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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________
Form 10-K/A (Amendment No.1)
(Mark One)
/X/ Annual report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
For the fiscal year ended August 31, 1997.
/ / Transition report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.
For the transition period from ________ to _________.
Commission File Number 1-8154
ESSEX COUNTY GAS COMPANY
(Exact name of Registrant as specified in its charter)
Massachusetts 04-1427020
(State of organization) (IRS Employer Identification No.)
7 North Hunt Road, Amesbury, Massachusetts 01913
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (978) 388-4000
Securities registered pursuant to Section 12(b) of the Act:
Title of Class Exchange
Common Stock, No Par Value NASDAQ/NMS
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes / X / No / /
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of the registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. / /
The aggregate market value of the voting stock held by
non-affiliates on October 31, 1997 based upon the last sales
price on that date was approximately $52,483,062.
The number of shares outstanding of Registrant's Common
Stock, no par value, was 1,693,002 at October 31, 1997.
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Registrant hereby amends and restates page 2 and Items 10, 11, 12,
and 13 of its 1997 Annual Report Form 10-K for the fiscal year ended
August 31, 1997, as follows:
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DOCUMENTS INCORPORATED BY REFERENCE: Part IV hereof
incorporates by reference certain of the Exhibits to the
following documents: Registration Statement No. 2-74531 on
Form S-7, filed October 23, 1981, Registration Statement No.
33-6597 on Form S-2 filed on June 19, 1986, Registration
Statement No. 33-69736 on Form S-3, filed on September 30,
1993, Registrant's Annual Report on Form 10-K for fiscal 1992,
Registrant's Annual Report on Form 10-K for fiscal 1993,
Registrant's Quarterly Report on Form 10-Q for the Quarter
ended February 28, 1991, Registrant's Quarterly Report on Form
10-Q for the Quarter ended May 31, 1992, Registrant's Quarterly
Report on Form 10-Q for the Quarter ended February 28, 1995,
Registrant's Quarterly Report on Form 10-Q for the Quarter
ended November 30, 1995, Registrant's Quarterly Report on Form
10-Q for the Quarter ended February 29, 1996, Registrant's
Quarterly Report on Form 10-Q for the Quarter ended May 31,
1996, Registrant's Quarterly Report on Form 10-Q for the
quarter ended February 28, 1997 and Registrant's Quarterly
Report on Form 10-Q for the quarter ended May 31, 1997.
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PART III
Item 10: Directors and Executive Officers of the Registrant
ELECTION OF DIRECTORS
Information About Nominees
In accordance with the Company's By-Laws, a Board of not
less than three or more than fifteen directors is to be elected
at the Annual Meeting of Stockholders to serve until the next
Annual Meeting of Stockholders and until their successors are
duly elected and qualified. The Board has fixed the number of
directors at twelve. All of the following persons are
currently Directors of the Company. Unless otherwise
noted, each of the Directors has been with the organizations
listed in the following table in the capacity or capacities so
listed for more than five years.
NOMINEES FOR DIRECTOR
Nominee and Principal Served as
Occupation for the last Director
Five Years Age Since
CHARLES E. BILLUPS ........... 68 1971
Chairman of the Board of the
Company since January 1985;
Interim President of the Company,
May 1992 to December 1992;
President and CEO of the Company,
1973 to 1989.
BENJAMIN C. BIXBY ............ 62 1979
Chairman of the Board, Bixby
International Corporation (a
processor of high performance
plastics.) Director, BankBoston, N.A,
Northeast Regional Board; Director,
Bay State Insurance Company;
Director, Merrimack Mutual
Insurance Company; Director,
Cambridge Mutual Fire Insurance
Company.
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Nominee and Principal Served as
Occupation for the last Director
Five Years Age Since
DANIEL A. BURKHARDT .......... 50 1985
General Partner, The Jones Financial Companies,
L.P., LLP (a brokerage investment banking
and other financial services company);
Director, St. Joseph Light & Power Co.;
Director, Galaxy Cablevision Management, Inc.;
Director, Mid-America Realty Trust; Director,
Southeastern Michigan Gas Enterprises, Inc.;
President, Treasurer and Director,
CIP Management, Inc.; General Partner,
CIP Management L.P., LLLP.
EDWARD J. CURTIS ............. 55 1993
President, E.J. Curtis Associates,
Inc. (professional management
consulting services); Director,
Southeastern Michigan Gas
Enterprises, Inc.
DOROTHY J. DOTSON ............ 53 1985
Senior Vice President, Managing Director,
NatWest Markets since December 1993 (an
investment banking company);
S.G. Warburg & Co., Inc., 1990 to 1993.
RICHARD P. HAMEL ............. 54 1991
Attorney at Law and Owner of the
law firm of Hamel, Deshaies
& Gagliardi; Director, First &
Ocean National Bank.
ROBERT S. JACKSON ............ 64 1985
Principal, Phase II Consulting (utility
consulting) since June 1, 1993;
Senior Vice President, Stone and
Webster Management Consultants, Inc.
from 1974 to 1993.
ERIC H. JOSTROM .............. 55 1981
President and Chief Investment
Officer, Constitution Management Company
Inc.; (registered investment advisor),
1992 to 1996; Director, Indosuez
International Investment Services, S.A.,
Paris; Director, Indosuez Asia Advisors Ltd.
Hong Kong; President and Managing Director,
Standard Chartered Equitor, N.A.; Former
President and Managing Director, Standard
Chartered North American Asset Management Co.,
Inc.; President, Indosuez Asia Strategic
Growth Fund, Inc.; Deputy Managing Director,
Standard Chartered Equitor Global Asset
Management Co., LTD, London; Chartered North
American Asset Management Co., Inc.; Deputy
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Nominee and Principal Served as
Occupation for the last Director
Five Years Age Since
Managing Director, Standard Chartered Equitor
Global Asset Management Co., LTD, London.
ROBERT L. MEADE .............. 67 1983
Attorney at Law and private investor.
KENNETH L. PAUL .............. 56 1977
Vice President, Sales and Marketing,
Process Engineering, Division of
Process Engineering Systems Inter-
national since 1994; President
and CEO, Process Engineering, Inc.,
from 1990 to 1994; Director, Family Bank.
PHILIP H. REARDON ............ 61 1992
President and Chief Executive Officer of the
Company since 1992; President and Chief
Executive Officer, New Jersey Natural Gas
Company, 1987 to 1992; Director, Middlesex
Water Company since 1991; Director, First &
Ocean National Bank since 1995.
RICHARD L. WELLMAN 44 1994
Consultant, Client Services Manager,
Katahdin Analytical Laboratories, Inc.,
1995 to 1996; Laboratory Operations Manager,
Pace New England, Inc., 1988 to 1995;
Director, Acadia Management, Inc.
Executive Officers of the Registrant
The following sets forth certain information as of August
31, 1997 with respect to Essex County Gas Company's executive
officers. These officers have been elected or appointed to
terms which will expire January 20, 1998:
First
Served as
Name Position Age Officer
Charles E. Billups* Chairman of the Board 68 1971
Philip H. Reardon* President and Chief Executive
Officer 61 1992
William T. Beaton Vice President, Human Resources
and Customer Services 41 1995
Wayne I. Brooks Vice President, Distribution
and Engineering 50 1985
James H. Hastings Vice President and Treasurer 51 1985
Allen R. Neale Vice President, Supply
Planning 46 1985
John W. Purdy, Jr. Vice President, Marketing
and Public Affairs 61 1987
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*Also chairman and/or members of certain committees of the
Board of Directors.
There are no family relationships among any of the executive
officers and directors.
Each of the above has served as an officer or in a supervisory
capacity with Essex County Gas Company for the last five years.
SECTION 16(a) BENEFICIAL REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's executive officers and directors, and
persons who own more than ten percent of the Company's Common
Stock, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. Officers,
directors and greater than ten-percent shareholders are
required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms
received by it, or written representations from certain
reporting persons that no Forms 5 were required for those
persons the Company believes that during the fiscal year ended
August 31, 1997, all filing requirements applicable to the
officers, directors, and greater than ten-percent beneficial
owners were complied with. Philip H. Reardon received a grant of
options from the Company in February 1995 and filed a late
report on Form 4. The delay in filing the report was
inadvertent.
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Item 11: Executive Compensation
DIRECTORS' COMPENSATION
Each Director, other than Mr. Billups, is paid a fee of
$500 for each meeting of the Board of Directors attended and
$400 for each meeting of Committees of the Board attended.
Reasonable travel expenses are reimbursed. In addition, each
Director, other than Mr. Billups and those Directors who
receive salaries from the Company, is paid a quarterly retainer
of $1,250 for all other services rendered to the Company.
Also, each member of the Executive Committee is paid a
quarterly retainer of $1,250 except Mr. Billups and those
members who receive salaries from the Company. Finally, Mr.
Billups is paid a quarterly retainer of $5,000 in lieu of the
foregoing Directors' fees.
The Company maintains a plan that allows the members of
the Board of Directors to defer receipt of all or any part of
their fees as a Director or as a member of any and all
Committees of the Board. Under the Deferral Plan, a
participating Director may elect that deferred amounts be
credited to either a cash fee account or to a stock fee
account. A Director may also elect that any amounts previously
credited to a cash fee account be transferred to a stock fee
account, but amounts credited to a stock fee account cannot be
transferred to a cash fee account. Amounts credited to the
stock fee account are credited with the number of shares of
Common Stock that can be purchased at fair market value on the
date such amount is credited to the account. Fees deferred and
related earnings are payable when a Director ceases to be a
Director, following a Director's retirement from his primary
occupation, or on a fixed date five or more years after the
election to defer fees. The plan also provides an election to
receive deferred fees and accrued interest in one sum or in
annual installments, not to exceed ten years. In the event of
death of a Director, payments are made to the beneficiary
designated by the Director. As of August 31, 1997, the total
number of shares of Common Stock credited to the Directors'
stock fee accounts was 51,253. Until such time as the shares
are issued by the Company and delivered to a Director, such
director has none of the rights of stockholders generally,
including the right to vote or dispose of the shares
represented by the amounts credited to the stock fee accounts.
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The Company also has a non-qualified retirement plan for
any member of the Board who is not a common law employee of the
Company. The Plan provides for an annual benefit equal to the
annual retainer in effect on the date of retirement and has a
vesting schedule which provides for no vesting for less than
five years of service, 50 percent vesting with five years of
service increasing by 10 percent each year until 100 percent
vested after 10 years of qualifying service.
COMPENSATION OF EXECUTIVE OFFICERS
Cash Compensation
The following table shows compensation paid by the Company
and its subsidiaries to the Company's President and Chief
Executive Officer and the other Executive Officers of the
Company whose total annual salary and bonus for fiscal 1997
exceeded $100,000.
Summary Compensation Table
__Annual Compensation__|__Long Term Compensation__ |
Name and Other |Restr- Securities | (3)
Principal Annual icted(2) Underlying All Other
Position (1) Bonus Compen- Stock Options/ Compen-
Year Salary sation Awards SARS(#) sation
($) ($) ($) ($) ($)
Philip H.
Reardon 1997 185,233 15,000 | - | 15,618
President 1996 176,278 - | - | 17,712
& Chief
Executive 1995 175,462 - | 24,000 | 25,100
Officer | |
| |
John W.
Purdy, Jr. 1997 109,341 6,000 | - | 11,244
Vice
President 1996 110,492 - | - | 12,716
Marketing
and 1995 107,683 - | - | 18,132
Public
Affairs | |
| |
James H.
Hastings 1997 100,973 10,000 | - | 10,015
Vice
President
and 1996 95,300 - | - | 10,864
Treasurer 1995 90,000 - | - | 14,828
| |
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(1) Compensation for Mr. Reardon includes $3,802, $3,078 and
$2,262 and in deferred directors fees for fiscal 1997,
1996 and 1995, respectively.
(2) The named executive officers have no restricted stock
holdings.
(3) The amounts in this column represent the contributions by
the Company on behalf of the above-named individuals to
the Company's Employee Stock Ownership Plan (the "ESOP")
which is a qualified defined contribution plan and the
Company's contribution to its Employee Thrift Savings Plan
(the "Thrift Plan") which is a defined contribution plan
that incorporates salary deferral provisions pursuant to
Section 401(k) of the Internal Revenue Code for all
employees who have elected to participate on that basis.
During the fiscal year ended August 31, 1997, the Company
contributions under the ESOP and Thrift Plan for Mr.
Reardon were $10,020 and $5,598, respectively,
contributions under the ESOP and Thrift Plan for Mr. Purdy
were $7,692 and $3,552, respectively, and contributions
under the ESOP and Thrift Plan for Mr. Hastings were
$6,759 and $3,256, respectively.
Fiscal Year-End Option/SAR Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/SARs
Options/SARs at FY-End (#) at FY-End($)(1)
Name Exercisable Unexercisable Exercisable Unexercisable
Philip H. Reardon 9,600 14,400 16,800 25,200
____________
(1) The values represent the difference between the
exercise price of the options and the market price of the Company's
common stock at fiscal year-end.
Employee Plans and Agreements
The Company maintains a non-contributory defined benefit
pension plan (the "Plan"), for non-union employees to provide
retirement benefits based on a final full five-year average
compensation formula. Non-union employees are eligible for the
Plan at age 21, with one year of service, with benefits based
on a maximum of 25 years of service until age 65.
The following table shows the 1997 annual pension benefits
payable to employees upon retirement at age 65 in various
levels of final five-year average compensation and
years-of-service classification, assuming the election of a
retirement allowance payable as a life annuity:
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Pension Plan Table
Years of Service
Final 5-Year
Covered 25 or
Compensation 10 15 20 more
$100,000 $21,270 $31,906 $42,541 $53,176
120,000 25,670 38,506 51,341 64,176
140,000 30,070 45,106 60,141 75,176
160,000 34,470 51,706 68,941 86,176
180,000 38,870 58,306 77,741 97,176
Compensation under the Plan for the executive officers
named in the Summary Compensation Table consists of regular
compensation, excluding bonuses and special pay, and is the
same as the Annual Compensation shown in the Summary
Compensation Table. The estimated credited years of service at
normal retirement under the Plan for the individuals named in
the Summary Compensation Table is: Philip H. Reardon, 10, John
W. Purdy, Jr., 15, and James H. Hastings, 29. The benefits
listed in the Pension Plan Table are not subject to any
deduction for Social Security or other offset amounts.
In addition, the Company has a Supplemental Executive
Retirement Plan ("SERP") for executives of the Company who are
selected by the Board of Directors to participate. The SERP
provides retirement and disability benefits as well as a death
benefit. Mr. Reardon has been selected and is participating in
the SERP. Benefits under the SERP are determined according to
the following Benefit Formula: 60% of highest 5 consecutive
full calendar years average compensation reduced by the
employee's qualified plan benefits from Essex County Gas
Company and New Jersey Natural Gas Company.
The Company has entered into contingent employment
agreements with Philip H. Reardon, John W. Purdy, Jr., and
James H. Hastings. These agreements become effective only upon
a change of control (as defined in the agreements). These
agreements call for the executive to receive an annual salary
at the rate which is not less than the current rate of annual
salary with the opportunity for increases from time to time
thereafter which are in accordance with the Company's regular
practices. In addition, the executive is also entitled to
current benefits, including insurance and participation in
qualified plans. In the event of a termination of any of these
employment agreements by the Company after a change of control
for any reason other than death, disability or cause, or in the
event a covered officer resigns upon the occurrence of (i) any
significant change in the nature or scope of the officer's
duties from those presently performed, any reduction in total
compensation, any other breach by the Company of the employment
agreement or (ii) a reasonable determination by such officer
that, as a result of a change of control and such change in
circumstances thereafter significantly affecting his position,
such officer is unable to exercise the authorities, powers,
functions or duties attached to his position, such officer will
be entitled to receive the above mentioned compensation and
benefits as provided for in the employment agreement for a term
of two years.
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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Committee's Compensation policies and plans applicable
to the executive officers seeks to enhance the profitability of
the Company and shareholder value, as well as control costs and
maintain reasonable rates for the customers. The Committee's
practices reflect policies that compensation should (1) attract
and retain well-qualified executives, (2) support short- and
long-term goals and objectives of the Company, (3) reward indi
viduals for outstanding contributions to the Company's success,
(4) be meaningfully related to the value created for
shareholders, and (5) relate to maintenance of good customer
relations and reasonable rates.
Chief Executive Officer
In establishing the Chief Executive Officer's
compensation, the Committee begins by determining the salary
paid to chief executive officers at similarly sized utility
companies, as reported in regional surveys, keeping in mind the
performance of those companies, in order to establish a start
ing point for the Chief Executive Officer's compensation. The
Committee then reviews certain of its financial goals,
including earnings, return on equity, and cost containment
efforts; to the extent these goals have been met or exceeded,
the Chief Executive Officer's compensation is increased. More
than any other factor, the Compensation Committee believes the
degree of success in meeting these financial objectives is the
most important element in determining the Chief Executive
Officer's compensation. Secondarily important (and somewhat
more subjective) in the Compensation Committee's considerations
are the following criteria: the development of a Company
strategic plan, the creation of an action plan to improve
relations with regulators, customers and the media, and
involvement in community affairs. The proposed compensation
amount is then submitted to the full Board of Directors for
approval.
Other Executive Officers
In establishing compensation for the Company's executive
officers other than the Chief Executive Officer, the Chief
Executive Officer first establishes a salary range for each
executive officer. These salary ranges are based in part upon
salaries provided to executive officers in comparable utility
companies, as reported by regional salary surveys, based on the
relative significance of each officer's responsibilities.
Specific salary levels are then established through evaluations
of each executive officer's performance of his or her goals and
duties with the assistance of outside compensation specialists.
Financial goals related to earnings, cost containment efforts
and return on equity are the most important factors. Other,
more subjective goals such as leadership qualities, as well as
technical abilities also influence the determination of each
executive officer's salary level. These base salary levels, as
determined by the Chief Executive Officer, are then reviewed by
the Compensation Committee and approved by the Board.
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Item 12: Security Ownership of Certain Beneficial Owners and
Management
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table lists the beneficial ownership, as of
August 31, 1997, of Common Stock by all directors, each of the
executive officers named in the Summary Compensation Table
herein and the directors and executive officers of the Company
as a group.
Amount of
Beneficial
Ownership Percent
of Common of
Name Stock* Class
Charles E. Billups 2,000 **
Benjamin C. Bixby 2,335(1) **
Daniel A. Burkhardt 1,634 **
Edward J. Curtis 100 **
Dorothy J. Dotson 484 **
Richard P. Hamel 25,700(2) 1.52%
James H. Hastings 6,572(3)
Robert S. Jackson 200 **
Eric H. Jostrom 38,946(4) 1.87%
Robert L. Meade 22,852 1.35%
Kenneth L. Paul 3,701(5) **
John W. Purdy, Jr. 5,189(6) **
Philip H. Reardon 18,369(7) **
Richard L. Wellman 500 **
All Directors and Executive Officers as a Group
(17 persons) 148,140(8) 8.79%
* Shares held directly with sole voting and/or investment power
unless otherwise indicated.
**Shares beneficially owned do not exceed one percent of the
outstanding shares of Common Stock.
(1) Includes 1,753 shares owned by his wife.
(2) Includes 25,600 shares of Common Stock owned by Trusts, of
which he is a co-trustee. Beneficial ownership of these
shares is disclaimed.
(3) Includes 2,020 shares of Common Stock held in the
Company's Employee Thrift Savings (401-k) Trust Fund,
3,109 shares of Common Stock held in the Company's
Employee Stock Ownership Plan Trust Fund and 61 shares of
Common Stock held in the Company's TRASOP Trust Fund.
(4) Includes 27,925 shares of Common Stock owned by Trusts, of
which he is a trustee or a co-trustee. Beneficial
ownership of these shares is disclaimed.
(5) Includes 1,268 shares of Common Stock owned by his son.
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(6) Includes 964 shares of Common Stock held in the Company's
Employee Thrift (401-k) Trust Fund and 3,627 shares of
Common Stock held in the Company's Employee Stock
Ownership Plan Trust Fund.
(7) Includes 1,000 shares owned jointly by his wife and mother-
in-law; 2,260 shares of Common Stock held in the Company's
Employee Thrift (401-k) Trust Fund; 2,340 shares of Common
Stock held in the Company's Employee Stock Ownership Plan
Trust Fund and 9,600 shares in the Company's Incentive
Stock Option Plan.
(8) See footnotes 1-7 above; includes 4,282 shares of Common
Stock held in the Company's TRASOP Trust Fund, 4,077
shares of Common Stock held in the Company's Employee
Thrift (401-k) Trust Fund, and 7,807 shares of Common
Stock held in the Company's Employee Stock Ownership Plan
Trust Fund for executive officers not previously noted.
Item 13: Certain Relationships and Related Transactions
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee has
served as an officer or employee of the Company.
Richard P. Hamel, a Director of the Company, is owner of
the law firm of Hamel, Deshaies & Gagliardi, a firm which
performed legal services for the Company during the past 22
years. The firm has also been retained for the current fiscal
year.
CERTAIN TRANSACTIONS
The Company engaged NatWest Markets as placement agent for
issuance of First Mortgage Bonds during the 1997 fiscal year.
Ms. Dorothy J. Dotson, a director of the Company, is a Senior
Vice President and Managing Director of NatWest Markets.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the registrant has
caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ESSEX COUNTY GAS COMPANY
(Registrant)
Date: December 29, 1997 by /s/ James H. Hastings
Vice President and Treasurer
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, this report has been signed below by the
following persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Charles E. Billups Chairman of the Board
/s/ Philip H. Reardon President and
Chief Executive Officer
/s/James H. Hastings Vice President and Treasurer
(Principal Financial and
Accounting Officer)
/ /Benjamin C. Bixby Director
/s/Daniel A. Burkhardt Director
/s/Edward J. Curtis Director
/ /Dorothy J. Dotson Director
/s/Richard P. Hamel Director
/s/Robert S. Jackson Director
/ /Eric H. Jostrom Director
/ /Robert L. Meade Director
/s/Kenneth L. Paul Director
/ /Richard L. Wellman Director