<PAGE> 1
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
KERR GROUP, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
KERR GROUP, INC.
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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4) Proposed maximum aggregate value of transaction:
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Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 2
KERR GROUP, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 25, 1995
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Kerr
Group, Inc., a Delaware corporation (the "Company"), will be held at the Century
Plaza Hotel, 2025 Avenue of the Stars, Los Angeles, California 90067, on
Tuesday, April 25, 1995 at 10:00 o'clock A.M., Pacific Daylight Time, for the
following purposes:
1. To elect two directors for the ensuing three year term;
2. To consider and act upon a proposal to amend and restate the 1993
Employee Stock Option Plan; and
3. To consider and act upon any other matters which may properly come
before the meeting or any adjournment thereof.
In accordance with the provisions of the By-Laws, the Board of Directors
has fixed the close of business on March 7, 1995, as the record date for the
determination of the holders of Common Stock entitled to notice of, and to vote
at, the Annual Meeting.
Your attention is directed to the accompanying Proxy Statement.
Stockholders who do not expect to attend the meeting in person are
requested to date, sign and mail the enclosed Proxy as promptly as possible in
the enclosed stamped envelope.
By Order of the Board of Directors
ROGER W. NORIAN
Chairman, President and
Chief Executive Officer
Los Angeles, California
March 27, 1995
<PAGE> 3
PROXY STATEMENT
KERR GROUP, INC.
1840 CENTURY PARK EAST
LOS ANGELES, CALIFORNIA 90067
ANNUAL MEETING OF STOCKHOLDERS
APRIL 25, 1995
PROXIES
The enclosed proxy is solicited by and on behalf of the Board of Directors
of Kerr Group, Inc., a Delaware corporation (the "Company"). Any proxy given may
be revoked by filing with the Secretary of the Company an instrument revoking it
or a duly executed proxy bearing a later date. The Company has retained
Georgeson & Co. Inc. ("Georgeson & Co.") to assist in the solicitation of
proxies from brokers, bank nominees, institutional holders and certain
individual holders of record. Georgeson & Co. will receive a fee from the
Company of approximately $5,500 for its services, plus reimbursement for its
out-of-pocket expenses. All additional expenses of the solicitation of proxies
for the Annual Meeting, including the cost of mailing, will be borne by the
Company. In addition to the services performed by Georgeson & Co. and
solicitation by mail, officers and regular employees of the Company may solicit
proxies from stockholders by telephone, telegram or personal interview. Such
persons will receive no additional compensation for such services. In addition,
the Company and Georgeson & Co. intend to request persons holding stock in their
name or custody, or in the name of nominees, to send proxy materials to their
principals and request authority for the execution of the proxies, and the
Company will reimburse such persons for their expense in so doing.
The Company anticipates mailing proxy materials and the Annual Report for
the fiscal year ended December 31, 1994, to stockholders of record as of March
7, 1995, on or about March 27, 1995.
OUTSTANDING VOTING STOCK
Only holders of record of the Company's Common Stock, par value $.50 per
share ("Common Stock"), at the close of business on March 7, 1995, are entitled
to vote on the matters to be presented at the Annual Meeting. The number of
shares of Common Stock outstanding on such date and entitled to vote was
3,677,095. Each such share is entitled to one vote with respect to such matters.
The holders of the Company's $1.70 Class B Cumulative Convertible Preferred
Stock, Series D, par value $.50 per share ("Convertible Preferred Stock"), will
not be entitled to vote at the meeting.
<PAGE> 4
The following table sets forth information available to the Company as of
March 7, 1995, with respect to the ownership of Common Stock by (i) each person
known to the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock, (ii) each named executive officer designated in the
section of this Proxy Statement captioned "Executive Compensation," and (iii)
all directors and executive officers as a group. Information regarding the
beneficial ownership of Common Stock by each director and nominee for director
is set forth in the section of this Proxy Statement captioned "Election of
Directors." Except as otherwise indicated, each person named below has sole
investment and voting power with respect to the securities shown.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT OF
BENEFICIAL SHARES
BENEFICIAL OWNER OWNERSHIP OUTSTANDING
--------------------------------------------------- ----------- -----------
<S> <C> <C>
The Gabelli Funds, Inc.
655 Third Avenue
New York, New York 1,175,277(1) 29.9%(1)
Kerr Group, Inc.
Employee Incentive Stock Ownership Plan,
effective March 19, 1985
("ESOP I") Los Angeles, California 212,600(2) 5.8%
Kerr Group, Inc.
1987 Employee Incentive Stock Ownership Plan,
effective October 19, 1987
("ESOP II") Los Angeles, California 268,636(2) 7.3%
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue Suite 650
Santa Monica, California 268,800(3) 7.3%(3)
Roger W. Norian 129,416(4) 3.5%
D. Gordon Strickland 36,893(5) *
Robert S. Reeves 23,525(5) *
Norman N. Broadhurst 14,912(5) *
J. Stephen Grassbaugh 12,151(5) *
All Directors and Executive
Officers as a Group (11 in number) 266,550(6) 7.2%
</TABLE>
---------------
* Less than one percent.
(1) According to Amendment No. 24 to the Schedule 13D filed jointly by Gabelli
Funds, Inc., GAMCO Investors, Inc., Gabelli Performance Partnership, Gabelli
International Limited and Mario J. Gabelli (collectively, the "Gabelli
Entities") with the Securities and Exchange Commission (the "SEC") on
January 18, 1995 (as amended, the "Schedule 13D"), the Gabelli Entities
beneficially owned 928,800 shares of Common Stock, which includes 15,000
shares of Common Stock owned beneficially by Mr. Mario Gabelli for his own
account. Under applicable SEC rules, the Gabelli Entities are also deemed to
own beneficially an additional 246,477 shares of Common Stock which the
Gabelli Entities have the right to acquire at any time upon conversion of
the 169,458 shares of Convertible Preferred Stock beneficially owned by the
Gabelli Entities.
The additional shares of Common Stock which may be acquired by the Gabelli
Entities upon such conversion, together with the 928,800 shares of Common
Stock indicated as beneficially owned by the Gabelli Entities and Mr. Mario
Gabelli in the table above, represent an aggregate of 1,175,277 shares, or
approximately 29.9% of the total shares of Common Stock outstanding as of
March 7, 1995, including, for this calculation only, the number of shares of
Common Stock that the Gabelli Entities have the right to
2
<PAGE> 5
acquire upon conversion of the Convertible Preferred Stock reported as
beneficially owned by them. The Schedule 13D states that the Gabelli
Entities have not acquired the shares of Common Stock for the purpose of
changing or influencing the control of the Company.
(2) All shares held by ESOP I and ESOP II are held for the benefit of
participants, all of whom are employees of the Company or its subsidiaries.
Participants have the power to vote such shares, but may not obtain or
dispose of such shares except under limited circumstances. As of March 7,
1995, 212,600 shares have been allocated to participants' accounts under
ESOP I and 268,636 shares have been allocated to participants' accounts
under ESOP II.
(3) According to Amendment No. 7 to the Schedule 13G filed by Dimensional Fund
Advisors, Inc. ("Dimensional") with the SEC on January 31, 1995 (as amended,
the "Schedule 13G"), Dimensional, a registered investment adviser, is deemed
to have beneficial ownership of 268,800 shares or 7.3% of the Common Stock
as of December 31, 1994. Dimensional reported that it had the power to vote
and make investment decisions regarding all shares of Common Stock owned
beneficially by it on behalf of its clients, which are unrelated and no one
of whom owns beneficially more than 5% of the outstanding shares of Common
Stock. The Schedule 13G states that Dimensional has not acquired the shares
of Common Stock for the purpose of changing or influencing the control of
the Company. All of the shares beneficially owned by Dimensional are held in
portfolios of DFA Investment Dimensions Group Inc., a registered open-end
investment company, or in series of the DFA Investment Trust Company, a
Delaware business trust, or the DFA Group Trust and DFA Participation Group
Trust, investment vehicles for qualified employee benefit plans, all of
which Dimensional serves as investment manager. Dimensional disclaims
beneficial ownership of all such shares.
(4) Includes 7,413 shares which have been allocated for voting and all other
purposes under ESOP I, and 6,510 shares which have been allocated for voting
and all other purposes under ESOP II. Mr. Norian has sole voting power with
respect to the 13,923 shares under ESOP I and ESOP II, but no power to
obtain or dispose of such shares, except under limited circumstances.
(5) Includes, respectively for Messrs. Strickland, Reeves, Broadhurst and
Grassbaugh, 26,000, 11,000, 6,000 and 3,200 shares issuable under presently
exercisable stock options held by such person. Also includes, respectively
for Messrs. Strickland, Reeves, Broadhurst and Grassbaugh, 4,306, 5,937,
3,335 and 3,648 shares which have been allocated for voting and all other
purposes under ESOP I, and 5,369, 5,731, 3,787 and 4,024 shares which have
been allocated for voting and all other purposes under ESOP II.
(6) Includes 27,585 shares of Common Stock purchased for the accounts of the
Company's non-employee directors by the trustee under the Company's Common
Stock Purchase Plan for Non-Employee Directors (the "Director Stock Purchase
Plan") and 46,200 shares (including shares designated in Note 5 above)
issuable upon exercise of stock options on or before May 8, 1995. Also
includes 24,639 shares (including shares designated in Notes 4 and 5 above)
which have been allocated for voting and all other purposes under ESOP I and
25,421 shares (including shares designated in Notes 4 and 5 above) which
have been allocated for voting and all other purposes under ESOP II, for the
Company's present officers included in the group, who have the power to vote
such shares, but may not obtain or dispose of such shares except under
limited circumstances.
3
<PAGE> 6
QUORUM AND VOTE REQUIREMENTS
The presence in person or by proxy of holders of record of a majority of
the outstanding shares of Common Stock is required for a quorum to transact
business at the Annual Meeting, but if a quorum should not be present, the
Annual Meeting may be adjourned from time to time until a quorum is obtained.
Under applicable Delaware law, abstentions and "broker non-votes" (i.e., proxies
from brokers or nominees indicating that such persons have not received
instructions from the beneficial owner or other persons entitled to vote shares
as to a matter with respect to which the brokers or nominees do not have
discretionary power to vote) will be treated as present for purposes of
determining the presence of a quorum at the Annual Meeting.
Directors will be elected by the plurality vote of the holders of Common
Stock entitled to vote at the Annual Meeting and present in person or by proxy.
The Company's proposal to amend and restate the 1993 Employee Stock Option Plan
requires the vote of the holders of a majority of the shares of Common Stock
entitled to vote at the Annual Meeting and present in person or by proxy. Under
applicable Delaware law, abstentions will be deemed present and entitled to vote
and will, therefore, have the effect of a negative vote on the proposal to amend
and restate the 1993 Employee Stock Option Plan, but will have no effect on the
outcome of the election of directors. A broker non-vote will have no effect on
the proposal to amend and restate the 1993 Employee Stock Option Plan or the
outcome of the election of directors.
ELECTION OF DIRECTORS
The Certificate of Incorporation of the Company provides that the Board of
Directors of the Company shall consist of not less than three nor more than
seventeen individuals divided into three classes of equal number, so far as
possible, each class having a term of three years. The By-Laws of the Company
currently provide that the number of directors shall be seven. Each year the
term of office of one class of directors expires.
The Board of Directors intends to present for action at the Annual Meeting
the election of James R. Mellor and Robert M. O'Hara, whose present terms expire
in 1995, to serve for a term of three years and until their successors are duly
elected and shall qualify. Mr. Mellor and Mr. O'Hara were first elected to the
Board of Directors in 1980.
Unless authority to vote for such directors is withheld, the enclosed Proxy
will be voted for the election of such persons except that the persons
designated as Proxies reserve discretion to cast their votes for other persons
in the unanticipated event that any of such nominees is unable, or declines, to
serve.
Directors will be elected by the plurality vote of the holders of Common
Stock entitled to vote at the Annual Meeting and present in person or by proxy.
Abstentions and broker non-votes will have no effect on the outcome of the vote.
The following table sets forth the name, the age, the principal occupation
for the last five years, the beneficial ownership of Common Stock and the
percentage of outstanding Common Stock represented by such ownership of each
director of the Company. Unless otherwise indicated, all shares of Common Stock
are owned directly and of record and the director owning such shares has sole
voting and investment power with respect thereto. Mr. Norian has been the
President and Chief Executive Officer of the Company since 1980 and has also
been the Chairman of the Board since 1983. Messrs. O'Hara, Hurlbert, Jackson,
Mellor and Sperry have been executives and a partner, respectively, with the
corporations, including subsidiaries, or the firm, as the case may be, with
which they are now associated or its predecessor for more than the past five
4
<PAGE> 7
years. Mr. Kyle recently retired from his position as Senior Vice President of
Chemical Bank, a position he had held for more than the preceding five years.
<TABLE>
<CAPTION>
AMOUNT
AND
NATURE OF PERCENT OF
BENEFICIAL COMMON STOCK
OWNERSHIP OUTSTANDING
DIRECTOR AT MARCH 7, AT MARCH 7,
NAME PRINCIPAL OCCUPATION SINCE 1995(1) 1995
---------------------- --------------------------------------- -------- ----------- ------------
<S> <C> <C> <C> <C>
NOMINEES TO SERVE IN OFFICE UNTIL 1998
------------------------------------------
James R. Mellor,
Age 64(2)........... Chairman, Chief Executive Officer and 1980 7,229 *
Director of General Dynamics
Corporation, a defense, aerospace, and
shipbuilding company; Director of
Bergen Brunswig Corporation and
Computer Sciences Corporation.
Robert M. O'Hara,
Age 68(3)........... Chairman and Chief Executive Officer of 1980 3,633 *
Falcon Management (formerly OMS
Company), investments and management
services; Director of TBC Corp.
DIRECTORS TO CONTINUE IN OFFICE UNTIL 1997
---------------------------------------------
Gordon C. Hurlbert,
Age 70(3)........... Chairman of the Board of Directors, CSC 1985 5,758 *
Industries, Inc. (Copperweld Steel);
Director of Carolina Power & Light
Company and Weirton Steel Corporation
Michael C. Jackson,
Age 54(2)........... Advisory Director, Lehman Brothers, 1985 6,304(4) *
Inc., investment bankers; Director of
Hampshire Group, Limited.
Roger W. Norian,
Age 51(5)........... Chairman, President and Chief Executive 1975 129,416 3.5%
Officer of the Company.
DIRECTORS TO CONTINUE IN OFFICE UNTIL 1996
---------------------------------------------
John D. Kyle,
Age 59(3)(5)........ Retired Senior Vice President, Chemical 1973 2,729 *
Bank
Harvey L. Sperry,
Age 64(2)(5)........ Partner, Willkie Farr & Gallagher, 1973 23,999 *
attorneys; Director of Weirton Steel
Corporation; Director of Hampshire
Group, Limited.
</TABLE>
---------------
* Less than one percent.
(1) Includes 7,029, 3,633, 3,758, 3,507, 2,629 and 7,029 shares of Common Stock
purchased for the accounts of Messrs. Mellor, O'Hara, Hurlbert, Jackson,
Kyle and Sperry, respectively, by the trustee under the Director Stock
Purchase Plan. Currently, the participating directors have voting and
dispositive power with respect to such shares only upon termination of their
services as a director of the Company. Excludes 10,000 shares issuable under
stock options granted to each non-employee director pursuant to
5
<PAGE> 8
the Company's 1993 Stock Option Plan for Non-Employee Directors. These
options are not exercisable unless and until the closing price of the Common
Stock on the New York Stock Exchange reaches $12.50 per share and remains at
or above that level for at least 10 consecutive trading days.
(2) Member of the Stock Option and Compensation Committee.
(3) Member of the Audit Committee.
(4) Includes 797 shares issuable upon conversion of 548 shares of Convertible
Preferred Stock held by Mr. Jackson pursuant to a self-directed Keogh plan.
(5) Member of the Executive Committee.
The Audit Committee is composed of three directors who are not officers or
employees of the Company. The Audit Committee held two meetings during 1994. The
Company's independent public accountants have been informed that they may refer
to and discuss with the Audit Committee (with or without previous consultation
with officers of the Company) any matters which may develop or arise in
connection with any audit or the maintenance of internal accounting controls or
any other matter relating to the Company's financial affairs. The Company's
internal audit department has also been granted direct access to the Audit
Committee. The Audit Committee reviews, at least annually, the services
performed and to be performed by the Company's independent public accountants
and the fees charged therefor, and, in connection therewith, considers the
effect of any nonaudit services on the independence of such accountants. The
Audit Committee also reviews with the Company's independent public accountants
and its internal audit department the general scope of their respective audit
coverages, the procedures and internal accounting controls adopted by the
Company and any significant problems encountered by either group.
The Stock Option and Compensation Committee (the "Compensation Committee")
is composed of three directors who are not officers or employees of the Company.
The Compensation Committee reviews and approves compensation programs generally
and, specifically, salaries, bonuses and stock options for officers and certain
other salaried employees of the Company. The Compensation Committee held three
meetings during 1994.
The Company does not have a nominating committee.
The Board of Directors held six meetings during 1994 and the Executive
Committee of the Board of Directors held one meeting during 1994.
The Company's executive officers, directors and ten percent stockholders
are required under Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the SEC and the New York Stock Exchange.
Copies of these reports must also be furnished to the Company. Based solely upon
its review of copies of such reports furnished to the Company through the date
hereof, or written representations that no reports were required to be filed,
the Company believes that during the fiscal year ended December 31, 1994, all
filing requirements applicable to its officers, directors and ten percent
stockholders were complied with, except that Mr. Jackson's Form 4 in connection
with the acquisition of 263 shares of Convertible Preferred Stock was not filed
in a timely manner. Such acquisition was subsequently reported in a Form 5 that
was filed on February 14, 1995. In addition, by an inadvertent omission, the
grant of restricted stock in 1993 to Messrs. Norian, Broadhurst, Grassbaugh,
Reeves and Strickland pursuant to the 1992 Key Executive Incentive Bonus Plan
was not reported on their respective Forms 5 for fiscal year 1993, although such
grant was described in the Company's Proxy Statement filed with the SEC and
distributed to the Company's stockholders for its Annual Meeting of Stockholders
held on April 27, 1993 and its Annual Meeting of Stockholders held on April 26,
1994. Such grant was subsequently reported in the Forms 5 filed for Messrs.
Norian, Broadhurst, Grassbaugh, Reeves and Strickland on February 14, 1995.
6
<PAGE> 9
EXECUTIVE COMPENSATION
The following table sets forth information regarding the compensation of
the Company's Chief Executive Officer and the four other most highly compensated
executive officers (the "Executive Group") for each of the last three fiscal
years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
------------------------------------
AWARDS
ANNUAL COMPENSATION -------------------------- PAYOUTS
----------------------------------- RESTRICTED SECURITIES --------
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($) (#) ($) ($)(1)(2)
----------------------------- ------ ---------- ------- ------------- ----------- ------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Roger W. Norian.............. 1994 570,000 15,000(4) -- 17,178(4) -- -- 1,500
Chairman, President and 1993 570,000 15,000(4) 60,807(3) 15,879(4) 45,000 -- 2,249
Chief Executive Officer 1992 500,000 80,000(4) 47,055(3) 22,284(4) -- -- 2,182
D. Gordon Strickland......... 1994 267,000 9,000(4) -- 10,302(4) -- -- --
Senior Vice President, 1993 267,000 9,000(4) -- 9,522(4) 5,000 -- --
Finance and Chief 1992 225,000 48,000(4) -- 13,370(4) 10,000 -- 3,537
Financial Officer
Robert S. Reeves............. 1994 224,000 6,200(5) -- 7,097(5) -- -- 1,500
Senior Vice President, 1993 224,000 12,200(5) 28,005(6) 12,914(5) 5,000 -- 2,249
Sales -- Plastic Products 1992 195,000 26,840(5) 56,801(6) 9,226(5) 5,000 -- 342
Division
Norman N. Broadhurst......... 1994 225,000 8,500(4) -- 9,732(4) -- -- 3,076
Senior Vice President, 1993 225,000 10,000(4) -- 10,586(4) -- -- 2,925
President of Consumer 1992 185,000 71,600(4) -- 19,944(4) 10,000 -- 1,999
Products Division
J. Stephen Grassbaugh........ 1994 153,800 5,000(4) -- 5,474(4) -- -- 1,500
Vice President, 1993 153,800 5,100(4) -- 5,394(4) -- -- 1,884
Controller 1992 130,008 27,200(4) -- 7,572(4) -- -- 1,525
</TABLE>
---------------
(1) Except as otherwise noted, perquisites and other personal benefits received
by each named executive officer (including, for certain of the named
executive officers, payments of premiums on life insurance policies, tax
preparation fees and car use allowances) in each instance aggregated less
than the lesser of $50,000 or 10% of such officer's annual salary and bonus.
(2) Includes for Messrs. Norian, Strickland, Reeves, Broadhurst and Grassbaugh,
respectively, $1,500, $0, $1,500, $3,076 and $1,500 for 1994 contributed by
the Company pursuant to the Company's Employees' Savings Plan.
(3) Represents payments to Mr. Norian of an amount which, after taxes, was equal
to his approximate income tax liability resulting from the release of
disposition restrictions in 1992 and 1993 with respect to certain shares of
Common Stock held by Mr. Norian pursuant to the terms of the 1984 Restricted
Stock Purchase Agreement.
(4) Pursuant to the Kerr Group, Inc. Key Executive Incentive Bonus Plan (the
"Bonus Plan"), Messrs. Norian, Strickland, Broadhurst and Grassbaugh
received 80% of their total bonus ($100,000, $60,000, $89,500 and $34,000,
respectively) for 1992, 50% of their total bonus ($30,000, $18,000, $20,000
and $10,200, respectively) for 1993, and 50% of their total bonus ($30,000,
$18,000, $17,000 and $10,000, respectively) for 1994, in cash on or about
March 1, 1993 with respect to the 1992 bonus amounts, on or about March 1,
1994 with respect to the 1993 bonus amounts, and on or about March 1, 1995
with respect to the 1994 bonus amounts. These amounts are reflected in the
respective bonus columns for 1992, 1993 and 1994. The remaining 20%, 50% or
50%, respectively, is reflected as an award of restricted stock received by
them on March 1, 1995 with respect to the 1992 bonus amounts, and will be
received by them on March 1, 1996 with respect to the 1993 bonus amounts,
and March 1, 1997 with respect to the 1994 bonus amounts, provided that they
are employed by the Company on such respective
7
<PAGE> 10
dates. No dividends have been or will be paid on the restricted stock
pending distribution. The number of shares of restricted stock awarded to
Messrs. Norian, Strickland, Broadhurst and Grassbaugh was 3,428, 2,056,
3,068 and 1,165, respectively, for 1992, 1,896, 1,137, 1,264 and 644,
respectively, for 1993, and 2,021, 1,212, 1,145 and 673, respectively, for
1994. The number of shares of restricted stock awarded was calculated by
dividing the dollar equivalent of the remaining portion of their respective
bonuses ($20,000, $12,000, $17,900 and $6,800, respectively) for 1992,
($15,000, $9,000, $10,000 and $5,100, respectively) for 1993, and ($15,000,
$9,000, $8,500 and $5,000, respectively) for 1994, by a number equal to 90%
of the average closing price of the Common Stock during the months of
December 1992, 1993 and 1994, respectively. The average closing price of the
Common Stock during December 1992 was $6.482, during December 1993 it was
$8.789, and during December 1994 it was $8.24. The aggregate restricted
stock holdings for Messrs. Norian, Strickland, Broadhurst and Grassbaugh as
of December 31, 1994 was 7,345, 4,405, 5,477 and 2,482, respectively
(including for this purpose the shares awarded on March 1, 1995 in respect
of 1994). The dollar value of such restricted stock holdings for Messrs.
Norian, Strickland, Broadhurst and Grassbaugh as of December 31, 1994 was
$61,514, $36,892, $45,870 and $20,787, respectively, which was calculated
using the closing price of the Common Stock on December 31, 1994, which was
$8.375 per share.
(5) Under the terms of the Bonus Plan, Mr. Reeves was awarded a $41,400 bonus
for services rendered in 1992, which bonus had a $10,000 and a $31,400
dollar component. Mr. Reeves received 80% of the $10,000 component and 60%
of the $31,400 component of his bonus in cash on or about March 1, 1993, for
an aggregate of $26,840. In addition, 20% of the $31,400 component of Mr.
Reeves' bonus ($6,280) was paid in cash on March 1, 1994. This amount is
reflected as other compensation. Further, the remaining 20% of each of the
$10,000 component and the $31,400 component of Mr. Reeves' bonus is
reflected as an award of restricted stock received on March 1, 1995.
Pursuant to the Bonus Plan, Mr. Reeves received 50% of his total bonus
($24,400) for 1993 and $6,200 for 1994 in cash on or about March 1, 1994 and
March 1, 1995, respectively. This amount is reflected in the bonus column
for 1993 and 1994. The remaining 50% is reflected as an award of restricted
stock receivable on March 1, 1996 with respect to the 1993 bonus amount and
March 1, 1997 with respect to the 1994 bonus amount. No dividends have been
or will be paid on the restricted stock pending distribution. The number of
shares of restricted stock awarded to Mr. Reeves was 1,418 for 1992, 1,542
for 1993, and 835 for 1994. The number of shares of restricted stock awarded
was calculated using the formula described above in Note 4. Restricted stock
to be received by Mr. Reeves in 1995, 1996 and 1997, respectively, is
conditioned on his employment by the Company on such respective dates. The
aggregate restricted stock holdings for Mr. Reeves as of December 31, 1994
was 3,795 (including for this purpose the shares awarded on March 1, 1995 in
respect of 1994). The dollar value of such restricted stock holdings for Mr.
Reeves as of December 31, 1994 was $31,783, which was calculated using the
closing price of the Common Stock on December 31, 1994, which was $8.375 per
share.
(6) Includes reimbursement of moving expenses of $10,315 in 1993 and $40,631 in
1992.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
No grants of stock options or SARs were made during the Company's last
fiscal year to any of the Company's executive officers.
8
<PAGE> 11
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
The following table provides information regarding the exercise of options
during the Company's last fiscal year and the number and value of unexercised
options held at year end by each of the named executive officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY
FY-END(#) OPTIONS/SARS AT FY-END($)
SHARES ACQUIRED VALUE --------------------------- ------------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE(1)
--------------------------------- --------------- ----------- ----------- ------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Roger W. Norian.................. 0 0 0 45,000 0 2,813
D. Gordon Strickland............. 0 0 26,000 14,000 43,000 18,563
Robert S. Reeves................. 0 0 11,000 9,000 19,000 8,813
Norman N. Broadhurst............. 0 0 6,000 4,000 18,000 12,000
J. Stephen Grassbaugh............ 0 0 5,600 2,400 11,200 5,800
</TABLE>
---------------
(1) In 1993 Messrs. Norian, Strickland, and Reeves were granted options to
purchase 45,000, 5,000 and 5,000 shares of Common Stock, respectively, at
an exercise price of $8.3125 per share. The amounts set forth in this
column were calculated using the difference in the fiscal year-end closing
price of the Common Stock, $8.375 per share, from the exercise price per
share. None of these options are exercisable unless and until the stock
price reaches $12.50 per share and remains at or above that level for at
least 10 consecutive trading days. In addition, options granted in 1992
were not exercisable unless and until the stock price reached $10.00 per
share and remained at or above that level for at least ten consecutive
trading days, which occurred in 1994.
SALARIED PENSION PLAN
The Company's salaried pension plan provides eligible employees with
retirement benefits equal to 28% of final five year average remuneration up to
social security covered compensation, plus 43% of final five year average
remuneration in excess of social security covered compensation for 30 years of
service, with a proportionate reduction for less than 30 years of service. In no
event will an employee's benefit be less than his accrued annual retirement
benefit under the prior plan at December 31, 1988. Mr. Norian's current annual
retirement benefit is $101,817, payable on a straight life annuity basis upon
retirement at age 65, as determined under the prior plan. Five years of service
are required in order to vest under the plan.
The following table sets forth estimated annual retirement benefits payable
on a straight life annuity basis upon retirement at age 65 under the Company's
salaried pension plan (without regard to lower accruals on earnings below social
security covered compensation) for various classes of employees based on their
average remuneration and years of service. Remuneration covered by the pension
plan primarily includes salary, bonus and other items included in compensation.
However, the Internal Revenue Code of 1986, as amended (the "Code"), limits
remuneration which may be taken into account under the pension plan for 1995 to
$150,000. Messrs. Norian, Strickland, Reeves, Broadhurst and Grassbaugh have, as
of December 31, 1994, 19, 8, 11, 6 and 15 years, respectively, of credited
service under the salaried pension plan.
<TABLE>
<CAPTION>
FINAL 5 YEAR YEARS OF SERVICE
AVERAGE ----------------------------------
REMUNERATION 10 20 30 OR MORE
--------------------------------------------- ------- ------- ----------
<S> <C> <C> <C>
$100,000................................... $14,333 $28,667 43,000
150,000................................... 21,500 43,000 64,500
200,000................................... 28,667 57,333 86,000
250,000................................... 35,833 71,667 107,500
</TABLE>
9
<PAGE> 12
COMPENSATION OF DIRECTORS
The directors who are not employees of the Company are currently
compensated for services as directors at the rate of $22,500 per year and $500
for each meeting of the Board of Directors attended. In addition, the Company
has established an unfunded retirement plan for directors of the Company who
serve in such capacity for ten years or more, retire after February 1, 1985, and
do not receive any other retirement benefits from the Company. Pursuant to such
plan, the Company will pay $1,000 per month for not more than ten years to a
qualifying director. In addition, in 1993 the six directors who were not
employees of the Company each received options to purchase 10,000 shares of
Common Stock at a price of $8.19 per share pursuant to the Company's Stock
Option Plan For Non-Employee Directors. These options are not exercisable unless
and until the closing price of the Common Stock on the New York Stock Exchange
reaches $12.50 per share and remains at or above that level for at least 10
consecutive trading days. In 1992, the Board of Directors adopted the Director
Stock Purchase Plan pursuant to which non-employee directors may elect to defer
the receipt of all or a portion of their fees. The amounts deferred are
contributed to a trust which will then purchase Common Stock using such amounts
on behalf of the participating directors. The Common Stock Purchase Plan for
Directors became effective on October 1, 1992.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Mr. Norian has an employment agreement with the Company which provides for
a one-time payment to Mr. Norian of $1,140,000, the continuation of specified
insurance benefits for a two-year period and the continued salary supplement for
the Supplemental Disability Policy described below, in the event Mr. Norian is
terminated by the Company for reasons other than "just cause" or permanent
disability, or in the event that Mr. Norian elects to terminate his employment
following his reassignment, relocation or change in reporting responsibilities.
Each of Messrs. Strickland, Reeves, Broadhurst and Grassbaugh has an employment
agreement with the Company which provides for continuation of such officer's
salary and specified insurance benefits for a certain period in the event that
notice of termination is given by the Company for reasons other than "just
cause" or permanent disability. The continuation period is currently eighteen
months for Mr. Reeves, one year for each of Messrs. Broadhurst and Grassbaugh
and six months for Mr. Strickland. The salary amounts which would be so payable
currently range from a six month amount of approximately $133,000 payable to Mr.
Strickland to an eighteen month amount of approximately $336,000 payable to Mr.
Reeves.
Mr. Norian's employment agreement provides for (i) an annual salary
supplement equal to the annual premium for a supplemental disability insurance
policy (the "Supplemental Disability Policy") paying Mr. Norian $90,000 per
annum for five years after termination due to disability and the sum of $800,000
at the end of such five year period (without offset for amounts payable to him
under any other policy owned by the Company), (ii) payments after termination
due to permanent disability of $60,000 per year until age 65 if the Supplemental
Disability Policy is in effect and $150,000 per year until age 65 if the
Supplemental Disability Policy is not in effect, and payments in an amount per
month equal to the difference between his monthly salary and $12,500 per month
for a period of two years after such termination, and (iii) supplemental life
insurance in the amount of $2,000,000. Mr. Norian's employment agreement also
provides that if a change in control (including a sale of all of the assets) of
the Company occurs, the obligations of the Company under the employment
agreement terminate and the Company will pay $1,140,000 to Mr. Norian.
10
<PAGE> 13
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the last completed fiscal year, Messrs. Jackson, Mellor and Sperry
served as members of the Compensation Committee. None of such members of the
Compensation Committee are or have been officers or employees of the Company.
Mr. Sperry is a partner in the law firm of Willkie Farr & Gallagher,
counsel to the Company.
Mr. Jackson is an Advisory Director of Lehman Brothers, Inc., which
performs investment banking services for the Company from time to time.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
In establishing and monitoring the executive compensation program for the
Company, the Compensation Committee looks at both the total compensation program
and each component thereof to assure that it is both competitive and sensitive
to individual and Company performance. In addition, the compensation determined
by the Compensation Committee is subject to the terms of existing employment
agreements with each member of the Executive Group. The Company has engaged a
consultant in the field of executive compensation matters to assist the
Compensation Committee in establishing and implementing compensation programs
that are consistent with these objectives and reflective of the Company's
financial performance.
In 1993, the Compensation Committee established and implemented the Bonus
Plan. Under the Bonus Plan, each participating executive, including Mr. Norian,
the Company's Chief Executive Officer, is eligible to receive incentive
compensation which is determined both qualitatively and quantitatively. The
qualitative portion is based on the achievement of specific objectives for each
participant and the quantitative portion is based on the achievement of
financial objectives established by the Compensation Committee with respect to
each respective business segment and the Company for the particular year. For
1994, each participant received a qualitative portion of the incentive
compensation. No participant received a quantitative portion for 1994 because
the financial objectives were not achieved. Fifty percent of the amounts payable
for 1994 pursuant to the Bonus Plan is deferred for two years, is payable in
Common Stock and is conditioned upon continued employment.
In order to implement the provisions of the Bonus Plan, the Compensation
Committee was required to eliminate a historical practice of the Company which
consisted of deferring a portion of the key executive annual compensation each
year, including 1992, and then paying that amount at the beginning of the
following year. Although the amount was described as a bonus, the Compensation
Committee concluded that it was, in fact, a deferral. In order to implement the
Bonus Plan, which, in fact, is an incentive compensation program and not a
deferral of base compensation, without penalizing the participants, the
Compensation Committee eliminated the deferral practice by increasing the base
salary of the participants by an amount not in excess of seventy percent of the
respective bonus amount earned by each of them for services rendered in 1992.
This increase, which became effective January 1, 1993, was deemed by the
Compensation Committee to be fair both to the Company and to the participants.
The salaries of the members of the Executive Group have not been increased
since January 1, 1993. No additional grants of stock options were made to these
individuals during 1994.
COMPENSATION COMMITTEE
Michael C. Jackson
James R. Mellor
Harvey L. Sperry
11
<PAGE> 14
PERFORMANCE GRAPH
The graph set forth below charts the yearly percentage change in the
Company's cumulative total stockholder return against each of the Standard &
Poor's 500 Index and the Manufacturing-Diversified Industries Index, in each
case assuming an investment of $100 on December 31, 1989 and the cumulation and
reinvestment of dividends paid thereafter through December 31, 1994.
<TABLE>
<CAPTION>
Measurement Period Kerr Group, S & P 500 MFG- DIVFD
(Fiscal Year Covered) Inc. Index Industrials
<S> <C> <C> <C>
Dec. 1989 100.00 100.00 100.00
Dec. 1990 49.45 96.89 99.13
Dec. 1991 65.06 126.28 121.49
Dec. 1992 67.67 135.88 131.67
Dec. 1993 87.19 149.52 159.82
Dec. 1994 87.19 151.55 165.47
</TABLE>
APPROVAL OF THE KERR GROUP, INC.
AMENDED AND RESTATED 1993 EMPLOYEE STOCK OPTION PLAN
On February 28, 1995 the Board of Directors amended and restated the 1993
Employee Stock Option Plan in the form of the Amended and Restated 1993 Employee
Stock Option Plan (the "Employee Stock Option Plan"), subject to stockholder
approval and ratification, for the purpose of increasing the number of shares of
Common Stock issuable upon the exercise of options from 100,000 to 280,000 and
to make such other modifications to ensure that the Employee Stock Option Plan
would thereafter comply with Section 162(m) of the Code. The 1993 Employee Stock
Option Plan was approved by stockholders and became effective on April 27, 1993.
12
<PAGE> 15
The Company is seeking stockholder approval of the Employee Stock Option
Plan in order to comply with the requirements of Rule 16b-3, promulgated by the
SEC under the Exchange Act, and the requirements of Section 162(m) and Section
422 of the Code. The following summary of the Employee Stock Option Plan is
qualified in its entirety by express reference to the text of the Employee Stock
Option Plan as filed with the SEC as an exhibit to the Company's Annual Report
on Form 10-K for the year ended December 31, 1994. The Employee Stock Option
Plan contemplates the issuance of "incentive stock options" within the meaning
of Section 422 of the Code, as well as "non-statutory stock options". As of
December 31, 1994, the Company had 22,497 shares available for grant under
existing employee stock option plans.
PURPOSE AND ELIGIBILITY
The primary purpose of the Employee Stock Option Plan is to attract and
retain capable executives and employees by offering such persons a greater
personal interest in the Company's business through stock ownership. Officers
and key employees of the Company and any of its subsidiaries (including members
of the Board of Directors who are also employees of the foregoing) are eligible
for grants of stock options under the Employee Stock Option Plan. The
approximate number of persons eligible to participate is 40. No person may be
granted options under the Employee Stock Option Plan to purchase more than
200,000 shares of Common Stock over the life of the Employee Stock Option Plan.
ADMINISTRATION
The Employee Stock Option Plan is administered by the Compensation
Committee. The Compensation Committee, in its sole discretion, has the
authority, among other things, to prescribe the form of the agreement embodying
awards of options made under the Employee Stock Option Plan, to construe the
Employee Stock Option Plan, to determine all questions arising thereunder and to
adopt and amend such rules and regulations for the administration of the
Employee Stock Option Plan as it may deem desirable.
TERMS AND CONDITIONS OF OPTIONS
Any options shall become exercisable in such amounts, at such intervals and
upon such terms and conditions as the Compensation Committee shall provide,
except that optionees who are subject to the restrictions of Section 16(b) of
the Exchange Act must hold options granted to them under the Employee Stock
Option Plan for at least six months prior to exercise. THE COMPENSATION
COMMITTEE HAS DETERMINED THAT ANY OPTIONS GRANTED WITHIN ONE YEAR OF THE
ADOPTION OF THE EMPLOYEE STOCK OPTION PLAN MAY BE EXERCISED ONLY AFTER THE
CLOSING PRICE OF THE COMMON STOCK ON THE NEW YORK STOCK EXCHANGE REACHES $12.50
AND REMAINS AT OR ABOVE THAT LEVEL FOR AT LEAST 10 CONSECUTIVE TRADING DAYS. THE
COMPENSATION COMMITTEE HAS ALSO DETERMINED THAT, UNLESS SPECIFICALLY WAIVED BY
THE COMPENSATION COMMITTEE, OPTIONS GRANTED AFTER THE ONE YEAR PERIOD UNDER THE
EMPLOYEE STOCK OPTION PLAN WILL NOT BECOME EXERCISABLE UNTIL THE PRICE OF THE
COMMON STOCK EXCEEDS THE EXERCISE PRICE BY A SIGNIFICANT AMOUNT. Subject to the
foregoing, options granted under the Employee Stock Option Plan are exercisable
until the earlier of (i) a date set by the Compensation Committee at the time of
grant, or (ii) ten years from their respective dates of grant. An incentive
stock option granted to an individual who owns, at the time of grant, stock
possessing more than ten percent of the total combined voting power of all
classes of stock of the Company or any parent or subsidiary thereof (a "Ten
Percent Shareholder") is exercisable for up to five years after the date of
grant unless a shorter period is designated by the Compensation Committee. In
addition, if a single stockholder or a group of stockholders deemed to
constitute a "person" under the securities laws acquires more than 50% of the
shares of the
13
<PAGE> 16
Company's capital stock which is entitled to vote for the election of directors,
then any option outstanding under the Employee Stock Option Plan will be
exercisable in full during the sixty-day period following the date of such
event. Thereafter, any such option will only be exercisable to the extent it was
exercisable prior to such event.
EXERCISE PRICE OF OPTIONS
The exercise price of non-statutory stock options granted under the
Employee Stock Option Plan may be less than the fair market value, but shall not
be less than 85% of the fair market value, of the shares covered by the options
on the date of grant. In no event, however, will the exercise price be less than
the par value of the shares covered by non-statutory stock options on the date
of grant. The exercise price of incentive stock options shall not be less than
the fair market value of the shares covered by the options on the date of grant.
In the case of an incentive stock option granted to a Ten Percent Shareholder,
the exercise price cannot be less than 110% of such fair market value. The
Compensation Committee will determine the exercise price of each option and the
manner in which it may be exercised.
PAYMENT FOR SHARES
Payment for shares of Common Stock purchased upon exercise of an option
granted under the Employee Stock Option Plan must be made in full at the time of
exercise.
Upon the exercise of any option, the option holder will be required to pay
to the Company an amount sufficient to pay all federal, state and local
withholding taxes applicable to the exercise of the option.
ADJUSTMENT FOR RECAPITALIZATION, MERGER, ETC.
The aggregate number of shares of Common Stock which may be purchased
pursuant to options granted under the Employee Stock Option Plan, the number of
shares of Common Stock covered by each outstanding option and the price per
share thereof in each such option may be adjusted as the Compensation Committee,
in its sole discretion, may deem equitable for any increase or decrease in the
number of outstanding shares of Common Stock resulting from a stock split or
other subdivision or consolidation of shares of Common Stock, or for other
capital adjustments or payments of stock dividends or distributions or other
increases or decreases in the outstanding shares of Common Stock effected
without receipt of consideration by the Company.
Subject to any required action by the stockholders, if the Company is the
surviving corporation in any merger or consolidation, any option granted under
the Employee Stock Option Plan shall cover the securities to which a holder of
the number of shares of Common Stock covered by the unexercised portion of the
option would have been entitled pursuant to the terms of the merger or
consolidation, but a dissolution or liquidation of the Company or a merger or
consolidation in which the Company is not the surviving corporation shall cause
every option outstanding under the Employee Stock Option Plan to become fully
exercisable during the ten-day period following the date of such event, and upon
such exercise, the option holder will receive the property into which the shares
of Common Stock otherwise issuable upon exercise of the option would have been
converted had they been outstanding at the time of such event.
MARKET VALUE
On March 7, 1995, the closing price for the Common Stock was $8.125.
14
<PAGE> 17
TRANSFERABILITY OF OPTIONS
No award of options, or any right or interest therein, is assignable or
transferable except by will or the laws of descent and distribution. During the
lifetime of an option holder, options are exercisable only by the option holder
or his guardian or legal representative.
TERMINATION OR AMENDMENT OF THE EMPLOYEE STOCK OPTION PLAN
The Board of Directors may amend or terminate the Employee Stock Option
Plan at any time without the approval of stockholders, provided that no such
action shall adversely affect options already granted thereunder, and further
provided that no such action will (a) increase the total number of shares of
Common Stock for which options may be granted under the Employee Stock Option
Plan (except in connection with certain capital adjustments described in the
section herein entitled "Adjustment for Recapitalization, Merger, Etc."), (b)
change the class of persons eligible to receive options, or (c) extend the
period during which options may be granted.
Any material amendments not approved by stockholders, however, would cause
the Employee Stock Option Plan to no longer comply with Rule 16b-3 under the
Exchange Act, in which case option grants to directors and certain officers
would not be exempt from the provisions of Section 16(b) of the Exchange Act.
FEDERAL INCOME TAX CONSEQUENCES
The following addresses certain federal income tax consequences of
participation in the Employee Stock Option Plan. Although the Company believes
the following statements are correct based on existing provisions of the Code
and the legislative history and administrative and judicial interpretations
thereof, no assurance can be given that legislative, administrative or judicial
changes or interpretations will not occur which would modify such statements.
In the case of non-statutory stock options, because there is no "reasonably
ascertainable fair market value" for the options on the date of grant, as
defined in Treasury Regulations, an optionee will not realize any income, nor
will the Company be entitled to any deduction, in the year of grant. An optionee
will generally realize ordinary income at the time shares are transferred to him
pursuant to his exercise of a non-statutory stock option or, if later, the time
the shares transferred to him are substantially vested. Accordingly, the
optionee will generally realize ordinary income when the shares of Common Stock
subject to the option are transferred to him. The amount of income recognized by
the optionee is the difference between the exercise price and the fair market
value of the Common Stock at the time of exercise.
The optionee's basis in the shares received upon exercise of a
non-statutory stock option is the fair market value of the shares at the time of
the taxable event. The Company will be entitled to a deduction for Federal
income tax purposes at the same time and in the same amount as the optionee is
considered to realize ordinary income under the rules described above, provided
that it satisfies its income tax withholding obligation.
When an optionee disposes of shares acquired upon exercise of a
non-statutory stock option, any amount received in excess of the optionee's
basis in the shares (as described above) will be treated as long-term or
short-term capital gain. If the amount received is less than the optionee's
basis, the loss will be treated as long-term or short-term capital loss, which
may be aggregated with other capital losses and, subject to certain limitations,
may be used to reduce the amount of the optionee's ordinary income subject to
taxation. Long-term capital gain or loss would arise from the sale of Common
Stock held for more than one year from the date it is acquired pursuant to the
exercise of a non-statutory stock option. Short-term capital gain or loss would
arise from the disposition of Common Stock so held for one year or less. The
Company receives no
15
<PAGE> 18
further deduction as a result of the realization by an optionee of any capital
gain or loss as described in this paragraph.
In the case of incentive stock options, an optionee will not realize
taxable income by reason of the grant or the exercise of the option. If an
optionee exercises an incentive stock option and does not dispose of the shares
within two years of the date the option was granted nor within one year of the
date the shares were transferred to the optionee, any gain realized upon a
subsequent disposition will be taxable to the optionee as long-term capital
gain, and the Company will not be entitled to any deduction. However, if the
optionee sells the shares acquired under an incentive stock option prior to the
end of either the one-year or two-year holding period described above, the
difference between the option exercise price and the lesser of (i) the fair
market value of the shares on the date of exercise or (ii) the amount received
upon disposition of the shares, will generally be treated as compensation and
will then generally be taxable to the optionee at ordinary income tax rates. The
Company will be then entitled to a deduction in the amount of such taxable
income realized by the optionee. Any further gain realized on such a disposition
will be capital gain, either short or long-term, depending on the optionee's
holding period after exercise of the option.
Optionees are strongly advised to consult with their individual tax
advisers to determine their personal tax consequences resulting from the grant
or exercise of options under the Employee Stock Option Plan.
RECOMMENDATION AND VOTE
Approval of the adoption of the Employee Stock Option Plan requires the
affirmative vote of the holders of a majority of the shares of Common Stock
present, in person or by proxy, and entitled to vote at the Annual Meeting. The
proxy will be voted in accordance with the directions thereon, or, if no
directions are indicated, "FOR" adoption of the Employee Stock Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE EMPLOYEE
STOCK OPTION PLAN.
NEW PLAN BENEFITS
The Company cannot determine the nature or amount of awards that will be
made in the future under the Employee Stock Option Plan since no employee has
yet received any options under this plan, as amended and restated.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Mr. Sperry is a partner in the law firm of Willkie Farr & Gallagher,
counsel to the Company.
Mr. Jackson is an Advisory Director of Lehman Brothers Inc., which performs
investment banking services for the Company from time to time.
On January 16, 1990 and June 11, 1991, the Board of Directors authorized
unsecured loans of $30,000 and $100,000, respectively, to Mr. Strickland. The
loan authorized on January 16, 1990 bears interest at 6% per annum and accrued
interest is paid annually. The principal of the loan is to be paid in six equal
installments beginning in 1991, however, on January 1, 1992, $15,000 of
principal was forgiven by the Company. The loan authorized on June 11, 1991
bears interest at 7.76% per annum and principal and accrued interest are due on
the earlier of June 11, 1996 or on the fifth business day after Mr. Strickland's
employment with the Company is terminated. As of March 7, 1995, the principal
amount and $28,404 of accrued interest remained outstanding.
16
<PAGE> 19
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Stockholder proposals to be included in the Company's proxy statement with
respect to the 1996 Annual Meeting of Stockholders must be received by the
Company at its executive offices located at 1840 Century Park East, Los Angeles,
California 90067 no later than December 1, 1995.
RELATIONSHIP WITH AUDITORS
The Board of Directors has appointed the firm of KPMG Peat Marwick,
independent public accountants, as auditors of the Company for the year ending
December 31, 1995. This firm has audited the Company's accounts since 1960. It
is expected that representatives of KPMG Peat Marwick will be present at the
Annual Meeting of Stockholders where they will have an opportunity to address
the meeting, if they so desire, and to respond to appropriate questions.
OTHER BUSINESS OF THE MEETING
Management is not aware of any matters to come before the Annual Meeting
other than those stated in this Proxy Statement. However, inasmuch as matters of
which the management is not now aware may come before the meeting or any
adjournment, the proxies confer discretionary authority with respect to acting
thereon, and the persons named in such proxies intend to vote, act and consent
in accordance with their best judgment with respect thereto. Upon receipt of
such proxies (in the form enclosed and properly signed) in time for voting, the
shares represented thereby will be voted as indicated thereon and in this Proxy
Statement.
By Order of the Board of Directors
ROGER W. NORIAN,
Chairman, President and
Chief Executive Officer
Los Angeles, California
March 27, 1995
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1994 MAY BE OBTAINED WITHOUT CHARGE BY ANY STOCKHOLDER TO WHOM THIS
PROXY STATEMENT IS SENT, UPON WRITTEN REQUEST TO THE SECRETARY, KERR GROUP,
INC., 1840 CENTURY PARK EAST, LOS ANGELES, CALIFORNIA 90067.
17
<PAGE> 20
APPENDIX A
KERR GROUP, INC.
AMENDED AND RESTATED
1993 EMPLOYEE STOCK OPTION PLAN
***
ARTICLE I
PURPOSE
The Kerr Group, Inc. ("Company") 1993 Employee Stock Option Plan
(the "Old Plan") became effective on April 27, 1993 (the "Effective Date")
when the Old Plan was approved by a majority of the Company's stockholders.
On and effective February 28, 1995, the Board of Directors of the Company (the
"Board") amended and restated (subject to shareholder approval as set forth in
Article XIX) the Old Plan in the form of The Kerr Group, Inc. Amended and
Restated 1993 Employee Stock Option Plan (the "Plan"). The purpose of the
1995 amendment and restatement is to (i) increase the number of shares of
common stock of the Company, par value $.50 per share ("Common Stock") which
may be purchased hereunder and (ii) add provisions ensuring that Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), does not
limit tax
<PAGE> 21
deductions otherwise available to the Company on account of the exercise of
options granted hereunder.
The Plan is intended as an incentive and to encourage stock
ownership by key employees of the Company and of its subsidiaries in order to
increase their proprietary interest in the Company's success and to encourage
them to remain in the employ of the Company.
The word "Company" when used in the Plan with reference to
employment shall include any subsidiaries of the Company.
ARTICLE II
ADMINISTRATION
The Plan shall be administered by a Stock Option and Compensation
Committee (the "Committee") appointed by the Board from among its members and
shall consist of not less than three members thereof, each of whom must be
both a "disinterested person" within the meaning of Rule 16b-3(a)(2)(i)
promulgated under the Securities Exchange Act of 1934 (the "Exchange Act") and
an "outside director" within the meaning of Section 162(m) of the Code.
-2-
<PAGE> 22
Subject to the provisions of the Plan, the Committee shall have sole
authority, in its absolute discretion: (a) to determine which of the eligible
employees of the Company and its subsidiaries shall be granted options; (b) to
determine whether the options granted shall be "incentive stock options"
within the meaning of Section 422(b) of the Code, nonstatutory stock options
or any combination thereof; (c) to determine the times when options shall be
granted and the number of shares to be optioned; (d) to determine the purchase
price for the shares underlying the options granted ("Option Shares"); (e) to
determine the time or times when each option becomes exercisable and the
duration of the exercise period; (f) to prescribe the form or forms of the
option agreements under the Plan which forms shall be consistent with the Plan
but need not be identical to it; (g) to adopt, amend and rescind such rules
and regulations as, in its opinion, may be advisable in the administration of
the Plan; and (h) to construe and interpret the Plan, the rules and
regulations and the option agreements under the Plan and to make all other
determinations deemed necessary or advisable for the administration of the
Plan. All decisions,
-3-
<PAGE> 23
determinations and interpretations of the Committee shall be final and binding
on all optionees.
The Committee shall hold its meetings at such times and places as it
may determine, with a majority of the Committee constituting a quorum. Any
action which the Committee has the power to take at a meeting may be taken by
the Committee without a meeting if all of the members of the Committee give
their consent to such action in writing.
ARTICLE III
STOCK
The Option Shares shall be shares of authorized but unissued Common
Stock or previously issued shares of Common Stock reacquired by the Company.
Under the Plan the total number of Option Shares which may be purchased
pursuant to options granted hereunder shall not exceed in the aggregate
280,000 except as such number of shares shall be adjusted in accordance with
the provisions of ARTICLE IX hereof. No person may be granted options under
the Plan covering more than 200,000 Option Shares over the life of the Plan.
-4-
<PAGE> 24
In the event that any outstanding option under the Plan expires for
any reason or is terminated prior to the end of the period during which
options may be granted, the unexercised portion of such option may again be
granted pursuant to the Plan.
ARTICLE IV
ELIGIBILITY OF PARTICIPANTS
Officers and other key employees of the Company or of its
subsidiaries (including employees who are also Directors of the Company or the
Company's subsidiaries excluding persons who are members of the Committee)
shall be eligible to participate in the Plan.
-5-
<PAGE> 25
ARTICLE V
OPTION PRICE
Options shall be exercisable at prices (the "Option Price")
specified in the option agreements.
ARTICLE VI
EXERCISE AND TERM OF OPTIONS
The exercise of options may be limited in whole or in part for any
period or periods of time as specified in the option agreements. Except as
may be so specified, any option may be exercised in whole at any time or in
part from time to time during the option period. Notwithstanding the above,
(i) no option granted hereunder to a person subject to the restrictions of
Section 16(b) of the Exchange Act shall be exercisable before the date six
months following the date of grant of such option and (ii) this Article VI is
subject to the provisions of Article XIX.
All stock options granted hereunder shall terminate concurrently
with the termination of the optionee's employment if the Company terminates
the employment for cause or if the optionee resigns.
-6-
<PAGE> 26
Any other provision of the Plan notwithstanding, no option shall be
exercised after the date ten years from the date of grant of such option.
ARTICLE VII
PAYMENT OF SHARES
Payment for Option Shares shall be made in full upon exercise of the
option.
ARTICLE VIII
NON-TRANSFERABILITY OF OPTION
No option shall be transferable except by will or the laws of
descent and distribution. During the lifetime of the optionee, the option
shall be exercisable only by the optionee.
-7-
<PAGE> 27
ARTICLE IX
ADJUSTMENT FOR RECAPITALIZATION, MERGER, ETC.
If there is any stock dividend, split-up or combination of shares of
Common Stock or any other change in Common Stock, whether by way of exchange,
offering of subscription rights, recapitalization or otherwise, an adjustment
shall be made in the number of Option Shares in respect of which options may
be granted hereunder, the number of Option Shares to which each outstanding
option relates and the Option Price to be as the Committee, in its sole
discretion, may deem equitable.
Subject to any required action by the stockholders, if the Company
shall be the surviving corporation in any merger or consolidation, the holder
of the then unexercised portion of any option granted hereunder shall, upon
exercise in accordance with the terms hereof, receive the property, whether
Common Stock or other securities, into which the Option Shares otherwise
issuable upon exercise of the option would have been converted had they been
outstanding at the time of such event.
-8-
<PAGE> 28
The foregoing adjustments and the manner of application of the
foregoing provisions shall be determined by the Committee in its sole
discretion. Any such adjustment may provide for the elimination of any
fractional share which might otherwise become subject to an option.
-9-
<PAGE> 29
ARTICLE X
RIGHTS UPON MERGER, SALE OF ASSETS, LIQUIDATION, ETC.
If the Company shall be the surviving corporation in any merger or
consolidation, or if the Company shall merge with or into a wholly-owned
subsidiary and the Company is not the survivor, the holder of the then
unexercised portion of any option granted hereunder shall, upon exercise in
accordance with the terms hereof, receive the property, whether Common Stock or
other securities, into which the Option Shares otherwise issuable upon exercise
of such unexercised portion, would have been converted had they been
outstanding at the time of such event; provided, however, that the optionee
shall not have the right to exercise such unexercised portion as a result of
such event if the Committee makes an appropriate adjustment in the securities
covered by and/or the Option Price of such option as provided in Article IX
hereof.
If the Company is not the surviving corporation in any merger
or consolidation and substitute options are not issued, or if the Company sells
substantially all of its assets or liquidates, then during the ten (10) day
period commencing on the date of such
-10-
<PAGE> 30
event, the holder of an option granted hereunder may exercise all or any
unexercised part of the option, including any part thereof which would
otherwise not then be exercisable, and receive upon such exercise the property
into which the Option Shares otherwise issuable upon exercise of the option
would have been converted had such shares been outstanding at the time of such
event. The options shall terminate after such 10 day period.
If a single stockholder or a group of stockholders who would
be deemed to be a "person" within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934 acquires more than 50% of the shares of the
Company's capital stock which are entitled to vote for the election of
directors, then during the sixty (60) day period commencing after such event,
the holder of an option granted hereunder may exercise the unexercised portion
of such option as to all or any part of the Optioned Shares, including shares
as to which such option would not then otherwise be exercisable. If such
option is exercised in accordance with the provisions of the immediately
preceding sentence as to less than all of the Optioned Shares, such option
shall be deemed to have
-11-
<PAGE> 31
been so exercised in inverse chronological order with respect to the vesting
thereof. Upon the expiration of such 60 day period, the unexercised portion of
any such portion shall be exercisable only to the extent it was exercisable
prior to the occurrence of such event.
-12-
<PAGE> 32
ARTICLE XI
NO OBLIGATION TO EXERCISE OPTION
The granting of an option shall impose no obligation on the
recipient to exercise such option.
ARTICLE XII
USE OF PROCEEDS
The proceeds received from the sale of Option Shares pursuant
to the Plan shall be used for general corporate purposes.
ARTICLE XIII
RIGHTS AS A STOCKHOLDER
An optionee or a transferee of an option shall have no rights
as a stockholder with respect to any Option Share
covered by his option until such person shall have become the holder of record
of such share, and such person shall not be entitled to any dividends or
distributions of other rights in respect of such share for which the record
date is prior to the date on which such person shall have become the holder of
record thereof.
-13-
<PAGE> 33
ARTICLE XIV
REGULATORY MATTERS
Every option under the Plan is granted upon the express
conditions that (i) the inability of the Company to obtain, or any delay in
obtaining, from each regulatory body having jurisdiction, all requisite
authority to issue or transfer shares of stock necessary to satisfy such option
or (ii) the inability of the Company to comply with, or any delay in complying
with, any laws, rules or regulations governing the issuance of Option Shares
necessary to satisfy such option (including but not limited to complying with
the Securities Act of 1933 and all rules and regulations promulgated
thereunder), the fulfillment of which conditions are deemed necessary by
counsel for the Company to the lawful issuance or transfer of any such shares,
shall relieve the Company of any liability for the non-issuance or
non-transfer, or any delay in the issuance or transfer of, such shares.
At the time of exercise of any option, the Company may, if it
shall deem it necessary or desirable in order to comply with the Securities Act
of 1933, as amended (the "Act"), require the
-14-
<PAGE> 34
holder of the option to represent in writing to the Company that it is then the
holder's intention to acquire the Option Shares for the account of the holder,
that the holder shall not sell, transfer or dispose of such shares except
pursuant to an effective registration statement under the Act or an exemption
therefrom, as determined by, or with approval of, counsel satisfactory to the
Company, and that the holder acknowledges that such shares are unregistered
under the Act and accordingly must be held indefinitely unless such shares are
subsequently registered or an exemption from such registration is available.
In such event a legend shall be placed on the stock certificate representing
such shares to reflect the transfer restrictions, and stop transfer
instructions shall be issued to the Company's transfer agent with respect to
such shares.
-15-
<PAGE> 35
ARTICLE XV
CANCELLATION OF OPTIONS
The Committee in its discretion may, with the consent of any
optionee, cancel any outstanding option hereunder.
ARTICLE XVI
EXPIRATION DATE OF PLAN
No option shall be granted hereunder after 10 years following
the Effective Date.
ARTICLE XVII
AMENDMENT OR DISCONTINUANCE OF PLAN
The Board may, without the consent of optionees, at any time
terminate the Plan entirely and at any time or from
time to time amend or modify the Plan, provided that no such action shall
adversely affect options theretofore granted hereunder, and provided further
that no such action by the Board, without approval of the stockholders, may (a)
increase the total number of Option Shares, except as contemplated in ARTICLE
IX; (b) change the class of officers or employees eligible to receive options
under the Plan; or (c) extend the term of the Plan.
-16-
<PAGE> 36
ARTICLE XVIII
LIMITATION ON GRANTS OF INCENTIVE STOCK OPTIONS
To the extent the aggregate fair market value (determined as
of the date of grant of such options) of the shares of Common Stock with
respect to which any incentive stock options may be exercisable for the first
time by the optionee in any calendar year (under this Plan or any other stock
option plan of the Company and any parent or subsidiary of the Company) exceeds
$100,000, such options shall be treated as nonstatutory stock options.
-17-
<PAGE> 37
ARTICLE XIX
SHAREHOLDER APPROVAL
The amendment and restatement of the Plan by the Board is
effective February 28, 1995. However, notwithstanding
anything in the Plan or in an option agreement to the contrary, no option
granted hereunder on or after February 28, 1995 may be exercised until approval
of the Plan by the stockholders of the Company on or after such date in a
manner which complies with Rule 16b-3 promulgated pursuant to the Exchange Act
and Sections 162(m) and 422(b)(1) of the Code.
-18-
<PAGE> 38
KERR GROUP, INC.
ANNUAL MEETING OF STOCKHOLDERS, APRIL 25, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of KERR GROUP, INC. hereby appoints Roger W.
Norian and Harvey L. Sperry, and each or any one of them, the true and lawful
attorneys, agents and proxies of the undersigned with full power of
substitution for and in the name of the undersigned, to vote all the shares of
Common Stock of KERR GROUP, INC. which the undersigned may be entitled to vote
at the Annual Meeting of Stockholders of the CORPORATION to be held at the
Century Plaza Hotel, 2025 Avenue of the Stars, Los Angeles, California 90067,
on Tuesday, April 25, 1995, at 10:00 A.M., Pacific Daylight Time, and at any
and all adjournments thereof, with all of the powers which the undersigned
would possess if personally present, for the following purposes set forth on
the reverse side.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
/SEE REVERSE SIDE/
<PAGE> 39
/X/ PLEASE MARKS VOTES AS IN THIS EXAMPLE
THIS PROXY WILL BE VOTED FOR THE CHOICES SPECIFIED. IF NO CHOICE IS SPECIFIED
WITH RESPECT TO THE SELECTION OF DIRECTORS, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF DIRECTORS.
1. ELECTION OF DIRECTORS
NOMINEES: JAMES R. MELLOR AND ROBERT M. O'HARA (THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR.)
FOR WITHHELD
/ / / /
/ / __________________________________________________________________________
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANOTHER NOMINEE WRITE THE NAME
OF SUCH NOMINEE IN THE SPACE PROVIDED.
2. APPROVAL OF THE AMENDED AND RESTATED 1993 EMPLOYEE STOCK OPTION PLAN (THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR.)
/ / FOR / / AGAINST / / ABSTAIN
3. CONSIDERING AND ACTING UPON ANY OTHER MATTERS WHICH MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING AND
PROXY STATEMENT DATED MARCH 27, 1995. PLEASE SIGN EXACTLY AS NAME OR NAMES
APPEAR HEREON. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE,
GUARDIAN OR CORPORATE OFFICER, PLEASE GIVE YOUR FULL TITLE AS SUCH. FOR JOINT
ACCOUNTS, ALL CO-OWNERS MUST SIGN.
SIGNATURE: _________________________________________ DATE ___________________
SIGNATURE: _________________________________________ DATE ___________________
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY IN THE ENVELOPE PROVIDED.
<PAGE> 40
KERR GROUP, INC.
EMPLOYEE INCENTIVE STOCK OWNERSHIP PLAN
(ESOP I)
TO: All Participants
On April 25, 1995, Kerr Group, Inc. (the "Company") will hold its Annual
Meeting of Stockholders for the purposes indicated in the Notice of Annual
Meeting of Stockholders and Proxy Statement, each dated March 27, 1995, enclosed
herewith.
The Company's Employee Incentive Stock Ownership Plan ("ESOP I") provides
that United National Bank-North, as trustee under ESOP I (the "ESOP I Trustee"),
will vote the shares of the Company's Common Stock held in the ESOP I trust
according to instructions of the participants. Accordingly, you are requested to
complete the enclosed Participant Instruction Form. Please sign and date your
form and mail it as promptly as possible in the enclosed stamped envelope.
Your voting instructions are confidential.
United National Bank-North, as Trustee
KERR GROUP, INC.
EMPLOYEE INCENTIVE STOCK OWNERSHIP PLAN
<PAGE> 41
PARTICIPANT INSTRUCTION FORM
UNDER
KERR GROUP, INC.
EMPLOYEE INCENTIVE STOCK OWNERSHIP PLAN
(ESOP I)
FOR
ANNUAL MEETING OF STOCKHOLDERS
APRIL 25, 1995
I am a participant in the Employee Incentive Stock Ownership Plan ("ESOP
I") of Kerr Group, Inc. (the "Company") entitled to vote the number of shares of
the Company's Common Stock (the "ESOP I Shares") shown on the label attached to
this form. This number is the number of ESOP I Shares allocated to my account as
of March 7, 1995 under ESOP I.
I understand that UNITED NATIONAL BANK-NORTH, as trustee (the "ESOP I
Trustee") under ESOP I, will vote ESOP I Shares upon instructions from
participants and that if I vote less than all ESOP I Shares allocated to me, the
ESOP I Trustee will vote such ESOP I Shares in the same proportion as all ESOP I
Shares are voted. I further understand that I may direct the ESOP I Trustee to
vote certain ESOP I Shares in favor and certain ESOP I Shares against any of the
proposals, but that to do so requires separate forms.
I acknowledge receipt of the Company's Notice of Annual Meeting of
Stockholders and Proxy Statement for its Annual Meeting of Stockholders to be
held on April 25, 1995.
I instruct the ESOP I Trustee to vote all my ESOP I Shares as follows:
PROPOSAL 1
The election of James R. Mellor and Robert M. O'Hara as directors.
1. FOR / / Proposal 1 (the Board of Directors recommends a vote FOR).
"Strike-Off" Line
------------------------------------------------------
2. My ESOP I Shares should be WITHHELD / / from Proposal 1.
(If you wish to not vote on any nominee, write the name of such nominee on the
"Strike-Off" Line and your votes covered by this form will be withheld from such
nominee.)
PROPOSAL 2
The adoption of the 1993 Employee Stock Option Plan.
1. FOR / / Proposal 2 (the Board of Directors recommends a vote FOR).
2. AGAINST / / Proposal 2.
3. My ESOP I Shares should be WITHHELD / / regarding Proposal 2.
PROPOSAL 3
Considering and acting upon any other matters which may properly come before the
meeting or any adjournment thereof.
I direct that Roger W. Norian and Harvey L. Sperry, and each or any one of
them, be appointed my true and lawful attorneys, agents and proxies with full
power of substitution in my name to vote at the Annual Meeting, and at any and
all adjournments thereof, with respect to my ESOP I Shares for the purposes of
any matters which may properly come before the meeting or any adjournment
thereof.
1. I hereby grant the power of attorney referred to above. / /
2. I hereby withhold the grant of the power of attorney referred to
above. / /
Dated _____________________, 1995
_________________________________
(Signature of Participant)
(Please sign exactly as your name
appears on the label to this form.
If you are signing as executor,
administrator or guardian, please
give your full title as such.)
Please read all instructions carefully. Then mark, sign, date and mail this
instruction form to:
Proxy Department
Bank of Boston
P.O. Box 1628
Boston, MA 02105-9903
A pre-addressed, postage-paid envelope has been provided for your convenience.
<PAGE> 42
KERR GROUP, INC.
1987 EMPLOYEE INCENTIVE STOCK OWNERSHIP PLAN
(ESOP II)
TO: All Participants
On April 25, 1995, Kerr Group, Inc., (the "Company") will hold its Annual
Meeting of Stockholders for the purposes indicated in the Notice of Annual
Meeting of Stockholders and Proxy Statement, each dated March 27, 1995, enclosed
herewith.
The Company's 1987 Employee Incentive Stock Ownership Plan ("ESOP II")
provides that United National Bank-North, as trustee under ESOP II (the "ESOP II
Trustee"), will vote the shares of the Company's Common Stock held in the ESOP
II trust according to instructions of the participants. Accordingly, you are
requested to complete the enclosed Participant Instruction Form. Please sign and
date your form and mail it as promptly as possible in the enclosed stamped
envelope.
Your voting instructions are confidential.
United National Bank-North, as Trustee
KERR GROUP, INC.
1987 EMPLOYEE INCENTIVE STOCK OWNERSHIP PLAN
<PAGE> 43
PARTICIPANT INSTRUCTION FORM
UNDER
KERR GROUP, INC.
1987 EMPLOYEE INCENTIVE STOCK OWNERSHIP PLAN
(ESOP II)
FOR
ANNUAL MEETING OF STOCKHOLDERS
APRIL 25, 1995
I am a participant in the 1987 Employee Incentive Stock Ownership Plan
("ESOP II") of Kerr Group, Inc. (the "Company") entitled to vote the number of
shares of the Company's Common Stock (the "ESOP II Shares") shown on the label
attached to this form. This number is the number of ESOP II Shares allocated to
my account as of March 7, 1995 under ESOP II.
I understand that UNITED NATIONAL BANK-NORTH, as trustee (the "ESOP II
Trustee") under ESOP II, will vote ESOP II Shares upon instructions from
participants and that if I vote less than all ESOP II Shares allocated to me,
the ESOP II Trustee will vote such ESOP II Shares in the same proportion as all
ESOP II Shares are voted. I further understand that I may direct the ESOP II
Trustee to vote certain ESOP II Shares in favor and certain ESOP II Shares
against any of the proposals, but that to do so requires separate forms.
I acknowledge receipt of the Company's Notice of Annual Meeting of
Stockholders and Proxy Statement for its Annual Meeting of Stockholders to be
held on April 25, 1995.
I instruct the ESOP II Trustee to vote all my ESOP II Shares as follows:
PROPOSAL 1
The election of James R. Mellor and Robert M. O'Hara as directors.
1. FOR / / Proposal 1 (the Board of Directors recommends a vote FOR).
"Strike-Off" Line
------------------------------------------------------
2. My ESOP II Shares should be WITHHELD / / from Proposal 1.
(If you wish to not vote on any nominee, write the name of such nominee on the
"Strike-Off" Line and your votes covered by this form will be withheld from such
nominee.)
PROPOSAL 2
The adoption of the 1993 Employee Stock Option Plan.
1. FOR / / Proposal 2 (the Board of Directors recommends a vote FOR).
2. AGAINST / / Proposal 2.
3. My ESOP II Shares should be WITHHELD / / regarding Proposal 2.
PROPOSAL 3
Considering and acting upon any other matters which may properly come before the
meeting or any adjournment thereof.
I direct that Roger W. Norian and Harvey L. Sperry, and each or any one of
them, be appointed my true and lawful attorneys, agents and proxies with full
power of substitution in my name to vote at the Annual Meeting, and at any and
all adjournments thereof, with respect to my ESOP II Shares for the purposes of
any matters which may properly come before the meeting or any adjournment
thereof.
1. I hereby grant the power of attorney referred to above. / /
2. I hereby withhold the grant of the power of attorney referred to
above. / /
Dated _______________________, 1995
______________________________
(Signature of Participant)
(Please sign exactly as your name
appears on the label to this form.
If you are signing as executor,
administrator or guardian, please
give your full title as such.)
Please read all instructions carefully. Then mark, sign, date and mail this
instruction form to:
Proxy Department
The Bank of Boston
P.O. Box 1628
Boston, MA 02105-9903
A pre-addressed, postage-paid envelope has been provided for your
convenience.
