<PAGE>
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1/A
(AMENDMENT NO. 3)
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D/A
(AMENDMENT NO. 3)
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. 3 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 Shares, 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. 3 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 10. ADDITIONAL INFORMATION
Item 10(e) is hereby amended and supplemented by adding thereto the
following:
On August 18, 1997, Fremont and the Pension Benefit Guaranty Corporation
(the "PBGC") entered into an agreement pursuant to which, upon execution of a
definitive agreement by and between the Company and the PBGC, the PBGC has
agreed to dismiss its lawsuit now pending before the United States District
Court for the Eastern District of Pennsylvania seeking to terminate the
Company's Plan, withdraw its Notice of Determination and forbear from
instituting new proceedings with respect to the acquisition. Pursuant to the
terms of the definitive agreement, the Company will agree to (i) future enhanced
pension plan contributions, (ii) grant to the PBGC a second lien in the amount
of $40.7 million secured by substantially all of the assets of the Company,
(iii) various restrictions on future secured indebtedness and (iv) provisions
regarding notice of certain events. The definitive agreement will become
effective only upon the consummation of the Offer.
ITEM 11. MATERIALS TO BE FILED AS EXHIBITS
Item 11 is hereby amended and supplemented by adding thereto the following
Exhibits:
<TABLE>
<CAPTION>
<C> <S>
(a)(17) Term Sheet, dated August 18, 1997, by and among Fremont, the Company and the Pension Benefit
Guaranty Corporation.
(a)(18) Press Release issued by the Purchaser, dated August 19, 1997.
</TABLE>
2
<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.
(a)(17) Term Sheet, dated August 18, 1997, by and among Fremont, the Company and the Pension Benefit Guaranty
Corporation.
(a)(18) Press Release issued by the Purchaser, dated August 19, 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>
3
<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 19, 1997
<TABLE>
<S> <C> <C>
KERR ACQUISITION CORPORATION
By: /s/ GILBERT H. LAMPHERE
-----------------------------------------
Name: Gilbert H. Lamphere
Title: DIRECTOR AND PRESIDENT
</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 19, 1997
<TABLE>
<S> <C> <C>
FREMONT ACQUISITION COMPANY, LLC
By: /s/ GILBERT H. LAMPHERE
-----------------------------------------
Name: Gilbert H. Lamphere
Title: 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 19, 1997
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
By: /s/ GILBERT H. LAMPHERE
---------------------------------
Name: Gilbert H. Lamphere
Title: MANAGING DIRECTOR AND
DIRECTOR
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 19, 1997
FP ADVISORS, L.L.C.
By: Fremont Group, L.L.C., it managing
member
By: Fremont Investors, Inc., its
manager
By: /s/ GILBERT H. LAMPHERE
---------------------------------
Name: Gilbert H. Lamphere
Title:MANAGING DIRECTOR AND
DIRECTOR
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 19, 1997
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
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 19, 1997
<TABLE>
<S> <C> <C>
FREMONT INVESTORS, INC.
By: /s/ GILBERT H. LAMPHERE
-----------------------------------------
Name: Gilbert H. Lamphere
Title:MANAGING DIRECTOR AND DIRECTOR
</TABLE>
9
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
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<S> <C>
(a)(17) Term Sheet, dated August 18, 1997, by and among Fremont, the Company and the Pension Benefit Guaranty
Corporation.
(a)(18) Press Release issued by the Purchaser, dated August 19, 1997.
</TABLE>
10
<PAGE>
August 18, 1997
SUMMARY OF ESSENTIAL TERMS FOR AN AGREEMENT REGARDING
THE KERR GROUP, INC. RETIREMENT INCOME PLAN
PBGC OBLIGATIONS
In consideration of the performance by Fremont Acquisition Company, LLC
("Fremont"), and by Kerr Group, Inc. (including any successors in
interest thereto) ("Kerr"), of the obligations provided in this Summary,
and subject to the terms and conditions provided herein, the Pension
Benefit Guaranty Corporation ("PBGC") will (a) promptly upon execution
of definitive documentation that includes the essential terms provided
herein and other terms and conditions mutually acceptable to the parties
(i) dismiss its action now pending before the United States District
Court for the Eastern District of Pennsylvania seeking to terminate the
Kerr Group, Inc. Retirement Income Plan (the "Plan"), (ii) withdraw its
Notice of Determination ("Notice") regarding termination of the Plan,
and (iii) if Fremont elects and at Fremont's or Kerr's expense, assist
in Fremont's and Kerr's efforts to publicize PBGC's withdrawal of the
Notice, and (b) forbear from instituting proceedings under 29 U.S.C.
Section 1342(a)(4) based on the grounds that as a result of the Proposed
Acquisition, the Senior Debt or any Permitted Future Financings by Kerr
(each as described below), the possible long-run loss of the PBGC may
reasonably be expected to increase unreasonably.
PROPOSED ACQUISITION
Fremont has identified the following terms of the proposed acquisition:
Kerr intends to arrange for debt facilities of up to $52 million,
including up to a $20 million revolving credit facility, from one or
more commercial lenders or an affiliate of Fremont (including successors
and assigns, and any lender that refinances any such debt facilities,
the "Lender"). Additional borrowings of no more than $17.5 million may
be made by Kerr under the CAPEX Loan Facility, which may provide up to,
but no more than, $17.5 million to be used for the purchase of property,
plant and equipment only, provided, however, that no more than $10
million of such borrowings may be made before June 30, 1999. Together,
these borrowings, including any refinancings thereof, together with
associated accrued interest, fees, costs and expenses (the "Senior
Debt"), will be secured by a first lien and security interest on
substantially all of Kerr's assets, substantially upon the terms and
conditions to be disclosed to PBGC (the
<PAGE>
"Lender First Lien").
Except as discussed in Permitted Future Financings below, no term
debt or borrowings under the CAPEX Loan Facility may be reborrowed once
repaid. The mandatory amortization schedule for the term debt shall be
substantially as provided in Exhibit A. The CAPEX Loan Facility
(including the mandatory amortization schedule thereunder) shall be
substantially as described in Exhibit B.
Kerr will use approximately $45 million of the proceeds from the
above-referenced borrowings, except the CAPEX Loan Facility, to repay in
full certain of Kerr's issued and outstanding indebtedness. Fremont
will simultaneously purchase substantially all of the outstanding common
stock and options issued by Kerr for the purchase price of $21.3
million, and Fremont will also purchase all of the outstanding preferred
stock issued by Kerr for the purchase price of $6.1 million. Fremont
will provide additional funds to pay transaction fees and expenses and
to retire certain other indebtedness and certain other accrued
liabilities.
PERMITTED FUTURE FINANCINGS BY KERR
If, after the Closing of the Proposed Acquisition, Kerr desires to incur
additional unsecured indebtedness, beyond the Senior Debt, that is
secured by a lien senior to or pari passu with PBGC's Lien ("Permitted
Future Financings"), it may do so provided that for each $3 in such
additional debt incurred, $1 is immediately contributed into the Plan
(the "Future Financing Payments") until the Plan is 90% funded on a PBGC
termination basis; provided, however, that if a Plan Lien arises (as
defined below), no additional indebtedness will be permitted. Funded on
a PBGC termination basis means Plan Assets (determined pursuant to 29
U.S.C. Section 1301(a)(18)(B) and applicable regulations) divided by
Benefit Liabilities (calculated pursuant to 29 U.S.C. Section
1301(a)(16) and (a)(18), and applicable regulations). Such funding
computation shall be made annually as of the Plan Year End and shall
remain in effect until the next annual computation.
If, after the Closing of the Proposed Acquisition, Kerr desires to incur
additional unsecured indebtedness that is subordinated to the PBGC Lien,
Kerr may do so without limitation. Such unsecured borrowings will not
be subject to Future Financing Payments, provided that the PBGC Lien is
still in place. However, if PBGC has released the PBGC Lien according
to "Term of the Agreement -- Section B," then any unsecured borrowings
incurred following the PBGC Lien release
2
<PAGE>
will be subject to Future Financing Payments. Notwithstanding the
preceding sentence, Kerr may, at is option, elect to have PBGC
reinstate the PBGC Lien, in which case the unsecured borrowings
that are junior to the PBGC Lien will not be subject to Future
Financing Payments in accordance with the first two sentences of
this paragraph.
KERR OBLIGATIONS
PAYMENT OF TERMINATION LIABILITY
Kerr will pay PBGC upon termination of the Plan (other than a standard
termination pursuant to 29 U.S.C. Section 1341(b)), a sum of money
("Agreed Termination Liability") equal to the total amount of the Plan's
unfunded benefit liabilities, as calculated in accordance with 29 U.S.C.
Section 1301(a)(18), associated with the Plan as of the Plan termination
date set in accordance with 29 U.S.C. Section 1348.
PENSION PLAN CONTRIBUTIONS
Notwithstanding any credit balance in the Plan's funding standard
account, Kerr will make special payments into the Plan (together, the
"Enhanced Contributions"). Enhanced Contributions for a plan year will
be payable on April 15, July 15, October 15 of that year, and January 15
of the following year. Enhanced Contributions shall commence on October
15, 1997. Kerr will make the following Enhanced Contributions: Kerr
will pay no less than $7 million in cash annually into the Plan, in
equal quarterly installments of $1.75 million each, beginning with the
quarterly installment due October 15, 1997, and ending with the
quarterly installment due January 15, 2000; no less than $6 million in
cash annually into the Plan, in equal quarterly installments of $1.5
million each, beginning with the quarterly installment due April 15,
2000, and ending with the quarterly installment due January 15, 2003.
An additional Enhanced Contribution in the amount of $3.5 million will
be paid at closing.
Minimum Contributions after 2002. With respect to Plan years beginning
January 1, 2003 and thereafter, Kerr will pay "Minimum Contributions"
determined as follows. The Minimum Contribution for a Plan Year is the
minimum amount of cash required under section 412(m) of the IRC to be
contributed for the Plan Year in equal quarterly installments on April
15, July 15, and October 15 of the Plan year and on January 15 of the
following year, except that (i) Required Credit Balance shall not be
used in calculating the Minimum contributions, and (ii) the Required
Credit Balance shall not be included in the assets used in calculating
the unfunded current liability under section 302(d)(8) of ERISA and
3
<PAGE>
section 412(l)(8)(A) of the Code.
Additional Contributions after 2002. With respect to Plan years
beginning January 1, 2003 and thereafter, Kerr will also pay $1 million
in cash annually into the Plan in addition to the Minimum Contributions
in equal quarterly installments on April 15, July 15, and October 15 of
the Plan Year and on January 15 of the following year (the "Additional
Contributions").
"Required Credit Balance" means, as of the end of any Plan year, the
funding standard account credit balance as of December 31, 2002, plus
the funding standard account credit balance attributable to the
Additional Contributions, plus the excess of required Minimum
Contributions over required minimum payments, plus Future Financing
Payments after January 1, 2003, all adjusted for interest to the end of
the Plan year.
Future Financing Payments may not be used to satisfy the Enhanced
Contributions, Minimum Contributions, Additional Contributions and
minimum required payments.
Enhanced Contributions, Minimum Contributions, and Additional
Contributions will be on account of and applied to the minimum required
payments as defined in Section 412 of the IRC. If the amount of said
minimum required payments for a Plan year exceeds the amount of Enhanced
Contributions required for such Plan year, Kerr will pay the larger
amount instead.
The Enhanced Contributions, Minimum Contributions, Additional
Contributions and Future Financing Payments will not be required to the
extent that such contributions are not tax deductible for the year for
which the contributions are made. If the amount of any Enhanced
Contribution, Future Financing Payments, Minimum Contributions, or
Additional Contribution exceed the maximum tax deductible contribution
limitation, then any portion of the contribution not paid in a given
calendar year, due to the maximum tax deductible contribution
limitation, will be carried over and paid in the next calendar year to
which that limitation does not apply. Kerr will calculate the Plan's
current liability for tax deductibility purposes by using the lowest
interest rate in the permissible range, and PBGC will review Kerr's
calculations for compliance with applicable law and the agreement.
SECOND SECURITY INTEREST
In addition to PBGC's rights under applicable law, including any statutory
liens,
4
<PAGE>
Kerr's obligation to pay the amount of Agreed Termination Liability to
PBGC will be secured with a second lien and security interest (the "PBGC
Lien") on substantially all of Kerr's assets, including all now existing
and hereafter acquired property, plant and equipment. Such security
interest must be in place and perfected simultaneously with the closing
of the agreement between Kerr and PBGC. Documents creating such
security interest shall be executed and delivered to PBGC. The
obligation secured by the PBGC Lien will be $40.7 million. The PBGC
Lien will be junior to the Lender First Lien and to any future liens
securing the CAPEX Loan Facility and Permitted Future Financing, as
provided above, and will in all events be subject to the Intercreditor
Agreement (described below).
If any Enhanced Contribution, Minimum Contribution, Additional
Contribution or Future Financing Payment is not made when due, then
there shall be a lien and security interest in favor of the Plan (the
"Plan Lien") on all of Kerr's property and rights to property, for the
aggregate unpaid balance of Enhanced Contributions, Minimum
Contributions, Additional Contributions and Future Financing Payments.
Rules similar to those under Section 412(n) of the IRC will apply to the
Plan Lien; provided, however, that the Plan Lien will be subordinate to
the Senior Debt, in accordance with the Intercreditor Agreements. At
closing of the definitive agreement between Kerr and PBGC, Kerr will
execute and deliver documents to establish and perfect the Plan Lien,
including without limitation any Uniform Commercial Code financing
statements. PBGC will hold such documents in escrow until such time as
Kerr fails to pay an Enhanced Contribution, Minimum Contribution,
Additional Contribution or a Future Financing Payment when due.
In addition to other reasonable conditions, the closing of the
definitive agreement between Kerr and PBGC will be conditioned on the
closing of Kerr's agreements with the Lender and the execution of one or
more intercreditor agreements ("Intercreditor Agreements") among the
secured creditors which provide for, among other things, customary and
reasonable provisions regarding remedies available to first and second
lien holders (including without limitation a restriction on the exercise
of contractual remedies under the PBGC Lien or the Plan Lien until the
Senior Debt is paid or without the consent of the holders of the Senior
Debt) and the allocation of rights and responsibilities among the first
and second lien holders, as well as provisions reflected herein.
Except as otherwise expressly provided herein, there will be no other liens,
security interests or encumbrances on any of Kerr's assets, except for liens,
security interests or encumbrances, if any, that Kerr enters into to secure
purchase money indebtedness
5
<PAGE>
permitted under the credit facilities with the senior Lender in an aggregate
amount not to exceed $1 million, and other immaterial Permitted Liens to be
agreed upon in the definitive documentation.
TERM
A. TERMINATION OF AGREEMENT
This agreement and Kerr's obligations under the definitive agreement between
Kerr and PBGC will terminate, and PBGC will release the PBGC Lien, upon the
earliest to occur of A(i), A(ii), A (iii) and A(iv), below; provided,
however, that the agreement and Kerr's obligations under the agreement will
not terminate if any Plan Lien exists at the time. .
(i) Termination of the Plan in a standard termination under 29 U.S.C.
Section 1341(b).
(ii) The date after August 31, 2002, on which Kerr obtains both of the
credit ratings (which may be private ratings in the event a public
rating is not available) on either actual unsecured debt or
hypothetical unsecured debt in the amount of at least $50 million
at the rating levels (or better) specified below:
Rating Agency Rating
------------- ------
Standard & Poor's BBB-
Moody's Baa3
(iii) The date after August 31, 2002, on which Kerr demonstrates that the
Plan has had no unfunded benefit liabilities as defined in section
4001(a)(18) of ERISA for any two consecutive calendar years after
the date of this agreement, measured at the end of the year.
(iv) The date after August 31, 2002, on which Kerr is merged into, or
becomes a member of a Controlled Group with, a person that
satisfies the minimum credit rating test specified in item A(ii)
above, on a pro forma basis, after the merger is completed. For
this purpose, "Controlled Group" has the meaning specified in 29
U.S.C. 1301(a)(14).
B. EARLIER RELEASE OF PBGC LIEN
6
<PAGE>
PBGC agrees to release the PBGC Lien prior to August 31, 2002 as
indicated below if any of the following should occur, provided, however, that
the PBGC Lien will not be released if any Plan Lien exists at the time:
(i) If Kerr receives a minimum credit rating specified in item A(ii)
above prior to August 31, 2000, and the credit rating is maintained
continuously for two years at that level or better by both rating
agencies, the date that is the second year anniversary of first
receiving such a rating.
(ii) If Kerr is merged into or becomes a member of a controlled group
with a person prior to August 31, 2001 whose minimum credit ratings
(which may be private ratings in the event a public rating is not
available) on either actual unsecured debt or hypothetical
unsecured debt in the amount of at least $50 million are BBB by
Standard & Poor's and Baa2 by Moody's on a pro forma basis after
the merger is completed, and the credit rating of such controlled
group is maintained continuously for one year at that level or
better by both rating agencies, the date which is the first
anniversary of the merger.
(iii) If Kerr is merged into or becomes a member of a controlled group
with a person whose minimum credit ratings (which may be private
ratings in the event a public rating is not available) on either
actual unsecured debt or hypothetical unsecured debt on the amount
of at least $50 million are A- by Standard & Poor's and A3 by
Moody's on a pro forma basis after the merger is completed, the
date that Kerr is merged into or becomes a member of such
controlled group.
In the event that the PBGC Lien is released prior to August 31, 2002 and
any required Enhanced Contribution, Minimum Contribution, Additional
Contribution or Future Financing Payment is not made when due, then a Plan
Lien shall arise on all of Kerr's property and rights to property, and the
amount of such Plan Lien shall be immediately due and payable. The amount of
the Plan Lien shall equal 115 percent of the Plan's benefit liabilities
(calculated under 29 U.S.C. Sections 1301(a)(16) and (18)(A)) minus the
market value of the Plan's assets (calculated under 29 U.S.C. Section
1301(a)(18)(B)), both determined as of the last December 31 or on such other
basis as is agreed to in the definitive agreement. The parties shall further
agree to information to be provided by Kerr to facilitate these computations.
NOTICES AND INFORMATION REQUIREMENTS
7
<PAGE>
Kerr shall provide PBGC with thirty (30) days prior written notice of any
refinancing of debt.
Kerr shall provide PBGC with (10) days prior written notice of any borrowing
under any facility, except the revolving credit facility.
Kerr shall provide PBGC with quarterly financial statements, and audited
annual statements.
Kerr shall provide PBGC with written notices of all payments made with
respect to the outstanding amounts of the term loan portions of the debts to
the Lender (and, if applicable, any refinancing party provided above) within
30 days of such payments.
Kerr shall provide PBGC with the following actuarial information:
written notice 30 days prior to any actual change in any of the Plan's
actuarial assumptions or methods for the purpose of the minimum funding
standard of Section 412 of the IRC, which shall be subject to PBGC's
consent, such consent not to be unreasonably withheld;
a written statement of the amount and date of contributions made to the
Plan within 10 days of payment, or of any failure to make contributions
specified herein within 2 days of the due date;
for each plan year, Form 5500 for the Plan when filed with the IRS;
for each plan year, the annual actuarial valuation report for the Plan
within 10 days from the date such report is completed by the enrolled
actuary;
a copy of any reportable events notice to the Director of PBGC's Corporate
Finance and Negotiations Department at the same time such notice is filed in
accordance with 29 C.F.R. part 4043; and
a copy of plan amendments within 10 days after adoption.
Kerr shall provide PBGC with copies of all notices required to be given by,
or required to be provided to, the Lender, or by any other party to their
credit agreements.
Kerr shall notify PBGC thirty (30) days in advance of any merger or
consolidation with any other person or any sale or disposition of Kerr's
assets that is outside the
8
<PAGE>
ordinary course of business if such sale or disposition (in any one
transaction or series of related transactions) involves at least 5% of annual
revenues, operating profits, or assets.
9
<PAGE>
EVENTS OF DEFAULT
Subject to the terms and conditions of the Intercreditor Agreements (which
will contain restrictions on PBGC's ability to exercise its contractual
remedies -other than PBGC's rights and remedies under applicable law that
PBGC has not expressly agreed to forbear from exercising) the following
events shall constitute Events of Default:
(i) Kerr breaches or is in default of any of its obligations under the
agreement between PBGC and Kerr, including Kerr's obligation to make
required contributions;
(ii) Kerr breaches or is in default of any of its obligations under its
agreements with the Lender;
(iii) Kerr files or has filed against it a petition under Title 11 of the
United States Code, or under any similar Federal law or law of a State or
political subdivision of a State;
(iv) Kerr breaches or is in default of any representation or warranty
made in connection with this Summary or the agreement.
EXECUTION OF AGREEMENT
Fremont, Kerr and PBGC shall use their best efforts to execute definitive
documentation that includes the essential terms provided herein and other
terms and condition mutually acceptable to the parties by the date on which
the Lender agreements is executed. Kerr's obligations hereunder and under
the definitive documentation are contingent on consummation of Fremont's
tender offer for Kerr shares, and Fremont's obligations hereunder are
satisfied and released upon consummation of the tender offer. In the event
Fremont's tender offer is not consummated by September 10, 1997, this summary
of essential terms shall terminate, and all parties' obligations hereunder
shall terminate.
Upon the execution of definitive documentation, Kerr shall reimburse PBGC for
the cost advertisements to publicize the Notice of Determination to terminate
the Kerr plans, not to exceed $25,000.
10
<PAGE>
PENSION BENEFIT GUARANTY CORPORATION
By: /s/ illegible
----------------------------------------
Its: Deputy Executive Director and Chief Negotiator
----------------------------------------------
Date: August 18, 1997
---------------------------------------
FREMONT ACQUISITION COMPANY, LLC
By: /s/ Gregory P. Spivy
-----------------------------------------
Its: Vice President
----------------------------------------
Date: August 18, 1997
---------------------------------------
KERR GROUP, INC.
By: /s/ D. Gordon Strickland
-----------------------------------------
Its: President and Chief Executive Officer
-----------------------------------------
Date: August 18, 1997
---------------------------------------
11
<PAGE>
EXHIBIT A
MANDATORY AMORTIZATION SCHEDULE FOR TERM LOAN
- -----------------------------------------------------------------------------
PRINCIPAL AMOUNT
PERIOD PAYABLE MONTHLY
- -----------------------------------------------------------------------------
September 1, 1997 through and including August 1, 1998 $333,333.33
- -----------------------------------------------------------------------------
September 1, 1998 through and including August 1, 1999 $416,666.66
- -----------------------------------------------------------------------------
September 1, 1999 through and including August 1, 2000 $500,000.00
- -----------------------------------------------------------------------------
September 1, 2000 through and including August 1, 2001 $500,000.00
- -----------------------------------------------------------------------------
September 1, 2001 through and including August 1, 2002 $916,666.66
- -----------------------------------------------------------------------------
Termination Date All remaining
unpaid principal
and interest.
- -----------------------------------------------------------------------------
<PAGE>
EXHIBIT B
MANDATORY AMORTIZATION SCHEDULE FOR CAPEX LOAN
The principal of the CAPEX Loan shall be repaid in 84 equal, consecutive
monthly amounts, with each such amount equal to one eighty-fourth (1/84th) of
the original principal amount of such CAPEX Loan.
<PAGE>
[KERR ACQUISITION CORPORATION LETTERHEAD]
FOR IMMEDIATE RELEASE
FREMONT
REACHES AGREEMENT WITH
PENSION BENEFIT GUARANTY CORPORATION
EXTENDS TENDER OFFER
FOR SHARES OF
KERR GROUP, INC.
------------------------------------
SAN FRANCISCO, CALIFORNIA (August 19, 1997) -- Fremont Acquisition
Company and Kerr Acquisition Corporation announced today that they have
determined to extend their previously announced all cash tender offer for all
outstanding shares of common stock (and associated rights) and preferred stock
of Kerr Group, Inc. The tender offer and withdrawal rights will now expire at
12:00 midnight, New York City time, on Monday, August 25, 1997.
Fremont Acquisition Company, Kerr and the Pension Benefit Guaranty
Corporation (the "PBGC") have entered into an agreement pursuant to which, upon
execution of a definitive agreement between Kerr and the PBGC, the PBGC has
agreed to dismiss its lawsuit now pending before the United States District
Court for the Eastern District of Pennsylvania seeking to terminate Kerr's
Retirement Income Plan, withdraw its Notice of Determination and forbear from
instituting new proceedings with respect to the acquisition. Pursuant to the
terms of the definitive agreement, Kerr will agree to (i) future enhanced
pension plan contributions, (ii) grant to the PBGC a second lien on
substantially all of the assets of Kerr, (iii) various restrictions on future
secured indebtedness and (iv) provisions regarding notice of certain events.
The definitive agreement will become effective only upon the consummation of the
tender offer.
It is currently contemplated that a definitive agreement between Kerr
and the PBGC, which is currently being negotiated, will be executed prior to the
expiration of the tender offer. Assuming that all conditions to the closing of
the tender offer are satisfied,
<PAGE>
Fremont Acquisition Company currently anticipates that the tender offer will
be consummated promptly upon its currently scheduled expiration date of
Monday, August 25, 1997.
As of 12:00 midnight, Monday, August 18, 1997, 3,555,827 shares of
common stock and 295,146 shares of preferred stock had been tendered to Boston
EquiServe, L.P., the Depositary for the tender offer. This represents
approximately 90% of the common stock outstanding, 61% of the preferred stock
outstanding and 78% of the common stock outstanding on an as-converted, fully
diluted basis.
Kerr Group, Inc., headquartered in Lancaster, Pennsylvania, is a major
producer of plastic packaging products.
# # #
Contact: Gregory P. Spivy
Principal
(415) 284-8793
2
