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<SEC-DOCUMENT>0000897101-10-000480.txt : 20100309
<SEC-HEADER>0000897101-10-000480.hdr.sgml : 20100309
<ACCEPTANCE-DATETIME>20100309172817
ACCESSION NUMBER:		0000897101-10-000480
CONFORMED SUBMISSION TYPE:	DEF 14A
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20100421
FILED AS OF DATE:		20100309
DATE AS OF CHANGE:		20100309
EFFECTIVENESS DATE:		20100309

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ELECTRO SENSORS INC
		CENTRAL INDEX KEY:			0000351789
		STANDARD INDUSTRIAL CLASSIFICATION:	INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823]
		IRS NUMBER:				410943459
		STATE OF INCORPORATION:			MN
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		DEF 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-09587
		FILM NUMBER:		10668066

	BUSINESS ADDRESS:	
		STREET 1:		6111 BLUE CIRCLE DR
		CITY:			MINNETONKA
		STATE:			MN
		ZIP:			55343-9108
		BUSINESS PHONE:		9529300100

	MAIL ADDRESS:	
		STREET 1:		6111 BLUE CIRCLE DR
		CITY:			MINNETONKA
		STATE:			MN
		ZIP:			55343
</SEC-HEADER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>electro101090_def14a.htm
<DESCRIPTION>DEFINITIVE PROXY STATEMENT
<TEXT>
<HTML>
<HEAD>
<TITLE>ELECTRO-SENSORS, INC. DEF 14A </TITLE>
</HEAD>
<BODY bgcolor="#ffffff" style='font-family:"Times New Roman"'>



<BR>
<!-- MARKER FORMAT-SHEET="Head Minor Center Bold" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>SCHEDULE 14A -
<BR>INFORMATION REQUIRED IN PROXY STATEMENT  </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Minor Center Bold" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Schedule 14A Information </FONT></H1>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Proxy Statement Pursuant to Section 14(a) of the
<BR>Securities Exchange Act of 1934
<BR>(Amendment No.____ ) </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Filed by the registrant&nbsp;&nbsp;&nbsp;[X] </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Filed by a party other than the registrant&nbsp;&nbsp;&nbsp;[&nbsp;&nbsp;&nbsp;] </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Check the appropriate box:</FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[&nbsp;&nbsp;&nbsp;]  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Preliminary Proxy Statement </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[&nbsp;&nbsp;&nbsp;]  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[X]  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Definitive Proxy Statement  </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[&nbsp;&nbsp;&nbsp;]  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Definitive Additional Materials </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[&nbsp;&nbsp;&nbsp;]  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Soliciting Material Under Section 240.14a-12 </FONT></TD>
</TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="3"><B>ELECTRO-SENSORS, INC.</B> </FONT><BR>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2">(Name of Registrant as Specified in Its Charter) </FONT> </P>

<!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>N/A
<BR>(Name of Person(s) Filing Proxy Statement, if other than the Registrant) </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Payment of Filing Fee (Check the appropriate box): </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[X]  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>No fee required </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[&nbsp;&nbsp;&nbsp;]</FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1) </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Title of each class of securities to which transaction applies: </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2) </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Aggregate
number of securities to which transactions applies: </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(3)  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Per
unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it
was determined): </FONT></TD>
</TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Para Hang Level 2" FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(4)  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Proposed maximum aggregate value of transaction: </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(5)  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Total fee paid: </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[&nbsp;&nbsp;&nbsp;]</FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Fee paid previously with preliminary materials. </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[&nbsp;&nbsp;&nbsp;]  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1)  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Amount Previously Paid: </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2)  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Form, Schedule or Registration Statement No.: </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(3)  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Filing Party: </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(4)  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Date Filed: </FONT></TD>
</TR>
</TABLE>




<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></P>
<HR SIZE=3 COLOR=GRAY NOSHADE>
<PAGE>
<BR>

<P ALIGN=CENTER><FONT SIZE=2><img src="a101090001_v1.jpg" ALT="(ELECTRO SENSORS LOGO)"></font></P>


<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="100%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>ELECTRO-SENSORS, INC. 6111 Blue Circle Drive Minnetonka,
 Minnesota 55343</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=2><B> (952) 930-0100</B></FONT></P>

 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>NOTICE OF ANNUAL MEETING OF SHAREHOLDERS</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>To Be Held April 21, 2010</B></FONT></P>
 </TD>
 </TR>
</TABLE>

<P><FONT SIZE=2>To the Shareholders of
Electro-Sensors, Inc.: </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notice
is hereby given that the Annual Meeting of Shareholders of Electro-Sensors,
Inc. will be held at the Sheraton Minneapolis West Hotel, 12201 Ridgedale
Drive, Minnetonka, Minnesota, on Wednesday, April 21, 2010, at 2:00 pm, Central
Standard Time, for the following purposes: </FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="90%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>1.</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>To set the number of
 directors at five (5); </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>2.</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>To elect five (5) directors
 to serve until the next Annual Meeting of Shareholders; </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>3.</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>To ratify the selection of
 Boulay, Heutmaker, Zibell &amp; Co. P.L.L.P. as independent auditors for the
 Company for the fiscal year ending December 31, 2010; and </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>4.</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>To take action upon any
 other business as may properly come before the meeting or any adjournment or
 postponement thereof. </FONT></P>
 </TD>
 </TR>
</TABLE>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accompanying
this Notice of Annual Meeting is a Proxy Statement, Form of Proxy and the
Company&#146;s Annual Report on Form 10-K for the fiscal year ended December 31,
2009. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors has fixed the close of business on March 2, 2010 as the
record date for the determination of shareholders entitled to notice of and to
vote at the Annual Meeting of Shareholders. All shareholders of record are cordially
invited to attend the Annual Meeting in person. However, to assure the presence
of a quorum, the Board of Directors requests that you promptly complete, sign,
date and return the enclosed proxy card, which is solicited by the Board of
Directors, whether or not you plan to attend the Annual Meeting. The proxy is
revocable and will not be used if you attend the Annual Meeting and vote in
person or otherwise provide notice of your revocation. If you have any
questions regarding the completion of the enclosed proxy card or would like
directions to the Annual Meeting, please call the Company at (952) 930-0100.</FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="55%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="45%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>BY ORDER OF THE BOARD OF
 DIRECTORS, </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><img src="a101090002_v1.jpg" ALT="-s- Bradley D. Slye"></font></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Bradley D. Slye </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>President</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="30%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="22%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="77%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>Minnetonka, Minnesota </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Dated:</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>March 9, 2010 </FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<BR>

 <P ALIGN=CENTER><FONT SIZE=2><img src="a101090001_v1.jpg" ALT="(ELECTRO SENSORS LOGO)"></font></P>


<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="100%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P style="padding-bottom:5px" ALIGN=CENTER><FONT SIZE=2><B>ELECTRO-SENSORS, INC. 6111 Blue Circle Drive Minnetonka,
 Minnesota 55343 (952) 930-0100</B></FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>PROXY STATEMENT</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>FOR</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>ANNUAL MEETING OF SHAREHOLDERS</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>To Be Held April 21, 2010</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR STYLE="FONT-SIZE:1PX">
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER>&nbsp;</P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>GENERAL INFORMATION</B></FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Proxy Statement is furnished by the Board of Directors (the &#147;Board of
Directors&#148;) of Electro-Sensors, Inc., a Minnesota corporation (the &#147;Company&#148;),
to the shareholders of the Company in connection with a solicitation of proxies
to be voted at the Annual Meeting of Shareholders (the &#147;Annual Meeting&#148;) to be
held at 2:00 p.m., Central Time, on Wednesday, April 21, 2010, at the Sheraton
Minneapolis West Hotel, 12201 Ridgedale Drive, Minnetonka, Minnesota, and at
any and all adjournments or postponements thereof. This Proxy Statement and the
accompanying materials are first being mailed to shareholders on or about March
9, 2010. </FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
your shares are registered in the name of a bank or brokerage firm, you may be
eligible to vote your shares electronically via the Internet or telephone. A
large number of banks and brokerage firms are participating in the Broadridge
Investor Communication Services online program. This program provides eligible
shareholders who receive a paper copy of the Annual Report and Proxy Statement
the opportunity to vote via the Internet or telephone. If your bank or
brokerage firm is participating in Broadridge&#146;s program, your voting form will
provide instructions. If your voting form does not refer to Internet or
telephone information, please complete and return the paper proxy card in the
postage paid envelope provided. </FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any
proxy delivered pursuant to this solicitation is revocable at the option of the
person giving the proxy at any time before it is exercised. A proxy may be
revoked, prior to its exercise, by executing and delivering a later-dated proxy
via the Internet, via telephone or by mail, by delivering written notice of the
revocation of the proxy to the Company&#146;s Secretary prior to the Annual Meeting,
or by attending and voting at the Annual Meeting. Attendance at the Annual
Meeting, in and of itself, will not constitute a revocation of a proxy. The
shares represented by a proxy will be voted in accordance with the shareholder&#146;s
directions if the proxy is duly submitted and not validly revoked prior to the
Annual Meeting. If no directions are specified on a duly submitted proxy, the
shares will be voted, in accordance with the recommendations of the Board of
Directors, FOR approval of the number of directors to be set at five, FOR the
election of the directors nominated by the Board of Directors, FOR the
ratification of the Company&#146;s selection of auditors for the fiscal year ending
December 31, 2010, and in accordance with the discretion of the persons
appointed as proxies on any other matters properly brought before the Annual
Meeting and any all adjournments or postponements thereof. </FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
expense of preparing, printing, and mailing this Proxy Statement and the proxies
solicited hereby will be borne by the Company. The Company will request
brokerage firms, banks, nominees, custodians, and fiduciaries to forward proxy
materials to the beneficial owners of shares of Common Stock of the Company
(&#147;Common Stock&#148;) as of the record date, and will provide reimbursement for the
cost of forwarding the proxy materials in accordance with customary practice.
In addition to the use of the Internet and mail, proxies may be solicited by
officers, directors, and regular employees of the Company, without additional
remuneration, in person or by telephone or facsimile transmission. </FONT></P>

<P ALIGN=CENTER><FONT SIZE=2><B>Important Notice Regarding the Availability of Proxy
Materials for the Annual Meeting:<BR>
The Proxy Statement, Form of Proxy, and Annual Report on Form 10-K are available
at<BR>
http://www.idelivercommunications.com/proxy/else</B></FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>
<P ALIGN=CENTER><FONT SIZE=2><B>OUTSTANDING SHARES &amp; VOTING RIGHTS</B></FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company fixed the close of business on March 2, 2010 as the record date for
determining shareholders entitled to notice of and to vote at the Annual
Meeting. At March 2, 2010, the Company had outstanding 3,380,290 shares of
Common Stock, the only outstanding class of capital stock of the Company. Each
share of Common Stock outstanding on the record date entitles the holder
thereof to one (1) vote on each matter to be voted upon by shareholders at the
Annual Meeting. Holders of Common Stock are not entitled to cumulative voting
rights. </FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
majority of the shares of Common Stock entitled to vote at the Annual Meeting,
present in person or by proxy, constitutes a quorum for the transaction of
business. Abstentions are counted as shares present for purposes of determining
the presence or absence of a quorum, and as negative votes for purposes of any
proposal other than the election of directors. Abstentions will not be counted
for purposes of determining the number of votes cast in the election of
directors. Proxies relating to &#147;street name&#148; shares that are voted by brokers
on some matters, but not on other matters as to which authority to vote is
withheld from the broker (&#147;broker non-votes&#148;) absent voting instructions from
the beneficial owner, will be treated as shares present for purposes of
determining the presence or absence of a quorum but shall not be deemed to be
represented at the meeting for purposes of determining the approval of any
matter submitted to the shareholders for a vote. The Inspector of Election
appointed by the Board of Directors will determine the shares represented at
the meeting and the validity of proxies and ballots, and will count all votes
and ballots. </FONT></P>

<P ALIGN=CENTER><FONT SIZE=2><B>CORPORATE GOVERNANCE</B></FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
business affairs of the Company are conducted under the direction of the Board
of Directors in accordance with the Minnesota Business Corporation Act and our
Articles of Incorporation and Bylaws. The Board of Directors currently has five
members: Bradley D. Slye, Peter R. Peterson, Robert W. Heller, Joseph A.
Marino, and Geoffrey W. Miller. Members of the Board of Directors are informed
of our business through discussions with management, by reviewing materials
provided to them and by participating in meetings of the Board of Directors and
its committees, among other activities. The corporate governance practices that
we follow are summarized below. </FONT></P>

<P><FONT SIZE=2><B>Board Leadership Structure and Risk Management </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors believes that Bradley D. Slye, the Company&#146;s President and
Chief Executive Officer, is best situated to serve as Chairman of the Board
because he is the director most familiar with the Company&#146;s business and industry,
and most capable of effectively identifying strategic priorities and leading
the discussion and execution of strategy. Independent directors and management
have different perspectives and roles in strategy development. The Company&#146;s
independent directors bring experience, oversight and expertise from outside
the company and industry, while Mr. Slye brings company-specific experience and
expertise. The Board believes that Mr. Slye&#146;s combined role of Chairman and
Chief Executive Officer promotes strategy development and execution, and
facilitates information flow between management and the Board, which are
essential to effective governance. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;One
of the key responsibilities of the Board of Directors is to hold management
accountable for the execution of strategy once it is developed. The Board
believes that its independent directors work together effectively to serve this
oversight function, with no individual director serving as a &#147;lead&#148; independent
director. </FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors believes that oversight of the Company&#146;s risk management
efforts is another key responsibility that is shared by the entire Board. The
Board regularly reviews risk management information regarding the Company&#146;s
liquidity and operations. Board members receive financial statements monthly
which are then discussed at the quarterly meetings of the Board. In addition,
Mr. Slye frequently has informal discussions with board members regarding risk
management. </FONT></P>

<P><FONT SIZE=2><B>Independence </B></FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors has determined that Messrs. Marino, Miller and Heller are
independent directors as defined by the listing standards of the Nasdaq Stock
Market, since none of them are believed to have any relationships that, in the
opinion of the Board of Directors, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a director. If
Marino, Miller, and Heller were all elected at the Annual Meeting, they would
constitute a majority of the Board of Directors. Messrs. Slye and Peterson are
precluded from being considered independent by Nasdaq rules since each of them
currently serves as an executive officer of the Company. </FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors has determined that each member of the Company&#146;s Audit
Committee, Compensation Committee and Nominating Committee are independent in
accordance with the listing standards of the Nasdaq Stock Market. </FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>
<P><FONT SIZE=2><B>Code of Ethics and Business Conduct </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company has adopted the Electro-Sensors Code of Ethics and Business Conduct
(the &#147;Code of Conduct&#148;), a code of conduct that applies to all of our
directors, officers and employees. A copy of the Code of Conduct was provided
with the Proxy Statement for the 2004 Annual Meeting of Shareholders and is
also available upon written request to the Chief Executive Officer. If we make
any substantive amendments to the Code of Conduct or grant any waiver,
including any implicit waiver from a provision of the Code of Conduct to our
directors or executive officers, we will disclose the nature of such amendments
or waiver in a report on Form 8-K. </FONT></P>

<P><FONT SIZE=2><B>Director Attendance at Annual Meeting </B></FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>Directors&#146; attendance at Annual Meetings can
provide our shareholders with an opportunity to communicate with directors
about issues affecting the Company, thus, all directors are expected to attend
the Annual Meetings of Shareholders. All incumbent directors, except one,
attended the 2009 Annual Meeting of Shareholders. </FONT></P>

<P><FONT SIZE=2><B>Communications with the Board </B></FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholders
may communicate directly with the Board of Directors. All communications should
be directed to the Chairman of our Audit Committee at the address below and
should prominently indicate on the outside of the envelope that it is intended
for the Board of Directors or for non-management directors. If no director is
specified, the communication will be forwarded to the entire Board. Shareholder
communications to the Board should be sent to: </FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>Board of Directors <BR>
Attention: Chairman, Audit Committee<BR>
Electro-Sensors, Inc.<BR>
6111 Blue Circle Drive<BR>
Minnetonka, Minnesota 55343-9108</FONT></P>

<P><FONT SIZE=2><B>Committees and Meetings of the Board of Directors </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
present standing committees of the Board of Directors are described below. </FONT></P>

<P><FONT SIZE=2><B>Board Meetings </B></FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of Directors met four times during the last fiscal year. Two incumbent
members, Messrs. Peterson and Heller, of the Board of Directors attended fewer
than 75% of the total number of meetings held by the Board of Directors and the
committees on which they served. The absences were travel and illness related.</FONT></P>

<P><FONT SIZE=2><B>Directors&#146; Compensation </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Directors
who are not employees of the Company receive $1,250 per quarter for their
services on the Board.</FONT></P>

<P><FONT SIZE=2><B>Audit Committee </B></FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Messrs.
Marino, Miller, and Heller currently serve as members of the Audit Committee.
This committee met twice during the last fiscal year. The Audit Committee is
responsible for selecting the Company&#146;s independent auditors, and for assisting
the Board of Directors in its oversight of corporate accounting and internal
controls, reporting practices of the Company and the quality and integrity of
the financial reports of the Company. The Audit Committee Charter specifies the
composition and responsibilities of the committee. For more information
concerning the Audit Committee, see the Report of the Audit Committee on page
12 and the Audit Committee Charter attached as Appendix A to this definitive
Proxy Statement. The Board has
named Geoff Miller as the &#147;audit committee financial expert&#148; as defined by Item
407(d)(5)(ii) of Regulation S-K under the Securities Act of 1933. The Company
acknowledges that the designation of Mr. Miller as the audit committee
financial expert does not impose on Mr. Miller any duties, obligations or
liability that are greater than the duties, obligations and liability imposed
on Mr. Miller as a member of the Audit Committee and the Board of Directors in
the absence of such designation or identification. </FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>
<P><FONT SIZE=2><B>Compensation Committee </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Messrs.
Marino, Miller, and Heller currently serve as members of the Compensation/Stock
Option Committee (the &#147;Compensation Committee&#148;). The Compensation Committee
does not act pursuant to a charter. This committee did not meet during the last
fiscal year. The Compensation Committee is responsible for making
recommendations to the Board of Directors concerning compensation of the
Company&#146;s employees, officers, and directors, and is authorized to determine
the compensation of the Company&#146;s executive officers. The Compensation
Committee is authorized to administer the various incentive plans of the
Company and has all powers of the attendant thereto, including the power to
grant employee stock options. Executives of the Company can make
recommendations on setting their compensation but cannot set it directly. </FONT></P>

<P><FONT SIZE=2><B>Nominating Committee </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Messrs.
Marino, Miller, and Heller currently serve as members of the Nominating
Committee. The Nominating Committee did not meet during fiscal year 2009. The
Nominating Committee is responsible for evaluating and nominating or
recommending candidates for the Company&#146;s Board of Directors. A copy of the
Nominating Committee Charter, which has been adopted by the Company&#146;s Board of
Directors, is attached as Appendix B to this definitive Proxy Statement.</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P><FONT SIZE=2><B>Nominating Policy </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Nominating Committee will consider candidates for nomination as a director
recommended by shareholders, directors, third party search firms and other
sources. The Nominating Committee believes that candidates for directors should
have certain minimum qualifications, including being able to read and
understand basic financial statements, being over 18 years of age, having
familiarity with the Company&#146;s business and industry, having high moral
character and mature judgment, being able to work collegially with others, and
not currently serving on more than three Boards of public companies. The
Nominating Committee may modify these minimum qualifications from time to time.
</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
evaluating director nominees who meet the Company&#146;s minimum qualifications, the
Nominating Committee considers the following factors and qualifications, among
others: </FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="95%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2> the appropriate
 size and the diversity of the Company&#146;s Board of Directors; </FONT></P>
 </TD>
 </TR>

 <TR STYLE="FONT-SIZE:5PX">
 <TD VALIGN=TOP>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 </TR>

 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2> the needs of the
 Board with respect to the particular talents and experience of its directors;
 </FONT></P>
 </TD>
 </TR>

 <TR STYLE="FONT-SIZE:5PX">
 <TD VALIGN=TOP>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 </TR>

 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2> the knowledge,
 skills and experience of nominees, including experience in technology,
 business, finance, administration or public service, in light of prevailing
 business conditions and the knowledge, skills and experience already
 possessed by other members of the Board;</FONT></P>
 </TD>
 </TR>
 <TR STYLE="FONT-SIZE:5PX">
 <TD VALIGN=TOP>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 </TR>

 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2> familiarity with
 domestic and international business matters;</FONT></P>
 </TD>
 </TR>
 <TR STYLE="FONT-SIZE:5PX">
 <TD VALIGN=TOP>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 </TR>

 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2> age and legal and
 regulatory requirements;</FONT></P>
 </TD>
 </TR>
  <TR STYLE="FONT-SIZE:5PX">
 <TD VALIGN=TOP>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 </TR>

 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2> experience with
 accounting rules and practices;</FONT></P>
 </TD>
 </TR>
 <TR STYLE="FONT-SIZE:5PX">
 <TD VALIGN=TOP>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 </TR>

 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2> appreciation of
 the relationship of the Company&#146;s business to the changing needs of society;
 and</FONT></P>
 </TD>
 </TR>
  <TR STYLE="FONT-SIZE:5PX">
 <TD VALIGN=TOP>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 </TR>

 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2> the desire to
 balance the considerable benefit of continuity with the periodic injection of
 the fresh perspective provided by new members. </FONT></P>
 </TD>
 </TR>
</TABLE>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Nominating Committee will consider the attributes of the candidates and the
needs of the Board, and will review all candidates in the same manner. The
Nominating Committee does not have a diversity policy; however, as summarized
above, the Nominating Committee seeks to nominate candidates with a diverse
range of knowledge, experience, skills, expertise, and other qualities that
will contribute to the overall effectiveness of the Board of Directors. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
shareholder who wishes to recommend one or more directors must provide a
written recommendation to the Secretary of the Company at the address below by
November 23, 2010. Notice of a recommendation must include the name and address
of the shareholder and the class and number of shares such shareholder owns.
With respect to the nominee, the shareholder should include the nominee&#146;s name,
age, business address, residence address, current principal occupation, five
year employment history with employer names and a description of the employer&#146;s
business, the number of shares beneficially owned by the nominee, whether such
nominee can read and understand basic financial statements, and other Board
memberships, if any. </FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>Electro-Sensors, Inc.<BR>
Attn: Chairman, Nominating Committee<BR>
6111 Blue Circle Drive<BR>
Minnetonka, MN 55343-9108</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
recommendation must be accompanied by a written consent of the nominee to stand
for election at the Annual Meeting if nominated by the Nominating Committee and
to serve if elected by the shareholders. The Company may require any nominee to
furnish additional information that may be needed to determine the eligibility
of the nominee and whether the nominee has the attributes the Board believes
are important in its composition. </FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>
<P ALIGN=CENTER><FONT SIZE=2><B>ELECTION OF DIRECTORS<BR>
Proposals #1 and #2</B></FONT></P>

<P ALIGN="JUSTIFY"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Bylaws of the Company provide that the shareholders at each Annual Meeting
shall determine the number of directors, which shall not be less than one. The
Nominating Committee and the Board of Directors recommends that the number of
directors be set at five and that five directors be elected at the Annual
Meeting to serve until the next Annual Meeting or until their successors are duly
elected and qualified. Under applicable Minnesota law, approval of the proposal
to set the number of directors at five requires the affirmative vote of the
holders of the greater of (1) a majority of the voting power of the shares
represented in person or by proxy at the Annual Meeting with authority to vote
on such matter or (2) a majority of the voting power of the minimum number of
shares that would constitute a quorum for the transaction of business at the
Annual Meeting. </FONT></P>

<P ALIGN="JUSTIFY"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Nominating Committee recommended and the Board of Directors selected the
persons named below for election to the Board of Directors. All nominees are
currently directors of the Company. If, prior to the Annual Meeting, it should
become known that any of the following individuals will be unable to serve as a
director after the Annual Meeting by reason of death, incapacity or other
unexpected occurrence, the proxies will be voted for such substitute nominee as
is selected by the Board of Directors. The Board of Directors has no reason to
believe that any of the following nominees will be unable to serve. The Bylaws
of the Company provide that directors shall be elected by a plurality of the
votes cast by holders of shares present and entitled to vote on the election of
directors at a meeting at which a quorum is present. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table sets forth the principal occupations (for at least the last
five years) and directorships of the nominees: </FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="16%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="55%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="2%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="2%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="13%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1><B>Name</B></FONT></P>


 </TD>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1><B>&nbsp;</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1><B>Principal
 Occupation and Directorships</B></FONT></P>


 </TD>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1><B>&nbsp;</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Age</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>&nbsp;</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN="CENTER"><FONT SIZE=1><B>Director
 Since</B></FONT></P>

 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
<TR>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>Bradley D.
 Slye</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Chairman of
 the Board and President of the Company since 1997; Chief Financial Officer
 since 2000</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P ALIGN=CENTER><FONT SIZE=2>50</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P ALIGN=CENTER><FONT SIZE=2>1997</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Peter R.
 Peterson</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>President,
 P.R. Peterson Company (a venture capital firm); Secretary of the Company
 since 1973; Director of PPT Vision, Inc.</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>76</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>1969</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>Robert W.
 Heller</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P ALIGN="JUSTIFY"><FONT SIZE=2>CEO of PPT
 Vision, Inc. since 2009; Director of Heller Capital, Inc. (a management
 consulting and investment company), Director and audit committee member of
 HEI, Inc. (a public company in Victoria, MN) and 5 other private companies;
 President of Heller Capital, Inc. (1997-2009) VP of Manufacturing (1977-
 1996) and CEO (1991-1996) of Advance Circuits, Inc.</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P ALIGN=CENTER><FONT SIZE=2>64</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P ALIGN=CENTER><FONT SIZE=2>2007</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Joseph A.
 Marino</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>President
 and CEO of Cardia, Inc. (a medical equipment manufacturer) since 1998</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>58</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>1994</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>Geoffrey W.
 Miller</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P ALIGN="JUSTIFY"><FONT SIZE=2>CFO of
 Wilcox Paper (a distributor of fine paper to the Printing Industry) since
 2002; General Manager of AmSan &#150; Brissman Kennedy in 2001 (a distributor of
 janitorial supplies); CFO/VP Operations of AmSan &#150; Brissman Kennedy since
 1999</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P ALIGN=CENTER><FONT SIZE=2>55</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P ALIGN=CENTER><FONT SIZE=2>1999</FONT></P>
 </TD>
 </TR>
</TABLE>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;When
considering whether the nominees have the experience, qualifications,
attributes and skills, taken as a whole, to enable the Board of Directors to
satisfy its oversight responsibilities effectively in light of the Company&#146;s
business and structure, the Nominating Committee and the Board of Directors
focused primarily on the biographical information set forth in the table above.
In particular with regard to Mr. Slye, the Board of Directors considered his
years of experience with the Company, his high level of customer interaction,
and his strong engineering and product development background. These factors
all increase the Company&#146;s ability to develop new products that meet customer
needs, which is critical to the success of the Company. With regards to Mr.
Peterson, the Board of Directors considered his many
years of experience in the investment industry, which is valuable to the
Company as it decides how to invest excess cash and when to liquidate
investments. With regards to Mr. Heller, the Board of </FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>
<P><FONT SIZE=2>Directors considered the
broad perspective brought by his experience in the manufacturing industry and
his high-level management experience with other publicly-traded companies. With
regards to Mr. Marino, the Board of Directors considered his leadership in
building companies and his experience in the medical device industry. With
regards to Mr. Miller, the Board of Directors considered his significant
management experience, expertise, and background with regard to accounting and
financial matters. </FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>
<P ALIGN=CENTER><FONT SIZE=2><B>SECURITY OWNERSHIP OF CERTAIN<BR>
BENEFICIAL OWNERS AND MANAGEMENT</B></FONT></P>

<P ALIGN="JUSTIFY"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table sets forth information, as of March 2, 2010, regarding the
beneficial ownership of the outstanding shares of Common Stock by persons known
by the Company to beneficially own more than 5% of the outstanding shares of
Common Stock, by directors and director nominees, by the executive officers
named in the Summary Compensation Table, and by such directors and executive
officers as a group. </FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="46%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="2%" VALIGN=TOP>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 <TD WIDTH="24%" VALIGN=TOP>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 <TD WIDTH="2%" VALIGN=TOP>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 <TD WIDTH="22%" VALIGN=TOP>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=3 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Common Stock</B></FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Name and Address<BR>
 of Beneficial Owner</B></FONT></P>


 </TD>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Number of Shares<BR>
 Beneficially Owned<SUP>(1)(2)</SUP></B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Percent<BR>
 of Class</B></FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>Peter R.
 Peterson</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD rowspan=3 BGCOLOR="#D6F3E8">
 <P ALIGN=CENTER><FONT SIZE=2>1,266,551 (3)</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD rowspan=3 BGCOLOR="#D6F3E8">
 <P ALIGN=CENTER><FONT SIZE=2>37.5%</FONT></P>
 </TD>
 </TR>
 <TR BGCOLOR="#D6F3E8">
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>6111 Blue Circle Drive</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>

 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Minnetonka, MN 55343</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>

 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>

<TR>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Bradley D. Slye</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD rowspan=3>
 <P ALIGN=CENTER><FONT SIZE=2>55,747 (4)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD rowspan=3 >
 <P ALIGN=CENTER><FONT SIZE=2>1.6%</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>6111 Blue Circle Drive</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>

 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Minnetonka, MN 55343</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>

 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Robert W. Heller</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD rowspan=3  BGCOLOR="#D6F3E8">
 <P ALIGN=CENTER><FONT SIZE=2>6,200 (5)</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD rowspan=3  BGCOLOR="#D6F3E8">
 <P ALIGN=CENTER><FONT SIZE=2>*</FONT></P>
 </TD>
 </TR>
 <TR BGCOLOR="#D6F3E8">
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>10992 Mount Curve Road</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>

 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Eden Prairie, MN 55347</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>

 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Joseph A. Marino</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD rowspan=3 >
 <P ALIGN=CENTER><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD rowspan=3 >
 <P ALIGN=CENTER><FONT SIZE=2>*</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>13770 Frontier Court</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>

 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Burnsville, MN 55337</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>

 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Geoffrey W. Miller</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD BGCOLOR="#D6F3E8" rowspan=3 >
 <P ALIGN=CENTER><FONT SIZE=2>9,900</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD BGCOLOR="#D6F3E8" rowspan=3 >
 <P ALIGN=CENTER><FONT SIZE=2>*</FONT></P>
 </TD>
 </TR>
 <TR BGCOLOR="#D6F3E8">
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>12735 42<SUP>nd</SUP> Place North</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>

 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Plymouth, MN 55442</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>

 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Farnam Street Partners, L.P.</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD rowspan=3 >
 <P ALIGN=CENTER><FONT SIZE=2>314,826 (6)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD rowspan=3 >
 <P ALIGN=CENTER><FONT SIZE=2>9.3%</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>3033 Excelsior Boulevard, Suite 300</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>

 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Minneapolis, MN 55426</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>

 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Nicholas Swenson</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD BGCOLOR="#D6F3E8" rowspan=3 >
 <P ALIGN=CENTER><FONT SIZE=2>181,805 (7)</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD BGCOLOR="#D6F3E8" rowspan=3 >
 <P ALIGN=CENTER><FONT SIZE=2>5.4%</FONT></P>
 </TD>
 </TR>
 <TR BGCOLOR="#D6F3E8">
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>3033 Excelsior Boulevard, Suite 300</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>

 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Minneapolis, MN 55426</FONT></P>
 </TD>
 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>

 <TD VALIGN=TOP BGCOLOR="#D6F3E8">
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Officers and Directors as a Group (5
 persons)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP >
 <P ALIGN=CENTER><FONT SIZE=2>1,338,398</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD  VALIGN=TOP >
 <P ALIGN=CENTER><FONT SIZE=2>39.6%</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>*Indicates ownership of less than one
 percent (1.0%).</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>

 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>

 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="90%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>(1)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Except as
 otherwise indicated, each person named or included in the group has the sole
 power to vote and sole power to direct the disposition of all shares listed
 as beneficially owned by him. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>(2)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Beneficial
 ownership information is based on information furnished by the specified
 persons and is determined in accordance with Rule 13d-3 under the Securities
 Exchange Act of 1934 (the &#147;Exchange Act&#148;), as required for purposes of this
 Proxy Statement. Accordingly, it includes shares of Common Stock that are
 issuable upon the exercise of stock options exercisable within 60 days of
 March 2, 2010. Such information is not necessarily to be construed as an
 admission of beneficial ownership for other purposes. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>(3)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Includes
 5,850 shares held by Mr. Peterson&#146;s spouse and 11,400 shares held in his IRA
 Plan. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>(4)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Includes
 5,190 shares held by Mr. Slye&#146;s spouse, 150 shares held by Mr. Slye&#146;s
 children, and 22,240 shares held by the ESOP for the account of Mr. Slye. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>(5)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Includes
 5,000 shares that are issuable upon the exercise of stock options. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>(6)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>In its most
 recent Schedule 13D filing with the Securities and Exchange Commission on
 February 26, 2009, Farnam represents that they have sole voting and
 dispositive power over all such shares. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>(7)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>The number
 of shares beneficially owned by Mr. Swenson is based on a Schedule 13D filed
 with the Securities and Exchange Commission on December 4, 2009. </FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN=CENTER><FONT SIZE=2><B>TRANSACTIONS WITH RELATED PERSONS,<BR>
PROMOTERS AND CERTAIN CONTROL PERSONS</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company was not a party to any transactions with related persons, promoters or control
persons during the last fiscal year, nor are any such transactions currently
being contemplated by the Company. </FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P ALIGN=CENTER><FONT SIZE=2><B>EXECUTIVE COMPENSATION</B></FONT></P>

<P><FONT SIZE=2><B>Compensation Summary</B></FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table summarizes information concerning the compensation awarded or
paid to, or earned by, the Company&#146;s Named Executive Officers during the last
two fiscal years. Named Executive Officers include persons serving as Chief
Executive Officer during fiscal 2009; executive officers who were serving as of
December 31, 2009, received total compensation in excess of $100,000 for fiscal
2009 and, excluding the Chief Executive Officer, were among our two most highly
compensated individuals (the Most Highly Compensated Officers); and additional
individuals who would have been included as the Most Highly Compensated
Officers but for the fact they were not serving at the end of the year. </FONT></P>

<P ALIGN=CENTER><FONT SIZE=2><B>Summary Compensation Table</B></FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="25%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="2%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="5%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="4%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="4%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="10%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="7%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="7%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="5%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Name and
 principal
 position</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Year</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Salary<BR>
 ($)</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Bonus<BR>
 ($)</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Stock<BR>
 awards<BR>
 ($)</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Option<BR>
 awards<BR>
 ($)</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Nonequity<BR>
 incentive plan<BR>
 compensation<BR>
 ($)</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Nonqualified<BR>
 deferred<BR>
 compensation<BR>
 earnings<BR>
 ($)</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>All other<BR>
 compensation<BR>
 ($)(a)</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Total<BR>
 ($)</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR BGCOLOR="#D6F3E8">
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>Bradley D. Slye<BR>Chairman,</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=top>
 <P ALIGN=RIGHT><FONT SIZE=2>2009</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>176,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>28,984</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>204,984</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>President, CEO, CFO</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>2008</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>176,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>18,664</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>194,664</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR BGCOLOR="#D6F3E8">
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>Peter R. Peterson
 Secretary</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>2009</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>100,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>17,301</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>117,301</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>2008</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>100,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>12,758</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>112,758</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN=JUSTIFY><FONT SIZE=2>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amounts
reflect allocations to individual&#146;s account of Company contributions to the
ESOP, 401(k) Plan, and/or standard employee benefit plans.</FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>The Company maintains a 401k plan and matches up to 4% of an employee&#146;s
salary.</FONT></P>

<P ALIGN=CENTER><FONT SIZE=2><B>DIRECTOR COMPENSATION</B></FONT></P>

<P><FONT SIZE=2><B>Compensation Summary</B></FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table summarizes information concerning the compensation awarded or
paid to, or earned by, the Company&#146;s non-employee directors during the last fiscal
year. Directors who are not employees of the Company receive $1,250 per quarter
for their services on the Board. </FONT></P>

<P ALIGN=CENTER><FONT SIZE=2><B>Director Compensation Table</B></FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="29%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="2%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="11%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="4%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="4%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="10%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="8%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="9%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="4%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Director Name</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Fees earned or<BR> paid
 in cash<BR>
 ($)</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Stock<BR>
 awards<BR>
 ($)</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Option<BR>
 awards<BR>
 ($)</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Nonequity<BR>
 incentive plan<BR>
 compensation<BR>
 ($)</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Nonqualified<BR>
 deferred<BR>
 compensation<BR>
 earnings<BR>
 ($)</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>All other<BR>
 compensation<BR>
 ($)</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Total<BR>
 ($)</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>Robert W. Heller</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>5,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>5,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>Joseph A. Marino</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>5,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>5,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>Geoffrey W. Miller</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>5,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>5,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN=CENTER><FONT SIZE=2><B>SECTION
16(a) BENEFICIAL OWNERSHIP<BR>
REPORTING COMPLIANCE</B></FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to
Section 16(a) of the Exchange Act, the Company&#146;s directors, its executive
officers, and any persons who beneficially own more than 10% of the Company&#146;s
Common Stock are required to report their initial ownership of Common Stock and
subsequent changes in that ownership to the Securities and Exchange Commission.
Specific due dates for those reports have been established, and the Company is
required to disclose in this Proxy Statement any failure to file by those due
dates during fiscal 2009. Based upon a review of such reports furnished to the
Company, or written representations that no reports were required, the Company
believes that all of those filing requirements were satisfied with respect to
fiscal 2009. </FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>
<P ALIGN=CENTER><FONT SIZE=2><B>RATIFICATION
OF INDEPENDENT AUDITORS<BR>
Proposal #3</B></FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company&#146;s Board of Directors retained Boulay, Heutmaker, Zibell &amp; Co.
P.L.L.P. as its principal independent auditors for the fiscal year ended
December&nbsp;31, 2009 and has selected Boulay, Heutmaker, Zibell &amp; Co.
P.L.L.P. to serve as the Company&#146;s auditors for the fiscal year ending
December&nbsp;31, 2010. The Board of Directors desires that the selection of
such auditors for the current fiscal year be submitted to the shareholders for
ratification. If the selection is not ratified, the Board of Directors will
reconsider its decision.</FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
representative of Boulay, Heutmaker, Zibell &amp; Co. P.L.L.P. is expected to
be present at the Annual Meeting, will have an opportunity to make a statement
if he or she desires to do so and will be available to respond to appropriate
questions.</FONT></P>

<P ALIGN=CENTER><FONT SIZE=2><B>DISCLOSURE OF FEES PAID TO INDEPENDENT
AUDITORS</B></FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following fees were paid to Boulay, Heutmaker, Zibell &amp; Co.
P.L.L.P. for fiscal years 2009 and 2008:</FONT></P>

<TABLE ALIGN=CENTER BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="60%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="37%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="7%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="7%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>FY 2009</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>FY 2008</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR BGCOLOR="#D6F3E8">
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE="2"><B>Audit Fees</B> </FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>78,700</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>87,416</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE="2"><B>Audit-Related Fees</B> </FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>1,250</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR BGCOLOR="#D6F3E8">
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE="2"><B>Tax Fees</B> </FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>6,395</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>6,443</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE="2"><B>All Other Fees</B> </FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>1,300</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>1,530</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Audit Fees</B> were for professional services
rendered for the audit of the Company&#146;s consolidated financial statements and
review of the interim consolidated financial statements included in quarterly
reports and services in connection with statutory and regulatory filings or
engagements. </FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Audit-Related Fees</B> consist of the review of
and discussion with management regarding communications from the SEC.</FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Tax Fees</B> were for professional services
rendered for preparation of the Company&#146;s annual tax return, quarterly
estimates, and state returns.</FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>All Other Fees</B> were for professional
services rendered for the Company in connection with the Company&#146;s compliance
with Section 404 of Sarbanes-Oxley Act.</FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to
its written charter, the Audit Committee is required to pre-approve all audit
services, as well as all non-audit services performed by the Company&#146;s
independent auditors in order to assure that the provision of such non-audit
services does not impair the auditor&#146;s independence. Unless a particular service
has received general pre-approval by the Audit Committee in accordance with the
Audit Committee&#146;s pre-approval policy, each service provided must be
specifically pre-approved. Any proposed services exceeding pre-approved costs
levels will require specific pre-approval by the Audit Committee. </FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of
the Company&#146;s annual engagement agreement with its independent auditor, the
Audit Committee pre-approves the following audit services to be provided by the
independent auditor: statutory and financial audits for the Company and any of
its subsidiaries and affiliates, audit services associated with SEC
registration statements, periodic reports and other documents filed with the
SEC, production of other documents issued by the independent auditor in connection
with securities offerings (e.g., comfort letters, consents), and assistance in
responding to SEC comment letters. The Audit Committee also provides
pre-approval in the annual engagement of most consulting services provided by
the independent auditor related to the accounting or disclosure treatment of
transactions or events and the actual or potential impact of final or proposed
rules, standards or interpretations by the SEC, FASB, or other regulatory or
standard-setting bodies. </FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit
Committee has also provided the Company&#146;s independent auditors with a general
pre-approval of certain non-audit services, primarily tax services. The Audit
Committee does not believe that performance of these tax services impairs the
auditor&#146;s independence. Specifically, the Audit Committee has given the
independent auditors pre-approval for U.S. federal, state, and local tax
planning and advice, U.S. federal, state, and local tax compliance,
international tax planning and advice, international tax compliance, and tax
planning and advice related to merger and acquisition activities. The Company&#146;s
independent auditors must inform the Audit Committee whenever a pre-approved
service is provided. The aggregate amount of fees for these pre-approved tax
services may not exceed $8,000 without explicit approval by the Audit
Committee. </FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The term of
any pre-approval is 12 months from the date of pre-approval, unless the Audit
Committee specifically provides for a different term. The Audit Committee
retains the right to periodically revise the above list of pre-approved
services. </FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>
<P ALIGN=CENTER><FONT SIZE=2><B>AUDIT COMMITTEE REPORT</B></FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board
of Directors maintains an Audit Committee comprised of three of the Company&#146;s
directors. The Board of Directors and the Audit Committee believe that the
Audit Committee&#146;s current member composition satisfies the listing rule of the
Nasdaq Stock Market that governs audit committee composition, Rule 5605(c)(2),
including the requirement that audit committee members all be &#147;independent directors&#148;
as that term is defined by Rule 5605(a)(2).</FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit
Committee of the Board of Directors oversees and monitors the participation of
the Company&#146;s management and independent auditors throughout the financial
reporting process.</FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection
with its function to oversee and monitor the financial reporting process of the
Company, the Audit Committee has done the following:</FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="95%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2>Reviewed and discussed the audited financial statements for the
 fiscal year ended December 31, 2009 with the Company&#146;s management;</FONT></P>
 </TD>
 </TR>

 <TR STYLE="FONT-SIZE:5PX">
 <TD VALIGN=TOP>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 </TR>

 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2>Discussed with the Company&#146;s independent auditors the matters
 required to be discussed by Statement on Auditing Standards No.&nbsp;61, as
 amended (AICPA, <I>Professional Standards</I>,
 Vol. 1. AU section&nbsp;380), as adopted by the Public Company Accounting
 Oversight Board in Rule&nbsp;3200T; and</FONT></P>
 </TD>
 </TR>
 <TR STYLE="FONT-SIZE:5PX">
 <TD VALIGN=TOP>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 </TR>

 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=JUSTIFY><FONT SIZE=2>Received the written disclosure and the letter from the independent
 accountant required by applicable requirements of the Public Company
 Accounting Oversight Board regarding the independent accountant&#146;s communications
 with the Audit Committee concerning independence, and has discussed with the
 independent accountant the independent accountant&#146;s independence.</FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on
the foregoing, the Audit Committee recommended to the Board of Directors that
the audited financial statements be included in the Company&#146;s annual report on
Form 10-K for the fiscal year ended December 31, 2009.</FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="40%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="60%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE="2"><B>Audit Committee</B> </FONT> </P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><I>Joseph A. Marino</I></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><I>Geoffrey W. Miller</I></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><I>Robert W. Heller</I></FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>
<P ALIGN=CENTER><FONT SIZE=2><B>OTHER MATTERS</B></FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board
of Directors knows of no other matters to be brought before the Annual Meeting.
However, if any other matters are properly brought before the Annual Meeting,
it is the intention of the persons named in the accompanying proxy to vote in
accordance with their judgment on such matters.</FONT></P>

<P ALIGN=CENTER><FONT SIZE=2><B>SHAREHOLDER PROPOSALS</B></FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder
proposals for the proxy statement for the 2011 Annual Meeting of Shareholders
of the Company must be received no later than November 23, 2010 at the
Company&#146;s principal executive offices, 6111 Blue Circle Drive, Minnetonka,
Minnesota 55343, directed to the attention of the Chairman of the Audit
Committee, or the Chairman of the Nominating Committee if the proposal relates
to the nomination of a director, in order to be considered by the Board of
Directors for inclusion in next year&#146;s Annual Meeting proxy material under the
SEC&#146;s proxy rules. </FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Also, if a
shareholder proposal intended to be presented at the next Annual Meeting but
not included in the Company&#146;s proxy statement and proxy is received by the
Company after February 4, 2011, then management named in the Company&#146;s proxy
form for the next Annual Meeting will have discretionary authority to vote
shares represented by such proxies on the shareholder proposal, if presented at
the meeting, without including information about the proposal in the Company&#146;s
proxy material.</FONT></P>

<P ALIGN=CENTER><FONT SIZE=2><B>FORM 10-K</B></FONT></P>

<P ALIGN=JUSTIFY><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A copy of
the Company&#146;s Annual Report to the Securities and Exchange Commission on Form
10-K for the fiscal year ended December 31, 2009 has been provided with this
Proxy Statement. The Company will furnish to any shareholder, upon written
request, any exhibit described in the list accompanying the Form 10-K upon the
payment, in advance, of reasonable fees related to the Company&#146;s furnishing
such exhibits(s). Any such request should include a representation that the
shareholder was the beneficial owner of shares of Electro-Sensors Common Stock
on March 2, 2010, the record date for the 2010 Annual Meeting, and should be
directed to Mr. Bradley Slye, Chief Executive Officer, at the Company&#146;s
principal address.</FONT></P>

<P><FONT SIZE=2><B>The foregoing Notice of Annual Meeting and
Proxy Statement are sent by order of the Board of Directors.</B></FONT></P>

<P><FONT SIZE=2>Bradley D.
Slye</FONT></P>

<P><FONT SIZE=2>President<BR>
March 9, 2010</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P ALIGN="JUSTIFY"><FONT SIZE=2>Appendix A <BR>
Audit Committee Charter </FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>CHARTER FOR THE
AUDIT COMMITTEE<BR>
OF THE BOARD OF DIRECTORS<BR>
OF ELECTRO-SENSORS, INC.</FONT></P>

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 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P ALIGN="JUSTIFY">&nbsp;</P>
 </TD>
 <TD WIDTH="95%" VALIGN=TOP>
 <P ALIGN="JUSTIFY">&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>I.</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>PURPOSE</FONT></P>
 </TD>
 </TR>
</TABLE>

<P ALIGN="JUSTIFY"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
primary function of the Audit Committee of Electro-Sensors, Inc. (the
&#147;Company&#148;) is to provide oversight responsibilities by reviewing: the financial
reports and other financial information provided by the Company to any
governmental body or the public and the Company&#146;s systems of internal controls
regarding finance, accounting, legal compliance and ethics that management and
the Board of Directors (the &#147;Board&#148;) have established. The Committee&#146;s primary
duties and responsibilities are to:</FONT></P>

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 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P ALIGN="JUSTIFY">&nbsp;</P>
 </TD>
 <TD WIDTH="5%" VALIGN=TOP>
 <P ALIGN="JUSTIFY">&nbsp;</P>
 </TD>
 <TD WIDTH="90%" VALIGN=TOP>
 <P ALIGN="JUSTIFY">&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="LEFT"><FONT SIZE=2>Serve as an independent and objective party
 to monitor the Company&#146;s financial reporting process and internal control system.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="LEFT"><FONT SIZE=2>Coordinate and evaluate the audit efforts
 of the Company&#146;s independent auditors.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="LEFT"><FONT SIZE=2>Communicate directly with the independent
 auditors, the financial and senior management and the Board regarding the
 matters related to the Committee&#146;s responsibilities and duties.</FONT></P>
 </TD>
 </TR>
</TABLE>

<P ALIGN="JUSTIFY"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Committee will primarily fulfill these responsibilities by carrying out the
activities enumerated in Section III of this Charter.</FONT></P>

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 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P ALIGN="JUSTIFY">&nbsp;</P>
 </TD>
 <TD WIDTH="95%" VALIGN=TOP>
 <P ALIGN="JUSTIFY">&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>II.</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>MEMBERSHIP</FONT></P>
 </TD>
 </TR>
</TABLE>

<P ALIGN="JUSTIFY"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Committee shall be comprised of three or more directors elected by the Board,
each of whom shall be independent. In addition, no member of the Audit
Committee shall receive any compensation whatsoever from the Company other than
compensation paid to such member as a director of the Company and member of one
or more committees of the Board. Committee members shall serve until the next
annual organizational meeting of the Board, or until their successors are duly
elected and qualified. The Chair of the Committee shall be elected by the
Board. In the absence of the election of a Chair by the Board, the members of
the Committee shall elect a Chair by majority vote of the Committee membership.
</FONT></P>

<P ALIGN="JUSTIFY"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
Committee members shall have a working familiarity with basic finance and
accounting practices and shall be able to read and understand financial
statements at the time of their appointment to the Committee. Committee members
may enhance their familiarity with finance and accounting by participating in
educational programs conducted by the Company or an outside consultant. At
least one member of the Committee shall be a &#147;financial expert&#148;, as such term
is defined in applicable regulations of the Securities and Exchange Commission
and The Nasdaq Stock Market, Inc.</FONT></P>

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 <TD WIDTH="5%" VALIGN=TOP>
 <P ALIGN="JUSTIFY">&nbsp;</P>
 </TD>
 <TD WIDTH="5%" VALIGN=TOP>
 <P ALIGN="JUSTIFY">&nbsp;</P>
 </TD>
 <TD WIDTH="90%" VALIGN=TOP>
 <P ALIGN="JUSTIFY">&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>III.</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>RESPONSIBILITIES AND DUTIES</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Independent Auditors</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Appoint, compensate and oversee the
 Company&#146;s independent auditors. The Company&#146;s independent auditors shall
 report directly to the Committee. On an annual basis, the Committee should
 review and discuss with the auditors all significant relationships the
 auditors have with the Company to determine the auditors&#146; independence.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Review the performance of the independent
 auditors and discharge the independent auditors when circumstances warrant.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Prior to approval by the Board, pre-approve
 all audit services and non-audit services to be performed by the Company&#146;s
 independent auditors. Neither the Committee nor the Board shall approve, and
 the Company&#146;s independent auditors shall not provide to the Company, the
 following non-audit services if such services are to be provided
 contemporaneously while serving as independent auditors of the Company:
 bookkeeping services; financial IS design and implementation services;
 appraisal or valuation services; fairness opinions; contribution-in-kind
 reports; actuarial services; internal audit outsourcing services; management
 functions or HR; broker/dealer, investment adviser or investment banking
 services; and legal services and expert services unrelated to the audit.</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

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<BR>

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 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P ALIGN="JUSTIFY">&nbsp;</P>
 </TD>
 <TD WIDTH="5%" VALIGN=TOP>
 <P ALIGN="JUSTIFY">&nbsp;</P>
 </TD>
 <TD WIDTH="90%" VALIGN=TOP>
 <P ALIGN="JUSTIFY">&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Financial Reporting Processes</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Instruct the independent auditors, the
 Chief Executive Officer and Chief Financial Officer that the Committee
 expects to be advised if there are areas of Company operation that,
 consistent with the Committee&#146;s purpose, require its special attention.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Periodically consult with the independent
 auditors out of the presence of management regarding the adequacy of internal
 controls.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Consider the independent auditors&#146;
 judgments about the quality and appropriateness of the Company&#146;s accounting
 principles as applied and estimates used in its financial reporting.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Periodically consult with the independent
 auditors out of the presence of management regarding the accuracy and
 completeness of the Company&#146;s financial statements.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Documents/Reports Review</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Review with financial management and the
 independent auditors any earnings releases and all Forms 10-Q or 10-K prior
 to its release or filing. The Chair of the Committee may represent the entire
 Committee for purposes of this review.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Review and update this Charter
 periodically, at least annually, as conditions dictate.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Audit Committee Report</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Prepare an annual Audit Committee Report to
 be presented to the Board. The Committee will prepare the Audit Committee
 Report with the understanding that its representations will in used by the
 Board and the Company to comply with Item 306 of Regulation S-B and Item
 7(d)(3) of Schedule 14A as those regulations affect the Company.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Related-Party Transactions</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Review and approve all related-party
 transactions to which the Company may be a party prior to their
 implementation to assess whether such transactions meet applicable legal
 requirements.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Ethical and Legal Compliance</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Review periodically the Company&#146;s Code of
 Ethical Conduct for Senior Financial Officers and management&#146;s enforcement of
 the Code as it relates to the Company&#146;s financial reporting process and
 internal control system.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Establish and maintain procedures for efficiently
 responding to complaints received by the Company regarding accounting,
 internal accounting controls and auditing. At a minimum, these procedures
 shall allow employees to submit concerns regarding questionable accounting
 and auditing matters on a confidential, anonymous basis.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>IV.</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>AUTHORITY</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD colspan=2  VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>The Audit Committee shall have the sole
 authority to:</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>Appoint, discharge and authorize
 compensation of the Company&#146;s independent auditors; and</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>At the expense of the Company, to retain
 such consultants and advisors as it deems reasonably necessary or appropriate
 to assist it with its functions.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
 Audit Committee shall also have the authority as it deems necessary or
 appropriate to the functions of the Audit Committee, to request from the
 Chief Executive Officer, the Chief Financial Officer and such other members
 of Company management as the Committee shall deem appropriate advice and
 information, orally or in writing, concerning the Company&#146;s business
 operations and financial condition relevant to the functions of the
 Committee.</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P ALIGN="JUSTIFY">&nbsp;</P>
 </TD>
 <TD WIDTH="5%" VALIGN=TOP>
 <P ALIGN="JUSTIFY">&nbsp;</P>
 </TD>
 <TD WIDTH="90%" VALIGN=TOP>
 <P ALIGN="JUSTIFY">&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>V.</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>MEETINGS AND MINUTES</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
 Committee shall meet at least two times annually, or more frequently as
 circumstances dictate. The Audit Committee will maintain written minutes of
 its meeting. Such minutes will be provided to the Board, and filed with the
 minutes of the meetings of the Board.</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>
<P ALIGN="JUSTIFY"><FONT SIZE=2>Appendix B<BR>
Nominating Committee Charter</FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>CHARTER FOR THE
NOMINATING<BR>
COMMITTEE OF THE BOARD OF DIRECTORS OF<BR>
ELECTRO-SENSORS, INC.</FONT></P>

<P ALIGN="JUSTIFY"><FONT SIZE=2>PURPOSE:</FONT></P>

<P ALIGN="JUSTIFY"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Nominating Committee shall be responsible for matters relating to the
governance of Electro-Sensors, Inc. (the &#147;Company&#148;), including selection of
candidates for the Company&#146;s Board of Directors.</FONT></P>

<P ALIGN="JUSTIFY"><FONT SIZE=2>MEMBERSHIP:</FONT></P>

<P ALIGN="JUSTIFY"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Nominating Committee will be comprised only of independent (as such term is
defined by applicable laws and regulations or the Company&#146;s corporate
governance policies, if any) directors appointed by the Board.</FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Chair of the Nominating Committee shall be elected by the Board or, if not
elected by the Board, then by the majority of the members of the Committee. The
Chair of the Nominating Committee shall conduct the Committee meetings as well
as represent the Committee at meetings of the Company&#146;s Board.</FONT></P>

<P ALIGN="JUSTIFY"><FONT SIZE=2>RESPONSIBILITIES:</FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P >&nbsp;</P>
 </TD>
 <TD WIDTH="5%" VALIGN=TOP>
 <P >&nbsp;</P>
 </TD>
 <TD WIDTH="90%" VALIGN=TOP>
 <P >&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=2>Developing, reviewing and revising as
 appropriate, for adoption by the Board, the Principles of Corporate
 Governance by which the Company and the Board shall be governed.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=2>Developing, reviewing and revising as
 appropriate, for adoption by the Board, the codes of ethical conduct and
 legal compliance by which the Company and its directors, officers, employees
 and agents will be governed.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=2>Developing and recommending to the Board
 policies and processes designed to provide for effective and efficient
 governance, including but not limited to: policies for evaluation of the
 Board and the chairperson; nomination, election and reelection of Board
 members; and succession planning for the Board chairperson and other Board
 leaders.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=2>Annually reviewing the composition of the
 Board, focusing on the governance and business needs and requirements of the
 Company, and reporting to the Board regarding suggested changes in Board
 composition which will guide the Committee in the selection, recruitment and
 recommendation of directors.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=2>Overseeing organization, membership and
 evaluation of Board committees and committee members.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=2>Reviewing and making recommends regarding
 shareholder proposals that related to corporate governance. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=2>Establishing Board member selection
 criteria and meeting as necessary to consider the nomination and screening of
 Board member candidates and to evaluate the performance of the Board and its
 members.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=2>Evaluating the performance of Board members
 eligible for reelection; addressing performance issues as needed; and
 recommending the reelection of Board members who are performing effectively
 and continue to provide a competency needed on the Board.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=2>Annually reviewing the composition of the
 Board against a matrix of skills and characteristics focused on the
 governance and business needs and requirements of the Company, and reporting
 to the Board regarding suggested changes in Board composition which will
 guide the Committee in the selection, recruitment and recommendation of
 directors.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ><FONT SIZE=2>Review director nominees proposed by
 shareholders and recommend the director nominees for the annual meeting of
 shareholders. </FONT></P>
 </TD>
 </TR>
</TABLE>

<P ALIGN="JUSTIFY"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
members of management of the Company are requested to cooperate with the
Nominating Committee, and to render assistance to it as it shall request in
carrying out its functions.</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>
<P ALIGN="JUSTIFY"><FONT SIZE=2>MEETINGS:</FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Nominating Committee shall/ establish its own schedule or meetings and provide
a copy of it to the Board and will maintain written minutes of its meetings.
Such minutes shall be promptly made available to the members of the Board of
Directors, and filed with the minutes of the meetings of the Board of
Directors.</FONT></P>

<P ALIGN="JUSTIFY"><FONT SIZE=2>AUTHORITY:</FONT></P>

<P ALIGN="JUSTIFY"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Nominating Committee shall have the authority, as and when it shall determine
to be necessary or appropriate to the functions of the Nominating Committee,</FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="10%" VALIGN=TOP>
 <P ALIGN="JUSTIFY">&nbsp;</P>
 </TD>
 <TD WIDTH="5%" VALIGN=TOP>
 <P ALIGN="JUSTIFY">&nbsp;</P>
 </TD>
 <TD WIDTH="85%" VALIGN=TOP>
 <P ALIGN="JUSTIFY">&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>(i)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="LEFT"><FONT SIZE=2>at the expense of the Company and not at
 the expense of the members thereof, counsel (which may be, but need not be,
 the regular corporate counsel to the Company), employ one or more recruiting
 firms to assist in the identification and recruitment of director candidates
 and other advisors to assist it in connection with its functions; and</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="JUSTIFY"><FONT SIZE=2>(ii)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="LEFT"><FONT SIZE=2>to request from the Chief Executive
 Officer, the Chief Financial Officer, and such other members of the Company&#146;s
 management as the Committee shall deem appropriate, advice and information,
 orally or in writing, concerning the Company&#146;s business operations and
 financial condition relevant to the functions of the Committee.</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR><BR><BR><BR><BR><BR>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3>
<PAGE>
<A name="page_1"></A>
<DIV style="PADDING-RIGHT: 0%; PADDING-LEFT: 0%">
<DIV>
<P style="MARGIN: 0in 0in 0pt"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
</DIV>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><B><FONT lang=EN-US style="FONT-SIZE: 10pt" face="Times New Roman,serif">ELECTRO-SENSORS, INC.</FONT></B></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><B><FONT lang=EN-US style="FONT-SIZE: 10pt" face="Times New Roman,serif">THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS</FONT></B></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><B><FONT lang=EN-US style="FONT-SIZE: 10pt" face="Times New Roman,serif">PROXY FOR ANNUAL MEETING</FONT></B></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><B><FONT lang=EN-US style="FONT-SIZE: 10pt" face="Times New Roman,serif">April 21, 2010</FONT></B></P>
<P style="MARGIN: 0in 0in 0pt"><B><FONT lang=EN-US style="FONT-SIZE: 10pt" face="Times New Roman,serif"></FONT></B>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="Times New Roman,serif">The undersigned hereby appoints BRADLEY D. SLYE and PETER R. PETERSON, and each of them, with full power of substitution, as his or her Proxies to represent and vote, as designated below, all shares of the Common Stock of Electro-Sensors Inc. registered in the name of the undersigned at the Annual Meeting of Shareholders of the Company to be held at the Sheraton Minneapolis West Hotel, 12201 Ridgedale Drive, Minnetonka, Minnesota, at 2:00 p.m. local time, on April 21, 2010, and at any adjournment thereof.&nbsp; The undersigned hereby revokes all proxies previously granted with respect to such meeting.</FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><B><FONT lang=EN-US style="FONT-SIZE: 10pt" face="Times New Roman,serif">THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN FOR A PARTICULAR PROPOSAL, WILL BE VOTED FOR SUCH PROPOSAL.</FONT></B></P>
<P style="MARGIN: 0in 0in 0pt"><B><FONT lang=EN-US style="FONT-SIZE: 10pt" face="Times New Roman,serif"></FONT></B>&nbsp;</P>
<H1 style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center"><B><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif">DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED</FONT></B></H1>
<P style="MARGIN: 0in 0in 0pt"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
<DIV align=left>
<TABLE style="WIDTH: 100%; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="2%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="2%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="60%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="12%">
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><B><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif" color=black>FOR</FONT></B></P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="12%">
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><B><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif" color=black>AGAINST</FONT></B></P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="12%">
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><B><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif" color=black>ABSTAIN</FONT></B></P>
</TD></TR>
<TR>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="2%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif">1.</FONT></P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="2%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="60%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif">To set the number of directors at five.</FONT></P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="12%">
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><FONT style="FONT-SIZE: 10pt" face=Wingdings color=black>o</FONT></P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="12%">
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><FONT style="FONT-SIZE: 10pt" face=Wingdings color=black>o</FONT></P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="12%">
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><FONT style="FONT-SIZE: 10pt" face=Wingdings color=black>o</FONT></P>
</TD></TR></TABLE></DIV>
<P style="MARGIN: 0in 0in 0pt"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
<DIV align=left>
<TABLE style="WIDTH: 100%; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="2%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif">2.</FONT></P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="2%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="58%" colSpan=2>
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif">To elect five directors to serve until the next annual meeting of&nbsp;shareholders: </FONT></P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="2%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="2%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face=Wingdings color=black>o</FONT></P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="15%" rowSpan=2>
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif" color=black>Vote </FONT><B><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif" color=black>FOR</FONT></B><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif" color=black> all<BR>
</FONT><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif" color=black>nominees, except<BR>
as withheld&nbsp;below:</FONT></P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="2%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face=Wingdings color=black></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="2%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face=Wingdings color=black>o</FONT></P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="15%" rowSpan=2>
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif" color=black>Vote&nbsp;</FONT><B><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif" color=black>WITHHELD<BR>
</FONT></B><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif" color=black>from all nominees.</FONT></P>
</TD></TR>
<TR>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="2%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="2%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="29%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif">01&nbsp; Bradley D. Slye<BR>
02&nbsp; Peter R. Peterson<BR>
03&nbsp; Geoffrey W. Miller</FONT></P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="29%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif">04&nbsp; Joseph A. Marino<BR>
05&nbsp; Robert W. Heller</FONT></P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="2%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="2%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif" color=black></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="2%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif" color=black></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="2%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif" color=black></FONT>&nbsp;</P>
</TD></TR></TABLE></DIV>
<P style="MARGIN: 0in 0in 0pt"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
<DIV align=left>
<TABLE style="WIDTH: 100%; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="65%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 9pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in; BORDER-BOTTOM: windowtext 1pt solid" vAlign=top width="35%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 9pt" face="Times New Roman,serif">INSTRUCTION: To withhold authority to vote for any individual nominee, mark &#147;Vote </FONT><B><FONT style="FONT-SIZE: 9pt" face="Times New Roman,serif">FOR</FONT></B><FONT style="FONT-SIZE: 9pt" face="Times New Roman,serif">&#148; and write the nominee&#146;s name to be withheld in the space provided below.</FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 9pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 9pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
</TD></TR></TABLE></DIV>
<P style="MARGIN: 0in 0in 0pt"><FONT lang=EN-US style="FONT-SIZE: 12pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
<DIV align=left>
<TABLE style="WIDTH: 100%; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="2%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="2%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="60%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="12%">
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><B><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif" color=black>FOR</FONT></B></P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="12%">
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><B><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif" color=black>AGAINST</FONT></B></P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="12%">
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><B><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif" color=black>ABSTAIN</FONT></B></P>
</TD></TR>
<TR>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="2%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif">3.</FONT></P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="2%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="60%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif">To ratify the appointment of Boulay, Heutmaker, Zibell &amp; Co. P.L.L.P as independent auditors for the fiscal year ending December 31, 2010.</FONT></P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="12%">
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><FONT style="FONT-SIZE: 10pt" face=Wingdings color=black>o</FONT></P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="12%">
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><FONT style="FONT-SIZE: 10pt" face=Wingdings color=black>o</FONT></P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="12%">
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><FONT style="FONT-SIZE: 10pt" face=Wingdings color=black>o</FONT></P>
</TD></TR>
<TR style="HEIGHT: 5.85pt">
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in; HEIGHT: 5.85pt" vAlign=top width="2%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in; HEIGHT: 5.85pt" vAlign=top width="2%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in; HEIGHT: 5.85pt" vAlign=top width="60%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in; HEIGHT: 5.85pt" vAlign=top width="12%">
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><FONT style="FONT-SIZE: 10pt" face=Wingdings color=black></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in; HEIGHT: 5.85pt" vAlign=top width="12%">
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><FONT style="FONT-SIZE: 10pt" face=Wingdings color=black></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in; HEIGHT: 5.85pt" vAlign=top width="12%">
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><FONT style="FONT-SIZE: 10pt" face=Wingdings color=black></FONT>&nbsp;</P>
</TD></TR>
<TR style="HEIGHT: 5.85pt">
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in; HEIGHT: 5.85pt" vAlign=top width="2%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif">4.</FONT></P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in; HEIGHT: 5.85pt" vAlign=top width="2%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in; HEIGHT: 5.85pt" vAlign=top width="60%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif">To transact such other business as may properly come before the meeting or any adjournment or postponement thereof.</FONT></P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in; HEIGHT: 5.85pt" vAlign=top width="12%">
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><FONT style="FONT-SIZE: 10pt" face=Wingdings color=black></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in; HEIGHT: 5.85pt" vAlign=top width="12%">
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><FONT style="FONT-SIZE: 10pt" face=Wingdings color=black></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in; HEIGHT: 5.85pt" vAlign=top width="12%">
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><FONT style="FONT-SIZE: 10pt" face=Wingdings color=black></FONT>&nbsp;</P>
</TD></TR></TABLE></DIV>
<P style="MARGIN: 0in 0in 0pt"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
<DIV align=left>
<TABLE style="WIDTH: 100%; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD style="PADDING-RIGHT: 5.4pt; PADDING-LEFT: 5.4pt; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="64%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 5.4pt; PADDING-LEFT: 5.4pt; PADDING-BOTTOM: 0in; PADDING-TOP: 0in; BORDER-BOTTOM: windowtext 1pt solid" vAlign=top width="36%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif">Date:</FONT></P>
</TD></TR>
<TR>
     <TD style="PADDING-RIGHT: 5.4pt; PADDING-LEFT: 5.4pt; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="64%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 5.4pt; PADDING-LEFT: 5.4pt; PADDING-BOTTOM: 0in; PADDING-TOP: 0in; BORDER-BOTTOM: windowtext 1pt solid" vAlign=top width="36%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
</TD></TR>
<TR>
     <TD style="BORDER-RIGHT: windowtext 1pt solid; PADDING-RIGHT: 5.4pt; PADDING-LEFT: 5.4pt; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="64%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
</TD>
     <TD style="BORDER-RIGHT: windowtext 1pt solid; PADDING-RIGHT: 5.4pt; PADDING-LEFT: 5.4pt; PADDING-BOTTOM: 0in; PADDING-TOP: 0in; BORDER-BOTTOM: windowtext 1pt solid" vAlign=top width="36%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif"><BR>
&nbsp;</FONT></P>
</TD></TR>
<TR>
     <TD style="PADDING-RIGHT: 5.4pt; PADDING-LEFT: 5.4pt; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="64%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 5.4pt; PADDING-LEFT: 5.4pt; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="36%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="Times New Roman,serif">Signature(s) in Box<BR>
&nbsp;</FONT></P>
</TD></TR>
<TR>
     <TD style="PADDING-RIGHT: 5.4pt; PADDING-LEFT: 5.4pt; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="64%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 9pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 5.4pt; PADDING-LEFT: 5.4pt; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="36%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 8pt" face="Times New Roman,serif">(Please sign exactly as your name appears hereon. If stock is registered in more than one name, each holder should sign. If signing as an attorney, administrator, executor, guardian or trustee, please add your title as such. If executed by a corporation or other entity, the proxy should be signed by a duly authorized officer or other representative.)</FONT></P>
</TD></TR></TABLE></DIV>
<P style="MARGIN: 0in 0in 0pt"><FONT lang=EN-US style="FONT-SIZE: 8pt" face="Times New Roman,serif"></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><B><FONT lang=EN-US style="FONT-SIZE: 10pt" face="Times New Roman,serif">Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:</FONT></B></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><B><FONT lang=EN-US style="FONT-SIZE: 10pt" face="Times New Roman,serif">The Proxy Statement, Form of Proxy, and Annual Report on Form 10-K are available at</FONT></B></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><B><FONT lang=EN-US style="FONT-SIZE: 10pt" face="Times New Roman,serif">http://</FONT></B><B><FONT lang=EN-US style="FONT-SIZE: 10pt; TEXT-DECORATION: none" face="Times New Roman,serif" color=windowtext>www.idelivercommunications.com/proxy/else</FONT></B> </P>
<DIV>
<DIV style="mso-element-anchor-horizontal: margin; mso-element-anchor-vertical: paragraph; mso-element-left: right; mso-element-top: .05pt; mso-element-wrap: around; mso-height-rule: exactly">
<DIV align=left><FONT lang=EN-US style="FONT-SIZE: 12pt" face="Times New Roman,serif"></FONT>&nbsp;</DIV></DIV></DIV></DIV>
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