SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(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
14a6 (e)(2)
(X) Definitive Proxy Statement
() Definitive additional Materials
() Soliciting Material Pursuant to a240.14a-11(c)or a240.14a-12
(Name of Registrant as Specified In Its charter): REALCO, INC.
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (check the appropriate Box):
(x) No fee required.
() Fee computed on table below per Exchange Act Rules 14a-6(I)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
No Par Value Common Stock and Classes A and B Preferred Stock
2) Aggregate number of securities to which transaction applies:
3,099,347 shares
3) Per unit price of other underlying value of transaction computed
pursuant to 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:
..............
PROXY STATEMENT
AND
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on March 5, 1999
The Annual Meeting of Shareholders of REALCO, INC., (the "Company")
will be held on March 5, 1999, in Suite 490, at 1650 University Blvd.,
Albuquerque, New Mexico, at 9:30 a.m., New Mexico time to act upon the
following:
(1) To elect six Directors, and
(2) To consider such other business as may properly come before
the Annual Meeting.
Details relating to the above matters are set forth in the attached
Proxy Statement. The Board of Directors is not aware of any other
matters to come before the Annual Meeting. Only Shareholders of record
at the close of business on January 25, 1999, are entitled to vote at
the Annual Meeting. Shares cannot be voted unless a signed proxy is
provided or other arrangements are made to have the shares represented
at the Meeting.
IMPORTANT: WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, WE URGE
YOU TO SIGN, DATE, AND RETURN THE ENCLOSED PROXY WITHOUT DELAY.
REALCO, INC., HAS FURNISHED FOR YOUR CONVENIENCE A PRE-ADDRESSED,
STAMPED ENVELOPE. PLEASE MAIL IN YOUR PROXY TODAY. YOUR PROMPT
RETURN OF THE ENCLOSED PROXY WILL SAVE REALCO, INC., THE NECESSITY AND
EXPENSE OF FURTHER SOLICITATIONS TO OBTAIN A QUORUM AT THE ANNUAL
MEETING.
Sincerely,
s/Melvin A. Hardison
________________________
MELVIN A. HARDISON, Secretary
Albuquerque, New Mexico, January 26, 1999.
PROXY STATEMENT
REALCO, INC.
1650 University Boulevard, N.E., Suite 5-100
Albuquerque, New Mexico 87102
PERSONS MAKING THE SOLICITATION
The Board of Directors (the "Board") of REALCO, INC., (the
"Company") solicits the enclosed proxy for use at the Annual
Meeting of Shareholders of the Company, to be held in Suite 490, 1650
University Blvd., N.E. Albuquerque, New Mexico, at 9:30 a.m., New Mexico
time, and at any postponement(s) or adjournment(s) of the Annual
Meeting.
METHOD OF SOLICITATION
Solicitation will be made primarily by mail, commencing on or about
February 1, 1999, but may also be made by telephone or oral
communications by directors, officers and employees of the
Company.
PROXIES AND VOTING AT THE MEETING
A majority of the outstanding shares of the Company's No Par Value
Stock and Voting Preferred Stock, counted in the aggregate, must be
represented in person, or by proxy at the Annual Meeting in order to
hold the Annual Meeting. Only Shareholders of record at the close of
business on January 25, 1999, are entitled to vote at the Annual
Meeting. Shareholders are encouraged to sign and return their proxies
promptly, indicating the manner in which they wish their shares to be
voted. The proxy agents will vote the shares represented by the
proxies according to the instructions of the persons giving the
proxies. Unless other instructions are given, votes will be cast
in the Proxy's discretion:
1. For the election of the six nominees for Director presented
later in this Proxy Statement.
To be elected as a director, a nominee must receive the votes
of a majority of the shares represented at the Meeting (counting
No Par Value Stock and Voting Preferred Stock in the aggregate).
If no candidate receives a majority, the incumbent Director in
that seat will remain on the Board. If, for any reason any of
the nominees become unavailable for election, which the Board
does not anticipate, the proxies will be voted for a
substitute nominee to be designated by the Board.
2. In the Proxy's discretion on the transaction of such other
business as may properly come before the Annual Meeting
or any postponement(s) or adjournment(s) of the Annual Meeting.
To be passed, any other item that comes before the
Shareholders must also receive the affirmative vote of a
majority of the votes cast in person and by proxy at the
meeting.
Election Inspectors will be appointed at the meeting. Such
Inspectors will determine the validity of proxies and will
receive, canvas and report to the meeting the votes cast by the
Shareholders on each item brought before the Shareholders for vote.
No shares of the Company's Common Stock or Voting Preferred Stock can
be voted by any person who is not the record owner or voting under
authority granted by the record owner. All returned proxies are
counted toward the required quorum or the required percentages of
shares present at the meeting for election of directors. If any
Shareholder returns a proxy without indicating his directions whether
the proxy should be voted for or against any item or voted for or
withheld from voting on any item, the proxy will be voted by the proxy
agents for management's nominees for director and in the agent's
discretion on any other matter coming before the meeting. Any
Shareholder returning a proxy has the power to revoke that proxy at
any time before it is voted, by delivery of a written notice of
revocation, signed by the Shareholder, to the Secretary of the
Company; by delivery of a signed proxy bearing a later date; or by
attending the Annual Meeting and voting in person. Any proxy which is
not revoked will be voted at the Meeting.
In accordance with Company Bylaws, the Annual Meeting will be
conducted in accordance with an agenda which will be
conspicuously posted at the Annual Meeting. Participation at the
Meeting will be encouraged but will be limited to Shareholders and
holders of valid proxies for Shareholders. The Meeting will start
promptly at 9:30 a.m, New Mexico time.
ELECTION OF DIRECTORS
At the Annual Meeting, the Shareholders will elect six Directors to each
serve until the next annual or special meeting of Shareholders at which
directors are elected. The Board of Directors of the Company has
nominated James A. Arias, Bill E. Hooten, Arthur W. Schwartz, Marshall
Blumenfeld, Martin S. Orland and Noel Zeller as Management's candidates
for the six seats. Each of these individuals is a current Director.
Each of the Company's nominees has consented to be nominated and to
serve if elected. Certain Directors are identified below as members of
the Company's Audit Committee.
To be elected, each nominee must receive a majority of the votes cast,
in person or by proxy, at the Annual Meeting of Shareholders.
MANAGEMENT'S NOMINEES FOR DIRECTOR
JAMES A. ARIAS, who has served as the Company's President, Chief
Executive Officer and a Director since its formation in September 1983.
From 1975 to September of 1983, he was a partner of James Bentley &
Associates, a financial consulting and real estate syndication firm
in Albuquerque, New Mexico, which was merged into and became a
division of Financial Services Group, Inc., a New Mexico corporation,
of which Mr. Arias is President and a controlling shareholder. Since
1984, he has served as Manager of S&H Brokerage Inc., N.M., an
insurance broker in Albuquerque, New Mexico, which became a 49.99%
Company subsidiary during the previous fiscal year. Since June 1995, he
has served as interim sole Director of Arinco Computer Systems Inc., a
publicly traded New Mexico corporation that currently has no active
operations. In August, 1997, at the time when the Company
acquired a shareholding interest in Miller and Schroeder Financial,
Inc., a broker dealer headquartered in Minneapolis, Minnesota, Mr. Arias
became a Director and Audit Committee Member of that Company. Mr. Arias
is also a Director of Quatro, Inc., a New Mexico electronics company.
Both Miller and Schroeder and Quatro, Inc., are privately held
corporations. Mr. Arias will devote substantially all of his time to
the affairs of the Company.
BILL E. HOOTEN, who served as an Executive Vice President and a
Director of the Company since March 31, 1995. From inception to August
1995, Mr. Hooten served as the President and a Director of the
Company's predecessor Old Realco. He currently serves as a Director
and Chairman of the Finance and Real Estate Committees of Presbyterian
Health Care Services, headquartered in Albuquerque.
ARTHUR A. SCHWARTZ, who has served as a Director of the Company since
November, 1994. For more than the past five years Mr. Schwartz has
been President of Masters Coverage Corp., a successor company of S&H
Insurance Brokerage, Inc., of N.Y., an insurance broker located in New
York, New York. Of which he had been President and Manager. Masters
Coverage Corp. is a 50.01% owner of S&H Insurance Brokerage, Inc.,
N.M., an insurance brokerage company, of which 49.9% is owned by the
Registrant.
MARSHALL BLUMENFELD, who has served as a Director of the Company since
its formation in September 1983. Since 1963, Mr. Blumenfeld has been
engaged in the private practice of law in New York, New York, until 1997
when he retired from the practice.
MARTIN S. ORLAND, was first elected to the Board by the
Shareholders on March 21, 1997. He served for more than the past five
years as President of Fortis Private Capital, Inc., a Delaware
corporation that conducted a private venture capital investment
business in New York, New York. During the same period, Mr. Orland
was the Executive Vice President of Fortis Advisors, Inc., a Delaware
corporation, that conducted investments in commercial real estate and
mortgages in New York, New York. Both of these corporations are
subsidiaries of Fortis, Inc., which is a subsidiary of a Dutch
holding company. From April 1993, through August 1996, Mr. Orland was
a Director of Financing for Science International, Inc., a publicly
traded corporation, and since November of 1996 has served as a Director
of Continental Bank, a publicly traded financial institution. In 1997,
Mr. Orland became a Director of Quatro, Inc., a New Mexico based
electronics company.
NOEL ZELLER, was first elected to the Board by the Shareholders on
March 21, 1997. Mr. Zeller is the founder and owner of Zelco
Industries, Inc., a New York consumer products manufacturing
corporation, and for more than the past five years has served as the
President of that corporation. He is also the owner-manager of Zeller
Properties LLC, a New York corporation which is a real estate investing
company.
These nominees are the Company's current Board of Directors and each
has agreed to continue to serve as a Company Director if reelected by
the Shareholders.
All directors hold office until the next annual meeting of
shareholders or until their successors have been duly elected and
qualified. Executive officers of the Company are appointed by, and
serve at the discretion of, the Board of Directors. Directors are not
currently paid fees for attending directors' meetings, but the
Company reimburses Directors for out-of-pocket expenses incurred in
attending board meetings.
The Executive Officers and the Directors of the Company are:
Name Age Position
James A. Arias (2) 60 President,CEO and Director
Bill E. Hooten 62 Executive Vice President and
Director
Melvin A. Hardison 69 Secretary/Treasurer
Arthur A. Schwartz 58 Director
Marshall Blumenfeld (1) 64 Director
Martin S. Orland (1)(2) 62 Director
Noel Zeller (1) 62 Director
________________________________________________________________________
(1) Stock Option Committee member.
(2) Audit Committee member.
Background information for executive officers who are not also Directors
is as follows:
MELVIN A. HARDISON has served as the Secretary and Treasurer of the
Company since March 31, 1995. For more than the last five years, Mr.
Hardison served as the Vice President and Treasurer of Old Realco.
Employment Agreements
In March 1995, at the time of the Company's reorganization, Mr. Hooten
and the Company entered into a five-year employment agreement pursuant
to which Mr. Hooten serves as the Company's Executive Vice President.
The Company pays Mr. Hooten an annual salary of $120,000 per year.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock and Preferred Stock ("Voting
Shares") as of January 25, 1999. The Preferred Stockholders have voting
rights identical to the Common Stockholders. The Preferred Stockholders
have the right to convert all or any portion of their Preferred Stock to
Common Stock. The following table assumes the conversion of all
outstanding shares of Preferred Stock into Common Stock, and sets forth
the identity of (i) each shareholder who is known by the Company to own
beneficially more than 5% of the outstanding Voting Shares, (ii) each
director, and (iii) all officers and directors as a group. Except as
otherwise indicated, each of the Shareholders listed in the table or
included within a group listed in the table possesses sole voting and
investment power with respect to the Voting Shares indicated.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Shares Percent of
Name and Address Beneficially Owned Outstanding
Voting Shares
Financial Services Group, Inc. (1) 650,000 21.1%
1650 University Blvd., NE, Suite 5-100
Albuquerque, New Mexico 87102
James A. Arias (1) 650,000 21.1%
1650 University Blvd., NE, Suite 5-100
Albuquerque, New Mexico 87102
Nortek, Inc. (2) 200,000 6.5%
50 Kennedy Plaza
Providence, Rhode Island 02903
Arthur A. Schwartz (7) 35,000 1.2%
401 East 80th Street
New York, New York 10021
Marshall Blumenfeld (7) 27,500 *
1338 Van Buren Street
Hollywood, Florida 33019
Bill E. Hooten (3)(4)(5) 270,714 8.8%
1650 University Blvd., Suite 5-100
Albuquerque, New Mexico 87102
MLPF&S CUST EPO (3)(4) 57,855 1.9%
Bill E. Hooten IRRA FBO
Bill E. Hooten
Bill E. Hooten and
Phyllis S. Hooten (3)(5) 212,859 6.9%
Revocable Trust UTA
1650 University Blvd., Suite 5-100
Albuquerque, New Mexico 87102
Martin S. Orland (7) 1,650 *
52 Centerville Rd.
Holmdel, New Jersey 07733
Noel Zeller (7) 35,000 1.2%
3 Justin Road
Harrison, New York 10528
Deleware Charter Guarantee 24,714 *
Trust Co. TTEEBFO (3)(6)(7)
Melvin A. Hardison ISERP
P.O. Box 8963
Wilmington, Deleware 19899
All Executive Officers
and Directors as a Group (3)(5) 1,044,578 33.8%
___________
* less than 1%
1. Financial Services, Inc., is the registered holder of the shares.
Mr. James A. Arias, the President, Chief Executive Officer and
Chairman of the Board of the Company, is the sole Director and
President of Financial Services Group, Inc., and is the beneficial
holder of such shares.
2. Nortek, Inc., a New York Stock Exchange listed company, acquired
the shares as a result of its previous purchase of Ply Gem, Inc.,
formerly a New York Stock Exchange listed company. Realco, Inc.,
has no association with Nortek in any capacity.
3. The Series "A" and Series "B" shares have one vote on all matters
that may come before a meeting of shareholders. Upon the Offerings
being declared effective by the SEC, the holders of the Series "A" and
"B" Preferred Shares have the right to convert at any time their
Preferred Shares to Common Stock. See "Description Securities --
Preferred Stock".
4. The Trust was established for the benefit of Bill E. Hooten and
was established as a Roll Over account, to accept the Series "A"
Preferred Shares previously held in the Realco, Inc., Stock Bonus
Trust, Bill E. Hooten, Trustee, for the benefit of Bill E. Hooten.
Mr. Hooten as Trustee, has voting and investment power over such
shares.
5. Mr. Hooten, an officer and director of the Company, has the right
to convert Series "A" and "B" Preferred Shares into up to 420,521
shares of Company's Common Stock over which he has the right
to exercise voting and investment power.
6. Mr. Hardison, an officer and Secretary of the company, has the
right to convert Series "A" Preferred Shares into up to 35,305
shares of the Company's Common Stock over which he has the right to
exercies voting and investment power.
7. Does not include options to purchase 15,000 shares of the
Company's common stock.
Family Relationships
None of the Directors, Nominees or Officers of the Company are related
(as first cousins or closer) by blood, marriage or adoption to any other
Director, Nominee, or Officer.
Meetings of the Board
The Board does not hold regular meetings, but does hold such
meetings as the business of the Company requires. During the past
year the Board held four meetings. All members attended at least 75%
of the meetings.
The Board has no nominating or compensation committees, but does have an
Audit Committee consisting of Martin S. Orland, Arthur A. Schwartz
and Marshall Blumenfeld and a Stock Option Committee consisting of James
A. Arias, and Noel Zeller.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding
compensation earned or awarded to the Company's officers during the
Company's last three completed fiscal years ended September 30, 1996,
1997 and 1998. No other executive officer of the Company received
total salary and bonus compensation in excess of $100,000 for 1998.
Summary of Compensation Table
Annual Compensation
Name and Principal Position Year Salary Other
Compensation
James A. Arias, 1996 $ 78,000 -0-
President, CEO, Chairman 1997 $ 82,800 $ 14,300
of the Board (1) 1998 $ 87,600 -0-
Bill E. Hooten, Executive 1996 $ 120,000 -0-
Vice President (2)(3) 1997 $ 120,000 -0-
1998 $ 120,000 -0-
Melvin A. Hardison 1996 $ 68,250 $ 1,733
Secretary and Treasurer 1997 $ 68,250 $ 1,733
1998 $ 68,250 $ 1,733
Robert H. Feinberg (4) 1996 -0- -0-
1997 $ 25,000 -0-
1998 $ 303,900 -0-
Bradley Smith (5) 1996 -0- -0-
1997 $ 72,000 -0-
1998 $ 96,000 $28,000
____________
(1) The Company pays Mr. Arias a base salary per month, which calls
for increases at the rate of 6% per annum as a cost of living
adjustment. During fiscal 1998, the monthly salary compensation paid
to Mr. Arias was $7,300. During fiscal 1997, the monthly salary
compensation paid to Mr. Arias was $6,900. In addition, Mr. Arias is
to be paid an allowable bonus equal to 10% of all pretax profits in
excess of $400,000 during any year. Mr. Arias was not entitled to
any allowable bonus for the fiscal year ended September 1998.
(2) Pursuant to Mr. Hooten's employment agreement, he receives an
annual salary of $120,000 per year. See "Employment Agreements."
(3) Phyllis S. Hooten, the wife of Bill E. Hooten, is employed by
the company as an interior designer. She has been paid $9,000 per year
during the fiscal years ended 1996, 1997 and 1998. She was also
furnished a car that is leased by the Company for $472 per month.
None of this compensation paid or furnished to Mrs. Hooten is included
in the totals of the compensation paid to Mr. Hooten.
(4) Mr. Feinberg was first employed by First Commercial Real Estate
Services, Inc., a Company subsidiary, in April 1997, as its President.
Mr. Feinberg is not paid a basic salary, his compensation is based on
an annual sliding commission scale and he is primarily responsible for
payment of sales expenses which he may incur as part of his sale
efforts.
(5) Mr. Smith was first employed by the Prudential Preferred
Properties of Arizona, a Company subsidiary in January 1997. His base
salary is $96,000 and he has an incentive bonus arrangement which is
tied to annual pre-tax profit of Prudential Preferred Properties of
Arizona, which resulted in additional compensation of $28,000 in 1998.
Option Grants
During 1998 the Company granted certain of its officers options
under its Key Employee Incentive Stock Option Plan as follows:
<TABLE>
Option/SAR Grants in Last Fiscal Year
_____________________________________________________________________________
Individual grants
________________________________ _____________ ______________
(a) (b) (c) (d)
Number of Percent of total Exercise
securities options/SARs of base
underlying granted to price
option/SARS employees in ($/Sh)
granted(#) fiscal year
<S> <C> <C> <S> <C> <C>
Melvin A. Hardison 5,000 shares 5.5% $3.45
</TABLE>
Option/SAR Grants in Last Fiscal Year (continued)
_______________________________________________________________________
<TABLE>
<CAPTION>
Potential realizable
value at assumed Alternative
annual rates of stock to (f) and
price appreciation for (g): grant
option term date value
______________________ _____________
(e) (f) (g) (h)
Expiration * * Grant Date:
date present value*
<S> <C> <C>
Melvin A. Hardison 12-11-02 $ 5,545
</TABLE>
________________________________________________________________
* Each option was granted at 120% of the market price on the
date of the grant.
Employment Agreements
In March 1995, at the time of the Company's reorganization, Mr. Hooten
and the Company entered into a five-year employment agreement pursuant
to which Mr. Hooten serves as the Company's Executive Vice President.
The Company pays Mr. Hooten an annual salary of $120,000 per year.
On March 14, 1995, the Company entered into a three-year employment
agreement with Mr. Melvin A. Hardison, the Company's Treasurer and
Secretary, that provides he will be paid an annual salary of $68,250.
The employment agreement expired in February 1998. Mr. Hardison
continues to serve in the capacity of the Company's Treasurer and
Secretary and is paid an annual salary of $68,250.
Certain Transactions
During the past two years the Company was a party to the following
transactions in which certain officers and/or directors had a material
interest:
On January 1, 1996, upon first acquiring an independent determination of
the fairness or reasonableness of an agreement entered into with Mr.
Hooten, an officer and director, to lease space for the operation of
Hooten/Stahl. The lease expired on December 31, 1996, and is now
continuing on a month-to-month basis with no change in terms or
conditions. The Company currently pays an annual rental fee of
$103,250. The rent charged is comparable to rents charged in Albuquerque
by others for similar space.
Any future transactions with officers, directors or 5% beneficial
shareholders of the Company's Common Stock will be on terms no less
favorable to the Company or its affiliates than could be obtained from
unaffiliated third parties and will be approved by a majority of the
independent outside members of the Company's Board of Directors who do
not have an interest in the transaction.
Compensation of Directors:
Directors are not currently paid a fee or other compensation for serving
as Directors. However, the Company reimburses each Director for all out
of pocket expenses incurred to attend Directors.
ADDITIONAL COMPENSATION ARRANGEMENTS
In addition to the Key Employee Stock Incentive Plan discussed above,
the Company established a matching retirement 401K Plan effective
January 1, 1999, for the benefit of all Company employees. Pursuant to
the Plan, the Company will contribute up to 25% of employee
contributions, such contributions not to exceed $1,500 per employee.
There are currently no other plans, arrangements, commitments or
understandings with respect to the establishment of any plan or program.
DIVIDEND POLICY
The Company has not paid a dividend on its Common Stock for the last
five years. It is the present policy of the Company not to pay cash
dividends on the Common Stock. Any payment of cash dividends in the
future on the Common Stock will be dependent upon the Company's
financial condition, results of operations, current and anticipated cash
requirements, plans for expansion, restrictions under debt obligations,
if any, as well as other factors that the Board of Directors deems
relevant.
LEGAL PROCEEDINGS
The Company is subject to certain legal claims from time to time and is
involved in litigation that has arisen in the ordinary course of its
business. It is the Company's opinion that it either has adequate legal
defenses to such claims or that any liability that might be incurred due
to such claims will not, in the aggregate, exceed the limits of the
Company's insurance policies or otherwise result in any material adverse
effect on the Company's operations or financial position.
On April 11, 1997, the City of Albuquerque instituted condemnation
proceedings related to a parcel of land upon which the Rregistrant has
a joint venture financing arrangement for development. This matter is
more fully described in the Registrant's current 10-KSB filing enclosed
with this Proxy.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Grant Thornton, LLP, certified public accountants, has provided services
to the Company during the past fiscal year, which included the
examination of the Company's annual report to shareholders and
annual report on Form 10-KSB. A representative of Grant Thornton
LLP will be available at the Annual Meeting to respond to appropriate
questions concerning the financial statements of the Company, and will
have the opportunity to make a statement if the representative desires
to do so.
PROXY MATERIALS FOR NEXT ANNUAL MEETING
Shareholder proposals for consideration at the next Annual Meeting,
which the Company expects to hold in March 2000, must be received by the
Company no later than August 31, 1999. In order for such proposals to
be included, they must be legal and must comply with the Rules and
Regulations of the Securities and Exchange Commission.
OTHER BUSINESS
The Board knows of no other business which is to be presented at the
Annual Meeting. However, if other matters should properly come before
the Annual Meeting, the persons named in the proxy will vote on those
matters according to their judgment.
By Order of the Board of Directors
s/Melvin A. Hardison
__________________________________
Melvin A. Hardison, Secretary
Albuquerque New Mexico, January 26, 1999.
ON WRITTEN REQUEST, THE COMPANY WILL PROVIDE, WITHOUT CHARGE, A COPY OF
ITS ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED SEPTEMBER 30,
1998, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (INCLUDING THE
FINANCIAL STATEMENTS AND THE SCHEDULES THERETO) TO ANY RECORD HOLDER
OR BENEFICIAL OWNER OF THE COMPANY'S SHARES AS OF THE CLOSE OF BUSINESS
ON JANUARY 25, 1999. ANY EXHIBIT TO THE ANNUAL REPORT ON FORM 10-KSB
WILL BE PROVIDED ON REQUEST UPON PAYMENT OF THE REASONABLE EXPENSES OF
FURNISHING THE EXHIBITS. ANY SUCH WRITTEN REQUEST SHOULD BE ADDRESSED
TO MELVIN A. HARDISON, SECRETARY, REALCO, INC., 1650 UNIVERSITY
BOULEVARD, N.E., SUITE 5-100, ALBUQUERQUE, NEW MEXICO 87102.
PROXY
FOR THE ANNUAL MEETING OF SHAREHOLDERS OF REALCO, INC., to be held at
9:30 a.m., March 5, 1999, in Suite 490, 1650 University Blvd., N.E.
Albuquerque, New Mexico.
This Proxy is solicited by Management. Management recommends that you
vote "yes" for the election of each Management Candidate.
THE UNDERSIGNED HEREBY APPOINTS AS PROXIES, James A. Arias and Bill E.
Hooten, and each of them, each with the power to appoint his or her
substitute, and hereby authorize them to represent and to vote, as
designated below, all of the stock of REALCO, INC., owned of record by
the undersigned on January 25, 1999, at the 1999 Annual Meeting of
Shareholders to be held on March 5, 1999, and at any postponement(s)
thereof, for the election of six Directors and to vote upon any other
matters which may properly come before the Meeting, subject to any
directions in this proxy.
THIS PROXY REVOKES ALL PROXIES PREVIOUSLY GRANTED BY ME FOR ANY PURPOSE.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HERIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE SIX
PEOPLE WHO ARE MANAGEMENT'S NOMINEES TO THE BOARD OF DIRECTORS,
AND IN THE DISCRETION OF THE PERSONS NAMED AS PROXIES HEREIN ON ANY
OTHER MATTER BROUGHT BEFORE THE MEETING.
1. ELECTION OF DIRECTORS:
VOTE MY STOCK FOR THE FOLLOWING SIX NOMINEES:
( ) JAMES A. ARIAS, BILL E. HOOTEN, ARTHUR A. SCHWARTZ, MARSHALL
BLUMENFELD, NOEL ZELLER AND MARTIN S. ORLAND.
( ) NO: WITHOLD AUTHORITY TO VOTE FOR ALL CANDIDATES LISTED ABOVE.
INSTRUCTIONS: IF YOU DO NOT WANT YOUR STOCK VOTED FOR ANY
INDIVIDUAL LISTED ABOVE, LINE THROUGH THAT NOMINEES NAME.
2. OTHER MATTERS THAT MAY COME BEFORE THE MEETING:
IF ANY OTHER MATTERS ARE PROPERLY BROUGHT BEFORE THE MEETING (OR ANY
ADJOURNMENTS OF THE MEETINGS) IN THEIR DISCRETION, THE PERSONS NAMED AS
PROXIES OR THEIR SUBSTITUTES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS IN THEIR DISCRETION.
( )GRANTED ( )WITHHELD
SIGN BELOW AS YOUR NAME APPEARS ON THE LABEL. IF THERE IS NO LABEL, SIGN
YOUR NAME AS YOU NORMALLY SIGN YOUR NAME AND DATE YOUR PROXY.
________________________________________
SIGNATURE
DATE______________________,1999
________________________________________
SIGNATURE OF CO-OWNER (IF APPLICABLE)
DATE______________________,1999
WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE SIGN TITLE AS SUCH. IF A CORPORATION, PLEASE SIGN IN FULL
THE CORPORATION'S NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN THE PARTNERSHIP NAME BY AUTHORIZED PERSON.
IF ANYONE OTHER THAN THE SHAREHOLDER(S) NAMED ON THE ABOVE LABEL IS
SIGNING THIS PROXY, INDICATE THE CAPACITY IN WHICH YOU ARE SIGNING.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE. YOUR STOCK CANNOT BE VOTED UNLESS YOU VOTE IN PERSON AT THE
ANNUAL MEETING OR YOU RETURN SIGNED AND DATED PROXY BY THE TIME OF
VOTING AT THE ANNUAL MEETING.
REALCO, INC.
1650 UNIVERSITY BOULEVARD, N.E., SUITE 5-100
ALBUQUERQUE, NEW MEXICO 87102
