TECH/OPS SEVCON, INC.
One Beacon Street
Boston, Massachusetts 02108
December 8, 1998
BY DIRECT TRANSMISSION
- -----------------------
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington D.C. 20549
Re: Tech/Ops Sevcon, Inc.
Definitive Proxy Material
Pursuant to Rule 14a-6(b) under the Securities Exchange Act
of 1934 and Rule 101(a)(1)(iii) of Regulation S-T, Tech/Ops
Sevcon, Inc. hereby files by direct transmission a definitive
copy of the proxy statement and form of proxy for its 1999 Annual
Meeting of Stockholders.
Yours very truly,
/s/ Paul B. Rosenberg
Treasurer
cc: David R. Pokross, Jr., Esq.
American Stock Exchange (3 copies)
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Check the Appropriate Box
[X] Definitive Proxy Statement
Tech/Ops Sevcon, Inc.
- ----------------------------------------------------------------
(Name of Registrant as Specified in its Charter
Payment of Filing Fee (Check the appropriate box)
[X] No fee required.
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TECH/OPS SEVCON, INC.
ONE BEACON STREET, BOSTON, MASSACHUSETTS 02108
TELEPHONE (617) 523-2030
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the annual meeting of the stock-
holders of Tech/Ops Sevcon, Inc., a Delaware corporation, will be
held at the offices of Palmer & Dodge, 24th Floor, One Beacon
Street, Boston, Massachusetts, at 5:00 p.m. on Wednesday, January
27, 1999 for the following purposes:
(1) To elect two directors to hold office for a term of
three years.
(2) To transact such other business as may properly come
before the meeting.
Only stockholders of record at the close of business on De-
cember 11, 1998 are entitled to notice of the meeting or to vote
thereat.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING.
THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE
COMPLETE YOUR PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU AT-
TEND THE MEETING AND WISH TO VOTE IN PERSON, YOUR PROXY WILL NOT
BE USED.
By order of the Board of Directors,
David R. Pokross, Jr.
Secretary
Dated December 28, 1998
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PROXY STATEMENT
APPROXIMATE DATE OF MAILING: DECEMBER 28, 1998
INFORMATION CONCERNING THE PROXY SOLICITATION
The enclosed proxy is solicited by and on behalf of the Board of
Directors of Tech/Ops Sevcon, Inc. ("the Company") for use at the
annual meeting of stockholders of the Company to be held on January
27, 1999 at 5:00 p.m. at the offices of Palmer & Dodge, 24th Floor,
One Beacon Street, Boston, Massachusetts, or any adjournments or
postponements thereof. It is subject to revocation at any time prior
to the exercise thereof by giving written notice to the Company, by
submission of a later dated proxy or by voting in person at the
meeting. The costs of solicitation, including the preparation,
assembly and mailing of proxy statements, notices and proxies, will be
paid by the Company. Such solicitation will be made by mail and in
addition may be made by the officers and employees of the Company
personally or by telephone or telegram. Forms of proxies and proxy
material may also be distributed, at the expense of the Company,
through brokers, custodians and other similar parties to the
beneficial owners of the Common Stock.
On December 11, 1998, the Company had outstanding 3,107,873
shares of Common Stock, $.10 par value, which is its only class of
voting stock, held of record by approximately 370 holders.
Stockholders of record at the close of business on December 11, 1998
will be entitled to vote at the meeting. With respect to all matters
which will come before the meeting, each stockholder may cast one vote
for each share registered in his name on the record date. The shares
represented by every proxy received will be voted, and where a choice
has been specified, the shares will be voted in accordance with the
specification so made. If no choice has been specified on the proxy,
the shares will be voted FOR the election of the nominees as
directors.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table provides information as to the ownership of
the Company's Common Stock as of December 11, 1998 by (i) persons
known to the Company to be the beneficial owners of more than 5% of
the Company's outstanding Common Stock, (ii) the Chief Executive
Officer of the Company, and (iii) all current executive officers and
directors of the Company as a group. Beneficial ownership by
individual directors is shown in the table on pages 2, 3, and 4 below.
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Amount
Name and Address Beneficially Percent
of Beneficial Owner Owned (1) of Class
------------------- --------- --------
Dr. Marvin G. Schorr 354,838 (2) 11.4%
Tech/Ops Corporation
One Beacon Street
Boston, MA 02108
Bernard F. Start 232,977 (2) 7.5%
Tech/Ops Sevcon, Inc.
One Beacon Street
Boston, MA 02108
Dimensional Fund Advisors, Inc. 185,900 (3) 6.0%
1299 Ocean Avenue, Suite 650
Santa Monica, CA 90401
Matthew Boyle. . .... . . . 6,000 (4) #
Tech/Ops Sevcon, Inc.
One Beacon Street
Boston, MA 02108
All current executive officers and
directors as a group (8 persons).. 796,870 (5) 25.5%
___________
# Less than 1%
(1) Unless otherwise indicated, each owner has sole voting
and investment power with respect to the shares listed.
(2) Includes 500 shares subject to stock options exercis-
able within sixty days.
(3) As reported on Schedule 13G filed with the Securities
and Exchange Commission on July 6, 1998.
(4) Shares subject to stock options exercisable within
sixty days.
(5) Includes 19,000 shares subject to stock options exer-
cisable within sixty days
ELECTION OF DIRECTORS
The Company's Board of Directors has fixed the number of
directors at seven. Members of the Board of Directors are divided
into three classes serving staggered three-year terms. The term of
two of the Company's current directors, Matthew Boyle and C. Vincent
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Vappi, expires at the annual meeting. Mr. Boyle and Mr. Vappi are the
Board's nominees for re-election to three-year terms by the
stockholders at the annual meeting. The Company is not presently aware
of any reason that would prevent any nominee from serving as a
director if he is elected. If a nominee should become unavailable for
election, the proxies will be voted for another nominee selected by
the Board.
Pursuant to the Company's by-laws, directors will be elected by a
plurality of the votes properly cast at the annual meeting.
Abstentions, votes withheld and broker non-votes will not be treated
as votes cast and will not affect the outcome of the election. A
"broker non-vote" occurs when a broker holding a customer's shares
indicates on the proxy that the broker has not received voting
instructions on a matter from the customer and is barred by applicable
rules from exercising discretionary authority to vote on the matter.
The following table contains information on the two nominees for
election at the annual meeting and each other person whose term of
office as a director will continue after the meeting. The nominees
for election at the meeting are indicated by an asterisk.
Number
of Common
Has Been Shares of
a Director the Company
of the Owned
Company Benefici-
Business or its Pre- -ally on
Experience decessor Dec. 11
During Past Tech/Ops, 1998 and
Term Five Years and Inc. Percent of
Name Expires Other Directorships Since Class (1)
- ---- ------- ------------------- ----- --------
* Matthew 1999 President and Chief 1997 6,000
Boyle Executive Officer of (#)
Age -- 36 the Company since (2)
November 1997. Vice
President and Chief
Operating Officer of
the Company from Nov-
ember 1996 to November
1997. From 1994 to
1996, Mr. Boyle was
General Manager of GEC
Alsthom Regulateurs
Europa, Colchester,
England, an electronic
controls company and
from 1991 to 1994, Gen-
eral Manager of the IACD
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Scottish division of
Honeywell Control Systems
Ltd., Aberdeen, Scotland,
an electronics and con-
trols systems company.
Paul B. 2000 Treasurer of the Company 1988 83,980
Rosenberg (4)(5) since January 1988. Mr. (2.7%)
Age -- 66 Rosenberg is President of (3)
Tech/Ops Corporation, Bost-
on, Mass., a consulting firm,
and is a director of Land-
auer, Inc., Glenwood, Ill-
inois, a provider of personnel
dosimetry services.
Herbert 2000 Until June 1985, chief exec- 1971 31,500
Roth, Jr. (5) utive officer of LFE Corp- (1.0%)
Age -- 70 oration, Waltham, Mass., (3)
manufacturer of equipment
and systems for traffic and
industrial process control.
Mr. Roth is a director of
Boston Edison Company, Boston,
Mass., a public utility; Phoe-
nix Life Insurance Company;
Phoenix Total Return Fund,
Inc., a mutual fund; Mark IV
Industries, Inc., a divers-
ified manufacturing concern;
and a.trustee of Phoenix Series
Fund, Phoenix Multi Portfolio
Fund, and Big Edge Services
Fund, all mutual funds.
Dr. Marvin. 1998 Chairman of the Company's 1951 354,838
G. Schorr (4) Board of Directors since (11.4%)
Age -- 73 January 1988. Chairman of (3)
the Board of Directors and
President of Tech/Ops, Inc.,
the Company's predecessor.
Dr. Schorr is Chairman of
Landauer, Inc., Glenwood,
Illinois, a provider of pers-
onnel dosimetry services,
Chairman of Helix Technology
Corporation, Mansfield, Mass.,
manufacturer of cryogenic
equipment, and Chairman of
Tech/Ops Corporation, Boston,
Mass., a consulting firm.
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Bernard 2000 Vice-Chairman of the Board 1988 232,977
F. Start since November 1997. Pres- (7.5%)
Age -- 60 ident and Chief Executive (3)
Officer of the Company from
January 1988 to November
1997.
David 2001 President of Atlantic Man- 1997 2,500
R. Steadman (5)(6) agement Associates, a man- (#)
Age -- 61 agement services firm. Since (3)
1988. From 1990 to 1994, Mr.
Steadman served as President
and Chief Executive Officer
of Integra, a hotel and rest-
aurant company. Mr. Steadman
is Chairman of the Board of
Elcotel, Inc., a manufacturer
of high technology pay tele-
phone components, a director
of Aavid Thermal Technologies,
Inc., a manufacturer of thermal
management products, and a dir-
ector of several privately-held
companies.
* C. Vincent 1999 Until May 1991, Chairman 1971 8,500
Vappi (5)(6) and Chief Executive Officer (#)
Age -- 72 of Vappi & Company, Inc., (3)
Cambridge, Mass., a gen-
eral building contractor.
Mr. Vappi is a director of
John Hancock Mutual Life
Insurance Company, Boston,
Mass.
- ------------------------------------
# Less than 1%
(1) Unless otherwise indicated, each director has sole
voting and investment power with respect to the
shares listed.
(2) Shares subject to stock options exercisable within
sixty days.
(3) Includes 500 shares subject to stock options exercis-
able within sixty days.
(4) Member of the Executive Committee.
(5) Member of the Audit Committee.
(6) Member of the Compensation Committee.
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During the fiscal year ended September 30, 1998, the Board of
Directors held a total of five meetings. During such year, all
directors attended more than 75 percent of the total number of
meetings of the Board of Directors and all committees of the Board on
which the director served.
The Board of Directors has an Audit Committee and a Compensation
Committee. The Audit Committee, which met twice during the fiscal
year ended September 30, 1998, reviews the scope and results of the
external audit, including the audited financial statements, the
auditors' compensation and the adequacy of the Company's internal
financial controls, and recommends the engagement of the Company's
external auditors. The Compensation Committee, which met once last
year, reviews and recommends to the Board the annual salary, bonus,
stock options, and other benefits of the senior executives. The Board
of Directors does not have a nominating committee.
Director Compensation
Mr. Roth, the Chairman of the Audit Committee, and Mr. Vappi, the
Chairman of the Compensation Committee, are each paid $13,500 a year
for their services as directors. The other directors (except Mr.
Boyle) are paid $12,500 each. In addition, Mr. Start receives
compensation at an annual rate of $25,000 as Vice Chairman and the
Board of Director's representative in Europe.
On January 28, 1998, the stockholders approved the 1998 Director
Stock Option Plan, reserving 50,000 shares of common stock to be
issued for the grant of options under the Plan. Following the vote,
each of the Company'' six non-employee directors was granted an option
for 5,000 shares of common stock at a price of $15.1875 per share, the
fair market value of the stock at that date. The options will expire
90 days after the tenth anniversary of the date of grant and will
become exercisable in equal 500 share amounts on each of the first ten
anniversaries of the date of grant, commencing January 28, 1999. All
outstanding options issued under the Plan become immediately
exercisable in full in the event of a "Change in Control" of the
Company (as defined in the Plan).
In January 1997, the Company terminated its Directors' Retirement
Plan and fixed the annual retirement payment for the following
directors payable upon retirement for life in the amounts indicated,
with one-half of the amount payable to the director's surviving spouse
for life: Messrs. Roth and Vappi - $6,250 and Mr. Rosenberg - $5,000.
Messrs. Boyle, Schorr, Start, and Steadman will receive no benefits
under the Plan.
The Company pays the consulting business owned by Mr. Rosenberg
and Dr. Schorr $100,000 per year, under an Agreement extending until
December 31, 1999. Of this amount, $30,000 is paid to Mr. Rosenberg
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for his services as the Company's Treasurer, and $70,000 is applied
toward the expenses of maintaining an office and support facilities
for the Company's corporate office and for Mr. Rosenberg and Dr.
Schorr. Dr. Schorr receives no compensation from this payment.
EXECUTIVE COMPENSATION
The following tables provide information for the last three years
concerning the compensation of the two executives of the Company whose
total compensation exceeded $100,000 in the most recent fiscal year,
and the value of unexercised stock options at the end of such year.
Information concerning the President and Chief Executive Officer of
the Company is included only since November 1996, the date he joined
the Company,
Summary Compensation Table
Long-Term
Compens-
Name & Principal Fiscal Annual ation
Position Year Compensation Awards
- ---------------- ------ ------------------------ -----------
Other Securities
Annual Under-
Compens- lying
Salary Bonus ation(a) Options(#)
------ ----- ------- ----------
Matthew Boyle 1998 $146,250 $50,000 $ 0 20,000
President & Chief 1997 130,800 20,000 0 20,000
Executive Officer
from November 1997
Vice President &
Chief Operating
Officer (Nov 96
to Nov 97)
Paul A. McPartlin 1998 $ 85,600 $30,300 $11,100 0
Vice President & 1997 80,800 6,200 10,900 0
Chief Financial 1996 73,100 11,100 10,300 0
Officer
(a) Value of Company-provided automobile.
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Option Grants in Last Fiscal Year
The following table shows all stock options granted to
executive officers of the Company during the fiscal year ended
September 30, 1998:
Individual Grants Potential Realiz-
able
Number of Percent Value At Assumed
Secu of Total Annual Rates of
rities Options Exercised Stock Price Appre-
Under- Granted or Base Expirat ciation For Optio
lying to Em- Price ion Term
Name Options ployees ($/Sh) Date 5%($) 10%($)
Granted in Fiscal
(#) Year
Matthew 20,000 100% $13.75 11/12/ $173,000 $438,000
Boyle... (a)
(a) These options were granted on November 13, 1997, and become
exercisable with respect to 2,000 shares on each anniversary of the
grant date (September 13, 2007 in the case of the last 2,000 shares)
or earlier with respect to all shares upon a change in control of the
Company, as defined in the option grant.
Fiscal Year-End Option Values
Number of
Securities
Underlying Value of
Unexercised Unexercised
Options In-the-Money
Options
at 9/30/98 at 9/30/98
(#)
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
Matthew Boyle 2,000/38,000 $1,000/$35,000
Paul A. McPartlin 10,000/0 $99,600/$0
No executive officer of the Company exercised any stock options
during the last fiscal year.
Retirement Plan. Mr. Boyle and Mr. McPartlin participate in the
Company's U. K. Retirement Plan, a defined benefit plan, under which
benefits at age 65 are based upon 1/60th of final U. K. - based salary
(as defined) for each year of service, subject to a maximum of 2/3rds
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of final U K. - based base salary. A spouse's pension of 50% of the
employee's pension is payable at death either before or during
retirement. Pension payments escalate by at least 3% per year,
compounded, and at a higher rate in certain circumstances. The
employee contributes 4% of base salary, with the balance of the cost
being met by the Company.
The following table sets forth information concerning the annual
benefits payable to the employee pursuant to the U. K. Retirement Plan
upon retirement at age 65 for specified compensation levels and years
of service classifications. Benefits under the U. K. Retirement Plan
are computed solely on the U. K. base salary of participants,
exclusive of bonuses, incentive and other compensation, and are not
reduced on account of U. K. Social Security entitlement.
U. K. Retirement Plan Table
Average Annual Earnings Estimated Annual Pension Based on
on which Years of Service Indicated
Retirement --------------------------------
Benefits are Based 15 years 20 years 25 years 30 years
- ------------------ -------- -------- -------- --------
$ 100,000 $ 25,000 $ 33,400 $ 41,700 $ 50,000
125,000 31,300 41,700 52,100 62,500
150,000 37,500 50,000 62,500 75,000
175,000 43,800 58,300 72,900 87,500
200,000 50,000 66,700 83,300 100,000
225,000 56,300 75,000 93,800 112,500
250,000 62,500 83,300 104,200 125,000
275,000 68,800 91,700 114,600 137,500
300,000 75,000 100,000 125,000 150,000
Credited years of service at September 30, 1998 were 2 for Mr.
Boyle and 22 for Mr. McPartlin. Their compensation is entirely U. K.
based.
COMPENSATION COMMITTEE REPORT
The Company's compensation program is designed to motivate and
retain employees by encouraging and rewarding performance. The
program is administered by the Compensation Committee of the Board of
Directors (the "Committee"), consisting of three independent directors
who are not employees of the Company. The Committee regularly reviews
and approves generally all compensation and fringe benefit programs of
the Company, and also reviews and determines the base salary and
incentive compensation of the executive officer named above, as well
as stock option grants to all employees. All compensation actions
taken by the Committee are reported to the full Board of Directors,
which, excluding employee directors, approves the actions of the
Committee. The Committee also reviews and makes recommendations to
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the Board on policies and programs for the development of management
personnel, as well as management structure and organization. The Com-
mittee administers the Company's Equity Incentive Plan.
The Company believes that stock options are an important
incentive to motivate executive officers and other key employees for
improved long-term performance of the Company. The Company considers
stock ownership, options currently held and options previously granted
when granting options although there are no specific levels of
ownership for such grants.
The Committee believes that the combination of salary and
incentive compensation is the best method for compensating its
executive officers and senior managers to promote uniform excellence,
long-term commitment and team performance. Management salaries are
determined based upon individual performance, level of responsibility
and experience. The Committee reviews these salaries annually and
measures them against compensation data obtained from published
compensation surveys and surveys that the Committee makes of a group
of peer companies. The Committee believes that the salaries of the
Company's executive officers are in the mid-range of these surveys.
The peer companies are generally of about the same size as the Company
and are in technical, rather than consumer or distribution fields.
The peer companies may include some of the companies included in the
Industrial Controls Industry Index used in the Performance Graph. The
Company believes that its competitors for executive talent are not
necessarily companies which engage in the same business as the Company
and, therefore, the companies used for comparative compensation
purposes differ from the companies included in the Industrial Controls
Industry Index.
The recommended base salary and incentive compensation award for
the President is determined each year by the Committee based upon its
subjective assessment of the overall financial performance of the
Company and the performance of the President relative to corporate
objectives and other factors. Mr. Boyle's base salary during fiscal
1998 increased 11% to $150,000 from fiscal 1997. The increase in Mr.
Boyle's base salary related to his election as President and Chief
Executive Officer and attendant new levels of responsibility and
accountability in his new position. Due to the Company's strong
financial improvement in fiscal 1998 over the prior year, as well as
significantly improved quality control performance, a bonus of $50,000
was awarded to Mr. Boyle.
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During the last fiscal year, a stock option was granted for
20,000 shares to Mr. Boyle upon his election as the Company's Chief
Executive Officer, under the Company's Equity Incentive Plan.
Members of the Compensation Committee
Herbert Roth, Jr.
David R. Steadman
C. Vincent Vappi, Chairman
PERFORMANCE TABLE
The following table compares the cumulative total return (change
in stock price plus reinvested dividends) assuming $100 invested in
the Common Stock of the Company, in the American Stock Exchange
("AMEX") Market Value Index, and in the Media General Industrial
Controls Sector Index during the period from September 30, 1993
through September 30, 1998.
Value of Investment at September 30,
-----------------------------------
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
Tech/Ops Sevcon, Inc. $ 100 $163 253 361 259 350
AMEX Market Value Index 100 102 123 128 155 136
Media General Industrial
Controls Sector Index 100 109 111 90 164 117
AUDITORS
Arthur Andersen LLP, 225 Franklin Street, Boston, Massachusetts,
has served as auditors for the Company and its predecessor Tech/Ops,
Inc. since the latter was formed, and upon recommendation of the Audit
Committee, has been appointed as auditors for the current year.
Representatives of Arthur Andersen LLP are expected to be present at
the meeting with an opportunity to make a statement if they desire to
do so and are expected to be available to respond to appropriate
questions.
DEADLINE FOR STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
In order for a stockholder proposal to be considered for
inclusion in the Company's proxy materials for the annual meeting in
2000, it must be received by the Company at One Beacon Street, Boston,
Massachusetts 02108, Attention: Treasurer, no later than August 30,
1999.
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ADVANCE NOTICE PROVISIONS FOR
STOCKHOLDER PROPOSALS AND NOMINATIONS
The by-laws of the Company provide that in order for a
stockholder to bring business before or propose director nominations
at an annual meeting, the stockholder must give written notice to the
Secretary or other specified officer of the Company not less than 50
days nor more than 75 days prior to the meeting. The notice must
contain specified information about the proposed business or each
nominee and the stockholder making the proposal or nomination. If the
annual meeting is scheduled for a date other than the fourth Wednesday
in January and notice thereof is mailed to stockholders or publicly
disclosed less than 65 days in advance, the notice given by the
stockholder must be received not later than the 15th day following the
day on which the notice of such annual meeting date was mailed or
public disclosure made, whichever occurs first.
OTHER BUSINESS
The Board of Directors does not know of any business which will
come before the meeting except the matters described in the notice.
If other business is properly presented for consideration at the
meeting, the enclosed proxy authorizes the persons named therein to
vote the shares in their discretion.
Dated December 28, 1998
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(FORM OF PROXY CARD) Appendix A
TECH/OPS SEVCON, INC.
Proxy Solicited by the Board of Directors for Annual Meeting
of Stockholders to be held January 27, 1999
The undersigned appoints Marvin G. Schorr, Paul B. Rosenberg and
David R. Pokross, Jr. and each of them, the attorneys and proxies of the
undersigned, with power of substitution, to vote all the shares of
Tech/Ops Sevcon, Inc. which the undersigned is entitled to vote at the
Annual Meeting of Stockholders to be held January 27, 1999 at the
offices of Palmer & Dodge, 24th Floor, One Beacon Street, Boston,
Massachusetts at 5:00 p. m. and at any adjournments thereof.
Please complete, sign and date on reverse side
and mail in enclosed envelope
- ------------------------------------------------------------
_____
\ \ Please mark
\ X \ votes as in
\____\ this example
This proxy will be voted FOR both nominees for Director below
if no contrary instructions are given.
1. ELECTION OF DIRECTORS
Nominees for three-year terms: Boyle, Vappi
For Both Withheld from
Nominees both nominees
\__\ \__\
\__\_______________________
For both nominees except as MARK HERE FOR ADDRESS
noted above CHANGE AND NOTE AT LEFT
\___\
This proxy should be signed by the registered holder. Where
stock is registered in the names of more than one person, all
such persons should sign. When signing as executors, admin-
istrators, trustees, guardians, etc. please indicate your title as such.
Signature___________ Date________
Signature___________ Date________
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