<PAGE>
SCHEDULE 14A INFORMATION
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 Prospectus Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
KETEMA INC.
(Name of Registrant as Specified In Its Charter)
KETEMA 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(i)(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:
(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:*
(4) Proposed maximum aggregate value of transaction:
- - --------
*Set forth the amount on which the filing 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
[LOGO OF KETEMA] , INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 30, 1994
To the Stockholders:
The annual meeting of the stockholders of Ketema, Inc. (the "Company") will be
held at the Board Room, Thirteenth Floor, American Stock Exchange, 86 Trinity
Place, New York, New York 10006, on Thursday, June 30, 1994 at 10:00 a.m., for
the following purposes:
1. To elect two directors, each to serve for a term expiring at the 1997
annual meeting of stockholders and until their successor shall have been
duly elected and qualified or until his or her earlier resignation or
removal;
2. To approve or disapprove the appointment of Ernst & Young as
independent auditors for the fiscal year ending February 28, 1995; and
3. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
Pursuant to the Company's By-Laws, the Board of Directors has fixed the time
and date for the determination of stockholders entitled to notice of and to
vote at the meeting as of the close of business on May 6, 1994. Accordingly,
only stockholders of record on such date and at such time will be entitled to
vote at the meeting, notwithstanding any transfer of any stock on the books of
the Company thereafter. A complete list of the stockholders of record on the
record date, arranged in alphabetical order and showing the address and the
number of shares registered in the name of each such stockholder, will be
available for examination by any stockholder of the Company for any purpose
germane to the meeting, for a period of ten days prior to the meeting, at
American Stock Transfer and Trust Company, Shareholder Services Department,
46th Floor, 40 Wall Street, New York, New York 10005.
By order of the Board of Directors,
ROBERT L. WELTY
Secretary
Denver, Colorado
May 23, 1994
IF YOU DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WISH YOUR STOCK TO
BE VOTED, PLEASE DATE, SIGN AND MAIL THE ACCOMPANYING FORM OF PROXY AS
PROMPTLY AS POSSIBLE IN THE ENCLOSED STAMPED ENVELOPE ADDRESSED TO THE
COMPANY.
<PAGE>
[LOGO OF KETEMA] , INC.
Executive offices
501 South Cherry Street, Suite 600
Denver, Colorado 80222
PROXY STATEMENT
SOLICITATION OF PROXIES
The accompanying proxy is solicited by and on behalf of the Board of Directors
of Ketema, Inc. (the "Company") for use at the annual meeting of its
stockholders to be held on June 30, 1994 (the "Meeting") and at any and all
adjournments or postponements thereof.
The shares represented by the proxy will be voted as directed with respect to
the election of the directors and with respect to Proposal (2). If no direction
is indicated, such shares will be voted in favor of the election of each
nominee for director and in favor of Proposal (2). The stockholder giving the
proxy has the power to revoke it at any time before it is exercised.
The cost of solicitation will be borne by the Company. The Company may use the
services of its directors, officers and other regular employees to solicit
proxies personally or by telephone, and may request brokers, fiduciaries,
custodians and nominees to send proxies, proxy statements and other material to
their principals at the expense of the Company. This proxy statement and the
accompanying proxy are being sent to the stockholders of the Company on or
about May 26, 1994.
ANNUAL REPORTS
The annual report of the Company for the 1994 fiscal year is enclosed herewith.
THE COMPANY WILL FURNISH WITHOUT CHARGE (OTHER THAN A REASONABLE CHARGE FOR ANY
EXHIBIT REQUESTED) TO ANY STOCKHOLDER OF THE COMPANY WHO SO REQUESTS IN
WRITING, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE
FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, FOR THE YEAR ENDED FEBRUARY 28,
1994 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. Any such request
should be directed to Stockholder Relations Department, Ketema, Inc., Suite
600, 501 South Cherry Street, Denver, Colorado 80222.
VOTING RIGHTS
Pursuant to the Company's By-Laws, the Board of Directors has fixed the time
and date for the determination of stockholders entitled to notice of and to
vote at the meeting as of the close of business on May 6, 1994. Accordingly,
only holders of record of Common Stock, $1.00 par value per share ("Common
Stock"), or 7% Cumulative Voting Preferred Stock, $1.00 par value ("Preferred
Stock"), on such date and at such time will be entitled to vote at the meeting,
notwithstanding any transfer of any stock on the books of the Company
thereafter.
1
<PAGE>
Votes are tabulated at the Meeting by inspectors of election. On May 6, 1994,
the Company had outstanding 3,490,202 shares of Common Stock, each of which
entitles the holder to one vote. In addition, the Company holds 1,041,619
shares as treasury stock, which shares cannot be voted. No shares of Preferred
Stock were outstanding on such date.
(1) ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes normally elected
for staggered three-year terms and currently has six members. Two directors are
proposed to be elected at the Meeting, each to serve for a three-year term
expiring at the 1997 annual meeting of stockholders and until his or her
successor has been duly elected and qualified or until his or her earlier
resignation or removal. The Board of Directors has nominated for election the
persons named below and each has consented to be named as a nominee. All
proxies received by the Company will be voted for the election of the nominees
listed below, if no direction to the contrary is given. The affirmative vote of
the holders of a plurality of the shares of Common Stock present in person or
represented by proxy entitled to vote at the Meeting, is necessary to elect a
director. In the event that either nominee is unable or declines to serve, the
proxy solicited herewith may be voted for the election of another person in his
stead. The Board of Directors knows of no reason to anticipate that this will
occur.
The following table sets forth the name, age at May 1, 1994, principal
occupations during the past five years and other positions with the Company of
the nominees for election as directors and each of the continuing directors of
other classes. Each of the persons named in the table has been a director of
the Company continuously since June 22, 1988, except for (i) Mr. Williamson,
who has been a director since April 21, 1992 and (ii) Mr. Gruber, who has been
a director since June 25, 1992.
INFORMATION AS TO DIRECTORS
<TABLE>
<CAPTION>
Principal Occupation
and Other Positions
Name Age with the Company (1)
<C> <C> <S>
NOMINEES FOR TERMS
EXPIRING IN 1997:
ALAN R. GRUBER*# 66 Chairman of the Board and Chief Executive Officer
of Orion Capital Corporation ("Orion"), a property
and casualty insurance holding company; Chairman of
Guaranty National Corporation, an insurance company
affiliate of Orion; Trustee of four trusts which
manage the Neuberger & Berman family of equity
mutual funds; Director of Trenwick Group, Inc., a
property and casualty reinsurance underwriter.
ELIZABETH ROSENWALD 50 Private investor; Chairperson and Managing Director
VARET# of American Securities, L.P. ("American
Securities") and a Director of affiliated entities;
Director of AMETEK, Inc. ("Ametek"), a diversified
multi-product manufacturing corporation.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation
and Other Positions
Name Age with the Company (1)
<C> <C> <S> <C>
CONTINUING DIRECTORS WITH TERMS EXPIRING IN 1996:
ALEXANDER G. ANAGNOS 67 Financial advisor to Mr. William
Rosenwald and his family; Executive
Director of American Securities and a
Director of an affiliated entity; Trustee
of Eastover Corporation, a real estate
investment trust, since April 1990.
WILLIAM J. CATACOSINOS* 64 Chairman of the Board, Chief Executive
Officer and President of Long Island
Lighting Company; Director of Utilities
Mutual Insurance Co.
CONTINUING DIRECTORS WITH TERMS EXPIRING IN 1995:
CHARLES D. KLEIN*# 55 Financial advisor to Mr. William
Rosenwald and his family; Managing
Director of American Securities and
executive officer of affiliated entities;
Director of Ametek.
HUGH H. WILLIAMSON, III 52 President and Chief Executive Officer of
the Company since April 1992; President,
Chief Executive Officer and Chief
Operating Officer of Williamson &
Associates, a consulting firm, for more
than three years prior thereto.
</TABLE>
- - -------------------------
*Member of the Audit Committee.
# Member of the Compensation Committee.
(1) Except as otherwise indicated, the nominees and continuing directors have
held their present occupations for a period in excess of five years.
The Company has an Audit Committee and a Compensation Committee, but does not
have a Nominating Committee. The Audit Committee's functions include
recommending to the Board of Directors the engagement of an independent
accounting firm to audit the Company's financial statements, reviewing with the
independent auditors the plan and results of the auditing engagement, reviewing
the scope and results of the Company's procedures for internal auditing,
reviewing the independence of the auditors, considering the range of audit and
non-audit services and reviewing the adequacy of the Company's internal
accounting control structure.
During the fiscal year ended February 28, 1994 there were seven meetings of the
Board of Directors, one meeting of the Audit Committee and one meeting of the
Compensation Committee. Each current director attended at least 75% of the
aggregate number of the Company's Board meetings and committee meetings (if
such director served on a committee) held during the fiscal year ended February
28, 1994.
3
<PAGE>
STOCK OWNERSHIP
The following table sets forth the number of shares of Common Stock of the
Company beneficially owned by each director, each Named Executive Officer (as
defined below) and by all officers and directors of the Company as a group at
April 28, 1994, and the percentage of the outstanding shares of Common Stock so
owned by each director and such group.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Percent
Name Ownership(1) of Class(2)
<S> <C> <C>
Alexander G. Anagnos............................. 39,592(3) 1.13%
William J. Catacosinos........................... 11,704(4) 0.34%
Alan R. Gruber................................... 14,000(5) 0.40%
Charles D. Klein................................. 74,022(6) 2.09%
William E. Leisey................................ 3,494(7) 0.10%
Thomas A. Sims................................... 1,250(8) 0.04%
Robert L. Tomz................................... 3,207(9) 0.09%
Elizabeth Rosenwald Varet........................ 518,379(10) 13.82%
Hugh H. Williamson, III.......................... 84,526(11) 2.36%
All executive officers and directors as a group,
consisting of eleven
persons, including the individuals named above.. 767,979(12) 19.57%
</TABLE>
- - -------------------------
(1) Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), beneficial ownership of a security consists
of sole or shared voting power (including the power to vote or direct the
vote) and/or sole or shared investment power (including the power to
dispose or direct the disposition) with respect to the security through any
contract, arrangement, understanding, relationship or otherwise. Unless
otherwise indicated, beneficial ownership disclosed consists of sole voting
and investment power.
(2) Percent of class was calculated based on the ratio of beneficial ownership
to the sum of (a) the Company's outstanding shares of Common Stock, (b)
shares issuable upon conversion of the Company's 8% Convertible
Subordinated Debentures due 2003 ("Debentures") held by the applicable
beneficial owner and (c) the purchase of shares upon the exercise of
currently exercisable stock options for the applicable beneficial owner.
(3) Includes 19,201 shares (of which 7,702 shares are issuable upon conversion
of Debentures) beneficially owned by Mr. Anagnos' wife and son. Mr. Anagnos
disclaims any beneficial ownership of such shares. Mr. Anagnos has sole
voting and investment power with respect to 9,593 shares (of which 8,793
shares are issuable upon conversion of Debentures) and shared voting and
investment power with respect to 10,798 shares (of which 7,702 are issuable
upon conversion of Debentures). Mr. Anagnos is a director of an investment
manager for certain entities holding an aggregate of 94,400 shares
(including a Ketema employee benefit plan trust which holds among its
assets an aggregate of 56,000 shares); none of such 94,400 shares have been
included in the above table.
(4) Includes 1,604 shares issuable upon conversion of Debentures.
(5) Includes 6,666 shares held pursuant to restricted stock awards under the
1988 Stock Incentive Plan of Ketema, Inc. (the"1988 Plan").
(6) Includes 3,425 shares (of which 1,925 shares are issuable upon conversion
of Debentures) beneficially owned by Mr. Klein's wife. Mr. Klein disclaims
any beneficial ownership of such 3,425 shares. Mr. Klein has sole voting
and investment power with respect to 57,126 shares (of which 32,926 are
issuable upon conversion of Debentures) and shared voting and investment
power with respect to 13,471 shares (of which 10,911 are issuable upon
conversion of Debentures).
4
<PAGE>
(7) Includes 384 shares issuable upon conversion of Debentures and assumes the
exercise of currently exercisable stock options to purchase 2,750 shares.
(8) Assumes the exercise of currently exercisable stock options to purchase
1,250 shares.
(9) Includes 1,604 shares issuable upon conversion of Debentures beneficially
owned by Mr. Tomz and 1,603 shares issuable upon conversion of Debentures
beneficially owned by his son and a trust for the benefit of another son.
Mr. Tomz disclaims any beneficial ownership of such 1,603 shares.
(10) Includes 15,483 shares (of which 15,083 are issuable upon conversion of
Debentures) beneficially owned by Ms. Varet's husband. Ms. Varet disclaims
any beneficial ownership of such 15,483 shares. Ms. Varet has sole voting
and investment power with respect to 91,890 shares (of which 55,990 shares
are issuable upon conversion of Debentures) and shared voting and
investment power with respect to 411,006 shares (of which 190,522 are
issuable upon conversion of Debentures).
(11) Includes 55,636 shares (of which 7,444 shares are issuable upon conversion
of Debentures and 48,192 shares are issuable upon conversion of $500,000
principal amount of 8% convertible subordinated debentures due 2003 issued
June 24, 1992) and assumes the exercise of currently exercisable stock
options to purchase 28,890 shares.
(12) Includes (a) 6,666 shares held pursuant to restricted stock awards under
the 1988 Plan; (b) 344,834 shares issuable upon conversion of Debentures;
(c) 48,192 shares issuable upon conversion of $500,000 principal amount of
8% convertible subordinated debentures due 2003 issued June 24, 1992; and
(d) 41,015 shares assuming the exercise of currently exercisable stock
options held by all executive officers and directors as a group.
VOTING SECURITIES
The following table lists the beneficial ownership of each person or group who,
as of May 13, 1994, owns to the Company's knowledge more than five percent of
the Company's outstanding Common Stock.
<TABLE>
<S> <C> <C>
<CAPTION>
Amount and
Name and Address Nature Percent of
of Beneficial Owner of Beneficial Ownership Class
------------------- ----------------------- ----------
<S> <C> <C>
American Securities Partners, L.P.
(Successor to American Securities Corpora-
tion)
122 East 42nd Street, New York, NY 10168... 838,943 shares(a) 21.22%
Tweedy, Browne Company L.P.
TBK Partners, L.P.
Vanderbilt Partners, L.P.
52 Vanderbilt Avenue, New York, NY 10017... 491,525 shares(b) 14.08%
Lehman Brothers, Inc.; Lehman Brothers
Holdings, Inc.
and American Express Company
2 World Trade Center, 15th Floor
New York, NY 10048......................... 178,600 shares(c) 5.12%
Gabelli Funds, Inc.
GAMCO Investors, Inc.
Gabelli & Company, Inc. Profit Sharing Plan
Gabelli Performance Partnership
Gabelli Associates Fund
One Corporate Center, Rye, New York 10580-
1435...................................... 201,099 shares(d) 5.50%
</TABLE>
- - -------------------------
(a) Certain clients of American Securities Partners, L.P. ("American Securities
Partners"), an affiliate of American Securities, including Mr. Anagnos, Mr.
Klein and Ms. Varet and approximately 20 other persons or entities, some of
whom are relatives of the aforementioned persons (collectively, the
5
<PAGE>
"Reporting Persons"), have reported, in an amendment to Schedule 13D filed
with the SEC on April 28, 1994, beneficial ownership of an aggregate of
838,943 shares (21.22% of the Common Stock), of which 462,773 shares are
issuable upon conversion of Debentures. Of such clients, Lewis G. Cole, a
member of Stroock & Stroock & Lavan, counsel to the Company, reported
beneficial ownership of 310,357 shares (8.56%), as to 1,200 shares of which
he reported sole voting and dispositive power and as to 309,157 shares of
which (including 134,873 shares issuable upon conversion of Debentures) he
reported shared voting and dispositive power as a director and/or officer of
one or more corporations and/or foundations and as a co-trustee of certain
trusts; Nina K. Rosenwald, Ms. Varet's sister, reported beneficial ownership
of 402,660 shares (10.89%), as to 56,702 shares of which (including 32,242
shares issuable upon conversion of Debentures) she reported sole voting and
dispositive power and as to 345,958 shares of which (including 174,689
shares issuable upon conversion of Debentures) she reported shared voting
and dispositive power as a director and/or officer of one or more
corporations and/or foundations and as a co-trustee of certain trusts; Alice
R. Sigelman, Ms. Varet's sister, reported beneficial ownership of 412,840
shares (11.17%), as to 34,357 shares of which (including 24,197 shares
issuable upon conversion of Debentures) she reported sole voting and
dispositive power and as to 378,483 shares of which (including 182,606
shares issuable upon conversion of Debentures) she reported shared voting
and dispositive power as a director and/or officer of certain corporations
and/or foundations and as a co-trustee of certain trusts; and Ms. Varet
reported beneficial ownership of 502,896 shares (13.46%) of Common Stock, as
to 91,890 shares of which (including 55,990 shares issuable upon conversion
of Debentures) she reported sole voting and dispositive power and as to
411,006 shares of which (including 182,606 shares issuable upon conversion
of Debentures) she reported shared voting and dispositive power as a
director and/or officer of one or more corporations and/or foundations and
as a co-trustee of certain trusts.
A corporation organized on behalf of the Reporting Persons has proposed a
merger transaction pursuant to which the shares of Common Stock not already
owned by the Reporting Persons would be converted into the right to receive
$13.125 per share in cash. See "Certain Transactions--Proposed Merger
Transaction" herein. The Amendment to Schedule 13D also stated that certain
other clients of American Securities Partners beneficially owned an
aggregate of 196,237 shares (5.51%) (including 70,732 shares issuable upon
conversion of Debentures).
(b) Based upon an amendment to a Schedule 13D filed with the SEC on August 11,
1993, and through a Form 4 which was filed with the SEC on January 4, 1994,
(i) Tweedy, Browne Company L.P. reported beneficial ownership of an
aggregate of 483,425 shares (13.85%) of Common Stock, as to 422,780 shares
of which it reported sole voting power and as to 483,425 shares of which it
reported shared dispositive power; (ii) TBK Partners, L.P. reported sole
voting and dispositive power with respect to 4,600 shares (0.13%) of Common
Stock; and (iii) Vanderbilt Partners, L.P. reported sole voting and
dispositive power with respect to 3,500 shares (0.10%) of Common Stock.
(c) Lehman Brothers, Inc., Lehman Brothers Holdings, Inc. and American Express
Company and certain related entities reported, in a Schedule 13G filed with
the SEC on February 10, 1994, beneficial ownership of 178,600 shares of
Common Stock as to which they reported sole voting and dispositive power.
(d) Based upon a Schedule 13D filed with the SEC on May 13, 1994, (i) Gabelli
Funds, Inc. reported sole voting, dispositive power and beneficial
ownership of 146,294 shares (4.00%) of the Common Stock, of which 116,294
shares are issuable upon conversion of Debentures; (ii) GAMCO Investors,
Inc. reported sole voting, dispositive power and beneficial ownership of
41,829 shares (1.14%) of the Common Stock, of which 38,829 shares are
issuable upon conversion of Debentures; (iii) Gabelli & Company, Inc.
Profit Sharing Plan reported sole voting, dispositive power and beneficial
ownership of 10,076 shares (0.28%) of the Common Stock, of which 10,076
shares are issuable upon conversion of Debentures; (iv) Gabelli Performance
Partnership reported sole voting, dispositive power and beneficial
ownership of 1,900 shares (0.05%) of the Common Stock; and (v) Gabelli
Associates Fund reported sole voting, dispositive power and beneficial
ownership of 1,000 shares (0.03%) of the Common Stock.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information for each of the three fiscal
years ended February 28, 1994 concerning compensation paid to or accrued for
the President and Chief Executive Officer and the three other most highly
compensated executive officers of the Company whose total annual salary and
bonus exceeded $100,000 (such persons being referred to as the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
----------------------------------- -----------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING ALL OTHER
YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS/SARS COMPENSATION
---- -------- -------- ------------ ---------- ------------ ------------
(4) (A) (5) (4)
<S> <C> <C> <C> <C> <C> <C> <C>
Hugh H. Williamson, III
(1).................... 1994 $330,000 $180,000 $ 1,179 $ -- -- $21,731 b c d
President and Chief 1993 285,770 130,000 23,394 -- 200,000 20,336 b f
Executive Officer
Robert L. Tomz (2)...... 1994 130,000 56,014 112,356 -- 11,000 1,305 c d
Vice President, Finance 1993 28,260 12,717 10,000 -- -- --
and
Chief Financial Officer
Thomas A. Sims (3)...... 1994 108,600 41,881 -- -- 1,600 940 c d
Vice President, Human 1993 61,250 18,375 50,815 -- 5,000 116 f
Resources
William E. Leisey....... 1994 105,833 33,893 -- -- -- 45,572 c d e
Controller 1993 100,000 22,750 51,532 -- 2,000 955 d f
1992 93,333 13,000 -- --
</TABLE>
- - -------------------------
(1) Mr. Williamson joined the Company as President and Chief Executive Officer
in April 1992.
(2) Mr. Tomz joined the Company as Vice President in December 1992 and was
promoted to his current position in March 1993.
(3) Mr. Sims joined the Company as Vice President, Human Resources in August
1992.
(4) As permitted by the SEC's transition rules on executive compensation
disclosure, amounts of Other Annual Compensation and All Other Compensation
for the Company's 1992 fiscal year are not shown in the table.
(5) Stock appreciation rights ("SARs") entitle the holder to receive payment at
the time, and to the extent that, the related option is exercisable and is
exercised, in an amount equal to 66-2/3% of the difference between the then
fair market value of the Common Stock as to which the option is exercised
and the exercise price. Payment may be made in the form of cash or shares
of Common Stock, at the holder's election but subject to approval by the
Stock Incentive Plan Committee. In addition to the options noted,
conjunctive SARs were granted in 1993 to Messrs. Williamson, Sims and
Leisey in the amounts of 103,700, 4,000 and 2,000, respectively.
(a) Amounts represent relocation reimbursements.
(b) Includes director fees of $20,000.
(c) Includes imputed value of life insurance: Mr. Williamson--$1,031; Mr.
Tomz--$605; Mr. Sims--$240; and Mr. Leisey--$269.
(d) Includes matching contributions made by the Company under the Ketema
Savings and Investment Plan of $700 for each Named Executive Officer.
(e) Mr. Leisey received a lump sum cash payment of $44,603 in lieu of future
benefits from the Company's Supplemental Executive Benefit Plan.
(f) Includes imputed value of life insurance: Mr. Williamson--$336; Mr. Sims--
$116; and Mr. Leisey--$255.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The following table provides details regarding stock options granted to the
Named Executive Officers in fiscal 1994. In addition, the table shows the
hypothetical gains or "option spreads" that would result for the respective
options based on assumed rates of annual compounded stock price appreciation of
5% and 10% from the date the options were granted through their expiration
dates.
7
<PAGE>
STOCK OPTION/SAR GRANTS IN FISCAL 1994
<TABLE>
<CAPTION>
Potential
Realizable
Value at Assumed
Annual Rates of
Stock Price
% of Total Appreciation
Options/SARs Exercise for
Options/SARs Granted to or Base Option Term(3)
Granted Employees in Price Expiration ----------------
(#)(1) Fiscal Year ($/Share) Date 5% 10%
Name ------------ ------------ --------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Hugh H. Williamson, III. -- * * * * *
Robert L. Tomz.......... 11,000(2) 58.51% $11.125 5/14/2000 $49,819 $166,099
Thomas A. Sims.......... 1,600(2) 8.51% 11.125 5/14/2000 7,246 16,887
William E. Leisey....... -- * * * * *
</TABLE>
- - -------------------------
* Not applicable since no options were granted in fiscal 1994.
(1) Options/SARs generally become fully exercisable in the event of the
holder's death, retirement or termination of employment in connection with
a change of control. Optioned shares which may have been but were not
purchased during any one twelve-month period may be purchased during any
one or more succeeding twelve-month periods up to the expiration date.
None of the fiscal 1994 options were granted with conjunctive SARs.
(2) Represents nonqualified stock options which, commencing on May 14, 1994,
become exercisable in annual installments of 25% of the total grant.
(3) These amounts represent certain assumed rates of appreciation. Actual
gains, if any, on stock option exercises are dependent on future
performance of the Company's Common Stock. There can be no assurance that
the rates of appreciation reflected in this table will be achieved.
The following table illustrates stock option and stock appreciation rights
exercised by the Named Executive Officers during fiscal 1994 and the aggregate
amounts realized by each such officer. In addition, the table shows the
aggregate number of unexercised options and SARs that were exercisable and
unexercisable as of February 28, 1994 and the value of "in-the-money" stock
options and SARs which represents the positive difference between the year-end
price of the Company's Common Stock of $13.50 per share and the exercise price
of such options.
AGGREGATED STOCK OPTION/SAR EXERCISES IN FISCAL 1994 AND
OPTION/SAR VALUES AS OF FEBRUARY 28, 1994
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Shares Options and SARs In-the-Money Options and
Acquired as of February 28, 1994 SARs as of
on Value (1) February 28, 1994 (2)
Exercise Realized ------------------------- -------------------------
(#) ($) Exercisable Unexercisable Exercisable Unexercisable
Name -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Hugh H. Williamson, III. -- -- 19,260 180,740 $60,188 $1,049,828
Robert L. Tomz.......... -- -- -- 11,000 -- 26,125
Thomas A. Sims.......... -- -- 1,250 5,350 3,833 15,300
William E. Leisey....... -- -- 2,750 1,500 2,552 5,156
</TABLE>
- - -------------------------
(1) In addition to the options noted above, the number of unexercised
conjunctive SARs are as follows: Mr. Williamson: 103,700 unexercisable;
Mr. Sims: 1,000 exercisable and 3,000 unexercisable; and Mr. Leisey: 2,750
exercisable and 1,500 unexercisable.
(2) The value noted includes all options and conjunctive SARs, where
applicable.
8
<PAGE>
DEFINED BENEFIT PLAN
The Employees' Retirement Plan of Ketema, Inc. (the "Retirement Plan") is a
non-contributory defined benefit pension plan under which contributions are
actuarially determined. The following table sets forth the estimated annual
benefits payable upon retirement (assuming normal retirement at age 65) under
the Retirement Plan, before reduction for the portion of the benefit payable
under the Ametek Pension Plan (as described below), for individuals with the
indicated years of service at normal retirement age and at the indicated
average compensation levels:
<TABLE>
<CAPTION>
ANNUAL BENEFITS BASED ON
YEARS OF SERVICE AT NORMAL RETIRMENT AGE*
AVERAGE ------------------------------------------
COMPENSATION 15 20 25*
------------ ------------- ------------- --------------
<S> <C> <C> <C>
$150,000........................... $ 59,200 $ 63,000 $ 66,800
200,000........................... 79,600 84,700 89,800
250,000........................... 100,000 106,400 112,700
</TABLE>
- - -------------------------
* Benefit amounts assume a participant reaches age 65 in 1994; for younger
participants, the benefit amounts are less than the amounts indicated above.
Upon 25 years of service, the maximum benefit is reached.
The annual compensation taken into account for any plan year is generally equal
to the participant's salary and any bonus paid during the plan year as reported
in the Summary Compensation Table. Compensation in excess of certain amounts
prescribed by the Secretary of the Treasury ($150,000 for 1994) cannot be taken
into account under the Retirement Plan. The Named Executive Officers are
subject to this limitation. At February 28, 1994, the Named Executive Officers
had the following years of service to be credited under the Retirement Plan:
Messrs. Williamson--1; Tomz--1; Sims--1; and Leisey--26.
Pursuant to an agreement between Ametek and the Company, the pension accrued
under a similar plan maintained by Ametek (the "Ametek Pension Plan") as of
November 30, 1988 (the "Distribution Date") for each employee of Ametek (and
any of its subsidiaries) will remain the obligation of the Ametek Pension Plan
and will be payable when such employee's benefit becomes payable under the
Plan. Service with the Company (or any of its subsidiaries) will be credited
for purposes of vesting and the service period requirements applicable to early
retirement, disability and pre-retirement death benefits under the Ametek
Pension Plan. Mr. Leisey was formerly an employee of Ametek.
In addition, for retirements occurring in fiscal 1994, the maximum annual
pension benefit payable at normal retirement age is restricted by law to
$118,800. The $118,800 limit is adjusted annually by the Secretary of the
Treasury to reflect increases in the cost of living. The pension benefits
payable to the Named Executive Officers under the Retirement Plan are subject
to this limitation.
COMPENSATION OF DIRECTORS
The current annual rate of compensation for services as a director of the
Company is $20,000.
Pursuant to a Retirement Plan for Directors (the "Directors Plan"), the Company
has agreed to provide retirement benefits and death benefits to those directors
who have not accrued benefits under the above-described Employees' Retirement
Plan of Ketema, Inc. and who have completed at least three years of service as
a director or officer of the Company. The retirement benefit payable under the
Directors Plan is an annual amount equal to 100% of the highest annual rate of
compensation for directors during the director's period of service on the Board
of Directors; however, the benefit is reduced proportionately if the
participant has less than five years of service. The Company shall satisfy its
obligations arising under the Directors Plan exclusively from its general
assets. Mr. Anagnos, Dr. Catacosinos, Mr. Klein and Ms. Varet are participants
in the Directors Plan. Mr. Gruber will become a participant upon completion of
three years of service on the Board.
9
<PAGE>
During fiscal 1994 the Company maintained a Directors' Benefit Plan (the
"Directors Benefit Plan"), whereby the Company entered into individual
agreements with certain directors which required the Company to pay death
benefits to their designated beneficiaries and to pay benefits to the directors
under certain circumstances. The Directors Benefit Plan provided for a benefit,
payable for ten years, in an annual amount, specified in each director's
agreement, commencing at death or the later of age 70 or retirement. The annual
amount specified for each director covered under the Directors Benefit Plan was
$20,000. In addition, a lump sum death benefit was payable to the director's
beneficiary if the director died while serving on the Board of Directors, in an
amount specified in the director's agreement. The lump sum death benefit amount
for each director covered under the Directors Benefit Plan was $100,000. To
fund benefits under the Directors Benefit Plan, the Company purchased
individual life insurance policies on the lives of certain of the covered
directors. Mr. Anagnos, Dr. Catacosinos, Mr. Gruber, Mr. Klein and Ms. Varet
were participants in the Directors Benefit Plan during fiscal 1994.
Effective February 28, 1994, the Board of Directors approved the termination of
the Directors Benefit Plan as a cost-saving initiative and in consideration of
the termination of a similar plan for Company executives, with no further
obligation to Mr. Anagnos, Dr. Catacosinos, Mr. Gruber, Mr. Klein and Ms.
Varet. Active directors will continue to be covered by a group term life
insurance benefit of $50,000.
REPORT OF THE COMPENSATION COMMITTEE
The following report submitted by the Compensation Committee of the Board of
Directors, provides information regarding policies and practices concerning
compensation of the President and Chief Executive Officer and the other
executive officers of the Company. Decisions about executive officers' salary
and annual cash incentives are made under the supervision of the Compensation
Committee, while decisions concerning compensation in the form of stock
options, SARs and restricted stock awards are made under the supervision of the
Stock Incentive Plan Committee of the Board of Directors designated by the 1988
Stock Incentive Plan. The members of the Stock Incentive Plan Committee
currently are the same as the members of the Compensation Committee; thus,
references in this report to the "Compensation Committee" should be read, where
appropriate, as references to the Stock Incentive Plan Committee.
The function of the Compensation Committee is to review all matters relating to
the compensation of senior executives of the Company, and to make
recommendations to the Board of Directors for specific actions in regard to
such matters. Final determinations with respect thereto are made by the Board
of Directors. The Compensation Committee during fiscal 1994 was comprised of
Mr. Alan R. Gruber, Mr. Charles D. Klein, and Ms. Elizabeth R. Varet, none of
whom is an employee of the Company.
COMPENSATION PHILOSOPHY
The philosophy for compensating executives of the Company is to provide a
reasonable mix of cash and equity with a significant portion of total
compensation at risk. In this way, executives are encouraged and rewarded for
acting as "owners" rather than "employees." Incentive plans have been designed
to focus the best efforts of executives on the achievement of financial and
strategic objectives intended to benefit both the Company and its stockholders.
The Company's executive compensation programs include the following elements:
Base Salary: The Company's base salary policy is to establish competitive
salary ranges for executives targeted at approximately the median of base
salaries paid to executives in commensurate positions within other similar
organizations and industries. To establish these ranges, a procedure which is
carried out at the beginning of each fiscal year, the Company utilizes national
surveys of compensation for other industrial companies within appropriate
revenue ranges. The Company's compensation practices are compared with those of
companies in the manufacturing, fabrication, aerospace, and diversified
industrial sectors. Each executive's base salary is targeted to fall within an
appropriate salary range, the amount of which is based upon the executive's
past and expected contributions to the Company.
10
<PAGE>
Annual Cash Incentives: The Company has adopted an annual cash incentive plan
whereby executives may be rewarded for achieving or exceeding specific
financial and strategic objectives which must link directly with the long-term
strategy of the Company and ultimately to increasing stockholder value. At the
beginning of each fiscal year, objectives are formulated at the corporate,
division, and individual executive level by the Compensation Committee. Such
objectives are currently based upon a combination of profitability targets and
other corporate objectives (e.g., increase in international sales and reduction
of workers' compensation expense) determined by the Compensation Committee.
These objectives subsequently are presented to the Board of Directors for
review and approval. Annual cash incentive targets are fixed to allow
executives to earn total cash compensation (base salary plus annual incentives)
approximating the median total cash compensation paid to executives in similar
positions in companies of similar revenue size. Before an executive can achieve
this level of total cash compensation, the pre-established objectives must be
substantially met.
Long-Term Non-Cash Incentives: Incentive awards can take the form of stock
options, SARs or restricted stock awards. Such awards have the purpose of
aligning the executives' interests with the stockholders' interests. Such
awards provide inducements to the executives to remain with the Company over
the long term and to work to enhance corporate performance and,
correspondingly, stockholder value. Incentive award levels are targeted to
bring the executives' total compensation, i.e. base salary plus annual cash
incentives plus long-term non-cash incentives, to the 75th percentile of
competitive practice. Executives can reach this compensation level only if
long-term objectives are met and stockholders are similarly rewarded through
stock appreciation.
COMPENSATION PRACTICE
The compensation and benefits packages afforded to the Company's executive
officers are intended to be commensurate with competitive practice of similar
positions held by employees at competitors within the Company's industries.
Their future rewards will be closely tied to the overall results of the
Company. With total compensation significantly weighted toward long-term
rewards, the Company's compensation programs will be most effective for
providing incentives to pursue the Company's long-term strategies.
MR. WILLIAMSON'S 1994 CASH COMPENSATION
At the time Mr. Williamson joined the Company in April 1992, his base salary
was established by the Compensation Committee in consideration of comparative
salaries paid to the CEOs of other public companies of similar size within the
manufacturing industry, and the unique qualifications and experience which he
offered the Company. Mr. Williamson's annualized base salary remained unchanged
during fiscal 1994 as compared to fiscal 1993.
Pursuant to the Ketema, Inc. Annual Incentive Plan, Mr. Williamson was awarded
an incentive payment, as shown in the Summary Compensation Table above, for his
performance during fiscal 1994. The Compensation Committee considered the
following in recommending the incentive payment amount: (a) the Company, under
the first full year of Mr. Williamson's leadership achieved operating profit of
$5.5 million and net income of $1.2 million following three consecutive years
of losses; (b) through focused efforts in improving productivity and reducing
costs, the Company achieved its highest ever operating profit as a percent of
sales; and (c) international sales increased 18% during fiscal 1994 as compared
to international sales in fiscal 1993, further positioning the Company's
products in an increasingly international market.
Alan R. Gruber
Charles D. Klein
Elizabeth R. Varet
11
<PAGE>
PERFORMANCE GRAPH
The following graph presents a comparison of cumulative total returns for the
Company's Common Stock for the five year period ended February 28, 1994 with
these Standard & Poor's ("S&P") indices: the S&P 500 index, the S&P
Aerospace/Defense index and the S&P Manufacturing-Diversified index.
<TABLE>
<CAPTION>
FEBRUARY 28 OR 29 1989 1990 1991 1992 1993 1994
----------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ketema, Inc....................................... 100 96 78 68 88 96
S&P 500........................................... 100 119 136 158 175 190
S&P Aerospace/Defense............................. 100 109 124 138 146 203
S&P Manufacturing-Diversified..................... 100 113 128 144 155 190
</TABLE>
The above graph assumes $100 was invested on February 28, 1989 in Ketema, Inc.
Common Stock, and the securities underlying the S&P 500, the S&P
Aerospace/Defense index and the S&P Manufacturing-Diversified index, and
assumes reinvestment of dividends. The Company elected to replace the S&P
Capital Goods index used for comparison in the Company's 1993 proxy statement
with the S&P Manufacturing-Diversified index. The S&P Capital Goods index is no
longer available from S&P.
12
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's directors and officers
to file with the Securities and Exchange Commission and the American Stock
Exchange initial reports of ownership and reports of changes in ownership of
the Company's Common Stock. Copies of all such Section 16(a) reports are
required to be furnished to the Company. These filing requirements also apply
to holders of more than ten percent of the Company's Common Stock.
To the Company's knowledge, based solely on a review of the copies of Section
16(a) reports furnished to the Company and written representations that no
other reports were required, all Section 16(a) filing requirements applicable
to the Company's officers, directors and ten percent stockholders were complied
with during the fiscal year ended February 28, 1994.
CERTAIN RELATIONSHIPS
American Securities Partners (the successor to American Securities
Corporation), an investment banking firm which is an affiliate of American
Securities, rendered and continues to render financial advisory and other
services to the Company for which the Company paid $250,000 in fees for the
fiscal year ended February 28, 1994. Ms. Varet is Chairperson and Managing
Director of American Securities and a Director of American Securities Partners;
Mr. Klein is a Managing Director of American Securities and an executive
officer of American Securities Partners; and Mr. Anagnos is an Executive
Director of American Securities. In addition, an investment management
affiliate of American Securities, of which firm Mr. Anagnos is a Director and a
portfolio manager and Mr. Klein is a portfolio manager, rendered and continues
to render investment advisory and other services to an employee benefit plan
trust of the Company for which the trust paid $150,160 in fees for the fiscal
year ended February 28, 1994. American Securities is majority owned and
controlled indirectly, through family trusts of which Ms. Varet is a co-
trustee, by Ms. Varet and members of her family.
CERTAIN TRANSACTIONS
Proposed Merger Transaction: In September 1993, the Board of Directors
established a Special Committee of the Board consisting of Messrs. William J.
Catacosinos and Alan R. Gruber to consider the request of Hugh H. Williamson,
III that the Board of Directors approve Mr. Williamson and the group of
stockholders of the Company consisting of clients of American Securities
Partners (the "American Securities Group") or certain of the members thereof
becoming an "interested stockholder" within the meaning of Section 203 of the
Delaware General Corporation Law ("Section 203") and a similar provision in the
Company's Certificate of Incorporation. Mr. Williamson made this request so
that he and the American Securities Group could explore as a strategic
alternative for the Company a possible business combination transaction in
which the Company would be acquired by an entity to be formed by them, without
such transaction becoming subject to the restrictions that would otherwise be
applicable under Section 203 or the Certificate of Incorporation. On October
19, 1993, the Board of Directors of the Company, based on the recommendation of
the Special Committee made after consultation with independent legal counsel
selected by them, approved Mr. Williamson and the American Securities Group or
certain of the members thereof becoming an "interested stockholder" solely as a
result of any agreement, arrangement or understanding which may be reached by
them with respect to a proposal for a business combination between the Company
and an entity formed by them, provided that a written proposal for such a
business combination was submitted prior to a specified date (April 19, 1994,
subsequently extended to May 26, 1994).
In Amendment No. 12 to its Schedule 13D Statement, dated October 19, 1993, the
members of the American Securities Group stated that they were considering
various options with regard to their investment in the
13
<PAGE>
Company including initiating or responding to proposals regarding a merger or
other business combination. The Amendment also stated that the American
Securities Group had discussed generally and intended to explore with Mr.
Williamson a possible merger or business combination transaction. On April 28,
1994, KTM Holdings Corp., a corporation organized on behalf of the American
Securities Group ("KTM"), delivered a proposal to the Company's Board of
Directors proposing the acquisition of all outstanding shares of Common Stock
not already owned by the members of the American Securities Group at a price of
$13.125 per share payable in cash through a merger of a wholly-owned subsidiary
of KTM into the Company which would be the surviving corporation and become a
wholly-owned subsidiary of KTM (the "Merger Proposal"). The Merger Proposal
provides that the proposed merger, if approved by the Board of Directors based
on a favorable recommendation of the Special Committee, would be subject to a
number of conditions, including (i) the negotiation and execution of a
definitive merger agreement, (ii) approval by the holders of a majority of the
outstanding shares of Common Stock, (iii) KTM reaching satisfactory agreements
with (a) the institutional investors holding the Company's outstanding Senior
Notes regarding the early retirement of such notes and (b) Mr. Williamson
regarding, among other things, his continuation as Chief Executive Officer of
the Company and his exchange of the convertible debentures and options held by
him for an equity participation in KTM if the proposed merger is consummated,
and (iv) the funding of working capital and term loans to finance the
transaction under a bank commitment letter. Subsequently, KTM reached an
understanding with Mr. Williamson. The American Securities Group and Mr.
Williamson beneficially own in the aggregate approximately 22.87% of the
outstanding shares of Common Stock (after giving effect to the conversion of
all convertible debentures held by them and the exercise of all presently
exercisable stock options held by Mr. Williamson).
"Thereafter, the Special Committee, with the assistance of its financial and
legal advisors, began to consider the Merger Proposal in light of, among other
things, the operating and financial performance of the Company." There can be
no assurances that the merger contemplated by the Merger Proposal, or any other
business combination involving the Company, will be approved by the Special
Committee or the Board of Directors, or if approved, will be consummated.
The Merger Proposal is not being considered or acted upon at the Annual Meeting
of Stockholders. By voting for the election of the Directors or other matters
at the Annual Meeting, stockholders will not be voting on the Merger Proposal
which, if hereafter approved by the Board of Directors, will be submitted to
stockholders and voted upon only at a later Special Meeting of Stockholders
called for such purpose. In connection therewith, stockholders will be
furnished with a proxy statement describing the Merger Proposal and containing
information required by Rule 13e-3 (Going Private Transactions by Certain
Issuers or Their Affiliates) promulgated under the Exchange Act.
Subsequent to the Company's public announcement on April 28, 1994, of its
receipt of the Merger Proposal, the Company was served with, or advised of the
filing of, seven class action lawsuits in the Delaware Court of Chancery, New
Castle County relating to the Merger Proposal. The complaints name as
defendants, inter alia, all or certain directors of the Company and, in some
instances, the Company itself. All of the complaints allege that the proposal
by certain of the defendant directors who are members of the American
Securities Group to acquire the remaining interest of the Company at the offer
price of $13.125 in cash, if accepted, would be inadequate and unfair to the
minority stockholders of the Company and would constitute a breach of fiduciary
duties by the defendant directors. Certain of the complaints include further
allegations, among them, that the offer "effectively put[s] a cap on the market
price for Ketema stock" and therefore is manipulative, and that there is
allegedly non-public information in the possession of the defendants with
respect to the Company's prospects which should be disclosed to stockholders to
enable them to determine whether to exercise appraisal rights in any proposed
merger. The principal relief sought by the complaints is a declaration that, if
the acquisition were consummated at the offered price, it would constitute a
breach of fiduciary duty and the granting of a preliminary injunction to bar an
acquisition at the offered price. The complaints further seek to rescind the
merger if implemented prior to entry of an injunction, to recover damages in an
unspecified amount, reimbursement of costs, including attorneys' and experts'
fees, and other equitable relief.
Supplemental Senior Executive Death Benefit Program: During fiscal 1994, the
Company maintained a Supplemental Senior Executive Death Benefit Program (the
"Program"), whereby the Company entered into
14
<PAGE>
individual agreements with certain executives which required the Company to pay
death benefits to the executives' designated beneficiaries and to pay benefits
to the executives under certain circumstances. If a covered executive died
before retirement or before age 65 while on disability retirement, the
executive's beneficiary would receive a lump sum death benefit of up to
$150,000 and monthly payments from the date of the executive's death for 10
years. The specified dollar amount of the monthly payments was determined on an
individual basis and ranged from approximately $800 to $6,700. In addition, the
standard death benefit payable to all salaried personnel from the Company's
group term life insurance policy was limited to $50,000 for participants in the
Program. If a covered executive retired, or reached age 65 while on disability
retirement, the Program provided for an annual benefit, payable monthly over a
period of 10 years to the executive or the executive's beneficiary. The
payments would commence for retirees at age 70 or death, whichever is earlier.
However, if the executive retired after age 70, the payments would commence on
retirement. To fund the benefits under the Program, the Company obtained
individual life insurance policies on the lives of certain covered executives.
Effective February 28, 1994, the Program was terminated by the Company as a
cost-savings initiative with no further obligation to Messrs. Williamson, Tomz,
and Sims, participants in the Program. Mr. Leisey, also a participant, was
vested in a benefit (i.e. eligible for early retirement under the Employees'
Retirement Plan of Ketema, Inc.) and received a lump sum payment of $44,603 in
lieu of any future benefits from the Program.
Supplemental Retirement Benefit: As part of the compensation package for Mr.
Williamson which was recommended by the Compensation Committee and approved by
the Board of Directors, a retirement benefit was approved which permits Mr.
Williamson to retire at age 60 and receive an annual amount equal to 50% of the
three-year average of his then-current salary and bonus. The difference between
such amount and the amount received by Mr. Williamson under the Retirement Plan
would be paid by the Company. Automatic vesting would occur upon a change in
control of the Company prior to Mr. Williamson's reaching age 60.
Key Employee Severance Plan: Pursuant to the Ketema, Inc. Key Employee
Severance Plan (the "Plan") effective April 5, 1994, Messrs. Williamson, Tomz,
Sims, Leisey, and certain other key employees will be entitled to a severance
benefit in the event that the executive's employment is terminated by the
Company within 24 months of the effective date of the Plan without cause or by
the executive for good reason after a Change-in-Control (as defined below) in
an amount equal to 12 months of salary continuation, annual bonus, and certain
employee benefits. For the purposes of the Plan, a "Change-in-Control" means
the acquisition of 30% or more of the common stock of the Company by any party
other than the Company (or any of its affiliates), and a change in the members
of the Board of Directors, within any 24 month period, such that the members at
the beginning of the period cease to constitute a majority.
Relocation Loan: On May 27, 1993, pursuant to its relocation policy, the
Company made a non-interest-bearing loan to Mr. Tomz in the amount of $420,000,
which was repaid on February 28, 1994.
(2) APPOINTMENT OF INDEPENDENT AUDITORS
Pursuant to the Audit Committee's recommendation, the Board of Directors has
appointed the firm of Ernst & Young as independent auditors for the fiscal year
ending February 28, 1995. Ernst & Young has audited the accounts of the Company
since its inception. The stockholders are requested to approve the appointment.
It is expected that a representative of Ernst & Young will be present at the
annual meeting of stockholders. The representative will have an opportunity to
make a statement and is expected to be available to respond to appropriate
questions.
MANAGEMENT RECOMMENDS A VOTE FOR APPROVAL OF THE APPOINTMENT OF ERNST & YOUNG
AS THE COMPANY'S AUDITORS FOR THE FISCAL YEAR ENDING FEBRUARY 28, 1995.
15
<PAGE>
(3) OTHER MATTERS
As of this date, the Board of Directors is not aware of any matters which may
come before the Meeting other than those hereinabove set forth, but the proxy
solicited herewith confers discretionary authority to vote with respect to any
other business that may properly come before the Meeting or any adjournment or
postponement thereof.
Proposals of stockholders intended to be presented at the Company's 1995 annual
meeting of stockholders must be received by the Company at its executive
offices shown on page 2 of this proxy statement on or prior to January 26, 1995
to be eligible for inclusion in the Company's proxy material to be used in
connection with the 1995 annual meeting.
By order of the Board of Directors
ROBERT L. WELTY
Secretary
Denver, Colorado
May 23, 1994
16
<PAGE>
- - -------------------------------------------------------------------------------
KETEMA, INC.
ANNUAL MEETING OF STOCKHOLDERS, JUNE 30, 1994
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert L. Welty, Robert L. Tomz and Hugh H.
Williamson, III, or a majority of those present and acting, or, if only one is
present, then that one, proxies, with full power of substitution, to vote all
stock of Ketema, Inc. which the undersigned is entitled to vote at the Company's
Annual Meeting to be held at the Board Room, 13th Floor, American Stock
Exchange, 86 Trinity Place, New York, New York 10006, on Thursday, June 30,
1994, at 10:00 a.m., and at any adjournment or postponement thereof, hereby
ratifying all that said proxies or their substitutes may do by virtue hereof;
and the undersigned authorizes and instructs said proxies to vote as follows
(see reverse side):
(TO BE SIGNED ON REVERSE SIDE)
-----------
SEE REVERSE
SIDE
-----------
- - -------------------------------------------------------------------------------
<PAGE>
- - -------------------------------------------------------------------------------
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
1. Election of Directors: FOR WITHHELD
[_] [_]
For, except vote withheld from the following nominee(s)
- - --------------------------------------------------------------------
NOMINEES:
Alan P. Gruber and Elizabeth Rosenwald Varet
FOR AGAINST ABSTAIN
2. Proposed to approve the appointment [_] [_] [_]
of Ernst & Young as the independent
public accountants of the Company.
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
UNLESS OTHERWISE SPECIFIED IN THE SPACE PROVIDED, THE UNDERSIGNED'S VOTE IS TO
BE USED FOR THE SELECTION OF THE NOMINEES FOR DIRECTOR LISTED IN PROPOSAL (4)
AND FOR APPROVAL OF PROPOSAL (2), AS MORE FULLY DESCRIBED IN THE ACCOMPANYING
PROXY STATEMENT.
RECEIPT OF THE NOTICE OF SAID MEETING AND OF THE PROXY STATEMENT AND ANNUAL
REPORT TO STOCKHOLDERS OF KETEMA, INC. ACCOMPANYING THE SAME IS HEREBY
ACKNOWLEDGED.
PLEASE MARK, SIGN AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
SIGNATURE(S) _________________________________________ DATE __________________
Note: Your signature should appear the same as your name appears hereon. If
signing as attorney, executor, trustee or guardian, indicate the capacity
by which signing. When signing as joint tenants, all parties of the joint
tenancy must sign. When the proxy is signed by a corporation, it should be
signed by an authorized officer and the corporate seal affixed.
- - -------------------------------------------------------------------------------
