<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1/A
(AMENDMENT NO. 2)
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D/A
(AMENDMENT NO. 2)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
------------------------
KERR GROUP, INC.
(Name of Subject Company)
KERR ACQUISITION CORPORATION
FREMONT ACQUISITION COMPANY, LLC
(Bidders)
COMMON STOCK, PAR VALUE $0.50 PER SHARE (AND ASSOCIATED PURCHASE RIGHTS)
$1.70 CLASS B CUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES D, PAR VALUE $0.50
PER SHARE
(Title of Class of Securities)
492376108 AND
492376207
(CUSIP Number of Class of Securities)
GILBERT H. LAMPHERE
PRESIDENT
FREMONT ACQUISITION COMPANY, LLC
C/O THE FREMONT GROUP
50 FREMONT STREET
SUITE 3700
SAN FRANCISCO, CALIFORNIA 94105
(415) 284-8500
(Name, Address and Telephone Number of Person authorized to Receive Notices and
Communications on Behalf of Bidder)
------------------------
COPY TO:
KENTON J. KING, ESQ.
Skadden, Arps, Slate, Meagher & Flom LLP
Four Embarcadero Center, Suite 3800
San Francisco, California 94111
(415) 984-6400
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- --------------------------------------------------------------------------------
<PAGE>
This Amendment No. 2 amends and supplements the Tender Offer statement on
Schedule 14D-1/13D (the "Schedule 14D-1/13D") filed with the Securities and
Exchange Commission on July 8, 1997 by Kerr Acquisition Corporation (the
"Purchaser") and Fremont Acquisition Company, LLC ("Fremont"), relating to the
offer by the Purchaser to purchase (i) all of the issued and outstanding shares
of common stock, par value $0.50 per share, including the associated rights to
purchase shares of preferred stock (the "Rights" and, together with common
stock, the "Common Stock") issued pursuant to the Rights Agreement, dated as of
July 25, 1995, between Kerr Group, Inc., a Delaware corporation (the "Company")
and BankBoston, N.A. (formerly The First Bank of Boston), as Rights Agent, as
amended, and (ii) all of the issued and outstanding shares of $1.70 Class B
Cumulative Convertible Preferred Stock Series D, par value $0.50 per share (the
"Series D Preferred Shares"), of the Company, for $5.40 per share of Common
Stock and $12.50 per share of Series D Preferred Share, in each case net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated July 8, 1997 (the "Offer to Purchase"), a copy of which
is attached to the Schedule 14D-1/13D as Exhibit (a)(1), and the related Letters
of Transmittal, copies of which are attached to the Schedule 14D-1/13D as
Exhibits (a)(2) and (a)(3). This filing also constitutes Amendment No. 2 to the
Schedule 13D originally filed pursuant to Section 13(d) of the Securities
Exchange Act of 1934, as amended, on behalf of each of the Purchaser, Fremont,
Fremont Partners, L.P., FP Advisors, L.L.C., Fremont Group, L.L.C. and Fremont
Investors, Inc.
Capitalized terms used but not otherwise defined herein have the meanings
ascribed to such terms in the Offer to Purchase and the Schedule 14D-1/13D.
ITEM 4. SOURCES AND AMOUNT OF FUNDS OF OTHER CONSIDERATION
Items (a)-(b) The information set forth in "Section 10--Source of Amount of
Funds" of the Offer to Purchase is hereby amended and supplemented by adding the
following:
It is currently contemplated that of the $44.7 million in equity
contributions from Fremont, approximately 80.165%, 16.529% and 3.306% will be
obtained through the sale of equity interests to, respectively, Fremont
Partners, Fremont Offshore Partners, L.P., a Cayman Islands Exempted Limited
Partnership ("Fremont Offshore") and Fremont Partners Side-by-Side, a Delaware
limited partnership ("Fremont Side-by-Side"). The Investment General Partner of
Fremont Offshore is FP Advisors, and the sole General Partner of Fremont
Side-by-Side is Fremont Group. Fremont Partners, Fremont Offshore and Fremont
Side-By-Side together have committed capital of approximately $605 million
available to be drawn upon from time to time upon notice to the limited partners
of each of such partnerships. Fremont Partners, Fremont Offshore and Fremont
Side-By-Side have entered into an operating agreement with respect to the
formation and operation of Fremont pursuant to which Fremont Partners is
designated the sole Managing Member of Fremont. As sole Managing Member of
Fremont, Fremont Partners has the authority on behalf of Fremont, without the
further approval of the other members of Fremont, to take all actions that are
consistent with the business purposes of Fremont, as determined from time to
time by all members. Fremont Partners has guaranteed the performance of all
obligations of Fremont and the Purchaser pursuant to the Merger Agreement. The
obligations of Fremont and the Purchaser under the Merger Agreement are not
subject to any financing condition. It is currently contemplated that the offer
of equity interests in Fremont or the Company to key management of the Company
and/or entities related to management, if any such equity interests are offered,
would take place only following the consummation of the Offer.
If the Bridge Facility is utilized, each of Fremont Offshore and Fremont
Side-By-Side may participate together with Fremont Partners in the Bridge
Facility on a pro rata basis equal to the respective equity contributions
contemplated to be made by each of Fremont Partners, Fremont Offshore and
Fremont Side-By-Side in Fremont as described in the immediately preceding
paragraph.
2
<PAGE>
ITEM 10. ADDITIONAL INFORMATION
Items (b)-(c) The information set forth in "Section 14--Conditions of the
Offer" of the Offer to Purchase is hereby amended by replacing subparts (ii) and
(iii) with the following:
(ii) if the Minimum Condition has not been satisfied prior to the
Expiration Date, or (iii) at any time after the date of the Merger Agreement
and prior to the Expiration Date, any of the following conditions exist:
Item 10(e) is hereby amended by replacing such Section (e) in its entirety
with the following:
On July 30, 1997, a purported holder of Series D Preferred Shares filed a
complaint entitled DR. ALAN LATIES VS. KERR GROUP, INC., ET AL., Civil Action
No. 15825-NC, against the Company and its directors (the "Defendants") in the
Court of Chancery of the State of Delaware in and for New Castle County. The
complaint seeks certification of the action as a class action and declaratory
judgment that the acquisition is unfair to the holders of Series D Preferred
Shares. In addition, the complaint seeks an order (i) enjoining the Defendants
and any entities acting in concert with them from taking any action to
consummate any of the transactions contemplated by the Merger Agreement; (ii)
awarding plaintiff and the class damages against Defendants jointly and
severally and directing Defendants to account to the Class for their profits;
and (iii) awarding costs and expenses to plaintiff including reasonable
attorneys' fees.
The Defendants believe that the suit is without merit and intend to defend
the suit vigorously.
On August 1, 1997, the Pension Benefit Guaranty Corporation ("PBGC")
published a Notice of Determination to terminate the Kerr Group, Inc. Retirement
Income Plan (the "Plan"). According to the Notice, the PBGC intends to apply to
the United Staes District Court for the Eastern District of Pennsylvania for an
order terminating the Plan and appointing the PBGC statutory trustee of the
Plan.
Item 10(f) The information set forth in "Section 8--Certain Information
Concerning the Company" of the Offer to Purchase is hereby amended by deleting
therefrom the following:
"NONE OF FREMONT, THE PURCHASER, THE COMPANY AND THEIR RESPECTIVE
AFFILIATES OR REPRESENTATIVES ASSUMES ANY RESPONSIBILITY FOR THE VALIDITY,
REASONABLENESS, ACCURACY OR COMPLETENESS OF THE PROJECTIONS."
ITEM 11. MATERIALS TO BE FILED AS EXHIBITS
Item 11 is hereby amended and supplemented by adding thereto the following
Exhibits:
(a)(14) Complaint entitled DR. ALAN LATIES VS. KERR GROUP, INC., ET AL. Civil
Action No. 15825-NC.
(a)(15) Press Release issued by the Company, dated August 1, 1997.
(a)(16) Notice of Determination issued by the Pension Benefit Guaranty
Corporation, dated August 1, 1997.
3
<PAGE>
EXHIBIT LIST
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- --------- --------------------------------------------------------------------------------------------------------
<S> <C>
(a)(1) Offer to Purchase, dated July 8, 1997.
(a)(2) Letter of Transmittal with respect to the Common Stock.
(a)(3) Letter of Transmittal with respect to the Series D Preferred Shares.
(a)(4) Letter for use by Brokers, Dealers, Banks, Trust Companies and Nominees to their Clients.
(a)(5) Letter to Clients.
(a)(6) Notice of Guaranteed Delivery with respect to the Common Stock.
(a)(7) Notice of Guaranteed Delivery with respect to the Series D Preferred Shares.
(a)(8) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.
(a)(9) Press Release jointly issued by Fremont and the Company, dated July 1, 1997.
(a)(10) Form of Summary Advertisement, dated July 8, 1997.
(a)(11) Fairness Opinion of CIBC Wood Gundy Securities Corp., dated June 30, 1997.
(a)(12) Notice of United National Bank as Trustee of the Kerr Group, Inc. Employee Incentive Stock Ownership
Plan I to Participants in Kerr Group, Inc. Employee Incentive Stock Ownership Plan I.
(a)(13) Notice of United National Bank as Trustee of the Kerr Group, Inc. Employee Incentive Stock Ownership
Plan to Participants in Kerr Group, Inc. Employee Incentive Stock Ownership Plan.
(a)(14) Complaint entitled DR. ALAN LATIES VS. KERR GROUP, INC., ET AL. Civil Action No. 15825-NC.
(a)(15) Press Release issued by the Company, dated August 1, 1997.
(a)(16) Notice of Determination issued by the Pension Benefit Guaranty Corporation, dated August 1, 1997.
(c)(1) Agreement and Plan of Merger, dated as of July 1, 1997, by and among Fremont, the Purchaser and the
Company.
(c)(2) Option Agreement, dated as of July 1, 1997, by and between Fremont and the Company.
(c)(3) Guarantee, dated as of July 1, 1997, by and between Fremont Partners, L.P. and the Company.
(c)(4) Confidentiality Agreement, dated November 6, 1995, by and between Fremont Group, Inc. and Lehman
Brothers Inc. on behalf of the Company.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
4
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Date: August 1, 1997
<TABLE>
<S> <C> <C>
KERR ACQUISITION CORPORATION
By: /s/ GILBERT H. LAMPHERE
-----------------------------------------
Name: Gilbert H. Lamphere
Title: Director and President
</TABLE>
5
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Date: August 1, 1997
<TABLE>
<S> <C> <C>
FREMONT ACQUISITION COMPANY, LLC
By: /s/ GILBERT H. LAMPHERE
-----------------------------------------
Name: Gilbert H. Lamphere
Title: President
</TABLE>
6
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Date: August 1, 1997
<TABLE>
<S> <C> <C>
FREMONT PARTNERS, L.P.
By: FP Advisors, L.L.C., its general partner
By: Fremont Group, L.L.C., its managing member
By: Fremont Investors, Inc., its manager
</TABLE>
<TABLE>
<S> <C> <C>
By: /s/ GILBERT H. LAMPHERE
-----------------------------------
Name: Gilbert H. Lamphere
Title: Managing Director and Director
</TABLE>
7
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Date: August 1, 1997
<TABLE>
<S> <C> <C>
FP ADVISORS, L.L.C.
By: Fremont Group, L.L.C., its managing member
By: Fremont Investors, Inc., its manager
By: /s/ GILBERT H. LAMPHERE
------------------------------------------------
Name: Gilbert H. Lamphere
Title: Managing Director and Director
</TABLE>
8
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Date: August 1, 1997
<TABLE>
<S> <C> <C>
FREMONT GROUP, L.L.C.
By: Fremont Investors, Inc., its manager
By: /s/ GILBERT H. LAMPHERE
------------------------------------------------
Name: Gilbert H. Lamphere
Title: Managing Director and Director
</TABLE>
9
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Date: August 1, 1997
<TABLE>
<S> <C> <C>
FREMONT INVESTORS, INC.
By: /s/ GILBERT H. LAMPHERE
-------------------------------------
Name: Gilbert H. Lamphere
Title: Managing Director and Director
</TABLE>
10
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER EXHIBIT
- --------------- -------------------------------------------------------------------------------------------------
<C> <S>
(a)(14) Complaint entitled DR. ALAN LATIES VS. KERR GROUP, INC., ET AL. Civil Action No. 15825-NC.
(a)(15) Press Release issued by the Company, dated August 1, 1997.
(a)(16) Notice of Determination issued by the Pension Benefit Guaranty Corporation, dated August 1, 1997.
</TABLE>
<PAGE>
IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- ---------------------------------------x
DR. ALAN LATIES,
Plaintiff, Civil Action No. 15825
- v. -
KERR GROUP, INC., HERBERT ELISH,
HARVEY L. SPERRY, D. GORDON STRICKLAND, CLASS ACTION
JAMES R. MELLOR, ROBERT M. O'HARA, COMPLAINT
GORDON C. HURLBERT, MICHAEL C. JACKSON, ---------
and JOHN D. KYLE,
Defendants.
- ---------------------------------------x
Plaintiff, by his attorneys, alleges upon information and belief, except
as to paragraph 1 which is alleged upon knowledge, as follows:
PARTIES
-------
1. Plaintiff is and, at all relevant times, has been the owner of
shares of the $1.70 Class B Cumulative Convertible Preferred Stock, Series D,
per value $.50 per share (the "Preferred") of defendant Kerr Group, Inc.
("Kerr" or the "Company").
2. (a) Kerr is a corporation organized and existing under the laws of
the State of Delaware with offices in Lancaster, Pennsylvania. Kerr produces
plastic packaging products.
(b) The Company has authorized and outstanding about 487,000 shares
of Preferred and 3,933,000 shares of common stock (the "Common"). Both
classes are listed and traded on the New York Stock Exchange.
<PAGE>
(c) Holders of the Preferred are entitled to a cumulative dividend,
payable quarterly, at the annual rate of $1.70 per share. The Preferred is
redeemable at the option of the Company at any time, in whole or in part, at
a price of $20.00 per share plus cumulative unpaid dividends. In the event of
a dissolution, winding up, or liquidation of the Company, voluntary or
involuntary, the holders of Preferred are entitled to receive $20.00 per
share, plus any dividend arrearage on such stock, before any distribution or
payment is made to any holder of Common Stock. In addition, the Preferred is
convertible into Common Stock at the rate of 1.4545 shares of Common Stock
for each share of Preferred. The Preferred have the right to vote only on
amendments to the Certificate of Incorporation that would materially
adversely affect their rights. However, if six quarterly dividends on the
Preferred are unpaid, the holders of Preferred are entitled, voting as a
class, to elect two additional persons to the Board of Directors of the
Company until all such dividends have been paid.
(d) The Company has not declared a dividend on the Preferred since
the first quarter of 1996, or a total of six quarters. The cumulative amount
of undeclared dividends as of June 30, 1997 is $2.55 per Preferred share. At
June 30, 1997, the Preferred's liquidation value was $22.55 per share.
3. (a) Defendant Herbert Elish ("Elish") is the Chairman of Kerr's
Board of Directors. The other directors of Kerr are defendants Gordon C.
Hurlbert, Michael C. Jackson ("Jackson"), John D. Kyle, James R. Mellor,
Robert M. O'Hara, Harvey L.
<PAGE>
Sperry, and D. Gordon Strickland ("Strickland"), the President and Chief
Executive Officer of the Company.
(b) Each director owns a substantial number of shares of Common Stock,
as follows:
DIRECTOR COMMON SHARES OWNED
-------- -------------------
Harvey L. Sperry 22,696
D. Gordon Strickland 12,410
James R. Mellor 23,197
Gordon C. Hurlbert 14,455
Herbert Elish 20,685
Michael C. Jackson 9,850
Robert M. O'Hara 12,069
John D. Kyle 9,363
(c) In 1996 defendants Strickland and Elish each received options to
purchase 10,000 shares of Common Stock at a price of $3.9375 per share.
Except in the case of a change in control of the Company, these options are
not exercisable unless and until the closing price of the Common Stock on the
New York Stock Exchange reaches $10.00 per share and remains at or above that
level for at least 10 consecutive trading days.
(d) Defendant Jackson, an Advisory Director of Lehman Brothers, Inc.
("Lehman"), owns 748 Preferred and is the only Kerr Director who owns any
Preferred.
CLASS ACTION ALLEGATIONS
4. Plaintiff brings this action for declaratory, injunctive and other
relief on his own behalf and as a class action, pursuant to Rule 23 of the
Rules of this Court on behalf of a
<PAGE>
class (the "Class") consisting of all stockholders of Kerr (except defendants
herein and any person, firm, trust, corporation or other entity related to or
affiliated with any of the defendants or their successors in interest) who
have or will be harmed as a result of defendants' action.
5. This action is properly maintainable as a class action for the
following reasons:
(a) The Class of stockholders for whose benefit this action is
brought is so numerous that joinder of all Class members is impracticable.
The Preferred is owned by hundreds of stockholders who are scattered
throughout the United States.
(b) There are questions of law and fact which are common to members
of the Class and which predominate over all questions effecting only
individual members, including (i) whether the Acquisition (hereinafter
defined) provides for unfair treatment of the Preferred; and (ii) whether the
approval by Kerr's directors of the transaction which is the subject of this
action constitutes a violation of their fiduciary duties to the Class.
(c) Plaintiff's claims are typical of the claims of the other
members of the Class and plaintiff has no interests that are adverse or
antagonistic to the interests of the Class.
(d) Plaintiff is committed to the vigorous prosecution of this
action and has retained competent counsel experienced in litigation of this
nature. Accordingly, plaintiff is an adequate representative of the Class and
will fairly and adequately protect the interests of the Class.
<PAGE>
(e) The prosecution of separate actions by individual members of the
Class would create a risk of inconsistent or varying adjudications with
respect to individual members of the Class and establish incompatible
standards of conduct for the party opposing the Class.
(f) Defendants have acted on grounds generally applicable to the
Class, thereby making appropriate final injunctive or corresponding
declaratory relief with respect to the Class as a whole.
SUBSTANTIVE ALLEGATIONS
6. In October 1995, following defaults in covenants contained in loan
agreements governing its senior unsecured debt ("the Debt"), the Company
engaged Lehman to explore a possible sale of the Company. Kerr agreed to pay
Lehman a fee of 1% of the amount received on the sale of the Company, if the
Company is sold during the term of its agreement with Kerr or if it is sold
within 24 months thereafter to a buyer identified by Lehman.
7. Lehman contacted an affiliate of Fremont Partners, L.P. ("Fremont")
to determine Fremont's interest in acquiring Kerr. In late 1995 and early
1996, Fremont reviewed certain public and confidential information concerning
the Company, and indicated an interest in an acquisition. However, the
Company and Fremont could not agree as to a proper valuation of the Company,
and negotiations for a buy-out ceased.
8. In April 1996, Lehman informed Fremont that Lehman would no longer
be representing the Company, and that if Fremont had an interest in
participating in the recapitalization of the
<PAGE>
Company it should contact Kerr directly. Thereafter, the Company and Fremont
had a number of discussions regarding a possible recapitalization of Kerr. In
January 1997, Fremont continued its discussions of a recapitalization with
the Company's new financial advisor, CIBC Wood Gundy Securities Corp ("CIBC").
9. During the same period, Kerr and its advisors discussed a
restructuring of the Debt with the Debtholders. Such discussions reached an
impasse, and Kerr retained bankruptcy counsel and began preparations for a
possible bankruptcy filing. However, the Company obtained an extension of the
default waiver (the "waiver"), and sought financing that would enable Kerr to
purchase the Debt and provide it with working capital. The waiver expired on
March 7, 1997, with the Debtholders refusing to grant an extension. In April
1997, Kerr entered into a revolving credit agreement with Madelaine L.L.C.
secured by its receivables, in order to provide the Company with working
capital. However, certain provisions of the agreement with Madelaine
constituted additional defaults under the terms of the Debt. The Debtholders
threatened legal action against the Company, its officers, directors and
advisors, based upon claims of breach of contract and breach of fiduciary
duty. Kerr was notified that the Debt would be accelerated on June 4, 1997.
In late May, the Debtholders agreed not to accelerate the Debt until July 3,
1997, in exchange for $500,000 and the payment by the Company of interest on
the Debt at the default rate.
10. In late May 1997, Kerr and Fremont resumed discussions of a buy-out.
On June 30, 1997, the Company and Fremont entered
<PAGE>
into an agreement under which a corporation wholly owned by Fremont would
acquire all of the Company's shares of Preferred for $12.00 per Preferred
share and all of the Common Stock shares for $5.40 per share in cash (the
"Acquisition"), by means of a cash tender offer at those prices for the
Preferred and the Common Stock, to be followed by a cash merger whereby any
Preferred or Common shares not previously tendered would be acquired.
Following Fremont's purchase of shares of Common Stock in the tender offer,
Fremont is entitled to designate the number of directors of the Kerr board
which is proportionate to its ownership of the outstanding Common Stock
shares. The tender offer is conditioned upon Fremont receiving at least 51%
of the Common Stock shares. Fremont commenced its tender offer on July 8,
1997.
11. By reason of the individual defendants' positions as directors
and/or officers of Kerr, those defendants were and are in a fiduciary
relationship with plaintiff and the other public Preferred holders, and owe
them the highest obligations of good faith, full disclosure and fair dealing
and to act in an informed and deliberate manner so that the price paid for
the Preferred is fair and so that the total consideration paid upon the
acquisition of the Company is apportioned fairly as between the Preferred and
the Common Stock.
12. The Acquisition unduly favors the Common Stock at the expense of
the Preferred. The price to be paid for the Preferred under the Acquisition
is grossly unfair to the Class. Although Kerr's Schedule 14D-9 filing with
the Securities and Exchange
<PAGE>
Commission (the "14D-9") states that the Board, in approving the Acquisition,
relied upon the market prices of the Preferred and Common Stock, the
allocation of the Acquisition proceeds is more favorable to the Common Stock
than the recent relative market prices of the Preferred and Common Stock. The
price to be paid in the Acquisition for each of the Common Stock, $5.40, is
equal to 43.2% of the $12.50 to be paid for each of the Preferred. In 1996
and 1997, the Common Stock generally traded at a price which was less than
43.2% of the Preferred's market price. During the month of June 1997,
immediately prior to the announcement of the Acquisition plan, the Common
Stock traded at a high of $4.25, or only 30% of the Preferred's high of $14,
while the lowest price during the month for the Common Stock was $2.25, or
33% of the Preferred's low of $6.75. On June 30, 1997, the day before the
Acquisition plan was announced, the Common Stock closed at $3.875, or only
31% of the Preferred's closing price of $12.50.
13. The unfair allocation of Acquisition proceeds is also reflected in
the substantial premium over market paid to the Common Stockholders, and the
lack of any premium to the Preferred holders. The price paid for the Common
Stock holders in the Acquisition provides a premium of about 40% over the
pre-announcement market price, while no premium is to be paid on the
Preferred. In fact, with respect to the high prices during the month of June
1997, the Acquisition provides the Common Stock a premium of 27% over the
high price during that month, but relegates the Preferred to a DISCOUNT of
11% from its high of $14 per share.
<PAGE>
14. Moreover, the priorities and rights granted by the Company's
certificate of incorporation to the Preferred, including the Preferred's
liquidation priority, are valuable legal rights, upon which the Preferred
stockholders relied in acquiring their Preferred. Such priorities are of
particular importance when a corporation is in serious financial distress and
contemplating a bankruptcy filing, as was true of Kerr in 1997. In such
circumstances, the Common Stock's equity is more likely to be entirely wiped
out than the Preferred's and the Common's greater "upside" advantage is
eliminated. Indeed, had the extent of the Company's financial difficulties in
the first half of 1997 been fully disclosed, the Common would have traded at
a much lower percentage of the Preferred than indicated above. The price to
be paid for the Preferred in the Acquisition does not properly reflect the
value of the Preferred's special rights.
15. Although Kerr's directors obtained an opinion from CIBC that the
price "to be received by the holders of Common Stock, on the one hand, and
Preferred Stock, on the other, pursuant to the [Acquisition], is fair to such
holders from a financial point of view." CIBC did not opine as to the
fairness of the relative values to be received by the holders of the
Preferred and Common Stock. Similarly, the 14D-9 does not disclose the basis
upon which the price to be paid by Fremont was allocated as between the
holders of Preferred and Common Stock.
16. By approving the allocation of the Acquisition proceeds as between
the Preferred and Common Stock provided in the Acquisition, Kerr's directors,
in violation of their fiduciary
<PAGE>
duty, have benefitted themselves at the expense of the Class, since they own
substantial amounts of Common Stock and almost no Preferred. Also, the
consummation of the Acquisition would enable defendants Strickland and Elish
to realize large profits on the exercise of options on the Common Stock, and
would enable Lebman, of which defendant Jackson is an Advisory Director, to
obtain a large fee.
17. Despite the clear conflict between their own personal interests and
those of the holders of Preferred, Kerr's directors have failed to take
measures to assure that the Preferred's position is protected in the
negotiations with Fremont or the consideration and approval of the
Acquisition. The tender offer is not subject to the tender of any amount of
Preferred to Fremont and the Preferred have no right to vote upon the merger
which will follow the tender offer. Moreover, although the Company has not
paid six consecutive quarterly dividends to the Preferred, the directors have
failed to call a meeting of the Preferred to elect two directors to represent
the Preferred's interests on the Board with respect to the Acquisition.
18. Plaintiff and the other members of the Class will suffer injury
unless the unlawful actions complained of herein are enjoined.
19. Plaintiff and Class lack an adequate remedy at law. WHEREFORE,
plaintiff prays for judgment:
A. Declaring that this action be maintained as a class action on
behalf of the Class;
<PAGE>
B. Declaring that the Acquisition is unfair to the Preferred;
C. Enjoining defendants and all persons and entities acting in
concert with them from taking any action to consummate any of the
transactions contemplated by the Acquisition,
D. Awarding plaintiff and the Class damages against defendants
jointly and severally and directing defendants to account to the Class for
their profits;
E. Awarding costs and expenses to plaintiff including reasonable
attorneys' fees; and
F. Granting such other and further relief as this Court may deem
just and proper.
ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A.
By: /s/ [ILLEGIBLE]
------------------------------------
Suite 1401, Mellion Bank Center
P.O. Box 1070
Wilmington, Delaware 19899
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
Harold B. Obstfeld
HAROLD B. OBSTFELD, P.C.
500 Fifth Avenue, 56th Floor
New York, New York 10110-0002
(212) 391-4150
<PAGE>
500 New Holland Avenue
[KERR GROUP, INC., LOGO OMMITTED] Lancaster, PA
17602-2104
(717) 299-6511
FOR IMMEDIATE RELEASE
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LANCASTER, PENNSYLVANIA (August 1, 1997) - Kerr Group, Inc. (NYSE:KGM),
announced today that Pension Benefit Guaranty Corporation ("PBGC") has
published a Notice of Determination to terminate the Kerr Group, Inc.
Retirement Income Plan. According to the Notice, the PBGC intends to apply to
the United States District Court for the Eastern District of Pennsylvania for
an order terminating the Plan, establishing August 1, 1997 as the date of
termination of the Plan and appointing the PBGC statutory trustee of the Plan.
Kerr recently agreed to be acquired by Fremont. A tender offer for all
outstanding shares of Common Stock and Preferred Stock is currently pending
and scheduled to expire on August 4, 1997. The PBGC has advised the Company
that it took this action to insure that the PBGC's interests were
adequately protected in connection with the consummation of the tender
offer. Discussions among the Company, the PBGC and Fremont are continuing.
Kerr, headquartered in Lancaster, Pennsylvania, is a major producer of
plastic packaging products.
# # #
Company Contact: Geoffrey A. Whynot
Vice President, Finance and
Chief Financial Officer
(717) 390-8439
<PAGE>
ATTENTION ALL PARTICIPANTS, RETIREES
AND BENEFICIARIES OF THE
KERR GROUP, INC.
RETIREMENT INCOME PLAN
NOTICE OF DETERMINATION
-----------------------
PLEASE TAKE NOTICE that the Pension Benefit Guaranty Corporation
("PBGC") has determined, pursuant to Section 4042(a)(4) of the Employee
Retirement Income Security Act of 1974 ("ERISA"), AS AMENDED, 29 U.S.C.
Section 1342(a)(4), that the possible long-run loss of the PBGC with respect
to the Kerr Group, Inc. Retirement Income Plan (the "Plan") may reasonably be
expected to increase unreasonably if the Plan is not terminated. The PBGC has
further determined, pursuant to Section 4042(c) of ERISA, 29 U.S.C. Section
1342(c), that the Plan should therefore be terminated in order to protect the
interests of the PBGC. Accordingly, pursuant to Section 4042 of ERISA, 29
U.S.C. Section 1342, the PBGC intends to apply to the United States
District Court for the Eastern District of Pennsylvania for an order
terminating the Plan, establishing August 1, 1997 as the date of termination
of the Plan, and appointing the PBGC statutory trustee of the Plan.
Participants of the Plan should not expect to earn additional benefit
eligibility service under the Plan on or after the Plan's termination date.
The PBGC has completed its decisionmaking process in this matter.
Accordingly, this determination is effective on the date it is issued.
[PBGC LOGO OMITTED] Andrea E. Schneider
Acting Deputy Executive Director
and Chief Negotiator
PENSION BENEFIT GUARANTY CORPORATION
ISSUED: August 1, 1997
