TRANSMATION INC, DEF 14A, 1996-07-10

TRANSMATION INC
DEF 14A, 1996-07-10
INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS

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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:

<TABLE>
<S> <C>
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>

TRANSMATION, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

JOHN A. MISIASZEK, VICE PRESIDENT - FINANCE
(NAME OF PERSON(S) FILING PROXY STATEMENT)

Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

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

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

/X/ Fee paid previously with preliminary materials.

/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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

(3) Filing Party:

(4) Date Filed:
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1 Set forth the amount on which the filing fee is calculated and state how it
was determined.

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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TRANSMATION LOGO

AUGUST 20, 1996

The Annual Meeting of Shareholders of TRANSMATION, INC. (the "Company")
will be held at the Hutchison House, 930 East Avenue, Rochester, New York, on
Tuesday, August 20, 1996 at 12:00 noon, local time, for the following purposes
more fully described in the accompanying proxy statement:

1. To elect three directors of the Company.

2. To consider and act upon a proposal to approve and adopt an amendment
to the Articles of Incorporation of the Company which increases the
number of shares of Common Stock which the Company is authorized to
issue from 8,000,000 shares to 15,000,000 shares.

3. To consider and act upon a proposal to approve and ratify an
amendment to the Transmation, Inc. Amended and Restated 1993 Stock
Option Plan which increases the total number of shares available for
option grants thereunder from 400,000 to 600,000.

4. To consider and act upon a proposal to approve and ratify a further
amendment to the Transmation, Inc. Amended and Restated 1993 Stock
Option Plan which fixes a date certain for the exercisability of
options previously granted and to be granted in the future
thereunder.

5. To consider and act upon a proposal to approve and ratify an
amendment to the Transmation, Inc. Amended and Restated Directors'
Warrant Plan which fixes a date certain for the exercisability of
warrants previously granted and to be granted in the future
thereunder.

6. To consider and act upon a proposal to approve and ratify an
amendment to the Transmation, Inc. Employees' Stock Purchase Plan to
reduce, from one year to six months, the waiting period for
eligibility thereunder.

7. To consider and act upon a proposal to approve and ratify the
selection of Price Waterhouse LLP as the Company's independent
auditors for the fiscal year ending March 31, 1997.

8. To transact such other business as may properly come before the
Meeting or any adjournments thereof.

The Board of Directors has fixed the close of business on June 28, 1996 as
the record date for the determination of shareholders entitled to notice of and
to vote at the Meeting and any adjournments thereof.

BY ORDER OF THE BOARD OF DIRECTORS

John A. Misiaszek
Secretary
Dated: July 10, 1996
<PAGE> 3

TRANSMATION, INC.
10 VANTAGE POINT DRIVE
ROCHESTER, NEW YORK 14624

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PROXY STATEMENT

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GENERAL INFORMATION

This proxy statement is furnished to shareholders in connection with the
solicitation of proxies by the Board of Directors of Transmation, Inc. (the
"Company") to be used at the Annual Meeting of Shareholders of the Company which
will be held on Tuesday, August 20, 1996, and at any adjournments thereof (the
"Meeting"). This proxy statement and accompanying form of proxy are being first
mailed to shareholders on or about July 10, 1996. The proxy, when properly
executed and received by the Secretary of the Company prior to the Meeting, will
be voted as therein specified unless revoked by filing with the Secretary prior
to the Meeting a written revocation or a duly executed proxy bearing a later
date. Unless authority to vote for one or more of the director nominees is
specifically withheld according to the instructions, a signed proxy will be
voted FOR the election of the three director nominees named herein and, unless
otherwise indicated, FOR each of the other six proposals described in this proxy
statement and the accompanying notice of meeting.

As of June 28, 1996, the record date for the Meeting, there were 2,585,824
shares of the Company's Common Stock, par value $.50 per share (the "Common
Stock"), issued and outstanding. Only shareholders of record on the books of the
Company at the close of business on June 28, 1996 are entitled to notice of and
to vote at the Meeting and at any adjournments thereof. Each such shareholder is
entitled to one vote for each share of Common Stock registered in his name. A
majority of the outstanding Common Stock, represented in person or by proxy at
the Meeting, will constitute a quorum for the transaction of all business.

The affirmative vote of at least two-thirds of the outstanding shares of
Common Stock entitled to vote at the Meeting is required for approval and
adoption of the proposed amendments to the Articles of Incorporation. See
"PROPOSAL TO AMEND ARTICLES OF INCORPORATION TO INCREASE THE AUTHORIZED COMMON
STOCK FROM 8,000,000 SHARES TO 15,000,000 SHARES." The affirmative vote of at
least a majority of the outstanding shares of Common Stock entitled to vote at
the Meeting is required for approval and ratification of (i) each of the two
proposed amendments to the Amended and Restated 1993 Stock Option Plan, (ii) the
proposed amendment to the Amended and Restated Directors' Warrant Plan, and
(iii) the proposed amendment to the Employees' Stock Purchase Plan. See
"PROPOSAL TO APPROVE AND RATIFY AN AMENDMENT TO THE OPTION PLAN TO INCREASE THE
NUMBER OF SHARES AVAILABLE FOR OPTION GRANTS," "TWO PROPOSALS TO APPROVE AND
RATIFY AMENDMENTS TO THE OPTION PLAN AND THE WARRANT PLAN TO FIX DATES CERTAIN
FOR THE EXERCISABILITY OF OPTIONS AND WARRANTS" and "PROPOSAL TO APPROVE AND
RATIFY AN AMENDMENT TO THE EMPLOYEES' STOCK PURCHASE PLAN TO REDUCE THE WAITING
PERIOD FOR ELIGIBILITY THEREUNDER."

Shareholders are entitled to cumulate votes in the election of directors
provided a shareholder gives the President, a Vice President or the Secretary of
the Company notice that he desires that voting at the Meeting be cumulative.
Such notice must be in writing and must be given at least 48 hours before the
time fixed for holding the Meeting. In addition, a formal announcement must be
made at the commencement of the Meeting by the Chairman, the Secretary or by or
on behalf of the shareholder, stating that such notice has

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been given. In the event such notice is not received by the Company within the
prescribed time, shareholders will not be entitled to cumulate votes.

The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by use of the mails, directors, officers or regular employees of
the Company, without extra compensation, may solicit proxies personally or by
telephone or other telecommunication. In addition, the Company has retained
Regan & Associates, Inc., a professional solicitation firm, which may assist in
soliciting proxies for a fee estimated at $3,000 plus reimbursement of
out-of-pocket expenses. The Company has requested persons holding stock for
others in their names or in the names of nominees to forward soliciting material
to the beneficial owners of such shares and will, if requested, reimburse such
persons for their reasonable expenses in so doing.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT

The following table sets forth certain information as of June 28, 1996
regarding the only person known to the Company to be the record or beneficial
owner of more than 5% of the Common Stock.

<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS OF COMMON STOCK PERCENT OF
OF BENEFICIAL OWNER BENEFICIALLY OWNED (1) CLASS (1)
- --------------------- ---------------------- ----------
<S> <C> <C>
William J. Berk 492,184 19.0%
9258 Vista Del Lago
Boca Raton, FL 33428
</TABLE>

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(1) As reported by Mr. Berk as of June 28, 1996, with such percentage based on
2,585,824 shares issued and outstanding.

The following table sets forth certain information as of June 28, 1996
regarding the Common Stock held by (i) each director of the Company, (ii) each
"Named Executive" (see "EXECUTIVE COMPENSATION"), and (iii) all directors and
executive officers of the Company as a group.

<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED (1) CLASS (1)
- --------------------------------- ---------------------- ----------
<S> <C> <C>
Angelo J. Chiarella 19,081(2) 0.7%
E. Lee Garelick 56,714 2.2
Gerald R. Katz 37,481(3) 1.4
Robert G. Klimasewski 35,592(4) 1.4
Cornelius J. Murphy 6,829(5) 0.3
John W. Oberlies 6,005(5) 0.2
Harvey J. Palmer 9,100(5) 0.4
Arthur M. Richardson 8,605(5) 0.3
Philip P. Schulp 105,861(6) 4.1
Eric W. McInroy 13,567(7) 0.5
John A. Misiaszek 38,410(8) 1.5
All directors and executive 337,245(9) 12.7
officers as a group (11 persons)
</TABLE>

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(1) As reported by such persons as of June 28, 1996, with percentages based on
2,585,824 shares issued and outstanding except where the issuance of shares
pursuant to presently exercisable options and warrants indicated in the
other footnotes hereto would increase the number of shares owned by such
person and the number of shares outstanding.

(2) Includes 3,200 shares jointly owned by Mr. Chiarella and his wife, and
presently exercisable warrants to purchase an aggregate of 2,500 shares.

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(3) Includes 36,481 shares held by Mr. Katz as Trustee FBO Gerald R. Katz, and
presently exercisable warrants to purchase an aggregate of 1,000 shares.

(4) Includes presently exercisable options and warrants to purchase an aggregate
of 27,000 shares.

(5) Includes presently exercisable warrants to purchase an aggregate of 2,500
shares.

(6) Includes 400 shares owned by Mr. Schulp's wife, and presently exercisable
options to purchase an aggregate of 7,500 shares.

(7) Includes presently exercisable options to purchase an aggregate of 13,330
shares.

(8) Includes (i) 15,072 shares jointly owned by Mr. Misiaszek and his wife, (ii)
200 shares owned by his wife as custodian for their child (as to which
shares Mr. Misiaszek disclaims beneficial ownership), and (iii) presently
exercisable options to purchase 3,000 shares.

(9) Includes presently exercisable options and warrants to purchase an aggregate
of 64,330 shares.

ELECTION OF DIRECTORS

Three of the Company's nine directors are to be elected by the shareholders
at the Meeting, each to hold office for a term expiring in 1999 or until his
successor is duly elected and qualifies.

The Board of Directors recommends the election of the three nominees named
below, all of whom are currently directors of the Company. Unless authority to
vote for one or more of the nominees is specifically withheld according to the
instructions, proxies in the enclosed form will be voted FOR the election of
each of the three nominees named below. The votes represented by such proxies
may be cumulated if notice is given as described in "GENERAL INFORMATION."

The Board of Directors does not contemplate that any of the nominees will
be unable to serve as a director, but if that contingency should occur prior to
the voting of the proxies, the persons named in the enclosed proxy reserve the
right to vote for such substitute nominee or nominees as they, in their
discretion, shall determine.

PROPOSED FOR ELECTION AS DIRECTORS
AT THE 1996 ANNUAL MEETING

<TABLE>
<CAPTION>
DIRECTOR
NAME AND BACKGROUND SINCE
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<S> <C>
ANGELO J. CHIARELLA, age 62, has served as President and General Manager of Midtown 1967
Holdings Corp., Rochester, New York (commercial real estate) since 1963. He also
serves on the Board of Directors of Rochester Gas & Electric Corporation.
E. LEE GARELICK, age 61, was elected to the Board on June 21, 1996 to fill a vacancy 1996
occasioned by the resignation of William J. Berk. Mr. Garelick has been employed
by the Company as
a senior executive since April 1996. From June 1979 until April 1996, Mr. Garelick
was President and part owner of Altek Industries Corp., Rochester, New York
(manufacturer of calibration instrumentation), which is now a subsidiary of the
Company. Pursuant to the
Stock Purchase Agreement by which the Company acquired Altek Industries Corp. from
Mr. Garelick and James N. Wurtz on April 3, 1996, the Board of Directors agreed to
elect Mr. Garelick to fill the next vacancy occurring on the Board or, if sooner,
to nominate him for election to the Board at the Meeting. See "RELATED
TRANSACTIONS."
JOHN W. OBERLIES, age 57, has been Executive Director and Chief Operating Officer of 1987
Rochester Individual Practice Association, Inc., Rochester, New York (health
care), since September 1995. From September 1990 until September 1995, he served
as Executive Vice President and Chief Operating Officer of LeChase Construction,
Rochester, New York (general construction). For more than five years prior to that
he was Senior Vice President, Customer & Administrative Services, of Rochester Gas
& Electric Corporation (public utility).
</TABLE>

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DIRECTORS WHOSE TERMS DO NOT EXPIRE
AT THE 1996 ANNUAL MEETING

The following table sets forth certain information with respect to each
director of the Company whose term in office does not expire at the Meeting.

<TABLE>
<CAPTION>
DIRECTOR TERM
NAME AND BACKGROUND SINCE EXPIRES
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<S> <C> <C>
GERALD R. KATZ, age 78, is retired. He was President of Capital Industrial 1974 1998
Finishing Inc., Rochester, New York (finisher of industrial parts) from
1980 to 1983.
ROBERT G. KLIMASEWSKI, age 53, has served as President and Chief Executive 1982 1998
Officer of the Company since June 1994. He is also Vice Chairman of
Burleigh Instruments, Inc., Rochester, New York (manufacturer of laser
instrumentation and micropositioning equipment), which he founded in 1972.
CORNELIUS J. MURPHY, age 65, has served as Chairman of the Board of the 1991 1997
Company since January 1995. He has been Senior Vice President in the
Rochester, New York office of Goodrich & Sherwood Company (human resources
management consulting) since 1990. For over 35 years prior to that, he was
employed by Eastman Kodak Company in various executive positions, most
recently Senior Vice President and a Director in the office of the
Chairman. Mr. Murphy also serves on the Board of Directors of Rochester Gas
& Electric Corporation.
DR. HARVEY J. PALMER, age 50, is Professor and Chair of the Department of 1987 1997
Chemical Engineering in the College of Engineering and Applied Science of
the University of Rochester, Rochester, New York (education and scientific
research), where he has been a member of the faculty since 1971.
ARTHUR M. RICHARDSON, age 69, has been President of Richardson Capital Corp., 1985 1997
Rochester, New York (investments) since 1986. From 1974 to 1986 he served
as Chairman and Chief Executive Officer of Security N.Y. State Corp.,
Rochester, New York (commercial bank holding company). Mr. Richardson also
serves on the Boards of Directors of Rochester Gas & Electric Corporation,
Goulds Pumps, Inc. and Raymond Corporation.
PHILIP P. SCHULP, age 64, is a Vice President of the Company. He served as 1974 1998
Vice President-Sales from 1987 to 1991, and as a Vice President in other
capacities
since 1973.
</TABLE>

BOARD MEETINGS AND COMMITTEES OF THE BOARD

The Board of Directors held seven meetings during the fiscal year ended
March 31, 1996 ("Fiscal 1996"). Each current director then in office attended at
least 75% of the total of such Board meetings and meetings of Board Committees
on which he served.

The Board of Directors has established, among other Committees, an Audit
Committee, a Compensation and Benefits Committee, and a Nominating Committee of
the Board.

The current members of the Audit Committee are Messrs. Richardson
(Chairman), Chiarella, Katz and Dr. Palmer. The Committee held one meeting
during Fiscal 1996, at which it reviewed with Price Waterhouse LLP, the
Company's independent auditors, the Company's financial statements and internal
accounting procedures, Price Waterhouse LLP's auditing procedures and fees, and
the possible effects of professional services upon the independence of Price
Waterhouse LLP.

The current members of the Compensation and Benefits Committee are Messrs.
Chiarella (Chairman), Katz, Murphy, Oberlies, Richardson and Dr. Palmer. The
Committee makes recommendations to the Board with respect to compensation and
benefits paid to the Company's management and acts as the Stock Option

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Committee of the Board (see "EXECUTIVE COMPENSATION"). The Compensation and
Benefits Committee held three meetings during Fiscal 1996.

The current members of the Nominating Committee are Dr. Palmer (Chairman)
and Messrs. Klimasewski and Murphy. The purpose of the Nominating Committee is
to make nominations to the Board and to consider and establish procedures
regarding nominations to the Board submitted by shareholders. The Committee held
one meeting during Fiscal 1996. Shareholder recommendations for nomination to
the Board should be sent to the Company, to the attention of the President.

DIRECTORS' COMPENSATION

The Directors' Stock Plan provides for automatic, non-discretionary awards
of shares of Common Stock, in lieu of cash directors' fees, to each non-employee
director who elects to participate, at the rates of (i) a retainer of 1,000
shares of Common Stock for each full year during which he serves as a director
(or such lesser number of shares as has an aggregate market value not exceeding
$7,500), (ii) 200 shares of Common Stock for each regular or special meeting of
the Board, up to a maximum of six Board meetings per fiscal year, that he
attends (or such lesser number of shares per meeting as has an aggregate market
value not exceeding $1,500), and (iii) 100 shares of Common Stock for each
meeting of a Committee of the Board that he attends (or such lesser number of
shares per meeting as has an aggregate market value not exceeding $750). Except
for special meetings of the Board, attendance at meetings by conference
telephone equipment does not qualify for awards under the Directors' Stock Plan.
A maximum of 100,000 shares of Common Stock are available for awards under the
Directors' Stock Plan.

During Fiscal 1996, the Company's six current non-employee directors
(Messrs. Chiarella, Katz, Murphy, Oberlies, Richardson and Dr. Palmer) elected
to participate in the Directors' Stock Plan, and an aggregate of 14,200 shares
of Common Stock were so issued to them.

During Fiscal 1996, the Company paid cash directors' fees aggregating
$1,700 to William J. Berk, a non-employee director who elected not to
participate in the Directors' Stock Plan, consisting of a $1,000 retainer fee
and a $350 attendance fee for each meeting of the Board of Directors attended in
person. During Fiscal 1996 the Company also paid to each of its seven
non-employee directors the $1,000 retainer fee earned by them in Fiscal 1995
(prior to adoption of the Directors' Stock Plan), the payment of which had been
voluntarily deferred by such directors until Fiscal 1996.

Directors who are also employees of the Company (currently, Messrs.
Klimasewski, Garelick and Schulp) are paid no compensation for their services as
directors.

DIRECTORS' WARRANT GRANTS AND EXERCISES

Pursuant to the Company's Amended and Restated Directors' Warrant Plan (the
"Warrant Plan"), during Fiscal 1996 each current non-employee director of the
Company (Messrs. Chiarella, Katz, Murphy, Oberlies, Richardson and Dr. Palmer),
was granted a warrant, expiring on August 15, 2000, to purchase 2,000 shares of
Common Stock at an exercise price of $6.50 per share (the market price of the
Common Stock on the grant date). Each warrant becomes exercisable in 500-share
increments on specified dates provided that the market price of the Common Stock
reaches and maintains certain specified levels. However, if the shareholders
approve and ratify at the Meeting the proposed Amendment to the Warrant Plan,
such warrants will vest and become exercisable no later than August 16, 1999.
See "TWO PROPOSALS TO APPROVE AND RATIFY AMENDMENTS TO THE OPTION PLAN AND THE
WARRANT PLAN TO FIX DATES CERTAIN FOR THE EXERCISABILITY OF OPTIONS AND
WARRANTS." Under the terms of the Warrant Plan, none of such warrants is
transferable except by will or intestacy, and during the director's lifetime
they are exercisable only by him. Unexercised warrants lapse on the date a
director ceases to be a director of the Company, except that if one ceases to be
a director by reason of his death, his warrant lapses 90 days thereafter.

During Fiscal 1996, non-employee directors exercised warrants previously
granted to them under the Warrant Plan and purchased shares of Common Stock as
follows: Mr. Chiarella -- 2,500 shares at $3.875;

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Mr. Katz -- 2,500 shares at $3.875 and 1,500 shares at $3.00; Mr.
Oberlies -- 500 shares at $3.875; Dr. Palmer -- 2,500 shares at $3.875; and Mr.
Richardson -- 2,500 shares at $3.875.

DIRECTOR AND EXECUTIVE OFFICER FILINGS

During Fiscal 1996, each of six non-employee directors of the Company
(Messrs. Chiarella, Katz, Murphy, Oberlies, Richardson and Dr. Palmer)
inadvertently filed late with the Securities and Exchange Commission (the "SEC")
two reports relating to four automatic awards of Common Stock under the
Directors' Stock Plan. All of the Company's directors and executive officers are
now current in such filings. In making the foregoing statements, the Company has
relied on the written representations of its directors and executive officers
and copies of the reports that they have filed with the SEC.

EXECUTIVE OFFICERS

The Company is currently served by three executive officers, who are
elected annually by the Board of Directors and serve until their successors are
elected and qualify:

ROBERT G. KLIMASEWSKI, age 53, has served as President and Chief Executive
Officer of the Company since June 1994. He has served as a director of the
Company since 1982, and is also the Vice Chairman of Burleigh Instruments, Inc.,
a manufacturer of laser instrumentation and micropositioning equipment, which he
founded in 1972.

ERIC W. MCINROY, age 49, is a Vice President of the Company and, since
April 1996, has served as the Company's Chief Operating Officer. From 1982 until
April 1996, he was President of the Company's Transcat Division. He has also
served as Vice President of Transmation (Canada) Inc. since 1979.

JOHN A. MISIASZEK, age 48, is Vice President-Finance of the Company, a
position he has held since 1982. Mr. Misiaszek, a certified public accountant
who has been with the Company since 1975, has also served as Secretary and
Treasurer of the Company for more than the past five years.

EXECUTIVE COMPENSATION

Shown on the table below is information on the annual and long-term
compensation for services rendered to the Company in all capacities, for the
fiscal years ended March 31, 1996, 1995 and 1994, paid by the Company to those
persons who were, at March 31, 1996, the Chief Executive Officer and each other
executive officer of the Company (collectively, the "Named Executives").

SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
OTHER ANNUAL OPTION ALL OTHER
NAME AND SALARY BONUS COMPENSATION GRANTS COMPENSATION
PRINCIPAL POSITION YEAR ($)(1) ($)(1) ($)(2) (#) ($)(3)
<S> <C> <C> <C> <C> <C> <C>
Robert G. Klimasewski 1996 $150,000 $259,300(5) 0 0 0
President and Chief 1995 108,788 0 0 100,000 0
Executive Officer (4)
Eric W. McInroy 1996 $114,578 $57,212 0 30,000 0
President, Transcat 1995 135,000 0 0 15,000 $ 960
Division 1994 113,200 0 0 0 1,528
John A. Misiaszek 1996 $ 86,000 $39,822 0 0 $1,348
Vice President - Finance 1995 86,000 0 0 12,000 950
1994 86,000 0 0 0 950
</TABLE>

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(1) The amounts shown include cash compensation earned and paid during the
fiscal year indicated as well as cash compensation deferred at the election
of the Named Executive into the Company's Long Term Savings and Deferred
Profit Sharing Plan, a 401(k) plan.

(2) Does not include the value of perquisites and other personal benefits
because the aggregate amount of such compensation for any year does not
exceed 10% of the total amount of annual salary and bonus for any Named
Executive.

(3) The amounts shown include Company contributions to the 401(k) Plan.

(4) Mr. Klimasewski became President and Chief Executive Officer of the Company
late in the first quarter of Fiscal 1995. Prior to that, he served as an
outside director of the Company but was not employed by the Company in any
capacity. The amount shown as salary for Fiscal 1995 includes $2,450 in
standard outside directors' fees paid to Mr. Klimasewski in that year prior
to his becoming President and Chief Executive Officer. See "ELECTION OF
DIRECTORS -- DIRECTORS' COMPENSATION."

(5) Includes a one-time cash bonus of $100,000 paid to Mr. Klimasewski as an
incentive to entering into his Fiscal 1996 employment agreement with the
Company. See "EXECUTIVE COMPENSATION -- REPORT OF THE COMPENSATION AND
BENEFITS COMMITTEE WITH RESPECT TO EXECUTIVE COMPENSATION."

STOCK OPTIONS

Shown below is further information on grants of stock options during Fiscal
1996 to the Named Executives. The Company has no provision for stock
appreciation rights.

<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL 1996
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE
PERCENT VALUE AT ASSUMED
OF TOTAL ANNUAL RATES OF
OPTIONS STOCK
GRANTED TO PRICE APPRECIATION
OPTIONS EMPLOYEES EXERCISE FOR
GRANTED IN FISCAL PRICE EXPIRATION OPTION TERM (1)
NAME (#) YEAR ($/SH) DATE 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
Robert G. Klimasewski 0 -- -- -- -- --
Eric W. McInroy 23,950(2) 22.5% $6.25 8/14/00 $41,356 $91,386
6,050(3) 5.7 6.625 3/10/01 11,074 24,470
John A. Misiaszek 0 -- -- -- -- --
</TABLE>

(1) The dollar amounts in these columns are the result of calculations of
potential realizable value at the 5% and 10% rates set by the SEC and are
not intended to forecast future appreciation of the Common Stock. There can
be no assurance that the Common Stock will perform at the assumed annual
rates shown in the table. The Company will neither make nor endorse any
predictions as to future stock performance. As an alternative to the assumed
potential realizable values stated in the 5% and 10% columns, SEC rules
would permit stating the present value of such options at the date of grant.
Methods of computing present value suggested by different authorities can
produce significantly different results. Moreover, since stock options
granted by the Company are not transferable, there is no objective criteria
by which any computation of present value can be verified. Consequently, the
Company's management does not believe there is a reliable method of
computing the present value of such stock options.

(2) Options granted by stock option agreement authorized by the Board of
Directors, and not pursuant to the Amended and Restated 1993 Stock Option
Plan.

(3) Currently, none of such options vest or become exercisable unless and until
the market price of the Common Stock reaches and maintains certain specified
levels. However, if the shareholders approve and ratify at the Meeting one
of the proposed Amendments to the Amended and Restated 1993 Stock Option
Plan, such options will vest and become exercisable no later than the fourth
anniversary of the grant date.

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See "TWO PROPOSALS TO APPROVE AND RATIFY AMENDMENTS TO THE OPTION PLAN AND
THE WARRANT PLAN TO FIX DATES CERTAIN FOR THE EXERCISABILITY OF OPTIONS AND
WARRANTS."

Shown below is information with respect to (i) options exercised by the
Named Executives during Fiscal 1996 and (ii) unexercised options to purchase
Common Stock held by the Named Executives at the end of Fiscal 1996.

AGGREGATED OPTION EXERCISES IN FISCAL 1996 AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
SHARES
ACQUIRED VALUE OF ALL UNEXERCISED
ON VALUE UNEXERCISED OPTIONS HELD IN-THE-MONEY OPTIONS AT
EXERCISE REALIZED AT FY-END (#) FY-END ($)(1)
NAME (#) ($)(2) EXERCISABLE UNEXERCISABLE (3) EXERCISABLE UNEXERCISABLE(3)
<S> <C> <C> <C> <C> <C> <C>
Robert G. Klimasewski 2,500(4) $5,938(4) 27,000(5) 75,500(5) $59,875(5) $161,063(5)
Eric W. McInroy 0 -- 8,540 36,460 $ 8,568 $ 26,301
John A. Misiaszek 0 -- 8,000 9,000 $27,000 $ 19,125
</TABLE>

(1) Expressed as the excess of the market value of the Common Stock at fiscal
year-end ($6.375 per share) over the exercise price of each option.

(2) Expressed as the excess of the market value of the Common Stock on the date
of exercise over the exercise price of the option.

(3) Currently, none of the options granted under the Amended and Restated 1993
Stock Option Plan vest or become exercisable unless and until the market
price of the Common Stock reaches and maintains certain specified levels.
However, if the shareholders approve and ratify at the Meeting one of the
proposed Amendments to the Amended and Restated 1993 Stock Option Plan, each
such option will vest and become exercisable no later than the fourth
anniversary of its grant date. See "TWO PROPOSALS TO APPROVE AND RATIFY
AMENDMENTS TO THE OPTION PLAN AND THE WARRANT PLAN TO FIX DATES CERTAIN FOR
THE EXERCISABILITY OF OPTIONS AND WARRANTS."

(4) Exercise of warrants granted in 1990 under the Directors' Warrant Plan, when
Mr. Klimasewski was an outside director of the Company.

(5) Includes exercisable warrants to purchase 2,000 shares, and unexercisable
warrants to purchase 500 shares, granted in 1993 under the Directors'
Warrant Plan, when Mr. Klimasewski was an outside director of the Company.

EMPLOYMENT AGREEMENTS

During Fiscal 1996 the Company and Mr. Klimasewski were party to a one-year
employment agreement dated April 1, 1995. Effective April 1, 1996, the Company
and Mr. Klimasewski extended the term of his employment agreement for two years
and amended certain of the provisions thereof. The provisions of Mr.
Klimasewski's employment agreement, and of the extension and amendment thereof,
are described in "EXECUTIVE COMPENSATION -- REPORT OF THE COMPENSATION AND
BENEFITS COMMITTEE WITH RESPECT TO EXECUTIVE COMPENSATION." Mr. Klimasewski has
also agreed not to compete with the Company during the term of his employment
agreement, as so extended and amended.

REPORT OF THE COMPENSATION AND BENEFITS COMMITTEE
WITH RESPECT TO EXECUTIVE COMPENSATION

The following report of the Compensation and Benefits Committee (the
"Committee") required by the rules of the SEC to be included in this Proxy
Statement shall not be deemed incorporated by reference by any statement
incorporating this Proxy Statement by reference into any filing under the
Securities Act of 1933, as amended (the "Securities Act"), or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"),

8
<PAGE> 11

except to the extent that the Company specifically incorporates this information
by reference, and shall not otherwise be deemed filed under either such Act.

The following discussion applies to the compensation of all of the
Company's senior executives, including Robert G. Klimasewski, the Chief
Executive Officer, and the other Named Executives, except to the extent that
certain elements of Mr. Klimasewski's compensation are fixed pursuant to
contract with the Company (see "CHIEF EXECUTIVE OFFICER COMPENSATION" later in
this Report).

EXECUTIVE COMPENSATION PHILOSOPHY. The goals of the Company's executive
compensation program are to align compensation with business objectives and
performance, and to enable the Company to attract, retain and reward executives
who contribute to the long-term success of the Company and each of its business
Divisions and contribute to increasing shareholder value. The Company attempts
to compensate its executives competitively. To ensure that compensation is
competitive, the Company periodically compares its compensation practices with
those of comparable companies and adjusts its compensation parameters based on
this review. More importantly, the Company's executive compensation program is
intended to compensate sustained performance. Executives are rewarded based upon
corporate performance, Divisional performance and individual performance.
Corporate performance and Divisional performance are evaluated by reviewing the
extent to which strategic and business plan goals are met, including such
factors as operating profit and performance relative to benchmarks. Individual
performance is evaluated by reviewing organizational and management development
progress against set objectives. The primary criteria for individual performance
are as follows:

- Company-wide profitability in excess of an annually predetermined amount
is a prerequisite to the payment of any incentive compensation, so that
every executive is motivated to achieve profitability for the entire
Company

- Incentive compensation is measured by the Company's and each Division's
success in meeting key line items in the Company's budget, particularly
profits

- Divisional success for purposes of incentive compensation is measured by
gross margin and Divisional profitability

- Controlling expenses, as measured against budget, is rewarded

In the first quarter of each fiscal year, the Committee reviews with the
Chief Executive Officer and approves, with any modifications it deems
appropriate, an annual salary plan for the executives other than the Chief
Executive Officer (whose salary is fixed by contract). This salary plan is
developed under the ultimate direction of the Chief Executive Officer based on
industry peer group information and performance judgments as to the past and
expected future contributions of each executive.

During the early part of each fiscal year, the Chief Executive Officer sets
individualized objectives and key goals for each of the Company's executives in
keeping with the performance criteria set forth above. During each fiscal year,
the Chief Executive Officer gives executives ongoing feedback on performance.
After the end of the fiscal year, the Chief Executive Officer evaluates each
executive's accomplishment of objectives and attainment of key goals and
provides performance appraisals to the Committee along with recommendations on
salary, bonuses and stock options. The performance appraisals and
recommendations are considered by the Committee in deciding whether to grant
performance awards and in establishing the base salary for executives for the
next fiscal year. Similar objective-setting, feedback and evaluation with
respect to the Chief Executive Officer's performance is provided by the Chairman
of the Committee.

EXECUTIVE COMPENSATION PROGRAM. The Company's executive compensation
program is structured to attract and retain key executives capable of improving
products, promoting technological innovation, fostering teamwork and motivating
employees, all with the ultimate goal of improving profitability and enhancing
shareholder value.

The annual cash compensation paid to executives consists of a base salary
and cash bonuses. Salaries are reviewed by the Committee on an annual basis and
may be changed at that time based on (i) information

9
<PAGE> 12

derived from the evaluation procedures described above and a determination that
an individual's contributions to the Company have increased or decreased, (ii)
changes in competitive compensation levels, and/or (iii) changes in the
Company's business prospects.

Performance awards in the form of cash bonuses are awarded under the
Company's Annual Executive Bonus Plan, which is approved by the Board of
Directors on the recommendation of the Committee. Under this Plan, the Company
must first make a profit at a level determined by the Board of Directors before
any cash bonuses are paid to executives. For profits above this amount, a bonus
is established upon which an individual executive would receive a cash bonus
based on his individual performance against pre-established goals for his job
classification. Based on the Company's financial performance in Fiscal 1996, the
three Named Executives were awarded bonuses for Fiscal 1996 aggregating
$356,334.

Long-term incentives are intended to be provided through the grant of stock
options under the Amended and Restated 1993 Stock Option Plan. The Committee
views stock options as a means of aligning the long range interests of all
employees, including executives, with those of the shareholders by providing
them with the opportunity to build a meaningful stake in the Company. During
Fiscal 1996, the Committee granted to an aggregate of 145 employees (including
one executive officer, Eric W. McInroy) options to purchase an aggregate of
106,400 shares of Common Stock. See "EXECUTIVE COMPENSATION -- STOCK OPTIONS"
and "PROPOSAL TO APPROVE AND RATIFY AN AMENDMENT TO THE OPTION PLAN TO INCREASE
THE NUMBER OF SHARES AVAILABLE FOR OPTION GRANTS."

Executive and other employees are also entitled to participate in the
Company's Long-Term Savings and Deferred Profit Sharing Plan, a 401(k) plan.

CHIEF EXECUTIVE OFFICER COMPENSATION. Robert G. Klimasewski was elected
President and Chief Executive Officer of the Company in June 1994 upon the
resignation of William J. Berk, the Company's founder. While it was initially
contemplated that Mr. Klimasewski would serve as such on an interim basis only,
the Board subsequently determined, and Mr. Klimasewski agreed, that he would
serve as President and Chief Executive Officer on a customary year-to-year
basis.

During Fiscal 1996, Mr. Klimasewski was compensated pursuant to a one-year
employment agreement with the Company, effective April 1, 1995 (the "Employment
Agreement"), which was approved by the Board of Directors on the Committee's
recommendation. Under the Employment Agreement, Mr. Klimasewski was paid salary
of $150,000 (plus an automobile allowance of $1,000 per month). In addition, as
performance incentives, the Employment Agreement also provided for, and Mr.
Klimasewski was paid, a one-time cash bonus of $100,000 as an incentive to
entering into the Employment Agreement, and a cash bonus of $159,300 based on
performance meeting previously established criteria. As a further commitment to
the Company by Mr. Klimasewski, he agreed in the Employment Agreement to apply
approximately 50% of the after-tax amount of this latter cash bonus to the
purchase of Common Stock (which stock was purchased after the close of Fiscal
1996).

The Committee, with the concurrence of the Board of Directors, credits the
Company's continued financial success in Fiscal 1996 in large measure to Mr.
Klimasewski's leadership. The Company's net income increased by 223% to
$1,234,723 in Fiscal 1996 from $381,785 in Fiscal 1995. This amounted to net
income of $0.49 per share in Fiscal 1996 compared to $0.16 per share in Fiscal
1995. In addition, net sales increased to approximately $38.4 million in Fiscal
1996 from approximately $37.3 million in Fiscal 1995. Further, under Mr.
Klimasewski's leadership, immediately after the close of Fiscal 1996 the Company
completed its first acquisition in over 20 years.

In light of the Company's performance to date under Mr. Klimasewski's
leadership, effective April 1, 1996, the Company and Mr. Klimasewski entered
into an extension and amendment of the Employment Agreement (the "Extension"),
approved by the Board of Directors on the Committee's recommendation, which
reflects the Committee's assessment of Mr. Klimasewski's proven results and his
ability and dedication to provide the leadership and vision necessary to enhance
the long-term value of the Company. Under the Extension, which expires on March
31, 1998 but may be renewed for one year thereafter if both parties so elect,
Mr. Klimasewski's annual salary will be $200,000 during Fiscal 1997 and $235,000
during Fiscal 1998

10
<PAGE> 13

(plus an automobile allowance of $1,000 per month and, at Mr. Klimasewski's
election, the benefits provided to other senior executives of the Company).

As an annual incentive, the Extension also provides for the payment to Mr.
Klimasewski of an annual cash bonus pursuant to the Company's Annual Executive
Bonus Plan (which currently provides an annual bonus potential of up to $280,000
if pre-tax profits, before bonuses, for Fiscal 1997 reach $3.5 million);
however, Mr. Klimasewski will instead receive 30% of the amount of each such
annual bonus in the form of shares of Common Stock (30% of such cash bonus being
estimated by the Committee to be the after-tax equivalent of 50% thereof). Mr.
Klimasewski may so receive a maximum of 24,300 shares under the Extension, and
to the extent that he would otherwise be entitled to bonus shares in excess of
that number, the excess bonus compensation will instead be paid to him in cash.
The Committee believes that paying Mr. Klimasewski part of his bonus
compensation in shares of Common Stock will enhance his commitment to the
Company as a shareholder.

The Employment Agreement is terminable by either party on 30 days' notice,
but if the Company terminates the Employment Agreement without cause (as defined
in the Employment Agreement), Mr. Klimasewski will be entitled to severance in
an amount equal to the total compensation (including bonuses, benefits and stock
compensation) payable to him during the 12 months immediately preceding
termination.

Based on its study and review of comparable companies, the Committee
believes that the Extension fixes Mr. Klimasewski's total compensation (salary
and bonus) at a level that is commensurate with amounts paid to other chief
executive officers with comparable qualifications, experience, responsibilities
and results at similarly positioned companies.
COMPENSATION AND BENEFITS COMMITTEE

Angelo J. Chiarella, Chairman
Gerald R. Katz
Cornelius J. Murphy
John W. Oberlies
Harvey J. Palmer
Arthur M. Richardson

INSIDER PARTICIPATION IN COMPENSATION AND BENEFITS COMMITTEE

The Chief Executive Officer of the Company consults with the Compensation
and Benefits Committee. He participates in discussions of the Committee and
makes recommendations to it, but he does not vote or otherwise participate in
the Committee's ultimate determinations. The Board of Directors believes that it
is wise and prudent to have the Chief Executive Officer so participate in the
operations of the Compensation and Benefits Committee because his evaluations
and recommendations with respect to the compensation and benefits paid to
executives other than himself are extremely valuable to the Committee. However,
the Chief Executive Officer neither participates nor is otherwise involved in
the deliberations of the Compensation and Benefits Committee with respect to his
own compensation and benefits.

STOCK PRICE PERFORMANCE GRAPH

Set forth below is a line graph comparing, for the five most recent fiscal
years, the cumulative total shareholder return on the Common Stock, based on the
market price thereof, with the cumulative total return of companies on the
Standard & Poor's 500 Stock Index and the Standard & Poor's High Tech Composite
Index.

11
<PAGE> 14
TOTAL SHAREHOLDER RETURNS
[GRAPH]

<TABLE>
<CAPTION>
INDEXED RETURNS
YEARS ENDING
COMPANY/INDEX MAR91 MAR92 MAR93 MAR94 MAR95 MAR96
================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
TRANSMATION INC 100 81.82 131.82 154.55 193.16 231.82
S&P 500 INDEX 100 111.04 127.95 129.84 150.05 198.22
HIGH TECH COMPOSITE 100 102.33 112.44 132.25 167.36 225.95
</TABLE>

ASSUMES $100 INVESTED ON MARCH 31, 1991 IN THE COMPANY'S COMMON STOCK, THE
COMPANIES COMPRISING THE STANDARD & POOR'S 500 STOCK INDEX AND THE COMPANIES
COMPRISING THE STANDARD & POOR'S HIGH TECH COMPOSITE INDEX.

There can be no assurance that the Company's stock performance will
continue into the future with the same or similar trends depicted in the graph
above. The Company will neither make nor endorse any predictions as to future
stock performance.

The Stock Price Performance Graph above shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act or the Exchange Act, except
to the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under either such Act.

RELATED TRANSACTIONS

The Company has a Consulting Agreement dated April 1, 1979 and amended
April 1, 1990, with William J. Berk, a significant shareholder of the Company
and its former Chairman of the Board, President and Chief Executive Officer,
pursuant to which the Company will retain him as a consultant for 20 years
commencing March 1, 1995, and will pay him $30,000 a year for the first ten
years and $20,000 a year for the remainder. Such payments are not dependent upon
the actual rendering of consulting services. Throughout the consulting period
the Company must also provide Mr. Berk with substantially the same fringe
benefits as were provided to him when he was employed by the Company, including
a medical expense reimbursement plan for Mr. Berk's benefit, limited to $10,000
per fiscal year, and reimbursement for actual out-of-pocket costs for accounting
and legal fees and expenses incurred by him or his dependents, limited to
$10,000 per fiscal year. Mr. Berk has agreed that he will not compete with the
Company for so long as he receives payments from the Company in any form.

Pursuant to a Disability, Supplemental Death Benefit and Retirement
Agreement with Mr. Berk dated April 1, 1979 and amended April 1, 1990, the
Company must make annual payments to Mr. Berk, commencing March 1, 1995 and
continuing for the rest of his life, in the amount of $96,456. Upon Mr. Berk's

12
<PAGE> 15

death, his wife, if she survives him, will be paid annually 60% of that amount
for the rest of her life. The payments due under this agreement are not insured
or funded nor are any assets segregated or set aside for the benefit of Mr. Berk
or his wife.

Pursuant to a Stock Registration and Repurchase Agreement with Mr. Berk
dated April 1, 1979 and amended April 1, 1990, during Mr. Berk's lifetime and
for a period of five years after his death, Mr. Berk and his estate have
"piggyback" registration rights, at the Company's expense (with certain
exceptions), with respect to the same number of his shares as are being
registered by the Company. In addition, within five years after Mr. Berk's
death, his estate has a one-time demand registration right with respect to all
or any portion of the shares owned by the estate. In addition, at the request of
Mr. Berk's estate, the Company will redeem from his estate the maximum number of
shares permitted by Section 303 of the Internal Revenue Code (the "Code"), at a
redemption price equal to the market value of the Common Stock at the time of
his death, except that no such redemption will be required if it would cause a
default under any agreement of the Company or a violation of law. The Company
has agreed to use its best efforts to obtain a waiver or modification of any
agreement or take such proper corporate action to cure any violation of law so
as to enable the redemption to take place.

On April 3, 1996, the Company acquired all of the outstanding shares of
Altek Industries Corp. ("Altek") from E. Lee Garelick (now a director and
nominee for reelection at the Meeting) and James N. Wurtz, for a total purchase
price, negotiated at arms length, consisting of: (i) $1,700,000 in cash; (ii)
$3,100,000 in aggregate principal amount of unsecured notes; (iii) 300,000
shares of Common Stock (of which 100,000 shares were delivered at closing); and
(iv) payment of Altek's bank debt in the aggregate principal amount of
approximately $806,000. Of such total purchase price, Mr. Garelick was paid: (i)
$963,333 in cash; (ii) an unsecured note in the principal amount of $1,756,666,
bearing interest at 8% per year and payable $963,333 on April 1, 1997, and
$793,333 on April 1, 1998; and (iii) an aggregate of 170,000 shares of Common
Stock, of which 56,666 shares were delivered at closing and the balance will be
issued in equal annual installments on April 1, 1997 and April 1, 1998.

The Company has also entered into a three-year Employment Agreement,
commencing April 3, 1996, with Mr. Garelick providing for him to serve in a
senior executive capacity at an annual salary of $150,000. The employment
agreement contemplates that Mr. Garelick will devote to the performance of his
duties, on average, more than one week per month but less than three weeks per
month during the first year of the employment term, and less time during
subsequent years. If the employment agreement is terminated by the Company
without defined cause, or by reason of Mr. Garelick's death or defined
disability, the Company will continue to pay his salary for the balance of the
three-year term.

The owner of the premises on which Altek's business is conducted is a
corporation owned by the adult children of Mr. Garelick and Mr. Wurtz. Altek
leases those premises from the owner pursuant to a lease expiring in December
2000, at a rental of $64,404 per year, which the Company believes to be a market
rental rate.

PROPOSAL TO AMEND ARTICLES OF INCORPORATION
TO INCREASE THE AUTHORIZED COMMON STOCK
FROM 8,000,000 SHARES TO 15,000,000 SHARES

BACKGROUND AND DESCRIPTION OF AMENDMENT

The Company's Articles of Incorporation, as amended, currently authorize
the Company to issue 8,000,000 shares of Common Stock. On June 21, 1996, the
Board of Directors approved and adopted, subject to approval and adoption by the
shareholders, an amendment to the Articles of Incorporation (the "Articles
Amendment") which increases the number of shares of Common Stock that the
Company has authority to issue to 15,000,000 shares. The Common Stock's par
value of $.50 per share would not be changed by the Articles Amendment.

13
<PAGE> 16

As of June 28, 1996, the Company had 2,585,824 shares of Common Stock
outstanding. As of that date, an additional 1,273,950 shares of Common Stock
were committed for issuance as follows: (i) 200,000 shares required to be issued
in connection with the acquisition of Altek (see "RELATED TRANSACTIONS"); (ii)
400,000 shares available for option grants under the Amended and Restated 1993
Stock Option Plan, of which options to purchase an aggregate of 394,530 shares
are currently outstanding (see "PROPOSAL TO APPROVE AND RATIFY AN AMENDMENT TO
THE OPTION PLAN TO INCREASE THE NUMBER OF SHARES AVAILABLE FOR OPTION GRANTS");
(iii) 23,950 shares subject to a stock option agreement between the Company and
Eric W. McInroy (see "EXECUTIVE COMPENSATION -- STOCK OPTIONS"); (iv) 450,000
shares available for purchase under the Employees' Stock Purchase Plan, of which
an aggregate of 6,193 shares have already been purchased (see "PROPOSAL TO
APPROVE AND RATIFY AN AMENDMENT TO THE EMPLOYEES' STOCK PURCHASE PLAN TO REDUCE
THE WAITING PERIOD FOR ELIGIBILITY THEREUNDER"); (v) 100,000 shares available
for warrant grants under the Amended and Restated Directors' Warrant Plan, of
which warrants to purchase an aggregate of 12,000 shares are currently
outstanding (see "TWO PROPOSALS TO APPROVE AND RATIFY AMENDMENTS TO THE OPTION
PLAN AND THE WARRANT PLAN TO FIX DATES CERTAIN FOR EXERCISABILITY OF OPTIONS AND
WARRANTS"); and (vi) 100,000 shares available for awards under the Directors'
Stock Plan, of which an aggregate of 19,101 shares have already been awarded
(see "ELECTION OF DIRECTORS -- DIRECTORS' COMPENSATION").

Accordingly, only 4,140,226 shares of Common Stock are currently authorized
but uncommitted and available for issuance for other purposes. In addition, it
is proposed that at the Meeting the shareholders also approve an Amendment to
the Amended and Restated 1993 Stock Option Plan to increase the number of shares
of Common Stock available for issuance thereunder from 400,000 to 600,000. See
"PROPOSAL TO APPROVE AND RATIFY AN AMENDMENT TO THE OPTION PLAN TO INCREASE THE
NUMBER OF SHARES AVAILABLE FOR OPTION GRANTS."

The Board of Directors has considered in the past and will continue to
consider various means of broadening the ownership of the Common Stock and
enhancing its marketability, including the payment of stock dividends and stock
splits. The Board has also considered and will continue to consider the
possibility of making acquisitions through the issuance of Common Stock, and the
advisability of increasing stock ownership and meeting part of the Company's
future capital requirements through public offerings or private placements of
Common Stock. Any such future action is, of course, subject to the Company's
earnings and financial condition as well as market conditions and other factors
that the Board deems relevant. Finally, the Board believes that stock-based
compensation provides incentives to management and to employees at all levels
that are in the best interests of the shareholders, and the Board desires to
continue such compensation, through the Amended and Restated 1993 Stock Option
Plan or otherwise.

Aside from the Board's ongoing consideration of a stock dividend or stock
split, management's ongoing evaluation of acquisition possibilities, and the
Board's belief in the efficacy of stock-based compensation, the Board has no
present plans, agreements or understandings, pending or under discussion, for
the issuance of any shares of Common Stock except for the shares of Common Stock
intended or available for issuance as described above. However, the Board of
Directors considers that in the prudent operation of the Company, it is
desirable to have sufficient authorized but unissued shares of Common Stock
available to allow the Company to take prompt advantage of market or other
conditions in connection with possible financings or acquisitions, for stock
dividends or distributions, for grants of options and other stock rights, and
for other proper corporate purposes when such action is deemed necessary or
desirable by the Board of Directors. The Board of Directors believes that the
availability of additional shares of Common Stock for such purposes without
delay or the necessity for a special meeting of shareholders (except as may be
required by applicable law or regulatory authorities or by the rules of any
stock exchange on which the Company's securities may then be listed) will be
beneficial to the Company by providing it with the flexibility required to
consider and respond to future business opportunities and needs as they arise.

The Articles Amendment, if approved and adopted by the shareholders, would
result in over 11,140,000 shares of Common Stock authorized but uncommitted and
available for future issue by action of the Board of Directors, without further
action by the shareholders (except as may be required by applicable law or
regulatory authorities or by the rules of any stock exchange on which the
Company's securities may then be

14
<PAGE> 17

listed), for such purposes as the Board may then determine. None of these shares
would be subject to any preemptive rights. While the Board does not believe that
this increased capitalization would adversely affect the rights of existing
shareholders, the future issuance of shares of Common Stock might serve to
dilute the interest of existing shareholders. It is also possible that shares of
Common Stock may be issued at a time and under circumstances that may increase
or decrease the earnings per share, and increase or decrease the book value per
share, of shares currently outstanding.

If the Articles Amendment is approved and adopted by the shareholders at
the Meeting, it will become effective upon the filing thereof by the Ohio
Department of State. It is anticipated that such filing will occur within 30
days following the Meeting.

REQUIRED VOTE AND BOARD RECOMMENDATION

Ohio law requires that the Articles Amendment be approved and adopted by
the affirmative vote of at least two-thirds of the outstanding shares of Common
Stock entitled to vote at the Meeting. The Board of Directors recommends a vote
in favor of the proposal to approve and adopt the Amendment to the Articles of
Incorporation to increase the number of shares of Common Stock which the Company
has authority to issue from 8,000,000 to 15,000,000, and the persons named in
the enclosed proxy (unless otherwise instructed therein) will vote such proxies
FOR such proposal.

PROPOSAL TO APPROVE AND RATIFY AN
AMENDMENT TO THE OPTION PLAN TO
INCREASE THE NUMBER OF SHARES AVAILABLE FOR OPTION GRANTS

BACKGROUND OF PLAN AND DESCRIPTION OF AMENDMENT

At the 1993 Annual Meeting, the shareholders approved the Transmation, Inc.
1993 Stock Option Plan. In 1995, the Board of Directors approved amendments to
that Plan and adopted the Transmation, Inc. Amended and Restated 1993 Stock
Option Plan (the "Option Plan"). The Option Plan was approved and ratified by
the shareholders at the 1995 Annual Meeting. The Option Plan is designed to
provide incentives in the form of stock options to eligible employees of the
Company and its subsidiaries, and is intended to motivate employees to excel in
their work, influence employees to align their prospects with that of the
shareholders, and serve the Company as a compensation vehicle that will help to
attract, hire and retain superior employees.

On June 21, 1996, in an effort to ensure that the Company continues to
receive the benefits of the Option Plan, the Board of Directors approved and
adopted Amendment No. 1 to the Option Plan, which amends Section 4 of the Option
Plan to increase the number of shares available for option grants thereunder
from 400,000 to 600,000, and directed that Amendment No. 1 be submitted to
shareholders for their approval and ratification at the Meeting.

The Company has adopted a policy of granting options to purchase shares of
Common Stock to all full-time employees at all levels of employment and believes
that such grants have helped to motivate its employees to excel in their work by
aligning their prospects with those of the Company's shareholders. The Board of
Directors further believes that the Company's successful financial performance
during Fiscal 1996 was due, in part, to this policy and the incentives it
provides to employees. In furtherance of this policy, the Company has to date
granted to over 250 employees (including employees of its recently acquired
Altek subsidiary) options to purchase all but 5,470 of the 400,000 shares of
Common Stock currently available under the Option Plan. Therefore, the Company
would be unable to make significant additional option grants to new employees or
as further incentive to existing employees. The Board of Directors believes that
increasing the number of shares available for options granted under the Option
Plan will assist the Company in continuing to attract, hire, retain and motivate
superior employees and thus continue to contribute to the success of the
Company.

15
<PAGE> 18

DESCRIPTION OF OPTION PLAN AS PROPOSED TO BE AMENDED

The following is a summary of the principal features of the Option Plan.

INCREASE OF SHARES AVAILABLE. The Option Plan currently provides for the
granting of stock options to purchase up to an aggregate of 400,000 shares of
Common Stock (subject to adjustment as described below). If any option granted
under the Option Plan expires or terminates without having been exercised in
full, shares subject to the unexercised portion of such option may again be
available for other option grants under the Option Plan. Amendment No. 1 to the
Option Plan, if approved by the shareholders, would increase the number of
shares available for options thereunder from 400,000 to 600,000.

NATURE OF OPTIONS. The Company may grant under the Option Plan both
incentive stock options within the meaning of section 422 of the Code
("Incentive Stock Options") and stock options that do not qualify for treatment
as Incentive Stock Options ("Nonstatutory Stock Options"). The Company receives
no consideration for the grant of any options under the Option Plan.

TERM. The Option Plan will continue in effect until all shares of Common
Stock subject to issuance under options granted thereunder have been purchased
or expire unexercised, provided that no options may be granted under the Option
Plan after June 14, 2003.

ADMINISTRATION. The Option Plan is administered by a committee (the "Stock
Option Committee") comprised of the members of the Compensation and Benefits
Committee of the Board of Directors. Each member of the Stock Option Committee
and each member of the Compensation and Benefits Committee must be a
disinterested director within the meaning of Rule 16b-3 promulgated under the
Exchange Act. Subject to the express provisions of the Option Plan, the Stock
Option Committee has authority in its discretion and without limitation (i) to
determine the recipients of options, whether an option is intended to be an
Incentive Stock Option or Nonstatutory Stock Option, the times of option grants,
the number of shares subject to each option, the exercise price of each option,
the term of each option, the date when each option becomes exercisable, and the
vesting schedule of each option, and (ii) to make all other determinations
necessary or advisable for administering the Option Plan, which determinations
will be final and binding on all persons. Notwithstanding the foregoing, all
actions of the Stock Option Committee are subject to the approval of the
Compensation and Benefits Committee.

ELIGIBILITY. Options under the Option Plan may be granted to all full-time
employees of the Company, as the Stock Option Committee may select from time to
time, including those who are also officers or directors of the Company. As of
June 20, 1996, the Company had approximately 245 full-time employees eligible to
participate in the Option Plan.

VESTING OF OPTIONS; AMENDMENT TO VESTING SCHEDULE. As currently in effect
and subject to prior expiration (as described below), options granted under the
Option Plan vest and become exercisable over a four-year period, and only if the
market price of the Common Stock reaches certain specified levels for 20 of 30
consecutive days, as follows:

FOR OPTIONS GRANTED DURING THE 1995 CALENDAR YEAR:

<TABLE>
<CAPTION>
IF THE MARKET VALUE
OF A SHARE OF COMMON THE OPTION WILL BE
STOCK EQUALS AT EXERCISABLE
LEAST ON OR AFTER TO THE EXTENT OF
- -------------------- ---------------- ------------------
<C> <S> <C>
$ 7.00 the grant date 25%
$12.00 January 1, 1996 25%
$16.00 January 1, 1997 25%
$20.00 January 1, 1998 25%
</TABLE>

16
<PAGE> 19

FOR OPTIONS GRANTED DURING THE 1996 CALENDAR YEAR:

<TABLE>
<CAPTION>
IF THE MARKET VALUE
OF A SHARE OF COMMON THE OPTION WILL BE
STOCK EQUALS AT EXERCISABLE
LEAST ON OR AFTER TO THE EXTENT OF
- -------------------- ---------------- ------------------
<C> <S> <C>
$12.00 the grant date 25%
$16.00 January 1, 1997 25%
$20.00 January 1, 1998 25%
$20.00 January 1, 1999 25%
</TABLE>

FOR OPTIONS GRANTED DURING THE 1997 CALENDAR YEAR:

<TABLE>
<CAPTION>
IF THE MARKET VALUE
OF A SHARE OF COMMON THE OPTION WILL BE
STOCK EQUALS AT EXERCISABLE
LEAST ON OR AFTER TO THE EXTENT OF
- -------------------- ---------------- ------------------
<C> <S> <C>
$16.00 the grant date 25%
$20.00 January 1, 1998 25%
$20.00 January 1, 1999 25%
$20.00 January 1, 2000 25%
</TABLE>

As described below under the heading "TWO PROPOSALS TO APPROVE AND RATIFY
AMENDMENTS TO THE OPTION PLAN AND THE WARRANT PLAN TO FIX DATES CERTAIN FOR THE
EXERCISABILITY OF OPTIONS AND WARRANTS," a further amendment to the Option Plan
is proposed for approval and ratification at the Meeting. If the further
amendment to the Option Plan is approved by the shareholders, if and to the
extent the market value requirements described above are not satisfied, the
balance of each option previously granted and to be granted in the future under
the Option Plan will nevertheless become exercisable no later than the fourth
anniversary of its grant date.

TERMS AND CONDITIONS OF OPTIONS; OPTION PRICE. Except as described below,
the minimum option price of any option granted under the Option Plan is the
market value of the Common Stock on the grant date of the option, and the term
of the option, which is determined by the Stock Option Committee, may not exceed
ten years from the grant date. The market value of the Common Stock (reflected
by the last sale price thereof as reported by the Nasdaq Stock Market) on June
20, 1996 was $9.00 per share.

Notwithstanding the foregoing, in the case of an Incentive Stock Option
granted to any person owning stock possessing more than 10% of the voting power
of the Company, the option price must be at least 110% of the market value of
the Common Stock on the grant date, and the term of the option may not exceed
five years from the grant date. In addition, the aggregate fair market value
(determined as of the grant date) of the shares with respect to which Incentive
Stock Options are exercisable for the first time by any grantee during any
calendar year may not exceed $100,000.

An optionee may pay for the shares subject to the option by one or any
combination of the following methods, as determined by the Stock Option
Committee on the option grant date: (i) in cash; (ii) by delivery of shares of
Common Stock (valued at its then market value) already owned by the optionee; or
(iii) by the Company withholding shares of Common Stock (valued at its then
market value) that would otherwise be delivered to the optionee upon such
exercise.

NON-TRANSFERABILITY; EFFECT OF DEATH OR TERMINATION OF EMPLOYMENT. During
the lifetime of an optionee, an option may be exercised only by him and only
while he is an employee and has been an employee continuously since the option
grant. Options may be exercised for stated periods after termination of
employment in the case of the optionee's death, permanent and total disability,
or termination for other reason. During the lifetime of an optionee, options
issued under the Option Plan may not be transferred, whether voluntarily or
otherwise.

VESTING ACCELERATION. Under the Option Plan, all outstanding options not
then exercisable become immediately exercisable in full upon the occurrence of
certain defined events constituting a change in control of the Company.

17
<PAGE> 20

ADJUSTMENTS. In the event of a merger, consolidation, recapitalization,
stock split or similar event, the aggregate number and kind of shares available
for options under the Option Plan, and the number and kind of shares covered by
each outstanding option and the price per share thereof, will be appropriately
adjusted by the Stock Option Committee.

AMENDMENTS. The Board of Directors, without further shareholder approval,
may at any time further amend the Option Plan, provided that (except for
amendments made pursuant to the adjustment provisions described above), no
amendment may be made without the approval of the shareholders which would: (i)
increase the maximum number of shares that may be issued; (ii) reduce the
minimum option exercise price; (iii) change the class of individuals eligible to
receive options; (iv) extend the period for granting or exercising options; (v)
reduce the market price requirements for option vesting; or (vi) otherwise
materially increase the benefits accruing to participants under the Option Plan.
In the event that any amendment to the Option Plan so requires approval by the
shareholders, then prior to such approval the Stock Option Committee may grant
conditional options, which may not be exercised, transferred or encumbered prior
to such approval, and which will be automatically cancelled if the shareholders
fail to approve such amendment at their next meeting.

SECURITIES ACT REGISTRATION. The Company has filed with the SEC a
Registration Statement on Form S-8 registering the 400,000 shares currently
issuable upon exercise of options granted and to be granted under the Option
Plan. If Amendment No. 1 to the Option Plan is approved and ratified by the
shareholders at the Meeting, the Company intends to register the additional
shares issuable upon exercise of options granted and to be granted under the
Option Plan, pursuant to a Registration Statement on Form S-8, as soon as
practicable.

FEDERAL INCOME TAX CONSEQUENCES. The following summarizes the Federal
income tax consequences to participants and the Company of the grant and
exercise of Nonstatutory Stock Options and Incentive Stock Options under the
Option Plan. This discussion is merely a summary and does not purport to be a
complete description of the Federal income tax consequences of the Option Plan.
This description does not cover state and local tax treatment of participation
in the Option Plan.

Nonstatutory Stock Options: The grant of a Nonstatutory Stock Option under
the Option Plan will not result in the recognition of gross income to the
optionee or a deduction to the Company at the time of the grant. Upon the
exercise of a Nonstatutory Option, the optionee will recognize ordinary income
for Federal income tax purposes in an amount equal to the excess of the fair
market value of the shares purchased over the exercise price, unless he could be
subject to liability under Section 16(b) of the Exchange Act if he were to sell
the shares at a profit at such time (in which case, unless the optionee makes a
special election under the Code within 30 days after exercise, the optionee will
recognize ordinary income for Federal income tax purposes six months after the
date of the grant; if the optionee timely makes such election, he will recognize
ordinary income at the time of exercise).

The Company is required to withhold tax on the amount of income recognized
by the optionee and is entitled to a tax deduction equal to the amount of such
income for the fiscal year of the Company in which ends the taxable year of the
optionee in which such amount is included in the optionee's gross income. In
addition, under the Option Plan as currently in effect (and as more fully
described below under the heading "TWO PROPOSALS TO APPROVE AND RATIFY
AMENDMENTS TO THE OPTION PLAN AND THE WARRANT PLAN TO FIX DATES CERTAIN FOR THE
EXERCISABILITY OF OPTIONS AND WARRANTS"), the Company may be required to record
compensation expense as the price of the Common Stock approaches or exceeds the
market value requirements for exercisability set forth in the Option Plan. Under
those circumstances, the compensation expense would be deductible only to the
extent the Company had excess income against which such expense could be offset.
If the further amendment to the Option Plan so described below is approved by
the shareholders at the Meeting, the Company would not be required to record
compensation expense as the price of the Common Stock approaches or exceeds the
market value requirements for exercisability set forth in the Option Plan.

18
<PAGE> 21

Subject to certain limitations on the deductibility of capital losses, if
an optionee disposes of any shares received upon the exercise of a Nonstatutory
Stock Option, the optionee will recognize a capital gain or loss equal to the
difference between the fair market value of such shares at the time ordinary
income was recognized and the amount realized on disposition of such shares. The
gain or loss will be either long-term or short-term, depending on whether the
shares have been held for more than 12 months from the date of exercise. The
Company is not entitled to any tax deduction in connection with such disposition
of shares. The Code no longer provides for a deduction with respect to net
capital gain (the excess of long-term capital gain over net short-term capital
losses during a year). Net capital gain is now taxed at ordinary income rates,
except that the maximum tax rate for long-term capital gain is currently 28%.

Incentive Stock Options: In general, no income will be recognized by the
optionee and no deduction will be allowed to the Company at the time of the
grant or exercise of an Incentive Stock Option. The difference between the
exercise price and the fair market value of the shares on the date the Incentive
Stock Option is exercised is, however, an item of tax preference to the optionee
for purposes of the alternative minimum tax. Depending upon the optionee's
individual tax circumstances, there may be minimum tax liability in the year of
exercise as a result of the tax preference item. Further, depending upon the
optionee's individual tax circumstances, a credit against regular tax
corresponding to this minimum tax liability may be allowed in a subsequent year.
In computing alternative minimum taxable income in the year in which the
optionee disposes of shares acquired under the Option Plan through the exercise
of an Incentive Stock Option, the basis of the shares acquired through the
exercise of the Incentive Stock Option will be increased by the excess of the
fair market value of the shares on the date of exercise over the exercise price.

Subject to certain limitations on deductibility of capital losses, when the
shares received on the exercise of an Incentive Stock Option are sold, the
optionee will recognize long-term capital gain or loss equal to the difference
between the amount realized and the exercise price of the Incentive Stock Option
relating to such shares, provided that the sale of the shares is not made within
two years from the date of grant of the Incentive Stock Option or within one
year of the date of issuance of such shares to the optionee. If the
above-mentioned holding period requirements of the Code are not met, the sale of
the shares received upon the exercise of an Incentive Stock Option is a
"disqualifying disposition" and, in general, at the time of such disposition,
the optionee will recognize (i) ordinary income in an amount equal to the
difference between the exercise price and the lesser of the fair market value of
the shares on the date the Incentive Stock Option is exercised or the amount
realized on such disqualifying disposition, and (ii) capital gain to the extent
the amount realized on such disqualifying disposition exceeds the fair market
value of the shares on the date the Incentive Stock Option is exercised.
Alternatively, if the amount realized on such disqualifying disposition is less
than the exercise price, the optionee will recognize a capital loss in the
amount of the difference. Any capital gain or loss will be long-term or
short-term depending upon the holding period of the shares sold. In the event of
a disqualifying disposition, the Company may claim a deduction in the taxable
year of the disqualifying disposition equal to the amount taxable to the
optionee as ordinary income. In the absence of any disqualifying disposition,
the Company is denied any deduction in respect of shares transferred upon the
exercise of an Incentive Stock Option. As described above, the Code no longer
provides for a deduction with respect to net capital gain, and net capital gain
is now taxed at ordinary rates, except that the maximum tax rate for long-term
capital gain is currently 28%.

Under the Option Plan as currently in effect (and as more fully described
below under the heading "TWO PROPOSALS TO APPROVE AND RATIFY AMENDMENTS TO THE
OPTION PLAN AND THE WARRANT PLAN TO FIX DATES CERTAIN FOR THE EXERCISABILITY OF
OPTIONS AND WARRANTS"), the Company would be required to record compensation
expense as the price of the Common Stock approaches or exceeds the market value
requirements for exercisability set forth in the Option Plan. Under those
circumstances, the compensation expense would not be deductible for tax
accounting purposes. If the further amendment to the Option Plan so described
below is approved by the shareholders at the Meeting, the Company would not be
required to record compensation expense as the price of the Common Stock
approaches or exceeds the market value requirements for exercisability set forth
in the Option Plan.

19
<PAGE> 22

NEW PLAN BENEFITS

The following table sets forth the amount and dollar value of all
outstanding option grants actually received to date by the Named Executives and
by certain groups of individuals under the Option Plan. The benefits or amounts
to be received by or allocated to the Named Executives or such groups in the
future are not determinable.

<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE ($)(1) NUMBER OF UNITS
<S> <C> <C>
ROBERT G. KLIMASEWSKI $ 475,000 100,000
President and Chief Executive Officer
ERIC W. MCINROY $ 85,619 21,050
President, Transcat Division
JOHN A. MISIASZEK $ 57,000 12,000
Vice President -- Finance
ALL EXECUTIVE OFFICERS $ 617,619 133,050
ALL DIRECTORS WHO ARE NOT EXECUTIVE OFFICERS $ 47,500 10,000
ALL EMPLOYEES WHO ARE NOT EXECUTIVE OFFICERS OR $ 933,450 251,480
DIRECTORS
</TABLE>

(1) Expressed as the excess of the market value of the Common Stock on June 20,
1996 ($9.00 per share) over the exercise price of each option. Options have
been granted on various dates and have exercise prices ranging from $4.00
per share to $6.625 per share.

REQUIRED VOTE AND BOARD RECOMMENDATION

The affirmative vote of at least a majority of the outstanding shares of
Common Stock entitled to vote at the Meeting is required for the approval and
ratification of Amendment No. 1 to the Option Plan. The Board of Directors
recommends a vote in favor of this proposal, and the persons named in the
enclosed proxy (unless otherwise instructed therein) will vote such proxies FOR
such proposal.

TWO PROPOSALS TO APPROVE AND RATIFY
AMENDMENTS TO THE OPTION PLAN AND THE WARRANT PLAN TO
FIX DATES CERTAIN FOR EXERCISABILITY OF OPTIONS AND WARRANTS

BACKGROUND OF PLANS AND DESCRIPTION OF AMENDMENTS

A discussion of the background of the Option Plan and a description of its
principal features is set forth above under the heading "PROPOSAL TO APPROVE AND
RATIFY AN AMENDMENT TO THE OPTION PLAN TO INCREASE THE NUMBER OF SHARES
AVAILABLE FOR OPTION GRANTS."

The Transmation, Inc. Directors' Warrant Plan was approved by the
shareholders at the 1984 Annual Meeting. In 1995, the Board of Directors
approved a comprehensive amendment of that Plan and adopted the Transmation,
Inc. Amended and Restated Directors' Warrant Plan (the "Warrant Plan"). The
Warrant Plan was approved and ratified by the shareholders at the 1995 Annual
Meeting, and is designed to attract, retain and compensate highly-qualified
individuals, who are not employed by the Company or any of its subsidiaries, for
service on the Company's Board of Directors, and to allow them to increase their
ownership of Common Stock.

On June 21, 1996, the Board of Directors approved and adopted Amendment No.
2 to the Option Plan and Amendment No. 1 to the Warrant Plan (collectively, the
"Amendments"). The Amendments fix dates certain for the exercisability of
options and warrants previously granted and to be granted in the future under
the Option Plan and the Warrant Plan, and provide that if and to the extent that
certain market value requirements for exercisability are not satisfied, the
balance of each option or warrant previously granted or to

20
<PAGE> 23

be granted in the future under the Option Plan or the Warrant Plan will
nevertheless become exercisable no later than the fourth anniversary of its
grant date.

The Amendments reflect the Board of Directors' intention, at the time it
adopted the Option Plan and the Warrant Plan and recommended them to the
shareholders for their approval, to award non-compensatory options and warrants
in accordance with the provisions of Accounting Principles Board Opinion No. 25
("APB 25") entitled "Accounting for Stock Issued to Employees." The Amendments
will eliminate the Company's obligation to record compensation expense as the
price of the Common Stock approaches or exceeds the market value requirements
for exercisability set forth in the Option Plan and the Warrant Plan,
respectively. Under APB 25, for plans under which the number of shares granted
and the exercise price are known at the date of grant, but under which the
options or warrants granted are not exercisable unless the price of the
underlying shares reaches a target level significantly higher than the price on
the date of grant, compensation expense must be recognized when it becomes
probable that the target level will be achieved. Accordingly, under the Option
Plan and the Warrant Plan as currently in effect, the Company may be required to
record compensation expense for financial accounting purposes which may not be
currently deductible for tax accounting purposes. If the Amendments are approved
and ratified by the shareholders, the fact that options and warrants vest and
become exercisable on a date certain (the fourth anniversary of the grant date
thereof) will enable the Company to record compensation expense, if any, for
financial accounting purposes as of the date of grant of the option or warrant.

DESCRIPTION OF PLANS AS PROPOSED TO BE AMENDED

A description of the principal features of the Option Plan is set forth
above under the heading "PROPOSAL TO APPROVE AND RATIFY AN AMENDMENT TO THE
OPTION PLAN TO INCREASE THE NUMBER OF SHARES AVAILABLE FOR OPTION GRANTS." The
following is a description of principal features of the Warrant Plan.

ELIGIBILITY. Each member of the Company's Board of Directors who is not
employed by the Company or any of its subsidiaries and who is a member of the
Board of Directors on a "Grant Date" (as defined below) is eligible to
participate in the Warrant Plan. If a participating Director subsequently
becomes employed by the Company or any subsidiary, warrants previously granted
to him pursuant to the Warrant Plan continue in full force and effect while he
remains a member of the Board, but he is not entitled to further grants under
the Warrant Plan. As of June 20, 1996, the Company had six directors who were
not employed by the Company or any of its subsidiaries and who were therefore
eligible to participate in the Warrant Plan.

NUMBER OF SHARES AVAILABLE. The Warrant Plan allows for the granting of
warrants to purchase an aggregate of 100,000 shares of Common Stock. Shares of
Common Stock subject to warrants may be authorized but unissued shares or
previously issued shares reacquired by the Company. Shares subject to issuance
upon exercise of warrants will continue to be available for issuance if the
warrants for such shares are surrendered or lapse prior to exercise or otherwise
cease to be exercisable.

WARRANT GRANTS. The Warrant Plan provides for specific, non-discretionary
grants to participating directors of warrants to purchase 2,000 shares of Common
Stock on each of the following dates: (i) the day following conclusion of the
1995 Annual Meeting (the "1995 Grant Date"), (ii) the day following conclusion
of the 1996 Annual Meeting (the "1996 Grant Date"), and (iii) the day following
the conclusion of the 1997 Annual Meeting (the "1997 Grant Date") (each, a
"Grant Date"). The Warrant Plan contains no limit on the aggregate number of
warrants issuable to any participating director. A participating director may
elect to decline any warrant grant, provided that the Company may not pay
anything of value to such director in lieu of the warrant grant.

Warrants granted under the Warrant Plan expire on the fifth anniversary of
the Grant Date, and cannot be transferred other than by will or the laws of
descent and distribution.

EXERCISE PRICE. Each warrant is exercisable to purchase shares of Common
Stock at a price equal to the market value per share of the Common Stock on the
Grant Date.

21
<PAGE> 24

VESTING OF WARRANTS; AMENDMENT TO VESTING SCHEDULE. As currently in effect
and subject to prior expiration (as described below), warrants granted under the
Warrant Plan vest and become exercisable over a four-year period, if the market
price of the Common Stock reaches certain specified levels for 20 of 30
consecutive trading days, as follows:

FOR WARRANTS GRANTED ON THE 1995 GRANT DATE:

<TABLE>
<CAPTION>
IF THE MARKET VALUE
OF A SHARE OF COMMON
STOCK EQUALS AT THE WARRANT WILL BE
LEAST ON OR AFTER EXERCISABLE TO PURCHASE
- -------------------- -------------------- -----------------------
<C> <S> <C>
$ 7.00 the 1995 Grant Date 500 shares
$12.00 January 1, 1996 500 shares
$16.00 January 1, 1997 500 shares
$20.00 January 1, 1998 500 shares
</TABLE>

FOR WARRANTS GRANTED ON THE 1996 GRANT DATE:

<TABLE>
<CAPTION>
IF THE MARKET VALUE
OF A SHARE OF COMMON
STOCK EQUALS AT THE WARRANT WILL BE
LEAST ON OR AFTER EXERCISABLE TO PURCHASE
- -------------------- -------------------- -----------------------
<C> <S> <C>
$12.00 the 1996 Grant Date 500 shares
$16.00 January 1, 1997 500 shares
$20.00 January 1, 1998 500 shares
$20.00 January 1, 1999 500 shares
</TABLE>

FOR WARRANTS GRANTED ON THE 1997 GRANT DATE:

<TABLE>
<CAPTION>
IF THE MARKET VALUE
OF A SHARE OF COMMON
STOCK EQUALS AT THE WARRANT WILL BE
LEAST ON OR AFTER EXERCISABLE TO PURCHASE
- -------------------- -------------------- -----------------------
<C> <S> <C>
$16.00 the 1997 Grant Date 500 shares
$20.00 January 1, 1998 500 shares
$20.00 January 1, 1999 500 shares
$20.00 January 1, 2000 500 shares
</TABLE>

If Amendment No. 1 to the Warrant Plan is approved and ratified by the
shareholders at the Meeting, if and to the extent the market value requirements
for exercisability described above are not satisfied, the balance of each
warrant previously granted or to be granted in the future under the Warrant Plan
will nevertheless become exercisable no later than the fourth anniversary of its
grant date.

If Amendment No. 2 to the Option Plan is approved and ratified by the
shareholders at the Meeting, each option previously granted or to be granted in
the future under the Option Plan will similarly become exercisable no later than
the fourth anniversary of its grant date, regardless of whether the market value
requirements for exercisability described therein are satisfied. See "PROPOSAL
TO APPROVE AND RATIFY AN AMENDMENT TO THE OPTION PLAN TO INCREASE THE NUMBER OF
SHARES AVAILABLE FOR OPTION GRANTS."

NON-TRANSFERABILITY; EARLY EXPIRATION OF WARRANTS. Warrants granted under
the Warrant Plan are not transferable. If a participating director ceases to
serve on the Board of Directors for any reason other than death, all outstanding
unexercised warrants held by him will immediately expire. Upon the death of a
participating director while serving on the Board, only the portions of his
warrants vested on the date of death are exercisable by his legal
representative, and only within 90 days after the date of death (but in no event
following expiration of the warrant).

ADJUSTMENTS. In the event of a merger, consolidation, recapitalization,
stock split or similar event, the aggregate number and kind of shares available
for warrants under the Warrant Plan, and the number and kind of shares covered
by each outstanding warrant and the price per share thereof, will be
appropriately adjusted.

22
<PAGE> 25

ADMINISTRATION AND AMENDMENT. The Warrant Plan is administered by the
Board of Directors. The Warrant Plan may be terminated or amended by the Board
of Directors provided that any amendment that changes the timing of the grant of
warrants, the eligibility requirements for participating directors, the method
of determining the exercise price of warrants, the vesting schedule of warrants,
or the number of shares subject to warrants, may not occur more frequently than
once each six months unless otherwise necessary to comply with the Code or
ERISA. In addition, the shareholders must approve any amendment to the Warrant
Plan that would materially increase the benefits accruing to participating
directors, increase (other than pursuant to the adjustment provisions described
above) the number of shares that may be issued thereunder, or modify the
requirements as to eligibility for participation in the Warrant Plan.

SECURITIES ACT REGISTRATION. The Company has filed with the SEC a
Registration Statement on Form S-8 registering the shares issuable upon exercise
of warrants granted and to be granted under the Warrant Plan.

NEW PLAN BENEFITS

The following table sets forth the amount and dollar value of all
outstanding warrant grants actually received by the Named Executives and by
certain groups of individuals during Fiscal 1996. Although the number of
warrants to be granted in the future pursuant to the Warrant Plan are
determinable, the dollar value of such future grants is not determinable.

<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE ($)(1) NUMBER OF UNITS
<S> <C> <C>
ROBERT G. KLIMASEWSKI 0 0
President and Chief Executive Officer
ERIC W. MCINROY 0 0
President, Transcat Division
JOHN A. MISIASZEK 0 0
Vice President - Finance
ALL EXECUTIVE OFFICERS 0 0
ALL DIRECTORS WHO ARE NOT EXECUTIVE OFFICERS $30,000 12,000
ALL EMPLOYEES WHO ARE NOT EXECUTIVE OFFICERS OR 0 0
DIRECTORS
</TABLE>

(1) Expressed as the excess of the market value of the Common Stock on June 20,
1996 ($9.00 per share) over the exercise price of each warrant ($6.50 per
share, that being the market value of the Common Stock on August 16, 1995,
the date on which the warrants were granted under the Warrant Plan).

REQUIRED VOTE AND BOARD RECOMMENDATION

Each Amendment will be voted on separately. The affirmative vote of at
least a majority of the outstanding shares of Common Stock entitled to vote at
the Meeting is required for the approval and ratification of Amendment No. 2 to
the Option Plan and Amendment No. 1 to the Warrant Plan. The Board of Directors
recommends a vote in favor of each of these proposals, and the persons named in
the enclosed proxy (unless otherwise instructed therein) will vote such proxies
FOR each such proposal.

PROPOSAL TO APPROVE AND RATIFY
AN AMENDMENT TO THE EMPLOYEES' STOCK PURCHASE PLAN
TO REDUCE THE WAITING PERIOD FOR ELIGIBILITY THEREUNDER

BACKGROUND OF PLAN AND DESCRIPTION OF AMENDMENT

In 1995, the Board of Directors adopted the Transmation, Inc. Employees'
Stock Purchase Plan (the "Purchase Plan") and recommended that it be submitted
to the shareholders for their approval. The Purchase

23
<PAGE> 26

Plan was approved and ratified by the shareholders at the 1995 Annual Meeting
and became effective October 1, 1995. On March 11, 1996, the Board of Directors
approved and adopted certain technical amendments to the Purchase Plan which did
not require shareholder approval. The Purchase Plan is intended to encourage
ownership of Common Stock by present and future employees of the Company at all
levels of employment, and thereby provide to such employees the benefit of the
incentive created by stock ownership. The Board of Directors believes that
participation in the Purchase Plan aligns the interests of participating
employees with those of the shareholders, thus increasing the desire of
participating employees to remain with the Company, bolstering their efforts
while employed by the Company, and helping to attract other qualified applicants
for employment.

On June 21, 1996, the Board of Directors approved and adopted Amendment No.
2 to the Purchase Plan (the "Amendment"), which amends Section 5 of the Purchase
Plan to reduce, from one year to six months, the period an employee must be
employed by the Company (or a designated subsidiary of the Company) prior to
participating in the Purchase Plan, and directed that the Amendment be submitted
to the shareholders for their approval and ratification at the Meeting.

The Board of Directors believes that the Amendment, if approved by the
shareholders, will make the benefits of participation in the Purchase Plan
available to an expanded number of employees at earlier stages of their careers
with the Company. By accelerating eligibility for participation in the Purchase
Plan, the Board believes it will more quickly align the interests of
participating employees with those of the Company's shareholders, thus further
motivating participating employees to excel in their work and further
contributing to the Company's success.

DESCRIPTION OF PURCHASE PLAN AS PROPOSED TO BE AMENDED

The following is a summary of the principal features of the Purchase Plan.

ELIGIBLE EMPLOYEES: As currently in effect, each employee of the Company
(and of any subsidiary of the Company designated by the Board of Directors for
participation) is eligible to participate in the Purchase Plan, provided that
his customary employment is for more than 20 hours per week and he has been
employed for at least one year. As of June 20, 1996, the Board of Directors had
designated two subsidiaries, Transmation (Canada) Inc. and Altek Industries
Corp., as participating employers under the Purchase Plan. Accordingly, as of
June 20, 1996, there were approximately 245 employees of the Company and its
designated subsidiaries eligible to participate in the Purchase Plan.

The Amendment, if approved by the shareholders at the Meeting, would
reduce, from one year to six months, the period of time an employee would be
required to be employed by the Company or a designated subsidiary prior to
eligibility under the Purchase Plan.

PURCHASE OF SHARES: Eligible employees may participate by enrolling in the
Purchase Plan and authorizing specified payroll deductions, of up to 10% of
regular earnings, for the purchase of shares of Common Stock at a purchase price
that is 85% of the then-current market value of the Common Stock. No
participating employee may, during any calendar year, purchase shares through
the Purchase Plan having an aggregate fair market value in excess of $25,000. In
addition, a participating employee may not make purchases through the Purchase
Plan if such purchases would cause him to own 5% or more of the then outstanding
shares of Common Stock. Upon the death or termination of employment of any
participating employee, any amount remaining in his payroll deduction account
will be refunded to him or his estate.

SHARES AVAILABLE: A total of 450,000 shares of Common Stock may be
purchased under the Purchase Plan. As of June 20, 1996, 6,193 shares of Common
Stock had been so purchased since the Purchase Plan became effective on October
1, 1995. Shares subject to the Purchase Plan may be either authorized but
unissued shares or shares that were once issued and subsequently reacquired by
the Company. In the event of a merger, consolidation, recapitalization, stock
split or similar event, the aggregate number and kind of shares available for
purchase under the Purchase Plan will be appropriately adjusted.

24
<PAGE> 27

ADMINISTRATION AND AMENDMENT: The Purchase Plan is administered by the
Stock Option Committee, or such other committee appointed by the Board of
Directors. Any such committee will be comprised of at least two disinterested
members of the Board of Directors.

The Board of Directors may amend the Purchase Plan at any time, provided
that shareholder approval is required for amendments that materially (i)
increase the benefits accruing to participating employees, (ii) increase (other
than pursuant to the adjustment provisions described above) the number of shares
that may be issued under the Purchase Plan, or (iii) modify the requirements as
to eligibility for participation. The Board of Directors may terminate the
Purchase Plan at any time.

SECURITIES ACT REGISTRATION: The Company has filed with the SEC a
Registration Statement on Form S-8 registering the shares issuable pursuant to
the Purchase Plan.

NEW PLAN BENEFITS: The following table sets forth the number of shares of
Common Stock actually purchased by the Named Executives and by certain groups of
individuals pursuant to the Purchase Plan, and the dollar value of the benefit
to them from participation in the Purchase Plan, during Fiscal 1996.

<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE ($)(1) NUMBER OF SHARES
<S> <C> <C>
ROBERT G. KLIMASEWSKI $ 485 536
President and Chief Executive Officer
ERIC W. MCINROY $ 157 174
President, Transcat Division
JOHN A. MISIASZEK $ 97 107
Vice President - Finance
ALL EXECUTIVE OFFICERS $ 739 817
ALL DIRECTORS WHO ARE NOT EXECUTIVE OFFICERS $ 194 214
ALL EMPLOYEES WHO ARE NOT EXECUTIVE OFFICERS OR $ 3,131 3,432
DIRECTORS
</TABLE>

(1) Expressed as the excess of the market value of the Common Stock on each date
of purchase over the purchase price paid for such shares under the Purchase
Plan (85% of the market value of the Common Stock on each date of purchase).

REQUIRED VOTE AND BOARD RECOMMENDATION

The affirmative vote of at least a majority of the outstanding shares of
Common Stock entitled to vote at the Meeting is required for the approval and
ratification of Amendment No. 2 to the Purchase Plan. The Board of Directors
recommends a vote in favor of this proposal and the persons named in the
enclosed proxy (unless otherwise instructed therein) will vote such proxies FOR
such proposal.

SELECTION OF INDEPENDENT AUDITORS

The firm of Price Waterhouse LLP, certified public accountants, served as
the independent auditors of the Company for Fiscal 1996. In addition to the
audit of the Fiscal 1996 financial statements, the Company engaged Price
Waterhouse LLP to perform certain services for which it was paid professional
fees (see "RELATED TRANSACTIONS"). The Audit Committee of the Board of Directors
considered the possible effect of such professional services on the independence
of Price Waterhouse LLP and approved such services prior to their being
rendered.

The Board of Directors has selected Price Waterhouse LLP as the Company's
independent auditors for the fiscal year ending March 31, 1997. This selection
will be presented to the shareholders for their approval at the Meeting. The
Board of Directors recommends a vote in favor of the proposal to approve and
ratify this selection, and the persons named in the enclosed proxy (unless
otherwise instructed therein) will vote such

25
<PAGE> 28

proxies FOR such proposal. If the shareholders do not approve this selection,
the Board of Directors will reconsider its choice.

The Company has been advised by Price Waterhouse LLP that a representative
will be present at the Meeting and will be available to respond to appropriate
questions. In addition, the Company intends to give such representative an
opportunity to make any statements if he should so desire.

SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING

In order for any shareholder proposal to be included in the Company's proxy
statement to be issued in connection with the 1997 Annual Meeting of
Shareholders, such proposal must be received by the Company no later than March
10, 1997.

OTHER MATTERS

The Board of Directors does not know of any other matters that are to be
presented for action at the Meeting. Should any other matter come before the
Meeting, however, the persons named in the enclosed proxy will have
discretionary authority to vote all proxies with respect to such matter in
accordance with their judgment.

BY ORDER OF THE BOARD OF DIRECTORS

JOHN A. MISIASZEK
Secretary

Dated: July 10, 1996

26
<PAGE> 29

<TABLE>

PROXY TRANSMATION, INC.

The undersigned hereby appoints ROBERT G. KLIMASEWSKI AND JOHN A. MISIASZEK,
and each of them, proxies for the undersigned with full power of substitution,
to vote all shares of the Common Stock of TRANSMATION, INC. (the "Company")
owned by the undersigned at the Annual Meeting of Shareholders to be held at the
Hutchison House, 930 East Avenue, Rochester, New York, on Tuesday, August 20,
1996 at 12:00 noon, local time, and at any adjournment or adjournments thereof,
reserving to such proxies the right to vote such shares cumulatively to elect
the maximum number of nominees:

1. Election of Directors

<S> <C>
/ / FOR all nominees listed below (except as marked to the / / WITHHOLD AUTHORITY to vote for all nominees
contrary). listed below.

Instruction: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME LISTED BELOW.

ANGELO J. CHIARELLA E. LEE GARELICK JOHN W. OBERLIES

2. Proposal to approve and adopt an amendment to the Articles of Incorporation
which increases the number of shares of Common Stock which the Company is
authorized to issue from 8,000,000 shares to 15,000,000 shares.
/ / FOR / / AGAINST / / ABSTAIN

3. Proposal to approve and ratify an amendment to the Transmation, Inc. Amended
and Restated 1993 Stock Option Plan which increases the total number of shares
available for option grants thereunder from 400,000 to 600,000.
/ / FOR / / AGAINST / / ABSTAIN

4. Proposal to approve and ratify a further amendment to the Transmation, Inc.
Amended and Restated 1993 Stock Option Plan which fixes a date certain for the
exercisability of options previously granted and to be granted in the future
thereunder.
/ / FOR / / AGAINST / / ABSTAIN

5. Proposal to approve and ratify an amendment to the Transmation, Inc. Amended
and Restated Directors' Warrant Plan which fixes a date certain for the
exercisability of warrants previously granted and to be granted in the future
thereunder.
/ / FOR / / AGAINST / / ABSTAIN

6. Proposal to approve and ratify an amendment to the Transmation, Inc.
Employees' Stock Purchase Plan to reduce, from one year to six months, the
waiting period for eligibility thereunder.
/ / FOR / / AGAINST / / ABSTAIN

7. Proposal to approve and ratify the selection of Price Waterhouse LLP as
independent auditors for the year ending March 31, 1997.
/ / FOR / / AGAINST / / ABSTAIN

(Continued and to be signed on reverse side)

(Proxy -- continued from other side)

8. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
This Proxy will be voted as specified by the undersigned. This Proxy revokes any
prior proxy given by the undersigned. UNLESS AUTHORITY TO VOTE FOR ONE OR MORE
OF THE NOMINEES IS SPECIFICALLY WITHHELD ACCORDING TO THE INSTRUCTIONS, A SIGNED
PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES FOR DIRECTORS AND, UNLESS
OTHERWISE SPECIFIED, FOR EACH OF THE OTHER PROPOSALS LISTED HEREIN AND DESCRIBED
IN THE ACCOMPANYING PROXY STATEMENT. The undersigned acknowledges receipt with
this Proxy of a copy of the Notice of Annual Meeting and Proxy Statement dated
July 10, 1996, describing more fully the proposals set forth herein.

Dated:................. , 1996

..............................

..............................
Signature(s) of shareholder(s)
Please date and sign name
exactly as it appears hereon.
Executors, administrators,
trustees, etc. should so
indicate when signing. If the
shareholder is a corporation,
the full corporate name should
be inserted and the proxy
signed by an officer of the
corporation, indicating his
title.
</TABLE>