def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by
the Registrant þ
Filed by a Party other than the Registrant o
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Soliciting Material Pursuant to §240.14a-12 |
Ikonics Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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IKONICS CORPORATION
4832 Grand Avenue
Duluth, Minnesota 55807
(218) 628-2217
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders to be held at The
Kitchi Gammi Club, 831 E. Superior Street, Duluth, Minnesota, at 1:00 p.m., Central Time, on April
28, 2011.
The Secretarys Notice of Annual Meeting and the Proxy Statement which follow describe the
matters to come before the meeting. During the meeting, we will also review the activities of the
past year and items of general interest about the Company.
We hope that you will be able to attend the meeting in person and we look forward to seeing
you. Please mark, date and sign the enclosed proxy and return it in the accompanying envelope as
quickly as possible, even if you plan to attend the Annual Meeting. You may revoke the proxy and
vote in person at that time if you so desire.
Sincerely,
William C. Ulland
Chairman of the Board
March 22, 2011
IKONICS CORPORATION
Notice of Annual Meeting of Shareholders
to be held on April 28, 2011
The Annual Meeting of Shareholders of IKONICS Corporation will be held at The Kitchi
Gammi Club, 831 E. Superior Street, Duluth, Minnesota, at 1:00 p.m., Central Time, on April 28,
2011 for the following purposes:
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To elect seven directors to serve until the next annual meeting of
shareholders or until their successors are duly elected and qualified. |
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To transact such other business as may properly come before the Annual
Meeting, or any adjournment or adjournments thereof. |
The Board of Directors has fixed March 8, 2011 as the record date for the meeting, and only
shareholders of record at the close of business on that date are entitled to receive notice of and
vote at the meeting.
Your proxy is important to ensure a quorum at the meeting. Even if you own only a few shares,
and whether or not you expect to be present at the meeting, please mark, date and sign the enclosed
proxy and return it in the accompanying postage-paid reply envelope as quickly as possible. You
may revoke your proxy at any time prior to its exercise and returning your proxy will not affect
your right to vote in person if you attend the meeting and revoke the proxy.
By Order of the Board of Directors,
Jon Gerlach
Secretary
Duluth, Minnesota
March 22, 2011
PROXY STATEMENT
GENERAL INFORMATION
The enclosed proxy is being solicited by the Board of Directors of IKONICS Corporation,
a Minnesota corporation (IKONICS or the Company), for use in connection with the Annual Meeting
of Shareholders to be held on April 28, 2011 at The Kitchi Gammi Club, 831 E. Superior Street,
Duluth, Minnesota, at 1:00 p.m., Central Time, and at any adjournments thereof. Only shareholders
of record at the close of business on March 8, 2011 will be entitled to vote at such meeting or
adjournment. Proxies in the accompanying form which are properly signed, duly returned to the
Company and not revoked will be voted in the manner specified. A shareholder executing a proxy
retains the right to revoke it at any time before it is exercised by notice in writing to the
Secretary of the Company of termination of the proxys authority or a properly signed and duly
returned proxy bearing a later date.
The address of the principal executive office of the Company is 4832 Grand Avenue, Duluth,
Minnesota 55807 and the telephone number is (218) 628-2217. The mailing of this Proxy Statement
and the Board of Directors form of proxy to shareholders will commence on or about March 22, 2011.
This Proxy Statement is available at http://ir.10kwizard.com/files.php?source=638.
The Company will pay the cost of soliciting proxies in the accompanying form. In addition to
solicitation by the use of the mails, certain directors, officers and employees of the Company may
solicit proxies by telephone, regular or electronic mail, or personal contact, and have requested
brokerage firms and custodians, nominees and other record holders to forward soliciting materials
to the beneficial owners of stock of the Company and will reimburse them for their reasonable
out-of-pocket expenses in so forwarding such materials.
The Common Stock of the Company, par value $.10 per share, is the only authorized and issued
voting security of the Company. At the close of business on March 8, 2011 there were 1,979,607
shares of Common Stock issued and outstanding, each of which is entitled to one vote. Holders of
Common Stock are not entitled to cumulate their votes for the election of directors.
A plurality of the votes cast is required for election of the director nominees listed under
Election of Directors in this Proxy Statement. A shareholder voting through a proxy who abstains
with respect to any matter is considered to be present and entitled to vote on such matter at the
meeting. A shareholder (including a broker) who does not give authority to vote, or withholds
authority to vote, on any proposal shall not be considered present and entitled to vote on such
proposal.
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth, as of February 24, 2011, the number of shares of Common Stock
beneficially owned by each person who is a beneficial owner of more than 5% of the Common Stock
issued and outstanding, by each executive officer named in the Summary Compensation Table, by each
director, and by all officers and directors as a group. All persons have sole voting and
dispositive power over such shares unless otherwise indicated.
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Name and Address |
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Percentage of |
of Beneficial Owner(1) |
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Of Shares |
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Outstanding Shares |
Directors and executive officers: |
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William C. Ulland |
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238,502 |
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12.09 |
% |
Charles H. Andresen |
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26,289 |
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1.33 |
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Gerald W. Simonson |
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115,473 |
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5.85 |
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David O. Harris |
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89,362 |
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4.53 |
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Rondi Erickson |
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13,398 |
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* |
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Lockwood Carlson |
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* |
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Leigh Severance |
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175,079 |
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8.87 |
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Claude P. Piguet |
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21,675 |
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1.10 |
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Jon Gerlach |
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11,250 |
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* |
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All directors and executive
officers (11 persons, including
those named above) |
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700,976 |
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35.52 |
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Additional Beneficial Owners
> 5% |
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Joseph R. Nerges |
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394,534 |
(2) |
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19.99 |
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* |
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Less than one percent. |
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The address for each of the persons listed below is 4832 Grand Avenue, Duluth,
Minnesota 55807, except for Mr. Nerges, whose address is 1726 Bundy Street, Scranton,
Pennsylvania 18508. |
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Based solely on information contained in filings made by Mr. Nerges with the
Securities and Exchange Commission on or prior to February 24, 2011. |
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ELECTION OF DIRECTORS
The business of the Company is managed under the direction of a Board of Directors, with the
number of directors fixed from time to time by the Board of Directors. The Board of Directors has
fixed at seven the number of directors to be elected to the Board at the 2011 Annual Meeting of
Shareholders and has nominated the seven persons named below for election as directors, each to
serve until the 2012 Annual Meeting of Shareholders. Proxies solicited by the Board of Directors
will, unless otherwise directed, be voted to elect the seven nominees named below.
Each of the nominees is a current director of the Company and each has indicated a willingness
to serve as a director until the 2012 Annual Meeting of Shareholders. In case any nominee is not a
candidate for any reason, the proxies named in the enclosed form of proxy may vote for a substitute
nominee in their discretion.
All nominees for director, except for Mr. Ulland, meet the independence requirements of The
Nasdaq Stock Market, the stock exchange on which the Companys shares trade.
Following is certain information regarding the nominees for the office of director:
William C. Ulland, age 70
Mr. Ulland is Chairman, President and Chief Executive Officer of the Company. He was named
IKONICS Chief Executive Officer in February of 2000 and President in December of 2000. He has
been a member of the Companys Board of Directors since 1972 and has served as its Chairman since
1976. Mr. Ulland earned a degree in Geophysical Engineering from the Colorado School of Mines in
1963 and a Master of Science degree in Industrial Administration from Purdue University in 1965.
Prior to becoming the Companys Chief Executive Officer, he was involved in mineral development and
evaluation as Managing Partner of the American Shield Company and President of Geomines Inc.
Charles H. Andresen, age 70
Mr. Andresen was elected as a director of the Company in 1979. Mr. Andresen has been a
shareholder in the law firm of Andresen & Butterworth, P.A., in Duluth, Minnesota for the past five
years. Prior to being a shareholder in Andresen & Butterworth, P.A., Mr. Andresen was a
shareholder in the law firm of Andresen, Haag, Paciotti, & Butterworth, P.A. in Duluth, Minnesota.
Gerald W. Simonson, age 80
Mr. Simonson was elected as a director of the Company in 1978. He has been the President of
Omnetics Connector Corporation, a manufacturer of microminiature connectors for the electronics
industry located in Minneapolis, Minnesota, for more than the past five years.
David O. Harris, age 76
Mr. Harris was elected a director of the Company in 1965. He has been President of David O.
Harris, Inc., a manufacturers representative firm in Minneapolis, Minnesota, for more than the
past five years.
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Rondi C. Erickson, age 63
Ms. Erickson was elected as a director of the Company in 2000. She is the co-owner of Nokomis
Restaurant & Bar in Duluth, Minnesota. From October 1999 to February 2006, she was the Chief
Executive Officer and a director of Apprise Technologies Inc., a company that develops and sells
optical and electronic-based sensor technologies. Prior to joining Apprise, in 1995, Ms. Erickson
founded American Science Corporation, a registered FDA manufacturing establishment that provided
contract manufacturing and research and development support for a dental pharmaceutical company.
Prior to founding American Science, Ms. Erickson founded Bay West, Inc., an environmental services
firm, in 1974 and served as its Chief Executive Officer.
H. Leigh Severance, age 72
Mr. Severance was elected as a director of the Company in 2000. Mr. Severance has over forty
years investment experience as a portfolio manager and security analyst with advisory organizations
and a mutual fund, including his own firm, Severance Capital Management, which was founded in 1984
to specialize in micro and small capitalization companies and quantitative portfolio management
strategies. He also co-founded Jefferson Capital Management, a large capitalization quantitative
investment management company. Prior to 1984, Mr. Severance was a portfolio manager with Cambiar
Investors, H.L. Severance, Inc., Founders Asset Management, and J.M. Hartwell & Company. Mr.
Severance received a Masters in Business Administration from the University of Chicago in 1963. He
serves on the Board of Directors of Credo Petroleum Corporation and served on the Board of
Directors of LifeVantage Corporation, a publicly traded company, until 2007. He also serves on the
Board of Directors of a private company.
Lockwood Carlson, age 67
Dr. Carlson was appointed as a director of the Company in February 2009. Dr. Carlson is
President of Carlson Consulting Group, a Minneapolis-based consulting firm that he founded in 2002
and that provides strategic development foresight to organizations with a concentration in
technical products and services. Dr. Carlson holds the James Renier Chair in Technological
Leadership at the Center for the Development of Technological Leadership at the University of
Minnesota, where he is on the faculty and teaches in the Management of Technology program. Dr.
Carlson received his Ph.D. in Physics in 1971 from the University of Wyoming and is retired from 3M
Company where he served as Corporate Scientist. Dr. Carlson also serves on the Board of Directors
of several private companies and non-profit organizations.
Each nominee brings unique experience and skills to the Board of Directors. The Board of
Directors believes the nominees as a group have the experience and skills in areas such as
technology, manufacturing, finance and management that are necessary to effectively oversee the
Companys operations and growth strategies. The following is a summary of the experience and
skills that the Board of Directors believes makes each nominee a strong choice to serve as a
director of the Company:
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Mr. Ulland has been our chief executive officer for more than 10 years and has been a
director of the Company for more than 35 years. The Board of Directors believes his |
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knowledge of the Company and its business gained from this lengthy term of leadership
position him well to formulate and execute our business plans and growth strategies. |
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Mr. Andresen has deep institutional knowledge of the Company gained from his service on
the Board of Directors for more than 20 years. His legal knowledge acquired from
practicing law for more than 40 years also is a valuable resource to the Board of
Directors. |
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Mr. Simonson has deep institutional knowledge of the Company gained from his service on
the Board of Directors for more than 20 years. His professional experience in the
manufacturing sector also is a valuable resource to the Company. Mr. Simonsons financial
and accounting knowledge helped the Board of Directors to determine that he is an audit
committee financial expert under applicable rules of the Securities and Exchange
Commission. |
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Mr. Harriss institutional knowledge of the Company based on his service on the Board of
Directors for more than 40 years and his professional experience in the manufacturing
sector make him a valuable resource to the Companys management and Board of Directors. |
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Ms. Ericksons experience in the technology sector and her general management experience
are useful resources for the Board of Directors and the Companys management. She served
as Chief Executive Officer of Apprise Technologies, a company that develops and sells
optical and electronic-based sensor technologies, for six years. Ms. Erickson also founded
and managed several businesses prior to joining Apprise Technologies. |
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Mr. Severance has more than 40 years of experience analyzing and managing investments.
This investment experience is a valuable resource for the Companys other directors. |
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Mr. Carlson has significant technological and leadership experience gained through his
professional and academic background. He founded and serves as President of a consulting
firm that provides strategic advice primarily to technology companies and teaches in the
Management of Technology program at the University of Minnesota. He also previously worked
at 3M Company, a diversified technology company in the Fortune 100. His technological and
leadership skills are a valuable resource to the Board of Directors and the Companys
management. |
Committees of the Board of Directors and Meeting Attendance
The Board of Directors met four times during fiscal 2010. All incumbent directors attended at
least 75% of the meetings of the Board and of the committees on which they served held during the
periods for which they served as a director. The Company currently has an Audit Committee, a
Compensation Committee and a Nominating Committee.
The following is a description of the functions performed by each of the Committees:
Audit Committee
The Companys Audit Committee presently consists of Messrs. Simonson (Chairman), Andresen,
Carlson, Harris, Severance and Ms. Erickson. All of the members of the Audit Committee are
independent as that term is defined in the applicable listing standards of The Nasdaq Stock
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Market and Rule 10A-3 promulgated under the Securities Act of 1934, as amended (the Exchange
Act). In addition, the Board of Directors has determined that Mr. Simonson is an audit committee
financial expert as defined by applicable regulations of the Securities and Exchange Commission.
The Audit Committee provides assistance to the Board of Directors in fulfilling the Boards duties
relating to corporate accounting, reporting practices of the Company and the quality and integrity
of the Companys financial reports. Among other things, the Audit Committee selects and appoints
the Companys independent registered public accounting firm, meets with the independent registered
public accounting firm and financial management to review the scope of the audit and the audit
procedures and reviews annually the responsibilities of the Audit Committee and recommends to the
Board of Directors any changes to these responsibilities. The responsibilities of the Audit
Committee are set forth in the Audit Committee Charter, adopted by the Companys Board of Directors
on February 23, 2004. A copy the Audit Committee Charter was included as Exhibit A to the
Companys Proxy Statement for its 2010 Annual Meeting of Shareholders. The Audit Committee met
four times during fiscal 2010, once each quarter.
Compensation Committee
The Companys Compensation Committee presently consists of Messrs. Andresen (Chairman),
Simonson, Harris, Severance, Carlson and Ms. Erickson. All of the members of the Compensation
Committee are independent as that term is defined in the applicable listing standards of The
Nasdaq Stock Market. The Compensation Committee annually reviews and acts upon a compensation
package for the Chief Executive Officer and the Companys other executive officers, and sets
compensation policy for the other employees of the Company. In addition, the Compensation
Committee acts upon management recommendations concerning employee stock options, bonuses and other
compensation and benefit plans. The Compensation Committee also administers the IKONICS
Corporation 1995 Stock Incentive Plan. The responsibilities of the Compensation Committee are set
forth in the Compensation Committee Charter, adopted by the Companys Board of Directors on
February 23, 2004. Pursuant to the Compensation Committee Charter, the Committee has authority to
delegate any of its responsibilities to subcommittees as the Committee may deem appropriate,
provided that the subcommittees are composed entirely of independent directors. A copy of the
Compensation Committee Charter was included as Exhibit B to the Companys Proxy Statement for its
2010 Annual Meeting of Shareholders. The Compensation Committee met three times during fiscal
2010.
Nominating Committee
The Companys Nominating Committee presently consists of Ms. Erickson (Chairperson) and
Messrs. Andresen, Simonson, Harris, Severance, and Carlson. All of the members of the Nominating
Committee are independent as that term is defined in the applicable listing standards of The
Nasdaq Stock Market. The purposes of the Nominating Committee are to identify individuals
qualified to become Board members and to approve director-nominees to be considered for election
by shareholders and for election by the Board to fill any vacancy or newly created directorship.
The responsibilities of the Nominating Committee are set forth in the Nominating Committee which is
included as Exhibit A to this Proxy Statement. The Nominating Committee met once during fiscal
2010.
The Nominating Committee has established a policy with regard to the consideration of any
director candidates recommended by the Companys shareholders. The Nominating Committee will
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consider director candidates recommended by a Company shareholder provided that the shareholder
sends the Company a written notice received by the Secretary of the Company that (i) states the
name and address of the shareholder identifying the candidate as that information appears on the
Companys books and records and the number of shares of the Company owned by the recommending
shareholder and (ii) provides the following information about the candidate:
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name, age, and business and residential addresses; |
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principal occupation or employment; |
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number of shares of the Company beneficially owned; |
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statement of the persons citizenship; and |
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any other information that must be disclosed about nominees in proxy
solicitations pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended (including the candidates written consent to be named as a nominee and to
serve as a director if elected). |
The Company may require any proposed candidate to furnish such other information as may
reasonably be required by the Nominating Committee to determine the eligibility of the proposed
nominee to serve as a director. Provided a shareholder satisfies the requirements described above,
the Nominating Committee will consider director candidates recommended by shareholders in the same
manner that it considers all other director candidates. All director candidates must meet certain
minimum qualifications established by the Nominating Committee from time to time, and the
Nominating Committee will assess the experience, integrity, competence, diversity, skills, and
dedication to the Company of all director candidates. The Nominating Committee does not have an
independent policy with regard to considering the diversity of the Companys directors. The
Nominating Committee will consider a number of features when evaluating diversity, including age,
gender, ethnicity and professional experiences. As indicated above, diversity is one factor in the
total mix of information the Board of Directors considers when evaluating director candidates.
Shareholders who wish to suggest qualified candidates should write to the Office of the Corporate
Secretary of IKONICS Corporation, at 4832 Grand Avenue, Duluth, Minnesota 55807, stating the
information described above and any other relevant details concerning the candidates
qualifications for consideration by the Nominating Committee.
Board Leadership Structure and Role in Risk Oversight
Mr. Ulland has served in the combined roles of Chairman and Chief Executive Officer since
2000. Mr. Ullands combined service as Chairman and Chief Executive Officer creates unified
leadership for the Company. This leadership structure, which is common among U.S.-based
publicly-traded companies, demonstrates to customers and shareholders that the Company is under
strong leadership and minimizes the potential duplication of efforts among management and the
directors. The Board of Directors does not have a lead independent director and does not believe
that one is necessary in light of the Companys size and the lengthy experience the majority of the
directors have working with Mr. Ulland. The Board of Directors believes its leadership structure
allows the Company to operate most efficiently and is in the best interests of the Company and its
shareholders.
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The Companys management is responsible for day-to-day risk management of the Company.
Management reports to the Board of Directors on the material risks the Company faces when
management determines that the Companys risk profile materially changes. The Board of Directors
uses managements reports to evaluate the Companys exposure to risks in light of the Companys
business plan and growth strategies. The Board of Directors primarily focuses on risks in the
areas of operations, liquidity and regulatory changes and compliance, which the Board of Directors
believes are the areas most likely to potentially impact on the Company in a material way.
Director Compensation
Each non-employee director of the Company receives a quarterly retainer of $2,000, plus per
meeting fees of $2,000 for each meeting of the Board of Directors. Fees are not paid for committee
meetings. From time to time, the Companys non-employee directors have been awarded options to
purchase the Companys Common Stock under the 1995 Stock Incentive Plan and Mr. Ulland has been
awarded stock options under such plan in connection with his position as Chairman, President and
Chief Executive Officer. No such grants of stock options have been made since 2003. The following
table sets forth the total compensation paid to each director for fiscal 2010. Mr. Ulland did not
receive separate compensation for his service as a director during fiscal 2010.
DIRECTOR COMPENSATION
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Name |
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Fees Earned or Paid in Cash |
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Total |
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Charles H. Andresen |
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$ |
16,000 |
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$ |
16,000 |
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Gerald W. Simonson |
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$ |
16,000 |
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$ |
16,000 |
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David O. Harris |
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$ |
14,000 |
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$ |
14,000 |
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Rondi C. Erickson |
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$ |
16,000 |
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$ |
16,000 |
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H. Leigh Severance |
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$ |
16,000 |
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$ |
16,000 |
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Lockwood Carlson |
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$ |
16,000 |
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$ |
16,000 |
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Shareholder Communication with the Board of Directors and Director Attendance at Annual
Meetings
The Board provides a process for shareholders to send communications to the Board or any of
the directors. Shareholders may send written communications to the Board of Directors or
specified individual directors by addressing their communication to Chief Financial Officer,
IKONICS Corporation, 4832 Grand Avenue, Duluth, Minnesota 55807, by U.S. mail. The communications
will be collected by the Chief Financial Officer and delivered, in the form received, to the Board
or, if so addressed, to a specified director.
The Company does not have a formal policy regarding attendance by members of the Board of
Directors at the Companys Annual Meetings of Shareholders. The Company has always
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encouraged its
directors to attend its annual meeting of shareholders and expects to continue this policy. In
2010, seven Company directors attended the Companys Annual Meeting of Shareholders.
REPORT OF THE AUDIT COMMITTEE
The role of the Companys Audit Committee, which is composed of six independent non-employee
directors, is one of oversight of the Companys management and the Companys outside auditors in
regard to the Companys financial reporting and the Companys controls with respect to accounting
and financial reporting. In performing its oversight function, the Audit Committee relied upon
advice and information received in its discussions with the Companys management and independent
registered public accounting firm.
The Audit Committee has (i) reviewed and discussed the Companys audited financial statements
for the fiscal year ended December 31, 2010 with the Companys management; (ii) discussed with the
Companys independent registered public accounting firm the matters required to be discussed by
Statement on Auditing Standards No. 61, as amended, regarding communication with audit committees
(Codification of Statements on Auditing Standards, AU sec. 380); (iii) received the written
disclosures and the letter from the Companys independent registered public accounting firm
required by applicable requirements of the Public Company Accounting Oversight Board regarding the
independent registered public accounting firms communications with the Audit Committee concerning
independence; and (iv) discussed with the independent registered public accounting firm the
independent registered public accounting firms independence.
Based on the review and discussions with management and the Companys independent registered
public accounting firm referred to above, the Audit Committee recommended to the Board of Directors
that the audited financial statements be included in the Companys Annual Report on Form 10-K for
the fiscal year ended December 31, 2010 for filing with the Securities and Exchange Commission.
AUDIT COMMITTEE
Gerald W. Simonson, Chairman
Charles H. Andresen
Lockwood Carlson
David O. Harris
Rondi C. Erickson
H. Leigh Severance
Principal Accounting Firm Fees
The following table presents fees for professional audit services rendered by McGladrey &
Pullen, LLP for the audit of the Companys annual financial statements for 2010 and 2009, and fees
billed for other services rendered by McGladrey & Pullen, LLP and their affiliate RSM McGladrey,
Inc. for those years.
9
|
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
2009 |
|
Audit Fees(1) |
|
$ |
92,500 |
|
|
$ |
92,500 |
|
Audit-Related Fees(2) |
|
|
724 |
|
|
|
25,099 |
|
Tax Fees(3) |
|
|
11,400 |
|
|
|
20,205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
104,624 |
|
|
$ |
137,624 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Audit Fees consist of fees for professional services rendered for the audit of the
Companys financial statements and review of financial statements included in the Companys
quarterly reports. |
|
(2) |
|
Audit-Related Fees are fees principally for professional services rendered for the
procedures performed relating to Sarbanes-Oxley Section 404 compliance prior to deferral of
effectiveness of the requirement that the Companys auditor file an attestation report on the
Companys internal controls, review procedures performed in connection with the registration
of additional shares on Form S-8, and consultations regarding response to an SEC comment
letter. |
|
(3) |
|
Tax Fees in 2010 and 2009 consist of compliance fees for the preparation of tax
returns and related consultations for state and local tax queries. In 2009, fees were also
incurred for an audit by the Minnesota Department of Revenue ($7,800) as well as consultation
for payroll and capital loss planning ($1,500). |
The Audit Committees current practice on pre-approval of services performed by the
independent registered public accounting firm is to approve annually all audit services and, on a
case-by-case basis, all permitted non-audit services to be provided by the independent registered
public accounting firm during the fiscal year. The Audit Committee reviews each non-audit service
to be provided and assesses the impact of the service on the auditors independence. In addition,
the Audit Committee may pre-approve other non-audit services during the year on a case-by-case
basis.
Relationship with Principal Accounting Firm
The Audit Committee has selected McGladrey & Pullen, LLP to serve as the Companys independent
registered public accounting firm for the fiscal year ending December 31, 2011. It is the judgment
of the Audit Committee that McGladrey & Pullen, LLP has and will conduct its affairs in an
appropriate manner and warranted selection as the Companys independent registered public
accounting firm. The Board of Directors is not required to submit the selection of McGladrey &
Pullen, LLP for ratification by the Companys shareholders and is not doing so for ease of
administration and to maintain the Audit Committees flexibility to select an independent
registered public accounting firm that it believes is best suited to serve the Company. A
representative of McGladrey & Pullen, LLP is expected to be present at the Annual Meeting of
Shareholders or be afforded an opportunity to make a statement or respond to questions during the
meeting.
10
EXECUTIVE OFFICERS
Following is certain information regarding the current executive officers of the Company other
than William C. Ulland:
Claude P. Piguet, age 53
Mr. Piguet was named Executive Vice President on December 19, 2000. Previously, he was the
Companys Vice President of Operations beginning in May 1994. He was the Companys Director of
Operations from January 1992 to May 1994. Mr. Piguet joined the Company in 1990 and holds a
diploma of Engineer ETS/HTL from the Ecole DIngenieurs de lEtat de Vaud in Switzerland.
Jon Gerlach, age 44
Mr. Gerlach was named Chief Financial Officer, Vice President Finance and Secretary on August
5, 2003. Previously he served as the Finance Manager for Sappi Limited Cloquet. Prior to
working for Sappi, Mr. Gerlach served in various positions with Potlatchs Minnesota Pulp and Paper
Division from 1994 to 2002. His most recent position at Potlatch was the Division Manager of
Business Planning. Mr. Gerlach has also worked as a Financial Analyst with Maurices Incorporated
and with Ernst & Young LLP in their audit department. Mr. Gerlach earned a Masters in Business
Administration from the University of Minnesota Duluth in 2001 and a B.S. in Accounting from St.
Johns University in 1989.
Robert D. Banks, Jr., age 59
Mr. Banks has been the Companys Vice President of International Sales since February 1997.
Previously, he was the Companys Director of International Sales and Marketing from 1989 to 1997.
His prior experience includes positions with Marshall and Ilsley Bank, H & H Exports and the Boy
Scouts of America. He received a B.A. in both Economics and Environmental Studies from Northland
College in 1976.
Parnell Thill, age 46
Mr. Thill has been the Companys Vice President of Marketing since January 2005. Previously,
he served as the Companys Marketing Director beginning in 2001. Prior to joining IKONICS, Mr.
Thill worked as a marketing executive at The Stanley Works in the Industrial Tools Division. Mr.
Thill earned a Masters in Business Administration from St. Thomas University in 2001, a Bachelors
in Education from the University of Minnesota Duluth in 1991, and a Bachelors in English from
St. Johns University in 1987.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation for the fiscal years
ended December 31, 2010 and December 31, 2009, provided to the Chief Executive Officer and the
two other most highly compensated executive officers who received remuneration exceeding $100,000
during fiscal 2010 and 2009 (the Named Executive Officers).
11
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan |
|
All Other |
|
|
|
|
|
|
|
|
Salary |
|
Compensation |
|
Compensation |
|
Total |
Name and Principal Position |
|
Year |
|
($) |
|
($) |
|
($) |
|
($) |
|
William C. Ulland |
|
|
2010 |
|
|
|
218,500 |
|
|
|
14,885 |
|
|
|
11,669 |
|
|
|
245,054 |
|
Chairman, President
and Chief Executive Officer |
|
|
2009 |
|
|
|
214,200 |
|
|
|
|
|
|
|
10,710 |
|
|
|
224,910 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claude P. Piguet |
|
|
2010 |
|
|
|
131,120 |
|
|
|
9,924 |
|
|
|
7,052 |
|
|
|
148,096 |
|
Executive Vice
President |
|
|
2009 |
|
|
|
128,600 |
|
|
|
|
|
|
|
6,430 |
|
|
|
135,030 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jon Gerlach |
|
|
2010 |
|
|
|
121,740 |
|
|
|
4,962 |
|
|
|
6,335 |
|
|
|
133,037 |
|
Chief Financial
Officer and Vice President
Finance |
|
|
2009 |
|
|
|
119,500 |
|
|
|
|
|
|
|
5,975 |
|
|
|
125,475 |
|
The Company has not entered into employment agreements with any of the Named Executive
Officers. The amounts portrayed in the table above under All Other Compensation represent the
Companys contribution to its salary deferral plan adopted under Section 401(k) of the Internal
Revenue Code. The Companys executive officers are eligible to participate in a 401(k) defined
contribution plan. In any plan year, the Company will contribute to each participant up to 5% of
the participants compensation into the 401(k) plan. All of the Named Executive Officers
participated in the 401(k) plan during fiscal 2010 and 2009 and received contributions.
Amounts shown in the Non-Equity Incentive Plan Compensation column represent payments
pursuant to the Companys bonus program for the applicable fiscal year. Under the program,
executive officers were eligible to receive cash bonuses equal to a percentage of the years bonus
pool. The fiscal 2010 and fiscal 2009 bonus pools were set at 10% of the amount by which net
income before income taxes (as adjusted for unusual items of income or expense) (EBT) for the
applicable fiscal year exceeded the EBT target for that fiscal year. For fiscal 2010 and fiscal
2009, Mr. Ulland was eligible to receive a bonus equal to 30% of the pool, and Mr. Piguet, the
Companys Executive Vice President, was eligible to receive a bonus equal to 20% of the pool. Each
of the Companys other executive officers was eligible to receive bonuses equal to 10% of the pool
for each year. The Committee did not allocate 20% of the pool in 2010 and 2009.
The Company did not make any grants of stock options to the Named Executive Officers during
fiscal 2010 or fiscal 2009.
OUTSTANDING EQUITY AWARDS
AT FISCAL YEAR-END
As of the end of fiscal 2010, none of the Named Executive Officers had any unexercised stock
options, stock that had not vested or equity incentive plan awards.
12
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information with respect to the Companys Common Stock that may
be issued under its 1995 Stock Incentive Plan as of December 31, 2010. The 1995 Stock Incentive
Plan is the only equity compensation plan of the Company in existence as of December 31, 2010 and
has been approved by the Companys shareholders.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities |
|
|
|
|
|
|
|
|
|
|
|
remaining available for |
|
|
|
|
|
|
|
|
|
|
|
future issuance under |
|
|
|
Number of securities to |
|
|
Weighted-average |
|
|
equity compensation |
|
|
|
be issued upon exercise |
|
|
exercise price of |
|
|
plans |
|
|
|
of outstanding options, |
|
|
outstanding options, |
|
|
(excluding securities |
|
Plan Category |
|
warrants and rights |
|
|
warrants and rights |
|
|
reflected in column 1) |
|
Equity compensation
plans approved by
shareholders |
|
|
40,500 |
|
|
$ |
6.38 |
|
|
|
125,573 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation
plans not approved
by shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
40,500 |
|
|
$ |
6.38 |
|
|
|
125,573 |
|
|
|
|
|
|
|
|
|
|
|
EMPLOYMENT CONTRACTS; TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company does not have any employment agreements with any members of its executive
management team, but has entered into confidentiality and non-competition agreements with such
persons. These agreements generally provide that the executive will not solicit any other employee
of the Company to leave the Company during the executives employment with the Company and for two
years following such employment, will not compete with the Company during the executives
employment and for one year thereafter, and will protect the proprietary information of the Company
during and following such executives employment.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that the Companys directors, executive officers
and persons who own more than ten percent of the Companys Common Stock file initial reports of
ownership of the Companys Common Stock and changes in such ownership with the Securities and
Exchange Commission. To the Companys knowledge based solely on a review of copies of forms
submitted to the Company during and with respect to fiscal 2010 and on written representations from
the Companys directors and executive officers, all required reports were filed on a timely basis
during fiscal 2010.
ADDITIONAL MATTERS
The Annual Report of the Company for the year ended December 31, 2010, including financial
statements, is being mailed with this Proxy Statement.
13
Shareholder proposals intended to be presented at the 2012 Annual Meeting of Shareholders must
be received by the Company at its principal executive office no later than November 23, 2011 for
inclusion in the Proxy Statement for that meeting.
As of the date of this Proxy Statement, management knows of no matters that will be presented
for determination at the meeting other than those referred to herein. If any other matters
properly come before the Annual Meeting calling for a vote of shareholders, it is intended that the
shares of Common Stock represented by the proxies solicited by the Board of Directors will be voted
by the persons named therein in accordance with their best judgment.
By Order of the Board of Directors,
Jon Gerlach
Secretary
Dated: March 22, 2011
14
EXHIBIT A
IKONICS CORPORATION
NOMINATING COMMITTEE CHARTER
Purpose
The purposes of the Nominating Committee (the Committee) of the board of directors (the Board)
of IKONICS Corporation (the Company) are to:
|
|
identify individuals qualified to become Board members, and |
|
|
|
approve director-nominees to be considered for election by shareholders and for election by
the Board to fill any vacancy or newly created directorship. |
Organization and Committee Membership
The Committee will be composed of at least two directors, all of whom satisfy the definition of
independent under the listing standards of the Nasdaq Stock Market. The Committee members will
be appointed by the Board and may be removed by the Board in its discretion. The Board will
designate one member of the Committee to serve as chairperson of the Committee. The Chairperson
shall preside over the Committee. The Committee has the authority to delegate any of its
responsibilities to subcommittees as the Committee may deem appropriate, provided the subcommittees
are composed entirely of independent directors.
Meetings
The Committee shall meet as often as its members deem necessary to perform the Committees
responsibilities.
Committee Authority and Responsibilities Regarding Nominations
The Committee has the authority, to the extent it deems necessary or appropriate, to retain a
search firm to be used to identify director candidates. The Committee has sole authority to retain
and terminate any such search firm, including sole authority to approve the firms fees and other
retention terms. The Committee also has authority, to the extent it deems necessary or
appropriate, to retain other advisors. The Company will provide for appropriate funding, as
determined by the Committee, for payment of compensation to any search firm or other advisors
employed by the Committee.
The Committee will make regular reports to the Board and will propose any necessary action to the
Board.
The Committee, to the extent it deems necessary or appropriate, will:
|
|
identify individuals qualified to become members of the Board; |
|
|
establish procedures for shareholders to submit potential candidates for election to the
Board; |
|
|
review and evaluate potential candidates for election to the Board, including incumbent
directors and director candidates properly submitted by shareholders, and comply with any
requirements of the Securities and Exchange Commission to consider such candidates; |
|
|
nominate the director nominees to be considered for election by shareholders and for
election by the Board to fill any vacancy or newly created directorship; |
|
|
make recommendations to the Board regarding the size and composition of the Board and
develop and recommend to the Board criteria (such as, independence, experience relevant to the
needs of the Company, leadership qualities, diversity and ability to represent the
shareholders) for the selection of individuals to be considered as candidates for election to
the Board; |
|
|
review and reassess the adequacy of the Nominating Committee Charter annually and recommend
any proposed changes to the Board of Directors for approval; |
|
|
undertake such other responsibilities as may be delegated by the Board to the Committee
from time to time in accordance with applicable law; and |
|
|
take any and all other actions as may be required by the federal securities laws or other
applicable laws or regulations regarding the nomination of directors. |
A-2
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Shareowner ServicesSM |
|
P.O. Box 64945 |
|
St. Paul, MN 55164-0945 |
TO VOTE BY MAIL AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL ITEMS BELOW,
SIMPLY SIGN, DATE,
AND RETURN THIS PROXY CARD.
Please detach here
The Board of Directors Recommends a Vote FOR Item 1.
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1. |
|
Election of directors: |
|
01 Charles H. Andresen |
|
05 Rondi C. Erickson |
o |
Vote FOR |
o |
Vote WITHHELD |
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02 David O. Harris |
|
06 H. Leigh Severance |
|
all nominees |
|
from all nominees |
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03 Gerald W. Simonson |
|
07 Lockwood Carlson |
|
(except as marked) |
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04 William C. Ulland |
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(Instructions: To withhold authority to vote for any indicated
nominee, write the number(s) of the nominee(s) in the box provided
to the right.) |
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2. |
|
In their discretion, the proxies are authorized to vote on any other business
that may properly come before the Meeting, or adjournments or postponements thereof.
|
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THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN,
WILL BE VOTED FOR EACH PROPOSAL.
|
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Address Change? Mark box, sign, and indicate
changes below: o |
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Date
, 2011 |
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Signature(s) in Box |
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(If there are co-owners, each must sign.)
Please sign exactly as your name(s) appear
on Proxy. If held in joint tenancy, all
persons must sign. Trustees, administrators,
etc., should include title and authority.
Corporations should provide full name of
corporation and title of authorized officer
signing the Proxy.
|
IKONICS CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
Thursday, April 28, 2011
1:00 p.m., Local Time
Kitchi Gammi Club
831 E. Superior St.
Duluth, Minnesota
|
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IKONICS Corporation
4832 Grand Avenue, Duluth, MN 55807
|
|
proxy
|
|
This
proxy is solicited by the Board of Directors for use at the Annual Meeting on April 28,
2011.
The shares of stock you hold in your account will be voted as you specify on the reverse side.
If no choice is specified, the proxy will be voted FOR Item 1.
By signing the proxy, you revoke all prior proxies and appoint William C. Ulland and Jon Gerlach,
and each of them, with full power of substitution, to vote your shares on the matter shown on the
reverse side and any other matters which may come before the Annual Meeting and all adjournments.
See reverse for voting instructions.
110714