any dividend or other
right or property), which restrictions may lapse separately or in
combination at such time or times, in such installments or
otherwise, as the Committee may deem appropriate in its
discretion; provided, however, that regardless of any other
vesting or restriction period specified in any Award Agreement
with respect to any Restricted Stock, each Share of Restricted
Stock granted under the Plan shall become a Released Security
automatically upon the occurrence of a Change in Control.
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(iii) Registration. Any Restricted Stock granted
under the Plan to a Participant may be evidenced in such manner as
the Committee may deem appropriate in its discretion, including,
without limitation, book-entry registration or issuance of a stock
certificate or certificates. In the event any stock certificate is
issued in respect of Shares of Restricted Stock granted under the
Plan to a Participant, such certificate shall be registered in the
name of the Participant and shall bear an appropriate legend (as
determined by the Committee) referring to the terms, conditions
and restrictions applicable to such Restricted Stock.
(iv) Payment of Restricted Stock. At the end of the
applicable restriction period relating to Restricted Stock granted
to a Participant, one or more stock certificates for the
appropriate number of Shares of Released Securities, free of
restrictions imposed under the Plan and the Award Agreement, shall
be delivered to the Participant or, if the Participant received
stock certificates representing the Restricted Stock at the time
of grant, the legends placed on such certificates shall be
removed.
(v) Forfeiture. Except as otherwise determined by
the Committee in its discretion, upon termination of employment or
consultancy of a Participant (as determined under criteria
established by the Committee in its discretion) for any reason
during the applicable restriction period, all Shares of Restricted
Stock still subject to restriction under the Plan or an Award
Agreement shall be forfeited by the Participant; provided,
however, that the Committee may, when it finds that a waiver would
be in the best interests of the Company, waive in whole or in part
any or all remaining restrictions with respect to Shares of
Restricted Stock held by a Participant.
(d) Performance Share Awards.
(i) Issuance. The Committee is hereby authorized to
grant Awards of Performance Shares to Key Employees and
Consultants. Independent Directors are not eligible to be granted
Performance Shares under the Plan.
(ii) Performance Goals and Other Terms. The
Committee shall determine in its discretion the Performance
Period, the performance goal or goals to be achieved during any
Performance Period, the proportion of payments, if any, to be made
for performance between the minimum and full performance levels,
the restrictions applicable to Shares of Restricted Stock received
upon payment of Performance Shares (if Performance Shares are paid
in such manner), and any other terms, conditions and rights
relating to a grant of Performance Shares; provided, however, that
regardless of any other requirements or restrictions specified in
any Award Agreement with respect to any Performance Share, each
Performance Share granted under the Plan shall become immediately
payable in full (assuming the maximum performance goal and any
other requirements have been fully satisfied) automatically upon
the occurrence of a Change in Control. Performance goals
established by the Committee may be based on one or more measures
such as return on shareholders' equity, earnings or any other
standard or standards deemed relevant by the Committee, measured
internally or relative to other organizations and before or after
extraordinary items.
(iii) Rights and Benefits During the Performance
Period. The Committee may provide that, during a Performance
Period, a Participant shall be paid cash amounts, with respect to
each Performance Share held by such Participant, in the same
manner, at the same time, and in the same amount paid, as a cash
dividend on a Share. Participants shall have no voting rights with
respect to Performance Shares held by them.
(iv) Adjustments with Respect to Performance Shares.
Any other provision of the Plan to the contrary notwithstanding,
the Committee may in its discretion at any time or from time to
time adjust performance goals (up or down) and minimum or full
performance levels (and any intermediate levels and proportion of
payments related thereto),
21
<PAGE>
adjust the manner in which performance goals are measured, or
shorten any Performance Period or waive in whole or in part any or
all remaining restrictions with respect to Shares of Restricted
Stock issued in payment of Performance Shares, if the Committee
determines that conditions, including but not limited to, changes
in the economy, changes in competitive conditions, changes in laws
or governmental regulations, changes in generally accepted
accounting principles, changes in the Company's accounting
policies, acquisitions or dispositions by the Company or its
Affiliates, or the occurrence of other unusual, unforeseen or
extraordinary events, so warrant.
(v) Payment of Performance Shares. As soon as is
reasonably practicable following the end of the applicable
Performance Period, one or more certificates representing the
number of Shares equal to the number of Performance Shares payable
shall be registered in the name of and delivered to the
Participant; provided, however, that any Shares of Restricted
Stock payable in connection with Performance Shares shall, pending
the expiration, lapse, or waiver of the applicable restrictions,
be evidenced in the manner as set forth in Section 6(c)(iii)
hereof.
(e) Other Awards.
(i) Other Stock-Based Awards. Other awards, valued
in whole or in part by reference to, or otherwise based on, Shares
may be granted either alone or in addition to or in conjunction
with other Awards for such consideration, if any, and in such
amounts and having such terms and conditions as the Committee may
determine.
(ii) Other Benefits. The Committee shall have the
right to provide types of benefits under the Plan in addition to
those specifically listed if the committee believes that such
benefits would further the purposes for which the Plan was
established.
(f) General.
(i) No Consideration for Awards. Awards shall be
granted to Participants for no cash consideration unless otherwise
determined by the Committee.
(ii) Award Agreements. Each Award granted under the
Plan shall be evidenced by an Award Agreement in such form or
forms (consistent with the terms of the Plan) as shall have been
approved by the Committee.
(iii) Awards May Be Granted Separately or Together.
Awards to Participants under the Plan may be granted either alone
or in addition to, in tandem with, or in substitution for, any
other Award or any award granted under any other plan of the
Company or any Affiliate. Awards granted in addition to, or in
tandem with, other Awards, or in addition to, or in tandem with,
awards granted under any other plan of the Company or any
Affiliate, may be granted either at the same time as or at a
different time from the grant of such other Awards or awards.
(iv) Forms of Payment Under Awards. Subject to the
terms of the Plan and of any applicable Award Agreement, payments
or transfers to be made by the Company or an Affiliate upon the
grant, exercise or payment of an Award to a Participant may be
made in such form or forms as the Committee shall determine, and
may be made in a single payment or transfer, in installments, or
on a deferred basis, in each case in accordance with rules and
procedures established by the Committee in its discretion. Such
rules and procedures may include, without limitation, provisions
for the payment or crediting of interest on installment or
deferred payments.
(v) Limits on Transfer of Awards. No Award (other
than Released Securities), and no right under any such Award,
shall be assignable, alienable, saleable or transferable by a
Participant otherwise than by will or by the laws of descent and
distribution (or, in the case of an Award of Restricted
Securities, to the Company); provided, however, that a
22
<PAGE>
Participant at the discretion of the Committee may be entitled, in
the manner established by the Committee, (A) to designate a
beneficiary or beneficiaries to exercise his or her rights, and to
receive any property distributable, with respect to any Award upon
the death of the Participant or (B) to transfer any Award. No
Award (other than Released Securities), and no right under any
such Award, may be pledged, alienated, attached or otherwise
encumbered, and any purported pledge, alienation, attachment or
encumbrance thereof shall be void and unenforceable against the
Company or any Affiliate.
(vi) Term of Awards. Except as otherwise provided in
the Plan, the term of each Award shall be for such period as may
be determined by the Committee.
(vii) Share Certificates; Representation. In
addition to the restrictions imposed pursuant to Section 6(c) and
Section 6(d) hereof, all certificates for Shares delivered under
the Plan pursuant to any Award or the exercise thereof shall be
subject to such stop transfer orders and other restrictions as the
Committee may deem advisable under the Plan or the rules,
regulations and other requirements of the Commission, the Nasdaq
National Market or any other stock exchange or other market upon
which such Shares are then listed or traded, and any applicable
federal or state securities laws, and the Committee may cause a
legend or legends to be put on any such certificates to make
appropriate reference to such restrictions. The Committee may
require each Participant or other Person who acquires Shares under
the Plan by means of an Award originally made to a Participant to
represent to the Company in writing that such Participant or other
Person is acquiring the Shares without a view to the distribution
thereof.
(viii) Waiver of Conditions. The Committee may, in
whole or in part, waive any conditions or other restrictions with
respect to any award.
Section 7. Amendment and Termination of the Plan; Correction of Defects and
Omissions
(a) Amendments to and Termination of the Plan. The Board may at
any time amend, alter, suspend, discontinue or terminate the Plan; provided,
however, that shareholder approval of any amendment of the Plan shall also be
obtained if otherwise required by: (i) the Code or any rules promulgated
thereunder (in order to allow for Incentive Stock Options to be granted under
the Plan) or (ii) the quotation or listing requirements of the Nasdaq National
Market or any other principal securities exchange or market on which the Shares
are then traded (in order to maintain the quotation or the listing of the Shares
thereon). To the extent permitted by applicable law and subject to such
shareholder approval as may be required above, the Committee may also amend the
Plan, provided that any such amendments shall be reported to the Board.
Termination of the Plan shall not affect the rights of Participants with respect
to Awards previously granted to them, and all unexpired Awards shall continue in
force and effect after termination of the Plan except as they may lapse or be
terminated by their own terms and conditions.
(b) Correction of Defects, Omissions and Inconsistencies. The
Committee may in its discretion correct any defect, supply any omission or
reconcile any inconsistency in any Award or Award Agreement in the manner and to
the extent it shall deem desirable to carry the Plan into effect.
Section 8. General Provisions
(a) No Rights to Awards. No Key Employee, Consultant, Independent
Director, Participant or other Person shall have any claim to be granted any
Award under the Plan, and there is no obligation for uniformity of treatment of
Key Employees, Consultants, Independent Directors, Participants or holders or
beneficiaries of Awards under the Plan. The terms and conditions of Awards need
not be the same with respect to each Participant.
(b) Withholding. No later than the date as of which an amount
first becomes includable in the gross income of a Participant for federal income
tax purposes with respect to any Award under the Plan, the Participant shall pay
to the Company, or make arrangements satisfactory to the
23
<PAGE>
Company regarding the payment of, any federal, state, local or foreign taxes of
any kind required by law to be withheld with respect to such amount. Unless
otherwise determined by the Committee, withholding obligations arising with
respect to Awards to Participants under the Plan may be settled with Shares
previously owned by the Participant; provided, however, that the Participant may
not settle such obligations with Shares that are part of, or are received upon
exercise of, the Award that gives rise to the withholding requirement. The
obligations of the Company under the Plan shall be conditional on such payment
or arrangements, and the Company and any Affiliate shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment
otherwise due to the Participant. The Committee may establish such procedures as
it deems appropriate for the settling of withholding obligations with Shares.
(c) No Limit on Other Compensation Arrangements. Nothing contained
in the Plan shall prevent the Company or any Affiliate from adopting or
continuing in effect other or additional compensation arrangements, and such
arrangements may be either generally applicable or applicable only in specific
cases.
(d) Rights and Status of Recipients of Awards. The grant of an
Award shall not be construed as giving a Participant the right to be retained in
the employ or consultancy of the Company or any Affiliate. Further, the Company
or any Affiliate may at any time dismiss a Participant from employment or
consultancy, free from any liability, or any claim under the Plan, unless
otherwise expressly provided in the Plan or in any Award Agreement. Except for
rights accorded under the Plan and under any applicable Award Agreement,
Participants shall have no rights as holders of Shares as a result of the
granting of Awards hereunder.
(e) Unfunded Status of the Plan. Unless otherwise determined by
the Committee, the Plan shall be unfunded and shall not create (or be construed
to create) a trust or a separate fund or funds. The Plan shall not establish any
fiduciary relationship between the Company or the Committee and any Participant
or other Person. To the extent a Person holds any right by virtue of a grant
under the Plan, such right (unless otherwise determined by the Committee) shall
be no greater than the right of an unsecured general creditor of the Company.
(f) Governing Law. The validity, construction and effect of the
Plan and any rules and regulations relating to the Plan shall be determined in
accordance with the internal laws of the State of Wisconsin and applicable
federal law.
(g) Severability. If any provision of the Plan or any Award
Agreement or any Award is or becomes or is deemed to be invalid, illegal or
unenforceable in any jurisdiction, or as to any Person or Award, or would
disqualify the Plan, any Award Agreement or any Award under any law deemed
applicable by the Committee, such provision shall be construed or deemed amended
to conform to applicable laws, or if it cannot be so construed or deemed amended
without, in the determination of the Committee, materially altering the intent
of the Plan, any Award Agreement or the Award, such provision shall be stricken
as to such jurisdiction, Person or Award, and the remainder of the Plan, any
such Award Agreement and any such Award shall remain in full force and effect.
(h) No Fractional Shares. No fractional Shares or other securities
shall be issued or delivered pursuant to the Plan, any Award Agreement or any
Award, and the Committee shall determine (except as otherwise provided in the
Plan) whether cash, other securities or other property shall be paid or
transferred in lieu of any fractional Shares or other securities, or whether
such fractional Shares or other securities or any rights thereto shall be
canceled, terminated or otherwise eliminated.
(i) Headings. Headings are given to the Sections and subsections
of the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
24
<PAGE>
Section 9. Effective Date of the Plan
The Plan shall be effective on the date the Plan is adopted by the
Board, subject, however, to the approval of the Plan by the Company's
shareholders within 12 months following the date of adoption of the Plan by the
Board.
Section 10. Term of the Plan
No Award shall be granted under the Plan following the tenth
anniversary of its effective date. However, unless otherwise expressly provided
in the Plan or in an applicable Award Agreement, any Award theretofore granted
may extend beyond such date and, to the extent set forth in the Plan, the
authority of the Committee to amend, alter, adjust, suspend, discontinue or
terminate any such Award, or to waive any conditions or restrictions with
respect to any such Award, and the authority of the Board to amend the Plan,
shall extend beyond such date.
<PAGE>
[Front]
EDISON CONTROL CORPORATION
1999 ANNUAL MEETING OF SHAREHOLDERS - JUNE 8, 1999
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Jay Hanamann and Alan Kastelic, and each or
either of them as proxies, each with the power to appoint his substitute, and
hereby authorizes each or either of them to represent and to vote, as designated
below, all the shares of Common Stock of Edison Control Corporation held of
record by the undersigned on April 16, 1999 at the 1999 Annual Meeting of
Shareholders to be held on June 8, 1999 and adjournment thereof.
1. Election of Directors [ ] FOR all nominees listed below
(except as marked to the contrary)
[ ] WITHHOLD authority to vote
for all nominees listed below
William B. Finneran, Robert L. Cooney, John J. Delucca, Norman Eig, Alan J.
Kastelic, Mary E. McCormack and William C. Scott
INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.
- --------------------------------------------------------------------------------
2. Approval of the Edison Control Corporation 1999 Equity Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, upon such other business as may properly come before
the meeting and at any adjournment thereof.
(Continued on reverse side)
[Back]
(Continued from reverse side)
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 specified director nominees, FOR approval of the Edison Control
Corporation 1999 Equity Incentive Plan and on such other business as may
properly come before the meeting in accordance with the best judgment of the
proxies named herein.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting and
accompanying Proxy Statement relating to the Company's 1999 Annual Meeting of
Shareholders, the Company's Annual Report on Form 10-K and the Company's 1998
Annual Report.
Dated:___________________________, 1999
Signed:_______________________________
______________________________________
Signature(s) of Shareholder(s)
PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS HEREON. When shares are held
by joint tenants, both should sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give your full title as such.
If a corporation, please sign in
full corporate name by President or
other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD IMMEDIATELY USING THE
ENCLOSED ENVELOPE.
