##### Table of Contents




















| |                                      
| | -------------------------------------
| | Sincerely,                           
|
| | -s- Paul A. Miller                   
|
| | Paul A. Miller                       
| | President and Chief Executive Officer



---

TABLE OF CONTENTS



|                                                                         |  |  |  |  |  |  |  | 
|------------------------------------------------------------------------ |  |  |  |  |  |  |  | 
|NOTICE OF ANNUAL MEETING OF STOCKHOLDERS                                
|PROXY STATEMENT                                                         
|ANNUAL MEETING OF STOCKHOLDERS                                          
|PROPOSAL 1 ELECTION OF A CLASS OF DIRECTORS                             
|INFORMATION REGARDING DIRECTORS                                         
|PRINCIPAL OCCUPATION OF NOMINEES AND CONTINUING DIRECTORS               
|EXECUTIVE OFFICERS                                                      
|EXECUTIVE COMPENSATION                                                  
|PERFORMANCE GRAPH                                                       
|SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT          
|PROPOSAL 2 RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|STOCKHOLDER PROPOSALS AT 2006 ANNUAL MEETING                            
|CODE OF PROFESSIONAL CONDUCT                                            
|OTHER MATTERS                                                           



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##### Table of Contents



LSB CORPORATION


30 Massachusetts Avenue


North Andover, Massachusetts 01845


(978) 725-7500







NOTICE OF ANNUAL MEETING OF STOCKHOLDERS


To Be Held on May 3, 2005








| |                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------
| | 1. To elect four Class C Directors for a three-year
    term.                                                                               
|
| | 2. To ratify the appointment of KPMG LLP as the
    Companys independent registered public accounting firm for
    the current fiscal year.
|
| | 3. To transact such other business as may properly come
    before the meeting and any adjournments or postponements thereof.               







| |                                    
| | -----------------------------------
| | By Order of the Board of Directors,
|
| | Barbara A. Biondo                  
| | Secretary                          









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##### Table of Contents



LSB CORPORATION


30 Massachusetts Avenue


North Andover, Massachusetts 01845


(978) 725-7500







PROXY STATEMENT







ANNUAL MEETING OF STOCKHOLDERS


To Be Held on May 3, 2005








| |                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. To elect four Class C Directors, each for a
    three-year term to continue until the Companys annual
    meeting of stockholders in the year 2008 and until their
    successors are duly elected and qualified.
|
| | 2. To ratify the appointment of KPMG LLP as the
    Companys independent registered public accounting firm for
    the current fiscal year.                                                                         
|
| | 3. To transact such other business as may properly come
    before the Annual Meeting and any adjournments or postponements
    thereof.                                                                             



The Company










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Record Date; Voting




Quorum and Stockholder Vote Required






Proxies


FOR








2



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3



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PROPOSAL 1


ELECTION OF A CLASS OF DIRECTORS




FOR




FOR





INFORMATION REGARDING DIRECTORS




4



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##### Table of Contents





|                                           |                                                             |     |    |            |       |  |      |  | 
|------------------------------------------ | ----------------------------------------------------------- | --- | -- | ---------- | ----- |  | ---- |  | 
|                                           |                                                             |     |    | Trustee or |      
|                                           |                                                             |     |    | Director   |      
|Names of Nominees and Continuing Directors |                                                             | Age |    |            | Since | 
|                                           |                                                             |     |    |            |       | 
|                                           | Nominees for Class C Directorships (Term expiring
    2008) |     |    |            |       |  |      |  | 
|Eugene A. Beliveau                         |                                                             |     | 74 |            |       |  | 1978 | 
|Byron R. Cleveland, Jr.                    |                                                             |     | 73 |            |       |  | 1968 | 
|Robert F. Hatem                            |                                                             |     | 69 |            |       |  | 1974 | 
|Paul A. Miller                             |                                                             |     | 65 |            |       |  | 1989 | 
|                                           | Continuing Directors Class A (Term expiring 2006)           |     |    |            |       |  |      |  | 
|Thomas J. Burke                            |                                                             |     | 64 |            |       |  | 1985 | 
|Marsha A. McDonough                        |                                                             |     | 61 |            |       |  | 1993 | 
|Kathleen Boshar Reynolds                   |                                                             |     | 49 |            |       |  | 1991 | 
|                                           | Continuing Directors Class B (Term expiring 2007)           |     |    |            |       |  |      |  | 
|Malcolm W. Brawn                           |                                                             |     | 65 |            |       |  | 1991 | 
|Richard Hart Harrington                    |                                                             |     | 68 |            |       |  | 1995 | 




PRINCIPAL OCCUPATION OF NOMINEES AND CONTINUING DIRECTORS


Eugene A. Beliveau,


Malcolm W. Brawn,


Thomas J. Burke,


Byron R. Cleveland, Jr.


Richard Hart Harrington,


Robert F. Hatem,


Marsha A. McDonough,


Paul A. Miller,


Kathleen Boshar Reynolds,




5



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Amendment of By-law Concerning Director
Age Qualification


nd


The Board of Directors and its Committees










| |                    
| | -------------------
| | Executive Committee



6



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| |                     
| | --------------------
| | Nominating Committee









7



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| |                       
| | ----------------------
| | Stock Option Committee





| |                            
| | ---------------------------
| | Community Affairs Committee





| |                       
| | ----------------------
| | Compensation Committee



8



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| |                
| | ---------------
| | Audit Committee



Audit Committee Report






| |   |                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | discussed and considered the independence of KPMG LLP, reviewing
    as necessary all relationships and services which might bear on
    KPMG LLPs independence as outside auditor;
|
| |  | received written affirmation from KPMG LLP that it is, in fact,
    independent;                                                                                                    
|
| |  | discussed the overall audit process, receiving and reviewing all
    reports from KPMG LLP;                                                                                         
|
| |  | involved KPMG LLP in the Audit Committees review of the
    Companys financial statements and related reports with
    management;                                                
|
| |  | provided to KPMG LLP access to the Audit Committee and the full
    Board of Directors to report on all appropriate matters; and                                                    
|
| |  | discussed with KPMG LLP all matters required under auditing
    standards generally accepted in the United States of America to
    be reviewed.                                    





9



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| |                                  
| | ---------------------------------
| | Respectfully submitted,          
|
| | Eugene A. Beliveau
    (Chairman)
| | Byron R.
    Cleveland, Jr.      
| | Robert F. Hatem                  
| | Richard Hart Harrington          

Compensation of Directors











EXECUTIVE OFFICERS




10



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|                         |  |                                                                                                                                       |  |     |    | 
|------------------------ |  | ------------------------------------------------------------------------------------------------------------------------------------- |  | --- | -- | 
|Name                     |  | Position                                                                                                                              |  | Age |   
|                         |  |                                                                                                                                       |  |     |   
|Paul A. Miller           |  | Director, President and Chief Executive Officer of the Company
    and the Bank                                                       |  |     | 65 | 
|Jeffrey W. Leeds(1)      |  | Executive Vice President and Chief Lending Officer of the Bank,
    Assistant Treasurer of the Company                                |  |     | 65 | 
|Timothy L. Felter(2)     |  | Executive Vice President, Personal Banking and Investment
    Officer of the Bank and Company, Assistant Treasurer of the
    Company |  |     | 44 | 
|John E. Sharland(3)      |  | Senior Vice President, Chief Financial Officer and Treasurer of
    the Company and the Bank                                          |  |     | 42 | 
|Richard J. DAmbrosio(4) |  | Senior Vice President, Support Services Operations of the Bank,
    Assistant Treasurer of the Company                                |  |     | 57 | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Jeffrey W. Leeds, who joined the Bank in 1987, has been its
    Chief Lending Officer since 1988. He was appointed Assistant
    Treasurer of the Company in July 2001.                                                                                                                                                                                                                                               
|   
|(2) | Timothy L. Felter, who joined the Bank in 1990, was appointed
    Senior Vice President of the Bank in 1993, Senior Vice
    President, Department Manager of Residential Lending in 1994,
    Investment Officer in 1995 and Executive Vice President,
    Personal Banking, and Investment Officer in January 1999. He was
    appointed Assistant Treasurer and Investment Officer of the
    Company in July 2001.
|   
|(3) | John E. Sharland, who joined the Bank in 1992, was appointed
    Vice President and Chief Financial Officer in 1994, Senior Vice
    President in 1998 and Senior Vice President, CFO and Treasurer
    in January 1999. He was appointed Senior Vice President, CFO and
    Treasurer of the Company in March 2001.                                                                                                  
|   
|(4) | Richard J. DAmbrosio, who joined the Bank in 1983, was
    elected Vice President of Servicing in 1986 and Senior Vice
    President of Support Services/ Operations in 1998. He was
    appointed Assistant Treasurer of the Company in July 2001.                                                                                                                                                                  

11



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EXECUTIVE COMPENSATION




Summary Compensation Table


|                            |                                 |              |      |                     |        |            |          |              |  |           |              |        |  |     |        |   |  |   |         |         |       
|--------------------------- | ------------------------------- | ------------ | ---- | ------------------- | ------ | ---------- | -------- | ------------ |  | --------- | ------------ | ------ |  | --- | ------ | - |  | - | ------- | ------- | ------
|                            |                                 |              |      |                     |        |            |          | Long Term    |  |           |             
|                            |                                 |              |      |                     |        |            |          | Compensation |  |           |             
|                            |                                 |              |      |                     |        |            |          |              |  |           |             
|                            |                                 |              |      |                     |        |            |          | Awards       |  |           |             
|                            |                                 |              |      |                     |        |            |          |              |  |           |             
|                            |                                 |              |      |                     |        |            |          | Securities   |  |           |             
|                            |                                 |              |      |                     |        | Underlying |          |              | 
|                            |                                 |              |      | Annual Compensation |        |            | Options/ |              |  | All Other |             
|                            |                                 | Year Ended   |      |                     |        |            |          | SARs         |  |           | Compensation |       
|Name and Principal Position |                                 | December 31, |      |                     | Salary |            |          | Bonus        |  |           | (#)          |        |  | ($) |       
|                            |                                 |              |      |                     |        |            |          |              |  |           |              |        |  |     |       
|(a)                         |                                 | (b)          |      |                     | (c)    |            |          | (d)          |  |           | (g)          |        |  | (i) |       
|Paul A. Miller              |                                 |              | 2004 |                     |        | $          | 384,011  |              |  | $         | 71,500       |        |  |     | 10,000 |   |  | $ | 124,330 | (1)(2) 
|                            | President and                   |              |      | 2003                |        |            | $        | 350,601      |  |           | $            | 0      |  |     |        | 0 |  |   | $       | 151,706 | (1)(2)
|                            | Chief Executive Officer         |              |      | 2002                |        |            | $        | 352,106      |  |           | $            | 68,100 |  |     |        | 0 |  |   | $       | 148,722 | (1)(2)
|Jeffrey W. Leeds            |                                 |              | 2004 |                     |        | $          | 195,315  |              |  | $         | 22,000       |        |  |     | 8,000  |   |  | $ | 5,860   | (2)    
|                            | Executive Vice President        |              |      | 2003                |        |            | $        | 178,990      |  |           | $            | 0      |  |     |        | 0 |  |   | $       | 2,738   | (2)   
|                            | And Chief Lending Officer       |              |      | 2002                |        |            | $        | 176,250      |  |           | $            | 18,500 |  |     |        | 0 |  |   | $       | 5,287   | (2)   
|Timothy L. Felter           |                                 |              | 2004 |                     |        | $          | 145,988  |              |  | $         | 22,000       |        |  |     | 8,000  |   |  | $ | 4,380   | (2)    
|                            | Executive Vice President-       |              |      | 2003                |        |            | $        | 132,404      |  |           | $            | 0      |  |     |        | 0 |  |   | $       | 2,025   | (2)   
|                            | Personal Banking and Investment |              |      | 2002                |        |            | $        | 128,750      |  |           | $            | 18,500 |  |     |        | 0 |  |   | $       | 3,862   | (2)   
|                            | Officer                         |              |      |                     |        |            |          |              |  |           |              |        |  |     |        |   |  |   |         |         |       
|Richard J. DAmbrosio       |                                 |              | 2004 |                     |        | $          | 96,994   |              |  | $         | 13,000       |        |  |     | 6,500  |   |  | $ | 2,882   | (2)    
|                            | Senior Vice President           |              |      | 2003                |        |            | $        | 87,485       |  |           | $            | 0      |  |     |        | 0 |  |   | $       | 1,323   | (2)   
|                            | Support Services Operations     |              |      | 2002                |        |            | $        | 86,600       |  |           | $            | 11,000 |  |     |        | 0 |  |   | $       | 2,598   | (2)   
|John E. Sharland            |                                 |              | 2004 |                     |        | $          | 93,875   |              |  | $         | 13,000       |        |  |     | 6,500  |   |  | $ | 2,816   | (2)    
|                            | Senior Vice President and       |              |      | 2003                |        |            | $        | 85,425       |  |           | $            | 0      |  |     |        | 0 |  |   | $       | 1,256   | (2)   
|                            | Chief Financial Officer         |              |      | 2002                |        |            | $        | 84,100       |  |           | $            | 11,000 |  |     |        | 0 |  |   | $       | 2,523   | (2)   






|    |                                                                                                                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes amounts accrued to fund supplemental retirement plans
    for the benefit of Mr. Miller pursuant to Supplemental
    Retirement Agreements with Mr. Miller. See EXECUTIVE
    COMPENSATION  Employment Agreements
    (page 13).
|   
|(2) | Includes matching contributions by the Bank to the Banks
    401(k) Retirement Savings Plan for the Named Executive Officer.                                                                                                               



12



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Option/ SAR Grants in Last Fiscal Year


|                      |  |                  |        |  |                  |  |       |                  |                 |                      |            |                  |  |     |            |  |     |  |        |  |  |  |         | 
|--------------------- |  | ---------------- | ------ |  | ---------------- |  | ----- | ---------------- | --------------- | -------------------- | ---------- | ---------------- |  | --- | ---------- |  | --- |  | ------ |  |  |  | ------- | 
|                      |  |                  |        |  |                  |  |       |                  |                 | Potential Realizable |           
|                      |  |                  |        |  |                  |  |       | Value at Assumed |                
|                      |  | Individual Grant |        |  |                  |  |       |                  | Annual Rates of |                     
|                      |  |                  |        |  |                  |  |       |                  | Stock Price     |                     
|                      |  | Number of        |        |  | Percent of Total |  |       |                  |                 |                      |            | Appreciation for | 
|                      |  | Securities       |        |  | Options/SARs     |  |       |                  |                 |                      |            | Option Term      | 
|                      |  | Underlying       |        |  | Granted to       |  |       |                  |                 |                      |            |                  | 
|                      |  | Options/SARs     |        |  | Employees in     |  |       | Exercise         |                 |                      | Expiration |                  |  | 5%  |            |  | 10% | 
|Name                  |  | Granted (#)      |        |  | Fiscal Year      |  |       | Price            |                 |                      | Date       |                  |  | ($) |            |  | ($) | 
|                      |  |                  |        |  |                  |  |       |                  |                 |                      |            |                  |  |     |            |  |     | 
|Paul A. Miller        |  |                  | 10,000 |  |                  |  | 10.4% |                  |                 | $                    | 16.77      |                  |  |     | 01/22/2014 |  |     |  | 83,850 |  |  |  | 167,700 | 
|Jeffrey W. Leeds      |  |                  | 8,000  |  |                  |  | 8.3%  |                  |                 | $                    | 16.77      |                  |  |     | 01/22/2014 |  |     |  | 67,080 |  |  |  | 134,160 | 
|Timothy L. Felter     |  |                  | 8,000  |  |                  |  | 8.3%  |                  |                 | $                    | 16.77      |                  |  |     | 01/22/2014 |  |     |  | 67,080 |  |  |  | 134,160 | 
|John E. Sharland      |  |                  | 6,500  |  |                  |  | 6.8%  |                  |                 | $                    | 16.77      |                  |  |     | 01/22/2014 |  |     |  | 54,503 |  |  |  | 109,005 | 
|Richard J. DAmbrosio |  |                  | 6,500  |  |                  |  | 6.8%  |                  |                 | $                    | 16.77      |                  |  |     | 01/22/2014 |  |     |  | 54,503 |  |  |  | 109,005 | 



Aggregated Option/ SAR Exercises in Last Fiscal Year


and Fiscal Year End Option/ SAR Values


|                      |  |          |        |  |          |              |           |               |              |           |                  |  |  |   |                   | 
|--------------------- |  | -------- | ------ |  | -------- | ------------ | --------- | ------------- | ------------ | --------- | ---------------- |  |  | - | ----------------- | 
|                      |  |          |        |  |          | Number of    |           |               |             
|                      |  |          |        |  |          | Securities   |           |               | Value of     |          
|                      |  |          |        |  |          | Underlying   |           |               | Unexercised  |          
|                      |  |          |        |  |          | Unexercised  |           |               | In-The-Money |          
|                      |  |          |        |  |          | Options/SARs |           |               | Options/SARs |          
|                      |  | Shares   |        |  |          |              | at Fiscal |               |              | at Fiscal |                 
|                      |  | Acquired |        |  | Value    |              |           | Year End(#)   |              |           | Year End($)      | 
|                      |  | on       |        |  | Realized |              |           | Exercisable/  |              |           | Exercisable/     | 
|Name                  |  | Exercise |        |  | ($)(1)   |              |           | Unexercisable |              |           | Unexercisable(2) | 
|                      |  |          |        |  |          |              |           |               |              |           |                  | 
|Paul A. Miller        |  |          | 40,000 |  |          | $            | 527,520   |               |              |           | 111,500/10,000   |  |  | $ | 1,284,305/$17,500 | 
|Jeffrey W. Leeds      |  |          | 0      |  |          |              | 0         |               |              |           | 48,000/8,000     |  |  | $ | 501,735/$14,000   | 
|Timothy L. Felter     |  |          | 6,680  |  |          | $            | 86,840    |               |              |           | 26,000/8,000     |  |  | $ | 226,295/$14,000   | 
|John E. Sharland      |  |          | 0      |  |          |              | 0         |               |              |           | 19,000/6,500     |  |  | $ | 160,705/$11,375   | 
|Richard J. DAmbrosio |  |          | 10,500 |  |          | $            | 123,015   |               |              |           | 16,500/6,500     |  |  | $ | 129,405/$11,375   | 






|    |                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------
|(1) | Based on the closing price per share of the Companys
    common stock on the day the shares were exercised.                            
|   
|(2) | Based on a closing price of $18.52 per share of the
    Companys Common Stock on December 31, 2004, less the
    option exercise price.

Employment Agreements




13



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Compensation Committee Report on Executive Compensation






| |                    
| | -------------------
| | Compensation Policy



14



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| |                                     
| | ------------------------------------
| | Chief Executive Officer Compensation





| |                           
| | --------------------------
| | Respectfully submitted,   
|
| | Thomas J. Burke (Chairman)
| | Eugene A. Beliveau        
| | Malcolm W. Brawn          



Compensation Committee Interlocks and Insider
Participation






15



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Stock Option Plans










Benefits


Insurance and Other Benefits.


Pension Plan.


16



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Annual Pension Benefit* Based on Years of Service(1)(2)


|                |  |          |        |  |          |   |        |          |  |   |            |  |  |   |        | 
|--------------- |  | -------- | ------ |  | -------- | - | ------ | -------- |  | - | ---------- |  |  | - | ------ | 
|Average         |  |          |        |  |          |   |        | 25 or    | 
|Compensation(3) |  | 10 Years |        |  | 15 Years |   |        | 20 Years |  |   | More Years | 
|                |  |          |        |  |          |   |        |          |  |   |            | 
|$20,000         |  | $        | 2,500  |  |          | $ | 3,750  |          |  | $ | 5,000      |  |  | $ | 6,250  | 
|$40,000         |  | $        | 5,000  |  |          | $ | 7,500  |          |  | $ | 10,000     |  |  | $ | 12,500 | 
|$60,000         |  | $        | 8,323  |  |          | $ | 12,484 |          |  | $ | 16,645     |  |  | $ | 20,806 | 
|$80,000         |  | $        | 12,023 |  |          | $ | 18,034 |          |  | $ | 24,045     |  |  | $ | 30,056 | 
|$100,000        |  | $        | 15,723 |  |          | $ | 23,584 |          |  | $ | 31,445     |  |  | $ | 39,306 | 
|$120,000        |  | $        | 19,423 |  |          | $ | 29,134 |          |  | $ | 38,845     |  |  | $ | 48,556 | 
|$125,000        |  | $        | 20,348 |  |          | $ | 30,521 |          |  | $ | 40,695     |  |  | $ | 50,869 | 
|$140,000        |  | $        | 23,123 |  |          | $ | 34,684 |          |  | $ | 46,245     |  |  | $ | 57,806 | 
|$150,000        |  | $        | 24,973 |  |          | $ | 37,459 |          |  | $ | 49,945     |  |  | $ | 62,431 | 
|$175,000        |  | $        | 29,598 |  |          | $ | 44,396 |          |  | $ | 59,195     |  |  | $ | 73,994 | 
|$200,000        |  | $        | 34,223 |  |          | $ | 51,334 |          |  | $ | 68,445     |  |  | $ | 85,556 | 
|$205,000**      |  | $        | 35,148 |  |          | $ | 52,721 |          |  | $ | 70,295     |  |  | $ | 87,869 | 






|    |                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|*   | Based on age 65 retirement in 2005 (Plan Year
    11/1/04  10/31/05).                                                                                     
|   
|**  | Federal law does not permit defined benefit pension plans to
    recognize compensation in excess of $205,000 for plan year 2005.                          
|   
|(1) | The annual pension benefit is computed on the basis of a
    straight life annuity.                                                                        
|   
|(2) | The Company provides additional retirement benefits to
    Mr. Miller through two supplemental retirement plans. See
    Employment Agreements (page 13).
|   
|(3) | Average compensation for purposes of this table is based on the
    average of the highest three consecutive years preceding
    retirement.               



17



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PERFORMANCE GRAPH







Indebtedness of Directors and Management and Certain
Transactions with Management and Others






18



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19



---



##### Table of Contents






SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT




|                                 |                                                                        |                 |  |         |            |  |  |      |  
|-------------------------------- | ---------------------------------------------------------------------- | --------------- |  | ------- | ---------- |  |  | ---- | -
|                                 |                                                                        | Amount          |  |         |           
|                                 |                                                                        | and Nature      |  |         |           
|                                 |                                                                        | of Beneficial   |  |         | Percent of | 
|Name of Beneficial Owner         |                                                                        | Ownership(1)(2) |  |         | Class(3)   | 
|                                 |                                                                        |                 |  |         |            | 
|Directors and Principal Officers |                                                                        |                 |  |         |            |  |  |     
|                                 | Eugene A. Beliveau                                                     |                 |  | 9,775   | (4)        |  |  | *    |  
|                                 | Kathleen Boshar Reynolds                                               |                 |  | 7,700   |            |  |  | *    |  
|                                 | Byron R. Cleveland, Jr.                                                |                 |  | 3,600   |            |  |  | *    |  
|                                 | Robert F. Hatem                                                        |                 |  | 11,275  |            |  |  | *    |  
|                                 | Paul A. Miller                                                         |                 |  | 131,583 | **         |  |  | 3.00 | %
|                                 | Thomas J. Burke                                                        |                 |  | 13,450  |            |  |  | *    |  
|                                 | Marsha A. McDonough                                                    |                 |  | 7,300   |            |  |  | *    |  
|                                 | Malcolm W. Brawn                                                       |                 |  | 24,000  | (5)        |  |  | *    |  
|                                 | Richard Hart Harrington                                                |                 |  | 7,255   |            |  |  | *    |  
|                                 | Jeffrey W. Leeds                                                       |                 |  | 74,320  |            |  |  | 1.69 | %
|                                 | Timothy L. Felter                                                      |                 |  | 59,591  | **         |  |  | 1.36 | %
|                                 | John E. Sharland                                                       |                 |  | 33,171  | **         |  |  | *    |  
|                                 | Richard J. DAmbrosio                                                  |                 |  | 30,750  | **         |  |  | *    |  
|                                 | All Directors and Named Executive Officers as a Group (13
    persons) |                 |  | 413,770 | (6)**      |  |  | 9.43 | %
|5% or more Stockholders          |                                                                        |                 |  |         |            |  |  |     
|                                 | First Manhattan Co.                                                    |                 |  | 295,200 | (7)        |  |  | 6.80 | %
|                                 | John Sheldon Clark                                                     |                 |  | 287,600 | (8)        |  |  | 6.65 | %






| |   |                      
| | - | ---------------------
| | * | Less than one percent



|   |                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|** | Includes shares held in the Companys 401(k) Plan. The
    estimated shares so held with respect to each such participant
    are: Paul A. Miller, 18,367 shares; Timothy L. Felter,
    9,311 shares; John E. Sharland, 5,921 shares; Richard
    J. DAmbrosio, 0 shares; and all Directors and Named
    Executive Officers as a group (13 persons), 33,599 shares,
    respectively.



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In accordance with the applicable rules of the SEC, a person is
    deemed to be the beneficial owner of shares of the Common Stock
    of the Company if he or she has or shares voting power or
    investment power with respect to such shares or has the right to
    acquire beneficial ownership of such shares at any time within
    60 days. As used herein, voting power means the
    power to vote or direct the voting of shares, and
    investment power means the power to dispose or
    direct the disposition of shares. Unless otherwise

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | indicated, each person named has sole voting and sole investment
    power with respect to all shares indicated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(2) | Includes shares of the Companys Common Stock which
    Directors and principal officers of the Company have the right
    to acquire within 60 days of February 28, 2005
    pursuant to options granted under the 1986 and 1997 Stock Option
    Plans of the Company. The following persons have exercisable
    options to purchase the number of shares indicated:
    Mr. Miller, 68,216 shares; Mr. Leeds,
    52,000 shares; Mr. Felter, 30,000 shares;
    Mr. Sharland, 22,250 shares;Mr. DAmbrosio, 19,750 shares;
    Mr. Burke, 12,000 shares; Dr. Beliveau,
    1,000 shares; Mr. Hatem, 8,000 shares;
    Mr. Cleveland, 2,500 shares; Messrs. Harrington
    and Brawn, 6,000 shares each; and Ms. McDonough and
    Ms. Boshar Reynolds 6,000 shares each; and all
    Directors and Named Executive Officers as a group,
    239,716 shares.
|   
|(3) | Computed on the basis of 4,385,726 outstanding shares as of
    February 28, 2005 plus 239,716 shares subject to
    options exercisable within 60 days of February 28,
    2005 held by the named individual or group.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|(4) | Includes 700 shares owned by a household member, as to
    which Dr. Beliveau disclaims beneficial ownership.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|(5) | Includes 1,000 shares owned by his spouse, as to which
    Mr. Brawn disclaims beneficial ownership.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(6) | The stated number of shares owned by the Named Executive
    Officers and Directors of the Company includes
    140,455 shares currently issued and outstanding and
    239,716 shares subject to stock options exercisable within
    60 days of February 28, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(7) | Based solely on Schedule 13G/ A filed with the Securities
    and Exchange Commission on or about February 8, 2005, First
    Manhattan Co. reports beneficial ownership of
    295,200 shares of Common Stock. First Manhattan Co. reports
    sole voting power with respect to 281,550 shares and sole
    dispositive power with respect to 281,550 shares, shared
    voting power with respect to 13,650 shares and shared
    dispositive power with respect to 13,650 shares. First
    Manhattan Co.s address is 437 Madison Avenue, New York, NY
    10022.                                                                                                                                                                                                                                                                                         
|   
|(8) | Based solely on a Form 13D filed with the Securities and
    Exchange Commission on or about December 7, 2004,
    Mr. John Sheldon Clark reports beneficial ownership of
    287,600 shares of Common Stock of the Company with sole
    voting power with respect to 270,600 shares and sole
    dispositive power with respect to 270,600 shares, and
    shared voting and dispositive power with respect to
    17,000 shares. Mr. John Sheldon Clarks address
    is 1633 Broadway,
    30th
    Floor, New York, New York 10019.                                                                                                                                                                                                                                                                                                                       

Section 16(a) Beneficial Ownership Reporting
Compliance




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PROPOSAL 2


RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM










| |           
| | ----------
| | Audit Fees







| |                   
| | ------------------
| | Audit-Related Fees





| |         
| | --------
| | Tax Fees



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| |               
| | --------------
| | All Other Fees








STOCKHOLDER PROPOSALS AT 2006 ANNUAL MEETING







CODE OF PROFESSIONAL CONDUCT







OTHER MATTERS




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